Hangzhou Hikvision Digital Technology Co., Ltd.
2020 Annual Report
April 17
th2021
To ShareholdersIn the past three years, we have met some challenges in development, and ourmanagement has been dedicated to their duties with diligence to ensure the Company’sstable operation with a view to long-term development. The Company's revenue hasincreased from RMB 41.91 billion in 2017 to RMB 63.50 billion in 2020, with a three-year compound growth rate of 14.86%; and the Company's net profit has risen 12.46%from RMB 9.41 billion in 2017 to RMB 13.39 billion in 2020 by the three-yearcompound growth rate.For us, technological innovation is the key to sustainable development. To respondto various challenges and to embrace new opportunities, our R&D expense ratio grewfrom 7.62% in 2017 to 8.99% in 2018, 9.51% in 2019, and 10.04% in 2020. In addition,we have accelerated our steps to deploy big data businesses and develop innovativebusinesses. And in order to meet the challenges, the spin-off and public listing ofEZVIZ Network has also been initiated.The application of artificial intelligence (AI) technology has been speeded up bothdomestically and globally. And we have sniffed the chances brought by the rise of bigdata technology applications, by the fusion of multi-detector technology, and by theend users’ improved awareness of smart city, enterprise digital transformation and theInternet of Things (IoT). In the three years to come, we will invest more in Researchand Development (R&D) and further improve operational efficiency to rewardshareholders. And we believe that this will be an opportunity for us to grow.
This year marks the 20
thanniversary of Hikvision since its establishment. We havegrown from 28 to more than 40,000 in staff number, and every setback and test havetoughened us, bringing us the new starts for growth and development. And all shouldbe attributed to this great era.Being open, transparent, and honest as always, we will pace ourselves toencounter challenges. And we will also pay attention to all kinds of new opportunities.Finally, we’d like to extend our sincere thanks to all shareholders for your trustand support to the Company's management team!See far, go further!
Hangzhou Hikvision Digital Technology Co., Ltd.
Board of Directors
2021.04
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 annual report are authentic,accurate and complete.All directors of the Company have attended the board meeting to review this report.The profit distribution proposal passed upon deliberation at the meeting of the Board of Directorsis set out as follows: based on the Company’s current total share capital of 9,343,417,190 shares, theCompany proposed to distribute cash dividend of RMB 8 (tax inclusive) per each 10 shares to allshareholders, bonus share and share distribution from capital reserve is nil.
Note:
This document is a translated version of the Chinese version 2020 Annual Report (“2020年年度报告”), and the published announcements in the Chinese version shall prevail. The complete publishedChinese 2020 Annual Report may be obtained at www.cninfo.com.cn.
Please read the full annual report and pay particular attention to the following risk factors:
1) Global COVID-19 epidemic risk: The global threat of COVID-19 epidemic has not yet been eliminated,
and the potential threats brought about by the aggressive monetary policies of various countries duringthe epidemic have not yet fully manifested. The Company will maintain its business strategy focusing onstable and healthy development and closely monitor the impact of the epidemic, to ensure the normaloperation of the Company’s businesses. If the epidemic leads to the deterioration of the global economy,the adverse influences on the Company’s businesses will escalate accordingly.
2) Risk of technology upgrade: Technologies such as artificial intelligence (AI), big data, cloud computing,and edge computing are developing rapidly. The speed of technology diffusion is accelerating. If theCompany is unable to closely track and adapt to the changes in cutting-edge technologies, or fails toquickly realize business innovation, the risk of uncertainty in the company's future development willincrease.
3) 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, which led to asignificant rise of internal management complexity and higher requirements on the Company'smanagement system. The Company’s sustainable development will face certain risks if the managementlevel fails to proportionally address the Company’s business expansion.
4) Supply chain risks: COVID-19 epidemic and political conflicts have brought adverse impact on theglobal raw material supply system. The Company has been making efforts to enhance management forour supply chain and optimize inventory adjustments and controls. However, if systemic risks arise in theglobal supply chain, the Company’s operating capabilities may be affected.
5) Global business risks: The Company operates in more than 150 countries and regions around the world.As the potential risks of epidemic, debt issues, political conflicts, and exchange rate fluctuations in variouscountries around the world are difficult to eliminate, the Company’s overseas business operations may beadversely affected.
6) Legal and compliance risk: The world's multilateral trading system is facing adverse impacts. The lawsand regulations of various regions that need to be complied with for business activities are verycomplicated. China and overseas countries have stricter data supervision and business compliancerequirements. If the Company's legal compliance capbilities cannot keep up with the situation, it will bring
adverse impacts on the Company's operations.
7) 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, procurement andfinancing, which could likely affect the profitability level of the Company.
8) Risk of cybersecurity: The Company has always attached great importance and taken active measuresto enhance 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.
9) Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale of
R&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.
CONTENTS
To Shareholders ...... 1
Section I Important Notes, Contents and Definitions ...... 3
Section II Corporate Profile & Key Financial Data ...... 9
Section III Corporate Business Summary ...... 14
Section IV Discussion and Analysis on Business Operation ...... 95
Section V Significant Events ...... 118
Section VI Changes in Shares and Information about Shareholders ...... 147
Section VII Information of Preferred Shares ...... 159
Section VIII Information about Convertible Corporate Bonds ...... 160
Section IX Information about Directors, Supervisors, Senior Management and Employees ...... 161
Section X Corporate Governance ...... 185
Section XI Corporate Bonds ...... 194
Section XII Financial Report ...... 195
Section XIII Documents Available for Reference ...... 355
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 |
| Qianmo Jiaying | Hangzhou Qianmo Jiaying Equity Investment Partnership (Limited Partnership) (formerly 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, Hikstorage | 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 | Hangzhou Hikfire Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
| HikSecurityCheck, HikRayin | Hangzhou Rayin Technology Co,. Ltd. (According to the context, also refers to the corresponding business) |
| Hangzhou Innovation Industry Park | Located in Binjiang District, Hangzhou, Zhejiang Province, the planned use is for R&D, office space and supporting facilities. |
| Chengdu Science and Technology Park | Located in Chengdu, Sichuan Province, the planned use is for R&D, office space and supporting facilities. |
| Chongqing Science and Technology Park | Located in Chongqing, the planned use is for production plants, warehouses and supporting facilities. |
| Xi’an Science and Technology Park | Located in Xi'an, Shaanxi Province, the planned use is for R&D, office space and supporting facilities. |
| Wuhan Science and Technology | Located in Wuhan, Hubei Province, the planned use is for R&D, office |
| Term | Definition |
| Park | space and supporting facilities. |
| Wuhan Intelligence Industry Park | Located in Wuhan, Hubei Province, the planned use is for production plants, warehouses and supporting facilities. |
| Zhengzhou Science and Technology Park | Located in Zhengzhou, Henan Province, the planned use is R&D, office space and supporting facilities, etc. |
| EZVIZ Industry Park | EZVIZ smart home product industry park, located in Hangzhou, Zhejiang Province, is planned to be used for R&D, office space and supporting facilities of Hangzhou EZVIZ Network Co., Ltd. |
| 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, HikRobot, HikAuto, HikMicro, HikStorage, HikImaging, HikFire, HikRayin and their related business or products. |
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 | 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 | ||
| Registered address | No. 555 Qianmo Road, Binjiang District, Hangzhou | ||
| Postal code of Registered address | 310051 | ||
| Business address | No. 518 WuLianWang Street, Binjiang District, Hangzhou | ||
| Postal code of Business address | 310051 | ||
| Company website | www.hikvision.com | ||
| market@hikvision.com; ir@hikvision.com | |||
| Board Secretary | Securities Affairs Representative | |
| Name | Huang Fanghong | Zhou Xinyi |
| Address | No. 518 WuLianWang Street, Binjiang District, Hangzhou | No. 518 WuLianWang Street, Binjiang District, Hangzhou |
| Tel. | 0571-88075998; 0571-89710492 | 0571-89710492 |
| Fax | 0571-89986895 | 0571-89986895 |
| hikvision@hikvision.com | hikvision@hikvision.com |
| Newspaper designated by the Company for information disclosure | Securities Times, Shanghai Securities Journal |
| Website specified by CSRC for release of the Annual Report | www.cninfo.com.cn |
| Place where the Annual Report is available for inspection | Office of the Board of Directors of the Company |
IV. Company Registration and Alteration
| Organization code | 91330000733796106P |
| Changes in principle business activities since the Company was listed (if any) | During the reporting period, there is no change in the Company's business scope. The Company's business scope is: research and development (R&D) and production of electronic products (including explosion-proof electrical products, communication equipment and related ancillary equipment, multimedia equipment, transmission and display equipment), fire protection and control products, big data and Internet of Things hardware and software products aircrafts, robots, intelligent equipment and intelligent systems, real-time communication systems, auto parts and accessories, automotive electrical signal equipment, servers and supporting hardware and software products; Sales of self-produced products; provide technical services, electronic technology consulting service, training service (excluding the organizational training), electronic equipment installation; electrical engineering, design, construction and maintenance of intelligent system projects. (except country prohibited and restricted items, relating to the specific mandatory license certificate) (subject to ratification in accordance with the project, approved by the relevant departments to operate) |
| Changes of controlling shareholders of the Company (if any) | No change during the reporting period |
| Name of the accounting firm | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Business address of the accounting firm | 30F Bund Center 222 Yan An Road East Shanghai |
| Name of accountants for writing signature | Tang Lianjiong, Zhang Shushu |
VI. Key accounting data and Financial IndicatorsWhether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
Unit: RMB
| 2020 | 2019 | YoY Change (%) | 2018 | |
| Operating income (RMB) | 63,503,450,891.78 | 57,658,110,065.22 | 10.14% | 49,837,132,481.61 |
| Net profit attributable to shareholders of the Company (RMB) | 13,385,526,714.15 | 12,414,587,690.45 | 7.82% | 11,352,132,255.21 |
| Net profit attributable to shareholders of the Company excluding non-recurring gains and losses (RMB) | 12,805,839,276.44 | 12,037,518,321.42 | 6.38% | 10,983,228,170.60 |
| Net cash flows from operating activities (RMB) | 16,088,156,566.67 | 7,767,720,171.14 | 107.12% | 9,113,286,027.76 |
| Basic earnings per share (RMB/share) | 1.445 | 1.343 | 7.59% | 1.240 |
| Diluted earnings per share (RMB/share) | 1.444 | 1.343 | 7.52% | 1.234 |
| Weighted average ROE | 27.72% | 30.53% | -2.81% | 33.99% |
| At December 31st 2020 | At December 31st 2019 | YoY Change (%) | At December 31st 2018 | |
| Total assets (RMB) | 88,701,682,384.20 | 75,358,000,240.29 | 17.71% | 63,491,508,747.79 |
| Net assets attributable to shareholders of the Company (RMB) | 53,794,311,162.05 | 44,904,033,876.83 | 19.80% | 37,589,417,652.35 |
| The total share capital of the Company as of the previous trading day of the annual report disclosure (share) | 9,343,417,190 |
| Fully diluted earnings per share (RMB/share) calculated with the latest share capital | 1.433 |
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
VIII. Key Quarterly Financial Indicators
Unit：RMB
Whether there is significant difference between the above individual or aggregate financial indicators and that ofwhat disclosed in the quarterly report, half-year report
□ Yes √ No
V. Differences in Accounting Data between Domestic and Overseas Accounting Standards
1. Difference in the financial report of net profits and net assets according to the disclosure of InternationalFinancial Reporting 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 InternationalFinancial Reporting Standards (IFRS) and China Accounting Standards in the reporting period.
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
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Operating income | 9,428,902,974.38 | 14,842,256,269.38 | 17,750,035,645.90 | 21,482,256,002.12 |
| Net profit attributable to shareholders of the Company | 1,496,269,608.01 | 3,127,703,222.86 | 3,814,978,645.77 | 4,946,575,237.51 |
| Net profit attributable to shareholders of the Company excluding non-recurring gains and losses | 1,469,074,026.95 | 2,994,424,350.73 | 3,576,189,605.69 | 4,766,151,293.07 |
| Net cash flows from operating activities | -3,982,048,164.94 | 4,052,014,505.51 | 5,464,651,652.26 | 10,553,538,573.84 |
IV. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Inapplicable
Unit：RMB
| Item | 2020 | 2019 | 2018 |
| Profit or loss from disposal of non-current assets (including the write-off for the impairment provision of assets) | -5,836,675.36 | -2,053,875.22 | 4,975,825.83 |
| 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.) | 571,403,657.30 | 413,790,429.84 | 319,304,315.50 |
| The investment cost of the company to obtain subsidiaries, associates and joint ventures is less than the income generated by the fair value of the investee's identifiable net assets when the investment is obtained | 281,193.50 | ||
| Net gains and losses from beginning of the reporting period to the merge date for the subsidiary merged involving enterprises under common control | -885,138.65 | -736,986.11 | |
| 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. | 98,373,869.75 | 26,872,639.66 | 62,153,461.82 |
| Other non-operating income and expenditures except the items mentioned above | 74,007,631.14 | 52,155,026.79 | 94,651,413.78 |
| Less: Impact of income tax | 109,931,807.07 | 86,193,406.35 | 84,510,487.85 |
| Impact of the minority interests (after tax) | 48,610,431.55 | 26,616,307.04 | 26,933,458.36 |
| Total | 579,687,437.71 | 377,069,369.03 | 368,904,084.61 |
Section III Corporate Business SummaryI. The principal business of the Company during the reporting period
1. Business Scope
Vision, hearing, smell, taste and touch together constitute the five senses of human beings. As for informationperception, vision may be deemed as the most vital means, as more than 80% information obtained by human beingscomes from sight. Deeply engaged in video technology development for the past two decades, Hikvision has beenupgrading machine’s video perception ability from capturing the target and capturing clearly all the way tounderstanding the target. And based on the video technology, we have built a complete value chain spanning fromR&D, manufacturing to marketing.For human beings, what you see is what you get, as human vision can only perceive the visible light, which isonly a small segment of 390-700 nanometers in the electromagnetic spectrum. Varying in wavelength and frequency,electromagnetic waves can extend from visible light to both ends. One end is a frequency band with longerwavelengths: infrared rays, microwave, and radio waves, etc., and the other end is a frequency band with shorterwavelengths: ultraviolet rays, X-rays, and gamma rays, etc. In light of the strategic positioning of the perceptionbusiness of the Internet of Things (IoT), Hikvision has expanded and deployed new business in a planned manner,and built the main technology architecture for multi-dimensional perception by establishing five main technicallines in visible light, millimeter wave, far-infrared rays, X-rays and sound wave. On this basis, we’ve managed tooffer a richer and broader technical product portfolio.Hikvision, focusing on the intelligent IoT, big data services and intelligent business, offers intelligent IoTproducts and services integrating software and hardware, cloud and edges, as well as big data platform products andservices combining IoT and information network, big data and intelligence, and develops innovative businesses insmart home, mobile robots and machine vision, auto electronics, intelligent storage, infrared thermal imaging,intelligent fire protection and control, intelligent security check, intelligent medical services, etc. Experiencegathered bit by bit in perception platforms, data platforms and application platforms naturally drive the R&D ofmore perception means, the acquisition of more perception data, and the development of more perceptionapplications. Perception technologies such as millimeter wave, far-infrared rays, X-rays and sound wave togetherempower Hikvision to enlarge its business scope and build an open and cooperative ecosystem to serve users in the
public service sector, big enterprises and small and medium-sized enterprises, and contribute to the constructionand service of intelligent business such as smart cities and digital enterprises.
2. Core Capabilities
2.1 Integration of Software and Hardware: Mutual Promotion between Software and Hardware ProductSystems
In recent years, Hikvision has unified the software development system, standardized the hardwaredevelopment process, provided a unified embedded software platform for various equipment, and unified interfacespecifications for networking accessing and operation and maintenance management of various equipment, usheringthe development of software and hardware products into a benign iterative cycle.
2.1.1 Unified Equipment Software Platform
Various hardware product types, diversified product operating environments, and different product operationand maintenance management ways have posed major challenges to the development of the IoT business. In thiscontext, Hikvision has launched HEOP (Hikvision Embedded Open Platform) to support containerized independentdeployment and flexible scheduling of algorithms or components for the sustainable development of intelligent IoT.
Hikvision is currently migrating its original hardware products to HEOP step by step, with all new productsdeveloped based on this platform. On this unified embedded software platform, all intelligent IoT equipment ofHikvision will feature the same software foundation to avoid the differences between various hardware developmentand operating environments, and support function changes of hardware products through software upgrades toimprove development efficiency significantly.
In addition, partners can realize iterative development of intelligent application functions of intelligent IoTequipment based on HEOP efficiently, and work with Hikvision to create value for customers.
2.1.2 Unified Software Support for Equipment
Hikvision provides various intelligent IoT equipment with unified access, networking, operation andmaintenance support capabilities through a unified intelligent perception networking platform, making the large-scale intelligent IoT a reality.
The unified device access framework supports the connection of various video equipment, multi-dimensional
sensing equipment, and intelligent equipment. With open interfaces and protocols, various intelligent IoT equipmentcan access Hikvision’s software platforms. And the development of equipment network access drivers is relativelyseparated from application software, that is, we can set up the platform first and then develop device drivers.Networking is possible in a large scale to support a variety of IoT perception equipment in line with nationalstandards and multi-industry standard specifications. And the integrated operation and maintenance service platformis applicable to a variety of IoT devices and IT equipment.Moreover, partners, through the interface provided by the intelligent perception networking platform, canconnect other manufacturers’ IoT equipment to the same software platform.
2.1.3 R&D Synergy Between Software and Hardware
At Hikvision, the R&D of software or hardware meeting customer requirements, application scenarios,industry characteristics and other demands is not carried out separately in most cases. Offering the best solutions tomeet users’ demands is our top priority. So, you will find that the hardware development demands may be completedby the software R&D team, while the software development demands may be undertaken by the hardware R&Dteam. We have formed a synergy between these two R&D types with the two teams supporting each other. Whencommunicating with users on business needs, software personnel will advise them on the hardware equipment theyneed; and for the newly developed intelligentequipment, the software team will develop application software thatmaximizes their value.Software Demand Drives Hardware R&DWhen understanding the demands of relevant industries and designing software functions, the business teamwill analyze the demands for hardware products at the same time, and timely feedback to the hardware products andAI algorithm team. Take hyperspectral water quality monitor and gas-cloud imaging gas detection explosion-proofcamera as examples:
Hyperspectral water quality monitor: To meet the needs of water resources protection, river and lakeshoreline management and protection, water pollution prevention, water environment governance, water ecologicalrestoration, law enforcement supervision and other demands, Hikvision’s hardware products and AI algorithm teamhas developed a hyperspectral water quality monitor, breaking through the limitations of traditional water qualitymonitoring methods. This device retrieves the water quality information with the hyperspectral technology,including chlorophyll a, total nitrogen, total phosphorus, transparency, COD, turbidity, suspended solids, ammonia
nitrogen, etc. To adapt to various application scenarios, the team has created an array of product forms includingsingle-point hyperspectral water quality monitor (for water quality detection in urban/rural rivers, water conservancyrivers, and natural lakes), and airborne hyperspectral water quality monitor (for urban/rural river basins, lakes,pollutant discharge monitoring, agriculture and forestry, plant protection, etc.).Gas-cloud imaging gas detection explosion-proof camera: To meet the gas detection demands of oil andgas field exploration, petroleum refining, natural gas pipeline transportation, environmental law enforcement andother scenarios where hazardous gas leakage may occur, Hikvision’s hardware product and AI algorithm team,going beyond the restrictions of traditional gas monitoring methods, gives play to the unique spectral imagingtechnology and detection algorithms to monitor, identify and quantitatively analyze leaking gas in real time,realizing real-time detection and early warning of dozens of flammable and explosive hydrocarbons such as methaneand ethylene in a highly efficient, long-distance, wide-range, dynamic and intuitive manner.
Hardware Capabilities Drives Software DevelopmentLeveraging Hikvision’s strong hardware research and development capabilities, the hardware team iscommitted to introduce new hardware devices. The software team, through in-depth communication with thehardware team, keeps abreast of the latest developments in hardware products, and rolls out new applicationsoftware R&D in a timely manner to maximize the functions of hardware equipment and reflect the applicationvalue of the equipment. Take specific route video relay software, traffic projection and intelligent analysis softwareas examples:
Specific route video relay software: The intelligent tracking PTZ dome camera designed by Hikvisionsupports functions of automatic target recognition and target positioning of vehicles. To fully give play to the
functions of this equipment, Hikvision’s software team has created a specific route video relay software, which usesmultiple intelligent tracking PTZ dome cameras to track cross-border vehicle targets, and is applied in the fullseamless video relay of hazardous chemical vehicles and other scenarios.Traffic projection and intelligent analysis software: The Radar-Assisted Camera developed by Hikvisioncombines the strengths of video and radar in perception methods and information perception in a profound way; thehigh-precision monitoring capabilities of millimeter-wave radar makes harsh environment no more a trouble, andthe full-structured analysis capabilities unique to video, covering license plates, models, and car logos, body colorrecognition, etc., realizes functions such as accurate movement description and behavior analysis of motor vehiclesand non-motor vehicles on the road. To double the might of the equipment, the Hikvision industrial team hasdeveloped the traffic projection and intelligent analysis software. Working together the comprehensive intelligentcollection capabilities of the radar-assisted camera, it can reproduce the real-time road traffic movement, andaccurately depicts the entry and exit of a single vehicle at the intersection, collect precise traffic parameters andtimely detect traffic incidents such as intersection and road section congestion, continuous lane changes to assist inthe diagnosis of intersection traffic operation, and support traffic signal control, comprehensive evaluation of roadsafety, and optimization of traffic scheduling.
2.2 Cloud-Edge Fusion: Perception Fusion Empowering Platform
2.2.1 Perception Fusion Empowering Platform: Realizes Intelligent Fusion and Utilization of Front and BackEnds
Aiming at “co-construction of locations, resource sharing, algorithm co-management, computing powerintegration, and service sharing”, Hikvision’s perception fusion empowering platform is geared towards the fusion
and utilization of industrial or urban IoT perception resources. As for perception resource construction, it supportsaccess networking, lean management and planning and deployment of front-end devices to realize “co-constructionof locations”. For perception resource utilization, the label association, fast retrieval, and on-demand access ofperception data are readily available for “resource sharing”. In terms of algorithm management, the open training,unified management, and flexible programming of intelligent algorithms together make “algorithm co-management”possible. In the aspect of intelligent computing power integration, the platform supports the unified management,load monitoring and reasonable scheduling of computing power resources to achieve “computing power integration”.Lastly, in terms of intelligent analysis service, there are directory publishing, business application and serviceconfiguration of intelligent services for “service sharing”.Hikvision’s perception fusion empowering platform provides competence center, application center,programming center, investigation and judgment center, operation center, and management center. The competencecenter provides the classification and search services of perception resources, and releases intelligent servicecapabilities; the application center serves for the application and review management of perception resources andintelligent analysis services; the programming center is for scene tag management, scene configuration, andintelligent analysis algorithm programming for the perception resources of the IoT; the investigation and judgmentcenter features functions such as automatic push of intelligent analysis events, manual investigation and judgment,event statistics and retrieval; the operation center offers intelligent service applications, intelligent service taskmonitoring, execution statistics, regular operation reports and other functions to business managing personnel; themanagement center is characterized by management functions covering background resource managementscheduling platform, IoT resources and algorithm resources for technical operation and maintenance personnel.
2.2.2 AI Open Platform: Makes Front-End Intelligent and Definable
Intelligent industry algorithms available in large number is the premise for the perception fusion empoweringplatform to function. Based on existing mature algorithms, it is necessary to provide more algorithm customizationservices matching with users’ actual application scenarios. Hikvision’s AI open platform, as a one-stop algorithmtraining platform for fragmented industry application scenarios, is capable of training perception algorithms basedon small sample data.Easy to operate, the AI open platform can generate intelligent algorithms through sample data collection, onlinedata labeling, and online algorithm training, and deploy the algorithms to front-end and back-end equipment.Supporting two training modes: public cloud and private cloud, this platform currently has more than 2,000registered users with over 15,000 intelligent algorithms trained for users in 2020 alone in addition to algorithmtraining services offered by Hikvision to its own users.
2.2.3 Algorithm Database: Provides a Basis for Algorithm Reuse
Hikvision’s algorithm database manages algorithms of different vendors, different functions, and differentforms in a unified way, providing a basis for the reuse of intelligent algorithms.
Formulating a complete algorithm description specification, Hikvision’s algorithm database can describe andmanage the name, type, function, technical parameters, application scenarios, operating environment and othercharacteristics of the algorithm, so as to provide the appropriate technical environment or scheduling parameters todeploy, arrange, and manage algorithms, and work together with the resource management scheduling platform to
realize the unified management of intelligent algorithms and on-demand scheduling.
2.3 Fusion of IoT and Information Network: Data Resource Platform Comes into Play in Multiple Industries
Hikvision’s iDatafusion platform has been applied and promoted in various fields such as public safety, trafficmanagement, bus scheduling, water conservancy and water affairs, natural resources, financial anti-fraud, andcampus management. Through the fusion, management, mining and service of perception data and business data, itprovides users with data models and applications, and meets users’ business application needs.
2.3.1 iDatafusion Platform: Brings Out a Complete Product System
Hikvision’s iDatafusion platform provides users with data integration, data processing, data analysis, datasharing, data services, and model repository capabilities.
The data resource platform provides data integration tools such as data integration workbench, general datacollector, data exploration, data definition and data simulation, etc., data processing tools such as data developmentworkbench, data desensitization and quality inspection, etc., data analysis tools such as BI (Business Intelligence)visual analysis, data mining engines, knowledge graphs, data cubes, and space-time engines, etc., data sharing toolssuch as API (Application Programming Interface) gateways, data cascades, etc., and data service capabilities suchas data catalogs, IoT catalogs, API catalogs, data subscriptions, data exchanges, etc. Among them, data miningengines and knowledge graphs together constitute the intelligent cognitive open capabilities based on the AI openplatform, and the data analysis operators and data models formed thereby can be further utilized by other analysis
tools such as the data cubes.To effectively improve the quality of IoT data, Hikvision advocates IoT data management from the source, andprovides comprehensive management applications for IoT elements, offering a series of management tools such asequipment management, space calibration, and transportation unit management; to better serve industries, we alsoprovide a series of optional data service product add-ons packages such as perception data service, multi-dimensional data fusion service, general application data service, industry application data service, etc., to elevatethe efficiency of application development based on the data resource platform.
2.3.2 Model Repository: Provides a Basis for Model Reuse
With models as the granularity, Hikvision’s model repository provides unified data model deliverablesdescription specifications to manage the process or task of data tools such as data integration workbench, datadevelopment workbench, data mining engines, data cubes, BI visualization analysis, and API gateways associatedwith models. Possessing such capabilities as model release, version management, information inquiry, statisticalanalysis, and integrated deployment to serve all 3
rd
parties developing models based on tools of the iDatafsionplatform, this repository can facilitate model reuse between various projects.
The final deliverable of the data model can be the dataset, API service, or BI visualization chart that supportsthe application. A data model can be used for multiple applications, and an application can rely on the support ofmultiple data models.The model repository functions as a foundation for the reuse of data models in multiple application sites.
2.4 Big Data-intelligence Fusion: Intelligent Application Open Platform Empowers Industries
2.4.1 Intelligent Application Open Platform: Support Universal Intelligent Application Scenarios
Hikvision has set up the intelligent application open platform for edge node applications, edge domainapplications, cloud center applications, and Internet operation applications respectively, to support universalintelligent application scenarios.
Edge node Hikvision Embedded Open Platform (HEOP): Consists of three parts: development environment,open content, and standard specifications. Therein, the development environment, with standardized tool chains anddevelopment tools (model toolsets, packaging tools), as well as containerized deployment methods, makes one-clickdeployment of development environments possible for cooperating vendors. The open content, through theabstraction of software functions, provides a unified external capability interface to avoid differences betweenproducts; and through the abstraction of hardware, realizes on-demand use of hardware resources to prevent resourcepreemption between different apps. Standard specifications, with a series of related standard specifications such asopen interface specifications, architecture execution specifications, test design specifications, etc., to ensure theconsistency of cross-device and cross-platform implementation.
HEOP features a device-level open platform that supports application decoupling development. Developerscan develop apps independent of intelligent devices to achieve two-way decoupling of product hardwaredevelopment and software feature development, thus promoting product development flexibility, shortening product
development cycles, and improving product development efficiency. For the time being, it has gathered multipleapps that have been applied to corresponding products; based on its basic capabilities, including audio and videoprocessing capabilities, deep learning reasoning, etc., partners can develop their own apps leveraging deviceresources and open capability interfaces to meet the demands of different scenarios, such as dangerous goodsidentification, electric bicycle identification, etc. Partners can also publish their apps on the Hikvision App Storefor promotion and sales; flexible deployment between devices is easy to achieve. No matter whether they aredeveloped by Hikvision or by a partner manufacturer, they can be directly used across products through a simplesecondary compilation and packaging, to achieve one-time development, multi-machine sharing, and high R&Defficiency.Edge domain intelligent application platform (Hikvision iSee): Provides a development framework for edgedomain intelligent applications, and general service capabilities that can be integrated into this framework, includingvideo live view and playback, access control, video intercom, elevator control and other connected perceptioncapabilities and video intelligent analysis functions, in addition to a number of optional common functionalcomponents. Developers can further develop dedicated components that meet specific application requirements onthis basis.Cloud center intelligent application platform (Hikvision iFar): Provides a development framework forcloud center intelligent applications, and general service capabilities that can be integrated into this framework,including comprehensive data intelligence application support capabilities such as IoT perception, intelligentanalysis, and big data analysis. Developers can further develop dedicated components that meet specific applicationrequirements on this basis.
Internet operation application open platform (Hikvision Infocloud): Based on EZVIZ cloud, providesbusiness operation service support capabilities for cities and industries, and a public Internet underlying platform(supporting the access and management of hundreds of millions of devices) and Internet-based high-concurrencybusiness services for industry users. The tenant platform integrates shared service units such as resource servicesand user services for the rapid up integration by business platform; the operating platform mainly delivers productservices, project services, etc., for operators to manage products and projects; intelligent services support people-vehicle identification, OCR text recognition, intelligent voice recognition, AI training service, data annotation,intelligent application engine, etc. At present, it has achieved online business operations of 14 public service areas,including community operation service cloud platform, rental house management cloud platform, environmental,food and drug enterprise information collection cloud platform, small and micro enterprise safety production
supervision platform, and waste classification intelligent management cloud platform, municipal IoT platform,temperature measurement data cloud platform, video integrated operation platform, intelligent voice cloud platform,fire protection operation cloud platform, vehicle security management cloud platform, Internet cloud court trialplatform, smart parking operation cloud platform, etc.
2.4.2 Component Database: Provides a Basis for Software Reuse
Hikvision’s unified software technology system supports the “architecture + component” development model.And our component database has gathered over 2,300 components of various types for four developmentarchitectures.
Hikvision’s component database manages the component development of internal software development teamsaround the world in a unified manner to avoid repeated component development plans, and combine and dividecomponents with repeated functions, thereby reducing development and maintenance costs.
The Hikvision component database, as an alternative source for software function reuse, offers a large numberof common functional components which support multiple development frameworks at the same time. Developerscan further develop dedicated components that meet specific application requirements on this basis, and use thetools provided by Hikvision’s unified technology system to package, deploy and manage components. The softwaredevelopment process based on Hikvision’s unified software technology system can be boiled down to “selectingarchitecture + selecting components + configuring components + developing new components + integration”,thereby improving the consistency and compatibility of the software released by us while ensuring high softwarequality.
2.5 Ecological Empowerment: Forms an All-round Open Ecological Empowerment System
2.5.1 Open System: Open Equipment + Open Platform + Open Data + Open Application
Hikvision offers comprehensive open capabilities spanning equipment, platforms, data, and applications toindustry application developers in all aspects.
Hikvision intelligent application open platform provides four development frameworks, more than 1,000 openinterfaces, more than 730 common components, and nearly 200 software platform products including basic software,general software, and industry software.
Our integrated operation and maintenance service platform offers equipment probes for the access of third-
party sensing devices, operation and maintenance data interfaces for data output and report output of operation andmaintenance data; and the partner operation and maintenance team management and cascading assessment functionfor various teams to deliver operation and maintenance services based on the same platform.
Hikvision’s IoT-information integrated data resource platform supports the access of third-party data storagemanagement systems or data formats in addition to mainstream data access; the IoT data management tools providedis capable of managing elements of various types of IoT devices from multiple vendors while evaluating locationdeployment; and data service interfaces support the development of business applications.Hikvision provides more than 80 related standards and specifications including overall technical specifications,general technical specifications, software interface specifications, IoT perception technical specifications,intelligent algorithm technical specifications, big data management and service specifications, technicalmanagement specifications, etc., to ensure the seamless integration between ecological partners’ technicalachievements and Hikvision’s software and hardware products.
2.5.2 Empowerment System: System Operation and Maintenance +Algorithm Training + Data Engineering+ Application Development
To support more partners to deliver application values for users based on Hikvision’s open system, Hikvision,based in Hangzhou has established a training and certification system, three software R&D centers in the northeast,northwest and southwest, the offline training empowerment mechanism of 19 provincial-level software R&Ddepartments, as well as an online training mechanism offering over 280 courses.
The training empowerment system, oriented to system operation and maintenance, algorithm training, dataengineering and application development, issues certifications of associates, professionals and experts based on theHikvision training and certification system and the training content and evaluation system.
3. Software and Hardware Products
3.1 Hardware Product Family: Edge Node Comprehensive Perception + Edge Domain Scenario Intelligence+ Central Intelligent Storage and Computing
Hikvision, centering on intelligent perception, has further integrated its technological expertise accumulatedover the years and reinforced its basic technical capabilities, developing an open platform for embedded devices,and creating an efficient and steady product development system that is safe and reliable. While enhancing its overallcompetitiveness, Hikvision has created a series of star intelligent products such as “DarkFighter X” and “ColorVu ”camera series, “DeepinMind” NVR, and “MinMoe” smart access control products, which are applied widely bygovernment agencies, enterprises, and the consumer market.In Hikvision’s hardware product family, edge node products focus on comprehensive intelligent perception,edge domain products on realizing scenario-based intelligence, and cloud center products on intelligent computingand streaming storage.
3.1.1 Edge Node Products: Comprehensive Intelligent Perception
1) Front-End Products
With continuous investment into video images, intelligent algorithms, optical lenses, hardware structures,software architectures, cyber security, and other technologies, Hikvision has put forward the philosophy of ultra-clarity and full-color, panoramic details, multi-dimensional perception, scenario definition, and universalintelligence to further improve cameras’ all-weather all-scenario perception, all-element extraction, and all-dataassociation capabilities.
Ultra-clarity and full-color: With in-depth research of Darkfighter, ColorVu technologies and adaptation oflarge aperture, ultra-depth-of-field lens, super photosensitive sensor, multi-spectral fusion architecture, 3D Coloraugmented engine and AI image augmented technology, Hikvision has managed to achieve accurate colorreproduction, high dynamic and clear imaging and adaptation to complicated scenes, and developed a ultra-clearfull-color product matrix featuring 4K ColorVu and Darkfighter series, to improve data quality from the imagesource, obtain richer detailed features, and present more true color night vision.
Panoramic details: We’ve comprehensively expanded the PanoVu product series. With multi-camera videoing,dynamic and static details, the long and short views, and panoramic details, we can meet the needs of capturingmultiple targets and elements, and conducting multi-business analysis under the same scenario, while presentingboth the overall vision and the details and rendering the view broad and clear.
Multi-dimensional perception: Based on video perception, combined with multi-dimensional sensingtechnology, we’ve gained the multi-dimensional data perception, accurate target capturing capabilities with time-space correlation, IoT sensing, and information fusion, thus being able to build a bridge between the physical worldand the digital world, and create a more accurate, more comprehensive, and richer IoT sensing system.
Scenario definition: The scenario defining cameras, with scenario-based hardware structure, intelligentdefinition of software, and intelligent operation and maintenance, can meet the business needs under variousenvironments and conditions, with the strengths of professional adaptation, rapid deployment, and easy maintenance.
Universal intelligence: Based on scenario-based application demands and driven by business, we’ve createdan intelligent product system oriented to all fields with product tiers and intelligent grading, to provide intelligentservices in all walks of life including public safety, emergency command, people’s livelihood, urban operation,traffic management, cultural tourism, education, and medical care and enable industry digital transformation andintelligent applications.
2) Intelligent Transportation and Portable Law Enforcement Products
Intelligent transportation products: Centering on the concept of “improving traffic order, alleviating trafficcongestion, preventing traffic accidents, improving traffic safety, and facilitating transportation and travel”, we’veput emphasis on scenario-based business adaptation, and innovated technologies to support new business models.The environmental protection series products are fully upgraded to continuously tackle the problem of lightpollution; the radar-assisted series cameras with deep integration of multi-dimensional perception have realized all-weather, multi-scenario, high-precision information detection, and innovatively introduced a complete closed-loopsystem for the management of traffic congestion in urban cities, which covers diagnosis, simulation, operation,evaluation, and adjustment, breaking through the technical limitations of single-dimensional perception, and withsupporting intelligent management and control system, and “weight balanced” adaptive control algorithm. At thesame time, perception products born in technological wave of video-radar multi-dimensional integration haveachieved business upgrades in urban roads, level crossings, curves, highways, ports and airports, industrial parksand other scenarios, while integrating multi-dimensional perception data, and expanding to new business fields, tocreate a benign ecology with the concept of “visible, knowable, intelligent and open”.
Static transportation products: For business involving entrances and exits, parking lots and roadside parking,we’ve launched a new generation of parking products represented by the “Guardian” series through theintensification, intelligence and informationization of the parking system, to optimize product portfolio and improveparking operation and management level and efficiency; combining videoing and multi-dimensional perceptiontechnologies, we’ve offered application for the sub-scenarios of parking management, and further researched theurban roadside parking management business, to help solve the parking problem in urban areas, and facilitatesmooth transportation.Portable law enforcement products: With technological innovation, gyroscope motion sensing and PTZcorrection algorithm, we’ve introduced a mechanical anti-vibration law enforcement recorder, to effectively solve
the industry pain point of law enforcement officers brought by motion blurring. In 2020, Hikvision was selected bythe police equipment procurement center of the Ministry of Public Security. With the integrated portable lawenforcement platform, we’ve realized the front-end and back-end integration, and the fusion of the business side, toprovide more complete portable law enforcement programs for public security, traffic police, urban management,taxation, food and drug supervision, fire protection and other sectors.
3) Access Control and Intercom Products
Hikvision has been investing in audio and video interaction, intelligent applications, multi-dimensionalperception, electromechanical control, and other technologies to improve user experience unremittingly. Based on“MinMoe”, we’ve enhanced the competitiveness of access control products, realized the integration of multi-modaldetection and recognition technologies, built an open hardware ecosystem with intelligent hardware and HEOParchitecture as the core to provide customers with convenient and fast customized solutions. Further optimizing theaudio effects of video intercom products, we’ve delivered full-color visualization in low light, avoided lightpollution, enhanced users’ real-time interactive audio-visual experience, strengthened our competitiveness ofbuilding intercom, and opened up prisons, medical intercoms, and other business fields to develop a unified videointercom program. Comprehensively upgrading the control technology and manufacturing process of turnstile,we’ve launched the new generation of intelligent, safe and stable products, covering buildings, transportation, scenicspots, campuses and other scenarios. Access control, intercom and turnstile products, combined with industryapplications, have formed a comprehensive solution to access control and attendance, visitor elevator control,building intercom, medical intercom, public address (PA), turnstile, smart storage and other application scenarios,with rapid development in the domestic and foreign markets.
4）Alarm ProductsHikvision has been increasing investment in core technologies such as radio frequency, detection optics, multi-dimensional perception, situational perception, and intelligent analysis to improve the comprehensive technicalcompetitiveness of products, aggressively drive cloud alarm/cloud operation business models based on Hik-ProConnect/ Hik-Connect, and create value for customers as always. Deeply engaged in the field of intrusion alarmproducts with continued innovation, Hikvision has brought forth the second generation of wireless intrusion alarmproducts, and made significant progress in overseas distribution markets and major customer markets. Iterating andextending the perimeter alarm field, and paying close attention to the actual needs of projects and customers, we’veintroduced the new generation of vibrating optical fibers and other product series to facilitate industry breakthroughs.As for public alarm, we have worked closely with the industry to accurately understand customer needs andlaunched a series of situational perceptional radar products, which have been widely adopted in key projects suchas border control and the Yangtze River fishing ban.
3.1.2 Edge Domain Products: Fragmented Scenario Intelligence
As for intelligent storage and computing application equipment in the edge domain, Hikvision has strengthenedthe diversification of hardware platforms, further deepened AI application, improved product capabilities, enhancedsystem opening to serve the intelligent and digital transformation of industries and meet fragmented AI demands.
1) Multifunctional Integrated Intelligent Equipment
Intelligent storage and computing equipment for fragmented scenarios-Hikvision DeepinMind NVR:
With the digital development trend, edge storage and computing application equipment plays a key role in thecirculation of digital information, realizing the aggregation, storage, analysis or secondary analysis, localizedapplication of various perception data at the node end and uploading key data to centers. Hikvision’s DeepinMindNVR series products have won honors such as “Top 10 Innovative Security Products” and “Special Award forInnovative Products at CPSE”, etc. With years of development, the products have achieved more excellences. Whilevigorously developing general intelligent applications, Hikvision has also been working with ecological partners to
deeply explore industry business applications, launching the AI open platform DeepinMind and HEOP openDeepinMind, etc., and has completed more than 100 industry-specific algorithm model trainings and applications.Serving industries such as smart education, smart communities, smart buildings, smart enterprises, smart agriculture,smart energy, smart logistics, etc., we’ve been dedicated to promoting efficiency with intelligence, driving industrialupgrading and transformation, and maximizing social benefitsIntelligent system application equipment for small and medium-sized edge scenarios-Intelligent FusionServer: For small centralized intelligent application scenarios such as streets, communities, police stations,enterprises, schools, etc., we provide Intelligent Fusion Servers that integrate a variety of intelligent video analysisalgorithms, such as the Intelligent Fusion Server with dozens of city management algorithms, the AI toolbox toimprove business efficiency, the AI container that brings together intelligence, big data, and application platforms,etc. Drawing on our AI intelligence and big data analysis capabilities, and IoT perception and various scenario data,we’ve been trying to improve the ability and efficiency of fragmented scenario management to facilitate the elasticexpansion of the platform in business.
Integrated Self-service Terminal: Featuring “government service, convenience service, and informationdisclosure”, this machine offers such functions as information inquiry, self-service certificate application, certificateprinting, etc. It has access to various data in the Internet and business information networks to meet actual needs,and is equipped with a variety of software functions, to support various self-service processing of public security,social security, taxation, industry and commerce, real-name authentication with intelligent analysis, quick inquiry,OCR data input, and multiple interactive methods such as touch-screen, voice intercom, etc., to facilitate handlingand improve user experience and efficiency. The integrated self-service terminal, interconnected online and offline,can be widely deployed in communities, enterprises and other places to reduce urban operating costs and contributeto the building of smart cities.
Interactive Tablets: We have developed a full-process solution incorporating conference tablets, conferenceroom door tablet, video conferences, and conference management systems. The pre-conference online reservations,material sharing, meeting notifications, self-service sign-in, conference room door tablet informationsynchronization, in-conference wireless projection, whiteboard writing, interaction and collaboration, andgeneration of voice minutes, the post-conference centralized management and control of equipment, statisticalanalysis of data, and sharing of meeting minutes provide users with a safe, intelligent and efficient meetingexperience. As for conference tablet hardware, Hikvision has developed new series of products with ingenuity andpersistency. The product adopts a unique penetrating arc pen slot for its look to bring out the sense of business,which is matched with the high-quality anodized surface inferior by no means to notebook computer in touch. Thezero-fit technology makes handwriting no more necessary and display ghosting no more the case. The newlyupgraded writing pen now is characterized by the pen-lifting sensor function, bringing users more conveniences.The fresh new Vision OS 2.0 interactive system, adopted for interaction, redefines the interactive informationarchitecture and functional layout of the conference tablet, and the system UI is fully upgraded to deliver the ultimatetablet interactive experience.
2) Intelligent Video Transmission
In 2020, Hikvision had focused on the operation and maintenance of the IoT system and network system, andreleased the intelligent video transmission system V1.0. This system combines the operation and maintenance ofthe IoT system and the network system into one through “topological visibility, unified management, and intelligentoperation and maintenance”, thus reducing the requirements for the ability of operation and maintenance personnel,and improving the efficiency to discover, analyze, and pinpoint hardware problems, with the scale of the unifiedmanagement capability reaching 5000 video channels.
3.1.3 Cloud Center Products: General and Intelligent Storage and Computing
Hikvision provides general computing, intelligent computing, general storage, streaming storage, and large-screen display products to empower the building of data center.
1) General Computing
Hikvision’s general server is a high-performance, high-reliable, and high-expandable general-purposecomputing product built by Hikvision drawing on 20 years of technological expertise and over 10 years of serverresearch and development experience and taking fully into consideration of the core demands of users in variousindustries. Supporting X86 and ARM architectures and compatible with domestic CPUs, it is highly reliable, safe,and ecologically versatile, and can provide a sturdy and reliable infrastructure for the construction of data centercomputing resources.
Hikvision’s general server product series can meet the demands of large and medium-sized enterprises ininformationization, virtualization, industry data analysis and high-load applications. They are also the ideal choicefor the industry data centers of government, Internet, energy, operators, finance and other sectors with demandingrequirements on server performance, scalability and reliability as well as remote enterprise informationenvironments.
2) Intelligent Computing
Embracing the video big data era, we need a solution to decouple video intelligent analysis and business. Thelower layer will undertake the intelligent analysis of massive videos, and the upper layer the analysis and processingof big data and user business applications. Hikvision’s intelligent server, equipped with a general GPU hardwareplatform which can meet various business needs, can also incorporate rapidly the cost-effective domestic GPUhardware platform, which is of stronger market competitiveness and is suitable for various visual in-depth analysisapplications. Integrating server resources and intelligent analysis algorithms, and adopting cutting-edgetechnologies such as multiple video intelligent analysis algorithms, clusters, and big data retrieval, it serves as astrong foundation for video big data processing in smart cities.
Hikvision’s intelligent analysis server has realized full analysis of multi-dimensional data such as audiovisualdata and IoT for city-level and various industry big data applications and governance business; intelligent analysisproducts, acquiring gradually the independent learning ability, will improve the adaptability to scenarios remarkablyto meet user business needs; we’ve released a new AI engine, which is compatible with mainstream computingplatforms, and with further improved standardization and openness; with the commercialization of hundreds ofalgorithms, we can facilitate intelligent applications in more business scenarios, and contribute to urban digitalconstruction and governance continuously.
3) General Storage
Hikvision’s general storage equipment is a professional system-level storage product designed for IT datacenters and IoT applications. It boasts networking modes such as SAN, NAS, and object storage to offer blockstorage, file storage, and object storage capabilities. Supporting core data protection functions such as RAID,snapshot, WORM, data synchronization, mirror backup, etc., it is widely used in database system DB, office systemOA, enterprise information system ERP and production system’s disaster recovery backup system.
4) Streaming Storage
The streaming storage is embedded with the advanced streaming file system HVFS (Hikvision Video FileSystem). In addition to VRAID (Video RAID-Redundant Arrays Of Independent Disks) data protection technology,it also incorporates intelligent algorithms for business data load to ensure that the system is of higher intelligence,flexibility and data security. This product series adopts the mode combining streaming data structure and objecttechnology to offer more convenient and efficient data reading and writing services.Hikvision, enhancing its streaming storage technology and brand building in professional video storage, hasmaintained its leading position in the video storage sector, toughened its multi-dimensional intelligence, data,application and storage integration capabilities, accelerated the steps of industry digitalization and application ofindustry innovations, and achieved groundbreaking technological progresses and mass production of products inpublic security, transportation, finance, education, real estate, petroleum, power and other industries. Relying on thetechnological strengths gained over the years in direct storage and intelligent integration, we’ve enriched the ITinformation product family and related solutions in return.
5) Large-screen Display
Hikvision’s display products, with video processing technology, image restoration technology, and imageaugmentation technology as the core, are widely applied in monitoring centers and command centers. At cloudcenters, Hikvision’s high-resolution visualization solution has been widely adopted. This solution is based on ultra-high-resolution display technology and intelligent interactive technology, and provides a display carrier for cloudcenter big data applications. Valuing quality and display effect, Hikvision makes efforts to offer better colorconsistency and higher definition resolution, releasing Mini LED, mirror series LCD products and other displayproducts. In the fields of special display and commercial display, we have further expanded application scenariosand offered quality and cost-effectiveness display products and display solutions.
3.2 Software Product Family: Software Platform + Intelligent Algorithm + Data Model + Business Service
Hikvision’s software product family is composed of software platform, intelligent algorithm, data model andbusiness service.
3.2.1 Software Platform: Basic Platform + General Platform + Industry PlatformBasic software platform: Represented by “two pools, three databases, one screen, seven platforms and oneenvironment”. “Two pools” refer to computing storage resource pool and data resource pool for edge cloud andcentral cloud computing platform, cloud storage platform, and big data fundamental platform; “three databases”refer to component database, algorithm database, and model repository, respectively supporting management andreuse of components, algorithms and models; “one screen” refers to large-screen visual application developmenttools, which support the configuration of visual applications and the association with data without coding; “sevenplatforms” refer to resource management scheduling platform, intelligent perception networking platform, AI openplatform, perception fusion empowering platform, iDatafusion platform, intelligent application open platform,integrated operation and maintenance service platform, providing intelligent application scenarios with storage andcomputing resource scheduling and equipment network access, intelligent algorithm training, intelligent servicepublishing, data aggregation management, intelligent application development, integrated operation andmaintenance service capabilities; “one environment” refers to the four-dimensional space operation environment,that is, the virtual space-time operation environment instead of the physical world, supporting the storage,correlation and analysis of perception resources and data resources in the same space-time environment.General software platform: Provides general software functions across industries, including general securityand protection, visual command, alarm management, inspection supervision, conference interaction, content release,etc. The general software platform of visual command, as an example, includes AR scene tag platform, ARvirtualization platform, AR command platform, VR panoramic application platform, integrated communicationapplication platform, portable law enforcement integrated management platform, etc.Industry software platform: Hikvision, serving over 70 sub-industries, has gradually built more than 100application software platforms for various industries. Taking the traffic police industry as an example, we providethe traffic violation management platform, the comprehensive traffic management and control platform, the urbantraffic situation analysis and judgment platform, the traffic accident investigation and judgment platform, the lawenforcement comprehensive management platform, and the highway traffic safety monitoring and managementplatform, the smart check station application platform, the intelligent driving management video inspection platform,etc.
3.2.2 Intelligent Algorithms: General Algorithms + Industry-specific AlgorithmsOffering services to all walks of life, Hikvision has accumulated a large number of video artificial intelligenceanalysis algorithms which can be divided into general algorithms and industry-specific algorithms.General algorithms: algorithms that can be used for the development of intelligent applications in multipleindustries. For example, the algorithms to detect and classify transportation equipment, motor vehicles and non-motor vehicles, and the algorithm to detect traffic flow of people and vehicles, etc.Industry-specific algorithms: algorithms developed for industry application demands. For example,algorithms for the detection of exposed garbage, packaged garbage, misplacement of kitchen trash bins, roaduncleanness, road ponding, road damages, road leftovers, abnormal sidewalk piles, anti-collision bucket damages,transformer box abnormalities, non-decorative tree hangings, billboard damages, tree protection facility damages,incineration of garbage leaves, illegal parking of non-motor vehicles, messy materials on construction sites, etc.
3.2.3 Data Model: Industry Business Data Model
Hikvision provides big data application services for all walks of life based on the big data collection,management, analysis and service capabilities provided by the iDatafusion platform. In this process, we haveaccumulated a batch of industry business data models, which can be managed by the model repository, and can bereplicated and optimized in other similar application scenarios.Taking transportation as an example, we provide illegal parking remediation model, urban road trafficoperation evaluation and diagnosis model, urban road traffic tracing analysis model, urban road traffic short-termprediction model, high-precision real-time online traffic flow simulation model, and changeable lane featureresearch and judgment and control model, tidal lane feature research and judgment and control model, time-spaceanalysis and judgment model for fake-licensed vehicles, racketeering car analysis model, traffic accident addressanalysis model based on standard semantic analysis, public transportation OD
passenger flow analysis model,highway truck detour analysis model, driving behavior habit label and comprehensive scoring model, drivingbehavior safety risk management and control model, and risky section mining model based on active safety data.
OD: O means Origin, which refers to the departure location, and D means Destination, which refers to the end of the journey.
3.2.4 Business Service: System Operation and Maintenance + Data Engineering + Business OperationHikvision, concerned with users’ application demands, explores the transformation from being a product andsystem supplier to being a service provider for some business.System operation and maintenance services: Hikvision provides system operation and maintenance servicesto some industry users. For systems and equipment out of warranty, the operation and maintenance team will offerprofessional system operation and maintenance services.Data engineering services: Hikvision delivers data engineering services for IoT resource management, andintegration of data collection, management and services.Business operation services: Hikvision offers over 10 business operation services based on the Internetoperation platform and its private deployment methods. Among them, urban parking operation services have beenadopted in more than forty cities, and its business scope is expanding rapidly; business operation platforms for fireprotection operation, security check operation, community operation services, and waste classification intelligentmanagement cloud have also been put into use.
4. Business Organization
With the evolution of core capabilities and business scope, the business organization model of Hikvision isbeing constantly upgraded. In the era of HD and networked videos, Hikvision has identified the business scenariosin over 40 sub-industries of the seven major industries, i.e., public security, transportation judicature, finance,culture/education/health, energy and building. In recent years, Hikvision has been sharpening its video-centricintelligent IoT solutions and big data service capabilities, pushing the industrial applications further forward.Hikvision initiated business structure reforming in 2018, which divided the domestic business into three businessgroups: public business group (PBG), enterprise business group (EBG) and SME business group (SMBG). In thenew business structure, we dig deep into the market demands, coordinate corporate resources and intensify capacitybuilding in the context of the three business models, and make great efforts in facilitating public service optimization,driving users’ digital transformation and creating a pan-security industrial Internet, thus injecting vigor and vim intothe business organization.
4.1 Public Business Group (PBG): Facilitates Public Service Upgradation
4.1.1 Overview
As smart cities, smart police, smart transportation, smart urban management and other industries and cities-oriented smart business develop further, the public service sector has entered the stage of “AI universalempowerment and deepening of data value”. Hikvision, take advantage of the IoT, artificial intelligence, big dataand other technologies, has been endeavored to upgrade its “cloud-edge fusion, IoT-information network fusion,big data-intelligence fusion” capabilities and expand the product portfolio in terms of “hardware, platforms,algorithms, models, and services”. With precise marketing moves, we’ve covered the public service sector inoperation and further mined its value, to drive digital transformation for cites and industries, support smart cityoperation and management, as well as intelligent business in public safety, urban governance, transportation, naturalresources, ecological and environmental protection, etc.
4.1.2 Core Technologies: Build a Big Data-AI Fusion Base for Smart Cities to Support Industry and CityIntelligence
Based on the perception platform, data platform and application platform, Hikvision has built a Big Data-AIFusion Base for smart cities to provide basic support for the development of various smart city services.
Perception platform: Integrates and utilizes various perception resources in industries or cities, fully releasesthe value of perception resources, and empowers industries to quickly form visual and intelligent perceptionapplication capabilities. Leverages the existing urban perception resources to expand the application scope ofperception resources horizontally, and vertically enhance the capability of perception resources to support thebusiness segments, and ultimately boost the integration of perception applications with the functions of commissions,offices, and bureaus, and establish automated and intelligent early warning and prevention mechanism to provideintelligent support for government decision-making and command, and render social governance more intelligently.Data platform: Provides full life cycle support for the aggregation, management, mining and service ofperception data and government data for industries or cities. Distributes data to users in various sectors through datacatalogs, IoT catalogs, interface catalogs, etc., and realizes data distribution and sharing through subscription push,sharing and exchange, etc.Application platform: For various intelligent application scenarios such as edge node applications, edgedomain applications, cloud center applications, and Internet operation applications ranging from the IoT to businessinformation networks, provides intelligent application open platforms and common application components for
various industries to develop intelligent applications.Guarantee system: Provides standard specifications, operation and maintenance guarantee and safetyguarantee system to support the operation of intelligent businesses in industries and cities.
4.1.3 Value Fullfillment
While deepening its understanding of business in public safety, urban governance, transportation, naturalresources, ecological and environmental protection and other fields, Hikvision is committed to design solutions forvarious industry scenarios in the public service sector, and offer fundamental big data and artificial intelligencesupports to the construction of smart cities, striving to make cities smarter, the environment safer, services moretargeted, travel more convenient, and the ecology more livable.
1) Smarter Cities
Hikvision has been researching in depth the evaluation indicator system for smart city construction, andoptimizing the system in light of specific situations of different cities to guide the construction of smart cities.Adding efficiency indicator to constructive indicators, we’ve committed to making the construction of smart citiesfurther meet the actual urban management demands and the management goals of governors, and improve citizenexperience and satisfaction.
Hikvision, relying on the Big Data-AI Fusion Base, has organically combined the capabilities of integratingcity intelligent IoT perception network, perception data and government data, and developing intelligentapplications rapidly, to endow cities with peripheral perception, nerve center and brain decision-making capabilities,enable precise urban governance and the improvement and optimization of urban governance systems andgovernance models fundamentally.
Hikvision provides integrated communication support capabilities to connect the command links of variousgovernment agencies in peacetime and emergency, and realize coordinated handling of incidents based onsynchronization of situation and analysis.
2) Safer Environment
Hikvision provides security event monitoring, early warning and security protection capabilities for publicsafety, traffic safety, production safety, natural disaster emergency management, etc. to build a safer environment.
We have worked out industry solutions for public security. The comprehensive application capabilities for
public security video images, and the three-dimensional prevention and control system for typical applicationscenarios such as street patrol, community security, public security check station control, entertainment venues andspecial industry public security control, etc., can enhance users’ security risks early warning, prediction, andprevention capabilities to effectively carry out operations such as zone-level inspection and control, unit preventionand control, and element control, and help build a safe and harmonious social environment.
Our industry solutions for traffic safety provides intelligent detection capability for road traffic violations suchas red-light running, wrong road side, overrun, overspeed, improper hanging of the number plate, deliberateshielding and defacement of the number plate, inconsistent driving model, disqualified driving, non-motor vehicleviolation, pedestrian violation, dangerous driving habits, etc., and for illegal transportation operations such asunlawful operation, pick-up outside passenger station, illegal taxi refusal, etc., as well as data applications for real-time traffic conflict warning, traffic accident root cause analysis, road structural hidden danger analysis, andinvestigation and judgment on vehicles with hidden dangers and overloaded vehicles bypassing, to help ensure asafe transportation environment.
Hikvision has designed industry solutions for production safety, which is marked by the safety productionmonitoring and early warning function for hazardous chemical companies, small and micro enterprises, coal mines,non-coal mines, tailings ponds, fireworks and firecrackers businesses, etc. and functions for smoke detection, firedetection, indoor and outdoor recognition of fire protection passage occupancy, tooling compliance detection,personnel on-the-job and off-job detection, etc. to build a safe and efficient production environment.
Hikvision’s industry solutions for natural disasters feature functions such as comprehensive monitoring of allelements of natural disasters, disaster early warning, comprehensive disaster risk assessment, intelligent analysis,consultation, investigation, and judgment of disaster evolution situation, to build an emergency safety environmentthat reduces disaster risks.
3) More Targeted Services
Hikvision provides capabilities such as intelligent event analysis, IoT status detection, and lean managementapplications for city management and comprehensive governance in urban appearance, sanitation, municipalfacilities, environmental hygiene, etc., to render more targeted services.
The industry solution for city appearance and environmental sanitation management by Hikvision offersintelligent analysis services for street order, city appearance and environment, publicity and advertising,construction management, emergencies, etc., and application systems for city appearance management, supervision,
command and scheduling, administrative comprehensive law enforcement, and dregs removal supervision, etc. topromote scientific decision-making in urban management.Hikvision’s industry solutions for municipal facility management serves to monitor the state of public facilitiessuch as manhole covers and trash bins through IoT, and the state of landscaping such as tilting and falling of ancienttrees, and supplies a closed-loop process covering problem collection, dispatching and handling, and feedbackevaluation to form targeted municipal management service capabilities.Hikvision delivers the industry solutions for environmental sanitation management, including managementapplications for sorted drop, sorted collection, sorted transportation, sorted disposal, to assist the environmentalsanitation department to optimize garbage sorting operation mode, improve garbage sorting operation, and enhancethe lean disposal capacity for city appearance and environmental sanitation.
4) More Convenient Travel
Hikvision provides support capabilities for smart road network, smart traffic management, smart bus, smartparking and other urban transportation services to make travel more convenient.
The industry solution for traffic road networks from Hikvision is appreciated with capabilities of highwaynetwork monitoring, traffic situation analysis, intelligent monitoring of traffic incidents, emergency handling,integrated overrun and overload punishment, image-based toll inspection, key vehicle control, tunnel safety control,intelligent maintenance, perimeter prevention along the railways for expressways, national and provincial trunklines, railway networks, etc., and of hub security control, hub passenger flow monitoring and channeling, andexternal services for railway stations, airports, ports, passenger and freight stations, and comprehensivetransportation hubs, to create “smart road network”.
As for traffic management, Hikvision provides the industry solution with intelligent signal control capabilitiessuch as single-location adaptive control based on real-time traffic parameter perception, dynamic/static trunk greenwave control, and regional coordinated control, and professional smart travel service capabilities such as city-leveltraffic situation investigation and judgment, intersection problem diagnosis, traffic flow traceability, trafficsimulation, intelligent guidance, vehicle traffic management, real-scene command, key vehicle traffic protection,green parking, etc., for “smart traffic management”.
The industry solution provided by Hikvision for urban public transportation is capable of intelligent busscheduling, bus capacity monitoring, bus passenger flow analysis, bus stop sign service, taxi emergency scheduling,subway passenger flow monitoring, subway fast pass, etc. in urban ground public transportation, rail transit, and
online ride-hailing, etc., for “smart public transportation”.And for urban parking, Hikvision, through its industry solution, aims to create “smart parking”, withconvenient parking fee payment channels for unattended parking lots, automatic detection and recording of theparking process, integrated urban parking networks, unified management and comprehensive operations, aggregatedparking space data, the urban parking data center that sorts out and integrates data, and the convenient and diverseservices for car owners, such as parking space inquiry, reservation, route navigation, electronic payment, monthlyparking package, and bill inquiry etc.
5) More Livable Ecology
Hikvision strives to create a more livable ecology by offering intelligent monitoring management and servicecapabilities for natural resource monitoring and management, water conservancy and water affairs monitoring andmanagement, and ecological environment monitoring and management.Hikvision provides the industry solution for natural resource monitoring and management. The forest and grassfire protection intelligent monitoring and management capabilities such as fire risk monitoring, early warning andpositioning, fire alarm investigation and judgment, spread analysis, fire protection command, fire protectionresource management, fire protection supervision, fire file management, etc., the intelligent land supervisioncapabilities including land spot management, panoramic inspections, video-based land search, intelligent analysisand alarm of unlawful buildings, collection of event clues, alarm investigation and judgment, land law enforcement,etc., the nature reserve monitoring and management capabilities such as animal monitoring, pest control, patrolmanagement, biodiversity monitoring, etc., and the national park big data service capabilities, for example,monitoring evaluation, regulatory decision-making analysis, geological disaster monitoring, emergency command,forest and grass industry services, publicity and education training, together help realize intelligent supervision ofnatural resources.In terms of monitoring and management of water conservancy and water affairs, Hikvision’s industry solutionfeatures intelligent monitoring capabilities for rivers and lakes such as intelligent analysis of “four dislocations” ofrivers and lakes, river and lake cleaning management, sand mining management, intelligent management of watershorelines, intelligent supervision of water conservancy projects such as safety supervision of water projects underconstruction and intelligent supervision of water engineering safe operation, flood prevention and supervisioncapabilities such as water and rain monitoring and early warning, flood scheduling visualization, etc., online visualmanagement of water plant security management and urban and rural water supply and drainage, and intelligent
visualization of water administration law enforcement and water conservancy supervision to make possibleintelligent supervision of water conservancy and water affairs.The industry solutions for ecological environment monitoring and management from Hikvision providesintelligent monitoring capabilities for air pollution such as road smoky vehicle control, open burning supervision,heavily polluted weather vehicle control, construction site dust control, catering lampblack monitoring, movingpollution sources on the road, VOCs emissions, etc., enterprise pollution management capabilities for secret sewagedischarge monitoring, secret waste gas discharge monitoring, and pollution source station/building management,water ecological environment hyperspectral monitoring, solid waste full-process intelligent supervision, andecological environment big data analysis capabilities for water environment analysis, atmospheric environmentanalysis, pollution source general investigation to realize intelligent ecological environment supervision.
4.2 Enterprise Business Group (EBG): Facilitate Users’ Digital Transformation
4.2.1 Overview
The digital economy is thriving, and driven by digital and intelligent technologies, industrial reforms areaccelerating. Embracing the wave of digitalization, Hikvision, with business, product and technological innovations,has been working with partners to create products, solutions and service systems to drive digital transformation, andis committed to making itself the preferred partner of user scenarios, the major supplier of IoT equipment andfacilities, and an innovative partner for building the digital twin through the integration of IoT and informationnetwork.
Utilizing the AI Cloud architecture and its technological capability in intelligent IoT and IoT-informationnetwork fusion, Hikvision continues doubling down on the digital enterprise solutions that combine traditionalinformatization, equipment and facilities IoT and intelligent scenarios IoT. Hikvision has created thecomprehensive-perception product system, where it uses the AI open platform to consolidate its AI engineeringinnovation and delivery capability, creates low-code software engines, builds the digital world UI (User Interface)and intensifies enterprise-level SaaS services. Hikvision focuses on user value and releases the value deliverymethodologies, which have been implemented for the users in numerous industries including coal mining,metallurgy, commercial real estate, manufacturing, tobacco and liquor, salt, logistics, retail chain and education, etc.
4.2.2 Core Technologies: Drive Enterprises’ Digitalization by Building a Digital Product System for theIntelligent IoT Industry
Hikvision focuses on user value, perseveres in innovation of the core technology and provides the users withthe digital enterprise solutions for comprehensive perception, intelligent IoT and IoT-information network fusion.Create the Digital Product System for the Intelligent IoT Industry
Hikvision is dedicated to helping enterprises build their infrastructures for comprehensive perception andintelligent IoT and realizing acute perception of the whole value chain of enterprises covering the supply chain,production, market and services; through the IoT-information network fusion platform, we gain insights into theoperation and management problems and make improvements, thereby creating a complete digital twin.
Hikvision has integrated the multi-dimensional sensing technologies that include microwave, infrared rays,near infrared rays, visible light, X-rays etc. to develop the product series for over 10 industries, such as electricpower, petroleum, petrochemistry, coal mining, metallurgy, tobacco and liquor, salt, logistics and retail, etc. In therealm of scenario IoT, Hikvision has rendered over 100 types of perception products represented by “AR PanoVu”,solar-powered cameras, thermal imaging for hot work monitoring, and intelligent door tablet, to facilitatedigitalization based on the scenario elements including environment, personnel and behaviors; In the realm ofequipment and facilities IoT, the innovative products including micro-distance meter-reading camera, high-temperature highlighting camera, serial number identification system, thermographic temperature measurementcamera, and intelligent IoT server have been introduced into the Industrial Internet, pushing forward digitalizationof production and service processes.
Hikvision uses the industrial application platforms to enable large-scale equipment access, intelligent IoT and
data aggregation and to bolster IoT-information network fusion business applications. We continue productsiteration within the unified software technology architecture, offer software products and business applicationcomponents oriented for specific industries and scenarios and have rendered multiple innovative businessapplications such as digital platform, financial cash box handover and teaching assistant in instructional interaction.
Intelligent Application Implementation Accelerated by AI EngineeringDedicated to exploring and innovating AI technology, Hikvision transforms AI technology from a specializedprivilege to popularized offering and gradually to engineering application, seamlessly integrates AI visualtechnology with multidimensional perception, software engine, data intelligence and mechanical automationtechnologies and vigorously explores and builds AI engineering capacity, to facilitate rapid adoption of applicationsthat involves IoT perception and closed loop of corporate business process, mechanical automatic control andautonomous decision-making, and in-depth data insight and predictive analysis.To assist in temperature screening and social distancing, Hikvision has brought together visible light andthermal imaging temperature-measuring technologies and applied the “MinMoe” temperature screening equipmentextensively in hospitals, parks, factories and other scenarios and adequately meets safety control requirementsthrough personnel access control and temperature monitoring; in the coal mining industry, Hikvision has offeredthe coal mining enterprises the innovative gangue separation system to efficiently identify and accurately sort outgangue; in the financial industry, Hikvision has created the digital and intelligent risk control solution that is capableof compliance inspection, credit risk assessment and liquidity risk scrutiny, to help financial institutions improvetheir risk perception methods and identify risks efficiently, with accuracy rate increased tens of times comparedwith traditional means.
Efficient Delivery of Corporate Digital Application by Low-Code EngineHikvision, leveraging the low-code develop technology, has released the software engine products representedby inspection engine and attendance engine, which use abstract business models and diverse configuration templatesand visualization templates to reduce the barrier of corporate application development, enable the businessdepartments of users to participate in application development and enhance corporate application developmentefficiency. Drawing on its unified software technology architecture, Hikvision has realized AI collaboration,
integrated IoT sensing equipment and IoT data, and provided highly expandable business interfaces to integrate thecorporate information system and introduce the corporate scenario digitalization into the core business process.Hikvision has offered the inspection engine intended for the inspection application in various industrialscenarios. This product supports intensive integration with traditional IoT technologies and AI intelligent perceptiontechnologies, quickly generates customized inspection application and is extensively applied in multiple industrialscenarios including community property inspection, corporate safety production management and general educationand supervision safety, etc.; Hikvision offers the attendance engine intended for labor-intensive and office-centricscenarios, which is capable of attendance data collection, attendance management and working hours countingsuitable for all scenarios and renders diverse easy-to-use report forms and boards.
Create UI for the Digital World
Based on video and AI technology and fusion of multiple types of data from the IoT and information network,Hikvision has created a new digital world UI and a new interactive experience between the physical world and thedigital world.Hikvision provides manufacturing enterprises with AR digital workshop solution, which is based on AR livevideo and panoramic image stitching, interlinked with multidimensional perception information and businesssystem information such as production data, equipment operation data, blanking condition and relevant fault earlywarnings, to realize information aggregation and tagged display, help managers detect problems in time, andimprove operation and management efficiency.Hikvision provides chemical industry parks with AR safety-environment map solution, which is supported bythe panoramic AR scene tag video and the safety and environment related data of the chemical industry park, tocentrally display the real-time status and changes of the hazard sources, pollution sources, fire-fighting equipmentand key public areas in the field of view; the system is interlinked with the emergency response plan and emergencyresources to realize safety-environment integration, thereby enhancing the overall capability of risk prevention andcontrol and emergency disposal of the park.Hikvision provides tourist attractions with AR scene guide solution, which integrates AR technology andtourist interaction guide screen and uses multiple AR screens and the tags for tourist flow, buildings and scenicspots to offer tourists real-time preview of the scenic spots in the scenic area, to improve tourist interactionexperience and enjoyment, and facilitate intelligent marketing of tourist attractions.
Hikcloud: Enterprise-Level SaaS ServiceThe Hikcloud, expanding from retailing to other sectors such as community, education and logistics, provideschain-type users with digital transformation solutions covering connection, management, intelligence and insight.Hikcloud focuses on online IoT equipment, AI engineering and application service configurability, andmaintains sustainable fast growth of user base and connected equipment magnitude. Up to end of 2020, Hikcloudhad provided services to accumulatively over 150,000 retail outlets, 1,600,000 community property owners,1,300,000 parents of students, 10,000 offices, 450,000 logistics nodes and 2000 developers, and had been connectedto nearly 1,600,000 terminal devices altogether.The Hikcloud is constantly improving the developer service platform, where there are now over 2000developers that use its developer services to provide SaaS applications for specific scenario in their specialized areasand the average daily interface invocation frequency exceeds 30 million times per day.
4.2.3 Value Fullfilment
In the digital era, any enterprise would put more emphasis on value-creating business input, in hopes that thedigital technology will increase both quality and efficiency and create greater commercial value. Hikvisioncontinues its intensive exploration in the industries such as petroleum, petrochemistry, coal mining, metallurgy,electric power, logistics, retail chain, intelligent manufacturing, education, health care and intelligent finance.Thanks to its rich experience in successful delivery of digital transformation projects, it has refined its value deliverymethodology, which will accelerate digital transformation of enterprises and help users fulfill their value.
Value Delivery Methodology
Hikvision puts forward the value delivery methodology, helps users shape their vision of digital transformation,discerns the value chain of users, integrates digital solutions into the business process and boosts end-to-endimplementation of value-creating business.
Vision setting: oriented by user value, Hikvision has refined a complete business framework and a solutioncapability set and the value system centered on "shortening management distance, improving business efficiency,regulating operation behaviors and preventing safety risks", to help users set the vision of digital transformation
defined by ubiquitous perception and intelligent IoT.Value matching: based on its investigation and understanding of the industry and the analysis on key activitiesof typical user base, we have been deeply engaged in the business scenarios of users, to help users discern theirvalue chain and clarify their value propositions and enable value matching and value extraction with the solutioncapability set.Value fulfillment: we implement professional work procedure to facilitate delivery digitalization projects,fulfill double objectives of implementing value-creating business and gaining user approval and trust, work withusers and help users fulfill their blueprint of digital development.Build Industry Best Practices UnremittinglyUnderlain by the value delivery methodology and guided by the value principle of “shortening managementdistance, improving business efficiency, regulating work behaviors and preventing safety risks”, Hikvision has beenworking with the eco-system partners to build industry best practices for digital transformation, and has achievedremarkable results.
1）Help Enterprises Shorten Management Distance
Hikvision adequately utilizes its video-centric IoT perception and connection capability to help enterprise usersand governmental regulatory entities evolve from “on-spot management and decentralized management” to “unifiedmanagement and centralized management”, shortening the distance between the managers at all levels and the
production scenario, and alleviating management anxiety.Integrating IoT and digital technology, Hikvision provides the industrial park 3D digital command modulesolution characterized by data-driven design and intelligent service, to help build digital intelligent managementplatforms and realize the three-dimensional industrial park protection system that features “networked generallayout, closed partial areas, full monitoring over key entry points and full coverage on key locations”.Hikvision uses the “inspection engine” software to realize whole-process digital oilfield inspection and makesefficient analysis on inspection data and image data to help safety personnel and managers maintain real-time insightinto potential hazard of operating equipment, reduce safety risks and ensure safety of workers.
Using thermal imaging and multidimensional perception solutions, Hikvision builds the intelligent fisherysupervision system for the fishery administration, to realize full coverage of monitoring over water areas, intelligentwarning for vessels, remote inspection and other intelligent supervision approaches, and to implement the strategicdecision of “ten-year fishing ban on the Changjiang River”.
Leveraging video AI and IoT sensing technology, Hikvision builds treasury management platforms for bankinginstitutions, to impose visualized operational management over treasury vehicles, personnel, articles, environmentand compliance and to lay the foundation for capability building for the purpose of comprehensively improvingbusiness management, risk control and appraisal system.
2）Help Enterprises Improve Business Efficiency
Bring together AI and intelligent IoT technologies, Hikvision helps enterprises with their automated onlineprocess-based operation and improves business efficiency in sectors such as production, logistics and education.
Hikvision has intensively applied the intelligent IoT technology in production management of steelmakers,which has realized asset number automatic identification, automatic counting, automatic inspection on equipmentand remote control over operation, increased the efficiency of steel pipe weighing line by over 10%, improvedoperation efficiency and inspection efficiency and improved employee office environment.
In collaboration with tourist attractions, Hikvision has founded the Intelligent Tourism Institute, whichconducts joint research into AI and big data, facilitates creation of IoT integrated platforms and focuses its effortson scenic area safety and tourist service experience. It has rendered a range of innovative solutions including ARreal scene guide, which significantly enhances the service capacity of scenic areas and improves tourist servicequality.
Hikvision uses AI open platform to provide commodity identification service to empower intelligent containerretailers and combines visual technology with intelligent hardware to offer the innovative unmanned retailingsolution that integrates intelligent container terminal and operation, which has significantly reduced retaileroperation cost and improved consumer shopping experience.Hikvision works with banking institutions to serve new scenarios and new business types and combines cloudservice, AI and remote video technologies to create remote financial modules, extend the service radius, provide24h financial service and public service, create the bank that is always at the service of people and help bankstransform their customer service models.
Combining the technologies and products such as audio/video processing, AI, remote visitation equipment andintelligent interactive screen, Hikvision provides hospitals with intelligent ward solutions, to help hospitals optimizemedical care process and ward order management and improve medical service quality and patient experience.
3）Help Enterprises Regulate Work Behaviors
Drawing on AI scenario perception technology and corporate information-based management and employingthe traditional management methods such as human supervision and training, Hikvision efficiently helps establishstandardized management of process-based operation and scenario-based work behaviors.
Hikvision has built the visualized safety control platform for the State Grid, to enable whole-processstandardized, traceable and intelligent management of operation plan, operation process, safety inspection and safetyinformation and to strengthen penetration and execution of safety supervision.
Working with automakers, Hikvision uses intelligent on-board equipment and IoT sensing technology to createthe shuttle bus safety supervision platform, which realizes the intelligent applications such as bus positioning, busstaff attendance and temperature measuring, to ensure safe travel of buses, help bus management decision analysisand help creation of Internet of Vehicles.
Joining hands with cigarette manufacturers, Hikvision vigorously explores industrial tobacco intelligentmanufacture management applications. By using the inspection engine to combine offline inspection of fire-fightingequipment, online inspection of material assets and AI scenario-based intelligent inspection, Hikvision has reformedthe inspection method and realized complete closed loop covering inspection plan, execution, rectification andanalysis, to offer strong support for regulating work behaviors.
Hikvision provides intelligent work site solution that uses digital and intelligent technologies in safety,
environment and quality management of work sites. We have created the work site full view center that enables theintelligent applications covering waste truck washing in key areas of work site, hoisting machinery testing and airenvironment quality monitoring and enhances construction management efficiency.
4）Help Enterprises Prevent Safety RisksHikvision strives to create the corporate safety protection system that combines four elements--intelligentmanagement of personnel safety, intelligent monitoring of equipment and facilities, intelligent perception ofenvironmental safety and intelligent perception of bio-safety.Hikvision has provided the power generation safety solution for the China Southern Power Grid, to help thegrid protect work safety and improve quality and efficiency in the new context of grid development. Supported byvideo-centric AIoT technology, this solution enables ubiquitous perception of personnel behaviors, equipmenttemperature and operating condition and environmental state and provides the intelligent applications such as ARpanoramic view, intelligent patrol and remotely assisted switching operation, to help electric power system evolvefrom traditional operation and maintenance to intelligent operation and maintenance.
Hikvision provides universities, with data governance and application solutions and, centered around businessscenario abstract routine security business process and incident response process, has created a range of businessscenario based template applications and practice-oriented control cabin applications, which has significantlyenhanced the unified coordination and interoperation capability of campus security systems.
Using innovative video-radar integration technology, Hikvision helps industrial parks realize precisemonitoring over risks in transportation of hazardous chemicals. Focused on monitoring over illegal travel ofhazardous chemicals transportation vehicles, this solution uses radar-assisted monitoring equipment to provide theindustrial park security supervision authorities with warnings on illegal travel of hazardous chemicals transportationvehicles and facilitate compliance management over such vehicles.
Offering the security-fire integrated innovative solution, Hikvision works with manufacturing enterprises todeploy the digital corporate operation and command center and the seamlessly interoperating subsystems coveringthree-dimensional control, fire safety network, hot work monitoring, warehouse temperature, electrical fire warningand plant area inspection and to effectively enhance the ability to perceive and handle safety risks, so as toaccomplish the “security-fire integration” strategy and protect the core assets of manufacturing bases.
As the preferred strategy of any enterprise, digital transformation will usher the digital economy into the newstage of fast growth and accelerate reformation of industrial value chain and generation of new business models andnew business types. Hikvision will always adhere to the concepts of all-round opening, division of work, integrationand win-win cooperation, and actively work with eco-system partners of solutions to push towards flourishingdigital transformation in the areas of products, solutions and service systems.
4.3 SME Business Group (SMBG): Create a Pan-security Industrial Internet
4.3.1Overview
Driven by the emerging technologies such as AI and IoT, the customer demands of SME market have expandedfrom the traditional security protection to all aspects of livelihood and production, forming the pan-securityindustrial Internet defined by more expansive market, more abundant terminal products and more diverseapplication scenarios.
The SME market encompasses large number of specialized scenarios such as small and micro businesses, smalland micro industrial parks, shops, factories, residential areas, scenic areas and livestock farms, but due to smallproject granularity and high degree of dispersion of users, it is difficult to achieve efficient coverage over the market.Contractors, service providers and individual business owners are capable of fragmented coverage, but their solutioncapability has yet to be enhanced and updated, they have problem conducting standardized business and theirsurvival and development space is constrained. Distribution partners are faced with complex and constantly iteratingproduct solutions, great pressure in business learning and high difficulty in operational management, and theirpotential in large-scale business expansion has yet to be tapped.
Working with general practitioners and drawing on the technological elements such as big data and Internet,Hikvision optimizes the composite channel system, scenario solutions and service capability, integrates industrialchain resources, helps distributors quick update their understanding, improve management process and expandbusiness scope, and helps business owners provide efficient services to users, streamline implementation processand enhance interaction efficiency. Hikvision works hard to create one-stop preferred products and services definedby omni-channel, whole-process and omni-scenario offering, to meet the demands of all parts of the industrial chainand to create a pan-security industrial Internet.
4.3.2 Core Technology: Build Industrial Internet Products Matrix and Help Improve Efficiency andExperienceThe product matrix of the pan-security industrial Internet created by Hikvision is comprised of two mainlineplatforms: Hikvision Interconnectivity and Hikvision SMBG E-commerce. Based on the infrastructure capacity ofHikvision and the marketing network of partners, an enabling platform is built to adapt to the traditional industrialstructure.
1) Hikvision Interconnectivity
Oriented for b2C process, this platform helps partners such as contractors and installers operate with highefficiency and provides users with convenience in equipment usage, contents browsing and demand response.Hikvision Interconnectivity integrates the capabilities in equipment management, application configuration,solutions, value-added services and contents purchase guide, to provide SME users with one-stop scenario-specific
solutions, online interaction, contents marketing and services.
2) Hikvision SMBG E-commerce
Hikvision SMBG E-commerce: oriented for (F+B)2b process, this platform helps distribution partners linkto practitioners, integrates malls, communities, solutions, contents, services and tools, serves and also enables Tier1 and 2 distributors, and provides many capabilities such as linking to contents, linking to customers, linking toemployees and operation analysis.
The two platforms are mutually supportive and spirally driven, to improve omni-channel traffic integration andeco-system marketing, promote whole-process marketing, increase channel attraction and create the secondarygrowth curve.
4.3.3 Value Fullfillment
Hikvision constantly examines the business demands at all levels of the industrial chain and strives to improvethe professional proficiency over the entire industrial value chain. The whole-chain digitalization of productionterminal, circulation terminal, marketing terminal and usage terminal will immensely enhance the operationalefficiency of the entire industrial chain, empower numerous partners and help meet the pan-security fragmenteddemands.
1) Empowers Customers
Expand mall categories to support digitalization and intelligentization of pan-security and weak currentprojects; improve supply chain delivery efficiency, link and enable more channels/installers, and promote whole-chain digitalization and online equipment installation in the channels; diversify channel customers eco-system,promote integration of professional abilities, build directly supervised core stores, and enable comprehensivecoverage over market in lower-tier cities; use informatization to provide the contractors and installers with morecontents, tools and marketing support and help them provide better services to users and perform promotion moreefficiently.
2) Serves Users
Provide more tools and contact points to link users, combine online access points with offline outlets, and
provide the integrated whole-process service experience that covers requirements submission, solutions consulting,survey and design, commodity sale and delivery, after-sale service, operation and maintenance, to enhance userpurchase efficiency; realize the value-added applications such as online operation and maintenance of products,timely response to after-sale requirements and publicization of latest solutions and functions, to enhance the user-brand interaction experience; make use of the advantages of intelligent IoT to provide SMB users with the coresolutions such as integrated security protection, intelligent office and store management, enable coverage over allscenarios in AIoT digitalization and intelligentization, and help SMB users realize online digital operation of variouscommercial elements and improve management efficiency.
5.Innovative Businesses
Hikvision’s continuous efforts in technical reserves and expanding business scope provide a good basisfor innovative business development. Currently, the innovative business camp includes eight sub-businessesincluding EZVIZ Network, HikRobot, HikAuto, HikMicro, HikSemi, HikFire, Rayin and HikImaging, whichmay have a consistent technical foundation with Hikvision, or provide more abundant products and servicesto customers, or form effective synergy between upstream and downstream. The development and growth ofinnovative business has continuously injected new impetus into the long-term stability and sustainabledevelopment of the Company.
5.1 Innovative business-EZVIZ Network
The rapid development of the IoT and AI technologies has promoted the intelligence, convenience andcomfort of home life. The core of EZVIZ’s businesses is based on visual technologies. It uses Internet cloudcomputing, AI, multi-dimensional perception, IoT communication and motion control technologies to createa reliable IoT cloud platform, as well as safe and intelligent household products, so as to provide householdsand home-like users with intelligent products and services and maintain a rapid businesse development.
After years of cultivation, EZVIZ has formed a “1+4+N cloud platform - independently developedproducts-ecological products” business system. Centered on cloud platform services and by virtue of smarthome cameras, smart home entry, smart control and smart service robots and other independently developedproducts, it has driven the side-by-side development of other smar home protducts such as smart fresh airsystem, smart water purifier, smart bracelet, and kid’s smart watch, to create an intelligient home ecosystem.
5.1.1 EZVIZ IoT Cloud platform
Based on a globally distributed “self-developed architecture + three-party cooperation” hybrid cloudarchitecture, EZVIZ Cloud provides Cloud service capabilities with computing, storage and network supportwhich supports multiple types of device access. Centered on media services, it provides such services as videostorage, messaging services, AI services, application services and other rich and complete service options,which offer big data service capabilities, and provide security, operation, operation and maintenanceguarantees and support for top-level consumer applications and derivative applications at EZVIZ IoT openplatform. As of the end of 2020, EZVIZ IoT Cloud Platform has nearly 100 million global access devices,more than 70 million registered users on the platform, more than 25 million monthly active users, and morethan 10 million daily active users.
Aiming at ordinary consumer users, EZVIZ Cloud provides cloud storage, smart reminders, personnelidentification, screen detection, phone reminders, family-friendly text messages and other paid value-added
services applicable to home scenarios, and further enriched the services including cloud disks, elderly care,and other diversified value-added services in 2020 and expanded value-added services overseas to majorcountries in Europe, America, Asia, Oceania and other regions.
Aiming at the application demands of enterprise-level customers in complex scenarios, EZVIZ Cloudsupports developers and strategic partners to provide customers with the development of various complexapplications. On the device access side, through compatible standard protocols, open modules, SDKs, etc., itis convenient for customers’ multi-brand devices to access EZVIZ Cloud; on the users side, through EZVIZobject model and EZVIZ interface definition tool, it helps customers build App with zero/low code; on theapplication side, EZVIZ opens PaaS service and outputs through EZVIZ open platform and EZVIZ IoT openplatform.
5.1.2 Smart home products
By virtue of vision technology and AI, multi-dimensional perception, IoT communication, motion controland other technologies, EZVIZ maintains its continuous leading position in hardware products.
Smart Home Cameras (SHC) includes a variety of product options with different outlooks andperformances, providing security services for users in personal, family, and home-like scenarios, facilitatingcommunication, encouraging sharing, and conveying care & love. EZVIZ SHC has maintained the leadingglobal sales for many years. In 2020, EZVIZ released new products such as courtyard waterproof PTZ camerasand cameras that support mobile network access, which further enriches the access methods and usagescenarios of cameras. Meanwhile, it is supported by solar power supply system, which realizes scenariocoverage in areas without electricity and broadband. In terms of intelligence, a number of intelligent featured
detection and recognition algorithms have been released to adapt to different scenarios, such as personnelidentification, fall detection, pet detection, etc.
Smart home entry products mainly include smart door locks, smart visualized lookout and smartvisualized doorbells. With its core video technology capabilities, EZVIZ intelligently upgraded home entryproducts which support direct access to the EZVIZ IoT Cloud platform and perform intelligent applications inhome scenarios such as personnel identification based on cloud resources. Through continuous technologicalinnovation and marketing, EZVIZ’s smart home entry business has achieved considerable development. In2020, the product matrix of EZVIZ smart locks has been further enriched. In response to the requirements ofpersonnel access management for public rental housing and dormitory, centralized smart lock products werelaunched; pre-engineering products for the hardcover business of housing development have been promotedand applied to the fingerprint lock pre-installation business of Ronshine, Binjiang, Huafa, Jingrui and otherleading property developers.Smart control products mainly include smart sensors, smart screens, smart switches, and smart sockets.After the devices are connected to EZVIZ IoT Cloud platform, users can monitor in real time and remotecontrol the indoor environment, lighting systems, home appliances, energy consumption, etc. In 2020, EZVIZreleased a 4-inch smart screen. Through intelligent voice and touch technology, it will bring users a newinteractive experience of smart home, and the EZVIZ smart control product matrix was further enriched. Atpresent, EZVIZ smart control products have been promoted and applied to the smart home pre-installationbusiness of many leading real estate developers such as Longfor, Lvdu, and Ruchen, etc.Smart service robots mainly include companion robots and robot vacuum. In 2020, EZVIZ devoted itselfto the development of companion robots based on vision, hearing and environmental perception. Throughconnecting to EZVIZ IoT Cloud platform, it will provide personalized education and safe companionship forchildren. In terms of Robot Vacuum, EZVIZ built a new generation of Smart Vision Robot Vacuum based onindependently developed ToF, structured light technology and AI algorithm capabilities.
EZVIZ has gradually formed a dual-main business pattern of “cloud platform services + smart home”,and is further building a smart home ecosystem, expanding other smart home product categories in addition tothe four major self-developed products, and incorporating more devices into EZVIZ’s IoT ecosystem toenhance the richness of users’ home-scenario equipment and provide users with more comprehensive smarthome solutions. With the increase in the number and activity of platform users, EZVIZ also provides userswith more practical and considerate value-added services through in-depth exploration of user needs.EZVIZ will insist on exploring in-depth application scenarios, optimize product performance, andcontinue to explore new breakthroughs to provide rich and high-quality security protection and smart lifeexperience for the broad EZVIZ users and smart home enthusiasts.
5.2 Innovative business- HikRobot
Focusing on technologies such as visual perception, AI and navigation control, relying on its solid algorithmaccumulation, strong software and hardware development capabilities, and a complete marketing system, HikRobotfocuses on intelligent manufacturing, and continuously invests in the fields of mobile robots and machine vision topromote the digitization and intelligence of production and logistics.
5.2.1 Mobile robots: focusing on intralogistics and promote intelligent logistics of factoriesThe mobile robot business relies on the three major hardware product lines of Latent Mobile Robot (LMR),Conveyer Mobile Robot and Forklift Mobile Robot, and the two software platforms of robot control system (RCS)and intelligent warehouse management system (iWMS). It focuses on the intralogistics in the warehouse or factory,and provides professional intelligent logistics solutions targeting automobiles, 3C electronics, new energy,supermarkets, various vertical e-commerce and other sub-sectors, to further reduce operating costs for users, andimprove production efficiency and management quality.
LMR series: In 2020, focusing on the improvement of intelligence and safety, HikRobot completed theiterative upgrade of Simultaneous Localization and Mapping (SLAM) technology, which greatly improves productperformance and environmental adaptability, and achieves large-scale applications in the automotive, new energy,household appliances and other industries. HikRobot is the leader in the industry in releasing the self-developed“high-precision multi-vehicle collaborative operation control system”, which greatly expands the application rangeof robots. The safety level of the safety controller independently developed by HikRobot reaches SIL3 (SafetyIntegrity Level 3) level, making a major breakthrough in the industry.Conveyer Mobile Robot series: Fragmentation of demands have brought a lot of customization work, whichhas gradually become a pain point in the industry. In 2020, HikRobot introduced the design concepts and methodsof parametric design, improved the online design platform, and accumulated a large number of common components.The modularized development method has greatly improved the efficiency of customized development andfacilitated the rapid implementation of projects in various industries such as display panels, auto accessories, heavy
industry, and etc.Forklift Mobile Robot series: In 2020, HikRobot increased investment in independent research anddevelopment, strengthened collaboration with partners, and further improved and enriched its product portfolio. Thethird generation omni-directional forklift F1-1000 has completed iterative upgrades and has been widely used incommunications companies. The second-generation Carton Transport Unit (CTU) F0-50 was released. Itsperformance and stability have been greatly improved. The highest single stage stacking height can reach 5.2 meters,which is at the leading level in the industry. The forklift F4-1000 and the forklift F3-2000 have also beencontinuously upgraded and become the main products.
Intelligent support system: The intelligent support system represented by automatic power change substation,which could complete the battery replacement within 90 seconds, while the conventional charging method requiresat least one hour to fully charge the battery, which can greatly improve the actual operating hours of the robot. Forthe latest generation of automatic power change substation, the number of robots that can be supported by a singlesubstation has increased from 60 to 240.The demand for transformation and upgrading of the traditional manufacturing industry continues, theepidemic has continuous impact on traditional labor utilization methods, and the demand for automated logisticscontinues to be strong. It is predicted that China's mobile robot market will continue to maintain a growth of morethan 40% in the next five years. The mobile robot business will continue to improve the intelligence of the robotand optimize the delivery process of solutions and projects. Based on robot-based intelligent logistics applications,HikRobot devotes itself to creating end-to-end full-process intelligent logistics solutions.
5.2.2 Machine Vision: Focused on industrial sensing to promote production digitalization andintelligentization
As the core of industrial sensing, machine vision is the eyes of robots and automation equipment. It is a keytechnology for building the industrial Internet and the perception network for digital factory. It is also an importantpart of realizing flexible and intelligent production. In 2020, HikRobot further enriched and optimized machinevision products, and tried to cultivate a vision application ecology centered on the Visual Master Platform (VMPlatform), to work with partners to meet the application needs of fragmented industrial scenarios.
Industrial camera products: HikRobot released the second-generation of industrial camera series. It uses abrand-new FPGA platform, and has comprehensively improved the power consumption control, image quality andtransmission stability; HikRobot optimized and diversified high-speed and high-resolution cameras by usingmodular design of software and hardware, unified platform architecture, and achieved the combination expansionof different interfaces and resolutions. It focused on breakthroughs in low-power control technology of 10 GigabitEthernet, giving its products obvious power consumption advantages compared with competing cameras in theindustry, HikRobot has greatly improved image quality and product usability through comprehensively upgradingISP technology, adding pixel-by-pixel correction, and optimizing color restoration, image noise reduction and otheralgorithms,
In terms of ID products, the entire series of products adopt the AI architecture, including the use of AI codereading algorithms and AI heterogeneous processing platforms, supporting on-site training and learning, and quicklyadapting to various complex scenarios. Among them, for logistics code reading applications, 12 megapixel high-speed code readers were released; at the same time, a number of economic logistics code readers were released tomeet the code reading needs of various logistics links. For industrial code reading applications, the ultra-smallID2000 series, the miniaturized ID3000Pro series and the large-field ID5000 code reading series have beenintroduced, which greatly enhance the competitiveness of industrial code readers.
AI technology application: The application of deep learning technology in machine vision was further
promoted. The company continuously optimizes AI algorithm tools, explores the integration of AI algorithmsand traditional pattern recognition algorithms to complement each other. HikRobot actively promoted thehardware productization of AI technology, and released smart camera open platform that supports deeplearning, to provide hardware support for partners with AI algorithm development capabilities. In terms ofalgorithm platform, in addition to continuously optimizing software performance and usability, HikRobotfocuses on opening up its software architecture, providing a software framework and development interfacefor industrial partners in machine vision algorithm development and application development, and creating asimple, easy-to-use, open and compatible machine vision operating system to make the development offragmented vision applications more convenient and efficient.
In terms of solutions: For the logistics industry, HikRobot continuously optimized the multi-sided codereading system and DWS (Dimension Weight Scanning)
system, while introducing the single-pieceseparation system and theautomatic parcel feeding system for carbel sorting, which greatly improves theefficiency of code reading, parcel feeding and sorting. They are widely used at major domestic express logisticsand transshipment centers and promoting the construction of smart logistics; for 3C, new energy and otherindustries, HikRobot has launched a number of visual alignment assembly and defect detection solutions withits partners to greatly improve production line flexibility and defect detection rate, helping industry customersto improve quality and production capacity, reduce costs and increase efficiency.
In 2021, the Company will continue to make key investments in AI, 3D, and multispectral technologies,launch more competitive technologies and products, while investing more resources in ecological construction,and gradually shift from a product layout centered on image capture and imaging towards the ecologicalconstruction centered on the VM Platform. HikRobot looks forward to working with industrial partners to co-develop and create value together.
In the future, HikRobot will continue to focus on intelligent manufacturing. It will increase investmentsin the two business areas of mobile robots and machine vision, and improve efficiency and reduce costs forusers through technological innovation of software and hardware products and platforms and continuousimprovement of delivery processes. HikRobot will facilitate the development of global intelligentmanufacturing.
Dimension Weight Scanning, integrated system for automatic volume measurement, weighing and multi- IDauthorization/recognition code reading.
5.3 Innovative business - HikAuto
HikAuto focuses on the field of intelligent driving. Centered on video sensors, HikAuto combines varioustechnologies such as radar, AI, and perceptual data analysis and processing. The company is committed tobecoming the industry’s leading supplier of vehicle safety and intelligent products empowered byvideotechnology, with the capability of providing a wide range of services to passenger vehicle users, commercialvehicle users, and other types of consumption as well as industry users globally.
5.3.1 Passenger vehicle before-market
In 2020, HikAuto further deepened the business cooperation with top domestic brands such as SAICMotor Passenger Vehicle, Geely Automobile, Chang’an Automobile, Great Wall Automobile, etc. In this year,HikAuto won over 50 new mass production projects (more than 60 new projects and more than 40 vehiclemodels in total). Besides, HikAuto further expanded the market of joint ventures and international brands.This year, it officially passed the supplier reviewsof PSA, Mazda, Volvo, Jaguar Land Rover, etc., and hasobtained several designated projects including Dongfeng Honda, Shanghai General Motors and Renault Nissan.It has helped in increasing the order numbers, the product penetration rate, and the coverage of mainstreamhot-selling models. It has also achieved some advantages in terms of platform and scale.
With widespread use of intelligent driving technology, HikAuto's technological investments in early yearshave entered the payback period. This year, it officially mass-produced fully automatic parking products based onthe fusion of video and ultrasonic radar, and the performance of this product has been recognized by customers and
won a number of new orders designations from multiple car factories. At the same time, HikAuto has furtherincreased investments in developing the intelligent cockpit, and taken the lead in mass production of systemsincluding ID authorization/recognition unlocking keyless entry, fatigue driving monitoring and gesture recognition,which fully takes the advantages of HikAuto in the field of vision technology to bring about a more intelligentcockpit experience.
HikAuto will continue to increase its investments in intelligent driving sensors, algorithms and system
products, fully leverage its technological advantages based on the fusion of video, ultrasonic and millimeter waveradars, and launch more competitive solutions for around intelligent driving and intelligent cockpits.In 2020, the business growth of the passenger vehicle pre-installation products doubled. Besides, theaccumulation of technical solutions, customers, and projects has laid a good foundation for the continuous and rapidgrowth of HikAuto in the coming years.
5.3.2 Passenger vehicle aftermarket
Passenger vehicle owners' demand for Dashcam and and Around View Monitor continues to increase, anddriving video recording, rear-end collision evidence, injured feigning prevention, and parking view assist havegradually become rigid demands.In the dashcam product line, HikAuto has enriched its product line based on its differentiated technicalcapabilities such as night vision, AI, and networking, and formed a comprehensive product layout, which hasachieved omni-channel sales through mainstream online e-commerce platforms and offline auto accessory saleschannel. Among them, the F6/C6 series dashcam has become the leading product of the 5 million pixel high-definition intelligent networked recorder in the market.In the Around View Monitor system, HikAuto has expanded to five major vehicle lines and 31 vehiclemodels on the basis of three major car lines and 23 vehicle models in 2019. The key indicators, includingimage sharpness, night visibility, seamless interfacing, ultra-low delay and reliability etc., have reached theindustry-leading level, and advanced driving assistance functions such as BSD (Blind Spot Detection) andLDW (Lane Departure Warning) have been integrated into the Around View Monitor system to enhance thevalue and competitiveness of the system.
In 2020, HikAuto almost doubled the growth of its Dashcam products and Around View Monitor productsin the automotive aftermarket, which has created considerable brand value and earned more trust fromcustomers.
5.3.3 Commercial vehicle market
Commercial vehicles have achieved world-renowned vigorous development during the 13th Five-YearPlan. The rapid development of e-commerce has promoted the rapid rise of express delivery. Heavy trucks fortrunk logistics, medium and light trucks for branch transportation, and micro-trucks for urban distribution inthe “last mile” have all continued to grow, with sales exceeding 5 million units in 2020; the continuousintegration of traditional cruise-style taxis with online booking-type taxis has rapidly grown to more than 3million units. At present, China’s commercial vehicle inventory exceeds 20 million units. A huge number ofcommercial vehicle resources carries a large number of passenger and freight transportation in addition toaviation, railway and water transportation, which is closely related to the production and life of the people.However, safety issues such as traffic accidents, casualties, and damage to goods have become increasinglyprominent. Major traffic accidents are frequently reported, traffic accidents caused by blind areas of visionhave significantly increased after speeding and fatigue driving,.
In 2020, forward collision warning, lane departure warning, fatigue driving warning, driving behavioranalysis, etc. have gradually become the standard configuration of active and safe advanced assisted drivingconstruction projects for commercial vehicles in various regions. HikAuto has deeply explored the effects andefficiency of algorithms to improve the cost-effectiveness of the product system. It has won unanimously praisefrom users in more than 100 projects such as dangerous goods transport vehicles in Hunan Province,construction vehicles in Zhejiang Province, and heavy truck logistics vehicles in Guangdong Province. Besides,because of the rising trend of injuries and fatalities caused by the blind area of the driver’s vision, HikAutohas further studied vehicle operating scenarios in depth to explore blind area collision risk factors incombination with the actual operating environment of the vehicle. Through the integration of video and radar,it independently developed a 360° blind zone collision warning system for the entire vehicle body. This systemwill be widely used in buses, engineering vehicles, heavy trucks and other vehicles in the future to reducetraffic accidents and casualties caused by blind spots in the field of vision.
In November 2020, the Intelligent Connected Vehicle Technology Roadmap 2.0 was released by NationalInnovation Center of Intelligent and Connected Vehicles. Pursuant to the Roadmap, by 2025, the new carinstallation rate for partial autonomous driving (L2) and conditional autonomous driving (L3) will exceed 50%.According to Yole’s data, in 2018, the average number of cameras installed in vehicles worldwide was 1.7
units. It is expected that this number will reach 2.5 in 2021 and 3 in 2023. In 2020, the average number ofcameras per vehicle in China is only 1.3 units, and there is large room for market development. HikAuto willcontinue to increase its R&D investments in sensors, algorithms, and intelligent systems to help passengervehicle and commercial vehicle customers to make progress in the direction of intelligence and connectivity.
5.4 Innovative business - HikMicro
Centered on infrared thermal imaging technology and with MEMS-based technology, HikMicro provides coredevices, detectors, modules, infrared thermal imaging products and overall solutions to the world. The infraredthermal imaging industry has always been restricted by the high price of core components, which limits the scale ofapplication. HikMicro is committed to coping with this challenge and promoting infrared thermal imaging productsfrom a niche to the general public.
5.4.1 Core sensor technology advantages
Uncooled infrared thermal imaging sensor technology involves multiple disciplines and multiple fields. Atpresent, only a few countries in the world have mastered this technology. After 4 years of development andaccumulation, HikMicro has created advantages in the following five aspects:
Advanced integrated circuit (IC) design: The ultra-low noise readout circuit design in the detector can realizethe collection of extremely weak infrared signals and stable output of signals in ultra-harsh environments. In thesignal output channel, advanced low-noise processing technology is used to reduce the influence of externalinterference during the transmission process and ensure the clarity of the image; through the use of a hierarchicalbuffer output structure, the chip area is reduced, the power consumption is reduced, and the stability is improved.A readout circuit structure that suppresses external bias noise and suppresses environmental temperature changes isadopted, so that the chip can be used in a low-power, low-cost TEC (Thermal Electric Cooler)-free detector, whileachieving excellent and stable imaging quality. On-chip non-uniform correction technology is adopted to improvethe dynamic range of the chip. High-precision digital output and simple customer design may improve anti-interference ability; and standard universal input and output digital interface provide customers with conveniencefor system integration.
MEMS (Micro Electro Mechanical Systems) micro-bridge structure design: The pixel structure,packaging structure and layout design in the detector are important factors that affect the performance of the detector.
In order to obtain better performance, HikMicro optimizes the MEMS structural parameters of the detector. Theselected thermal material has the characteristics of high temperature coefficient of resistance (TCR) and low 1/fnoise factor. The small pixel adopts a double-layer structure design to maximize the infrared absorption area; thedesign of the resonant cavity and the infrared enhanced absorption structure realizes the maximum infraredabsorption rate of the detector in the 8-14um band.
MEMS and packaging process development: in accordance with the requirements of MEMS design andpackaging design, through craft menu development, stable batch output can be achieved. HikMicro’s processcapabilities are complete, with various metal film and dielectric film growth processes, dry and wet etchingprocesses, and organic cleaning processes. The minimum line width of the photolithography process can reach
0.35um. It has a number of self-developed core film growth processes and packaging processes in the infraredfield.
High vacuum packaging technology: Whether the chip can be electrically connected to external devices
in a vacuum environment and work stably and reliably under mechanical or environmental protection is animportant factor affecting product size and cost. HikMicro adopts advanced TEC (Thermo Electric Cooler)-freeceramic package packaging and wafer-level packaging processes. Compared with the traditional metalpackaging process, the ceramic package packaging process has obvious advantages of low power consumption,small size and low cost. The wafer-level packaging process adopts wafer processing throughout the wholeprocess, which has higher integration and yield, and has the advantage of lower cost.
Industrialization capability: The Company has self-built an independent and controllable 8-inch MEMSproduction line and packaging line with an annual production capacity of 10,000 wafers and a million detectors,which can continue to supply products to the market on a large scale.
5.4.2 Product core technical advantages
With regard to the finished product, after years of development and accumulation, thermal imaging productshave accumulated five major advantages: clearer images, smarter algorithms, more efficient temperaturemeasurement, more stable applications, and more reliable manufacturing.Clearer image: Focusing on image optimization, the self-developed adaptive AGC
4.0 can better adapt to the
environment and enrich the image level; DDE
technology makes the image more delicate and richer in details; 3DDNR
technology can effectively remove the noise in the image and improve the picture quality.Smarter algorithms: The deep learning algorithm and scenario optimization improves the alarm accuracy ofbehavior analysis, firework recognition, and target detection algorithms such as ships and vehicles.More efficient temperature measurement: through accurate and reasonable temperature measurement model,strict calibration, and standardized inspection process, the accuracy of temperature measurement is effectivelyimproved, the temperature difference of temperature measurement is small, and the stability is strong. The dual-light fusion technology superimposes visible light details in the thermal image, which is convenient for users tojudge, supports multiple rules and flexible control of points, lines, and frames to meet the temperature measurementrequirements of key areas and special points.More stable applications: PTZ’s intelligent temperature control system and intelligent air duct defoggingdesign ensure that the equipment can withstand the test of the severe cold in the northeast and the scorching heat ofSanya, and can operate stably at -45℃~70℃. The self-developed optical axis adjustment technology allows thevisible light channel to be positioned without deviation, making it easy to find the details of the problem.More reliable manufacturing: manufacturing and testing strictly in accordance with high quality productionrequirements, multiple standard screening of raw materials, fully automated production, and dust-free clean roompackaging; multiple rigorous tests such as aging and air tightness before leaving the factory ensure that the productis stable and reliable.
5.4.3 Three major thermal imaging product lines
Centered on its own sensors and relying on the advantages of sensors and product design technology, HikMicro
AGC: Automatic Gain Control, the gain mode is automatically adjusted to adapt to different scenes, so as to obtain a clearer image.
DDE: Dige Details Enhance, by sharpening the edges of objects in the image, the recognizability of the image is improved.
3D-DNR: 3D Digital Noise Reduction, the use of three-dimensional filtering technology effectively eliminates the noise in thevideo image and obtains a smooth and clear image.
divides its business into three product lines: online, handheld temperature measurement, and commercial vision.
Online products are mainly divided into two categories: security products and online temperaturemeasurement products. On the security product side, HikMicro combines thermal imaging, artificial intelligence,and image recognition technology with the strong temperature perception of thermal imaging as a powerfulsupplement to visible light to meet the needs of users for fire prevention and anti-theft. On the online temperaturemeasurement product side, based on video, HikMicro performs intelligent recognition of target characteristics andbehavior analysis and diagnosis optimized for temperature measurement application scenarios with leadingintelligent analysis algorithms, to create an efficient temperature measurement product suitable for the generalpublic, satisfying requirements of users to improve safety and efficiency.In outdoor fire prevention scenes, the firework recognition algorithm based on thermal imaging and deeplearning deeply integrates thermal imaging and AI technology to comprehensively improve stability and accuracy.One machine has multiple functions to protect forestry safety and contribute to environmental protection. Inperimeter prevention scenarios, behavior analysis based on deep learning can effectively classify humans, animals,vehicles and other targets, to filter false alarms, and provide reliable and accurate security guards. In the field oftemperature measurement, the dual-light fusion technology of visible light and thermal imaging is used to accuratelylocate abnormal areas and assist the daily maintenance of industrial equipment. In fields such as breedingtemperature measurement, inspection and quarantine, high-precision blackbody
-free equipment greatly reducesuser costs.
Hand-held temperature measurement products mainly focus on temperature measurement applications of
Blackbody: a device with constant radiant energy, which corrects the deviation of the radiation thermometer with the indication ofthe blackbody temperature, thereby improving the accuracy of the radiation thermometer.
industrial equipment such as electric power inspections. HikMicro provides mobile temperature measurementmodules, as well as a series of economical, professional, master and other handheld temperature measurementproducts, which constitute a complete mobile temperature measurement solution covering various applications,assists users to accurately measure temperature and diagnose defects with the advantages of temperaturemeasurement and image technology.
Commercial vision products are mainly divided into two areas: outdoor and assisted driving. In the outdoorfield, with its own sensor advantages and excellent image processing capabilities, HikMicro has released a seriesof observation products ranging from consumer to professional, which are widely used in hiking, outdoorexploration, search and rescue, and other scenarios; for assisted driving, HikMicro released thermal imagingsingle/binocular car assisted driver products, which are used to assist driving under severe conditions such as closedlight driving at night and heavy fog or smoke.
In addition, HikMicro has created a full range of integrated products from the detectors, cores,to the integrationof the whole machine, providing one-stop product integration services, allowing more partners to quickly integrateand use thermal imaging products to help create an infrared ecosystem circle.
5.4.4 Thermal imaging applications go to the masses
HikMicro launched its 160*120 resolution star product in 2019. The product is equipped with the most
advanced wafer-level packaging technology, which greatly reduces packaging materials, sensor costs, and promotesthermal imaging products entering into the ““thousand-RMB era””. Such products have met market demand dueto their good performance and affordable prices, which have also brought out more fragmented application potential.In 2020, HikMicro completed upgrading of economic products, which support algorithm customization andswitching, and load specified scenario algorithms trained and customized by the AI open platform to meet thefragmented and personalized needs of customers and benefit thousands of industries.
During the Spring Festival of 2020, in response to the COVID-19, HikMicro quickly launched thermal imagingtemperature screening products and a “fast and economical” temperature screening solution. Relying on self-developed sensors, by shortening the temperature measurement range, in combination with a large amount oftemperature measurement data analysis, HikMicro improved the environment self-adaptive ability of the equipmentthrough intelligent algorithm, and adopted advanced constant temperature and dust-free automatic manufacturingtechnology, so that the stability and consistency of the product have been greatly improved, and the product accuracy
can reach ≤0.5℃ (no blackbody) and ≤0.3℃ ( With blackbody).
With independent supply capability of core components, HikMicro will continue to consolidate its product-side technical advantages, open up more application scenarios, and continue to lead thermal imaging from a nicheto the general public.
5.5 Innovative Business- HikSemi
HikSemi is committed to providing high-quality products and comprehensive storage solutions for users
around the world. It provides a variety of storage products including solid-state hard disk SSD, memory card, cloudstorage, mobile solid-state hard disk PSSD, solid-state U disk, etc., and its business covers consumer level,enterprise level, industrial control level, video surveillance level and data center level and other scenarios that meetthe needs of multiple users.
Relying on a strong R&D team, deep technical precipitation, advanced management system and strict productstandards, HikSemi provides strong support for product development and production, which have reached theadvanced level of the industry in terms of safety, stability, durability, compatibility, reliability, etc.
5.5.1 Products of HikSemi
HikSemi makes continuous technological innovations based on user needs and develops correspondingproducts. For SSD products, it increases investment in research and development of industry/enterprise and datacenter products, actively innovates, pioneers the Zoned algorithm cluster, and has realized intelligent reconstruction
of data channels and cooperated with MagicBox management software to increase product life, and furtherconsolidated and expanded its video application advantages in the server field. In terms of dedicated SSDs for videosurveillance, the capacity has been further expanded, with a maximum capacity of a single disk reaching 8TB,providing a better choice for high-performance, large-capacity, and high-density applications. In addition, based ondata and technology accumulation, HikSemi has developed service items such as life warning, fault diagnosis, datamigration of out-of-guarantee bad disks, product life extension, etc., effectively improving user service experience.For the more consumer-oriented flash memory application products, HikSemi integrated resources to create the
HikSemi App, where users may access private storage products anytime and anyplace and browse and share datain various formats such as pictures and videos. The H200 cloudstorage product launched in 2020, with a brand-newhardware architecture, provides users with more ideal task processing efficiency. It is the first time in the industryto realize remote switch on and off, which greatly solves the pain points of users’ instant switch on and off. It wasstrongly concerned and favored by consumers at its launch. In terms of PSSD, as PCIE gradually becomes themainstream of SSD, HikSemi is also gradually applying new technologies. Following the launch of the fingerprint-encrypted PSSD-T100F in 2019, HikSemi launched a new Elite series of products in 2020. This series of productstakes high-speed, safety, waterproof, and appearance as the main entry points, in consideration of Hikvision’s self-developed firmware algorithm and extreme heat dissipation design, which greatly meets the needs of users in high-speed application scenarios. In terms of memory card products, relying on its position in the high-end videosurveillance industry and the accumulation of video storage technology, HikSemi, on the one hand, has successivelylaunched cost-effective video monitoring cards suitable for continuous data writing scenarios. On the other hand,HikSemi has continued to expand the memory card market segment and continuously launched cost-efficient and
high compatible consumer cards that can be widely used in civil secruity, mobile phones, cameras, speakers andother products, as well as driving record cards used in driving recorders, and handheld game cards favored bygamers.
5.5.2 Channel construction and user services
HikSemi has been developing in the industry market and channel markets and has initially completed themajor layout of domestic and foreign marketing networks, with nearly 2,000 customers, injecting strong newmomentum into sales growth. HikSemi has always paid attention to customer service. Adhering to the concept of“dedicated to customers’ continual success, adding value to companies and communities", HikSemi provides fast-responsive, efficient and convenient one-stop user services before, during and after product sales, so as to gaincustomer praise.
5.5.3 Supply chain management and quality management
HikSemi focuses on developing production control software, optimizing the supply chain management system,
expanding production capacity and implementing comprehensive quality management measures, improving thesupply chain management system and quality management, and further improving delivery capabilities and product
quality.With the accelerated advancement of technological innovations such as artificial intelligence, blockchain,cloud computing and the Internet of Things in the digital information age, data has also shown explosive growth,and the demand for storage in the memory market has continued to expand. Adhering to the original aspiration of ""Storing every beautiful moment and using intelligence to change lives" and the user-oriented concept, HikSemiwill continue to provide enterprises and consumers with the latest safe and reliable storage devices, systems andstorage solutions through product innovation, technological innovation, marketing innovation and brand building,and strive to become a leading provider of storage products and data storage solutions in China.
5.6 Innovative business- HikFire
Hikfire is committed to the research and development, production, sales and service of integrated fireprotection solutions, continues to develop security-fire integrated products and technologies, serves industrymanagement and applications, and is committed to building one-stop fire safety system solutions and one-stop fireoperations service solutions.
5.6.1 One-stop fire safety system solution
The gradual transformation of the fire protection industry to marketization and digitalization is an inevitabletrend, and the integrated application of fire-fighting materialization, platformization, and security-fire integrationhas gradually become a consensus of the industry. From the pre-installation market to the after-installation market,HikFire has built a one-stop fire safety system solution framework from detection and early warning, fire alarm,emergency evacuation to fire fighting and rescue, which can be divided into traditional fire fighting and smart firefighting business from the product dimension.
In the traditional fire protection field, products cover automatic fire detection and alarm systems and linkagesubsystems, including power supply monitoring of fire equipment, electrical fire monitoring, combustible gasdetection and alarm, fire emergency broadcast and telephone, fire door monitoring, emergency lighting andevacuation, residual pressure monitoring, gas fire extinguishing controller, etc. HikFire advocates the digitizationof installation and commissioning of traditional fire protectionprojects, to realize remote commissioning and online
management by using system-integrated commissioning tools, and provides convenient commissioning solutionsfor partners, which greatly improve delivery efficiency.
In the field of smart fire protection, by using multi-spectral fire detection and recognition technology, HikFireimproves wireless fire alarm solutions, optimizes fire graphic display devices and deepens the application of securityfusion products. The design of fire alarm and video linkage with traditional fire protection and smart security realizesthe integrated management of safety and fire protection, providing customers with full-cycle integrated solutions,which are widely used in the fire protection after-installation market.
HikFire provides industry solutions, and builds a scenario-based, systematic and visualized fire protectionsystem based on industry scenarios and actual business characteristics to help the industry improve the level of firesafety management. At present, two basic solutions and eight industry solutions have been released.
HikFire is committed to building a three-dimensional fire protection system with global coverage, full-timeavailability, and global visibility. Based on security-fire integration and intelligent management platform, throughdata sharing, analysis, prediction, and research and judgment, it improves the ability of fire safety trend earlywarning and forecast, which realizes differentiated and precise supervision, reduces fire safety risks, and improvesfire management efficiency.
5.6.2 One-stop fire protection operation service solution
In the field of fire protection operation services, HikFire builds a cloud service center based on cloudtechnology, and continues to provide operational service for key fire protection units, general social units,community streets, maintenance organizations, operating organizations, etc., to further open up upstream anddownstream businesses, and achieve business intensification and intelligence by integrating fire protection offlineservice and through “online operation + offline service”, so as to improve operating efficiency, reduce operatingcosts, provide value-added services, and build an industry and service ecosystem.
According to forecasts from the Prospective Industrial Research Institute, the scale of the smart fire protectionmarket in 2020 was approximately RMB 4 billion, representing a growth rate of about 15% over the previous year,in line with market expectations. The scale of the smart fire protection market in 2025 will be nearly RMB 8 billion.According to the calculations of Huicong Fire protection Website, the domestic fire alarm product market isexpected to exceed RMB 20 billion, and the overall market of the fire-fighting equipment market will exceed RMB70 billion.
HikFire continues to create the one-stop fire safety system solution and the one-stop fire protection operationservice solution , and commits itself to the digital transformation of fire protection. Through continuous integrationof new technologies and innovative management methods, it reduces fire safety risks and improves fire managementefficiency, so as to provide a safer environment for the whole society and make life better!
5.7 Innovative business - Rayin
Rayin is a complete solution provider focusing on X-ray detection business, dedicated to the technologyresearch and development, manufacturing, equipment sales and leasing services of non-visible light detectionequipment. Relying on the long-term accumulation in the fields of multi-dimensional sensing technology, invisiblelight imaging technology, artificial intelligence technology, equipment IoT technology, etc., technologyempowerment and value creation are carried out in the fields of smart security inspection and industrial "intelligent"manufacturing.
Rayin applies the intelligent algorithm innovation of contraband intelligent identification algorithm, on-the-job identification, equipment status monitoring and other intelligent algorithm to the field of security inspection. Itprovides multiple series of products such as physical inspection products, human security inspection products andindustrial detection products. Based on data networking supported by intelligent algorithms, it empowers users toachieve business closed-loop management, personnel on-the-job management, equipment operation andmaintenance management, and successfully implements system applications in core security business scenarios suchas public security, transportation, government, hospitals, cultural museums, enterprises, and large-scale eventvenues.
5.7.1 Luggage security inspection field
Based on X-ray imaging technology, Rayin focuses on the application of intelligent algorithms and the
improvement of recognition efficiency. It provides multiple series of security inspection machines. Rayincontinuously optimizes and enhances the effect of intelligent recognition algorithms, improves the types andaccuracy of contraband identification, and helps security inspectors to improve the quality and efficiency of securityinspection work. The products are widely adapted to security inspection business scenarios such as transportationhubs, judicature cultural and tourism, etc. Rayin also released a series of intelligent analysis products, whichfully integrates the business needs of the security inspection machine for the detection of contraband, continuouslyoptimizes and improves the effect of the intelligent identification algorithm, improves the recognition type andaccuracy of contraband, and assists security inspectors to improve the quality and effect of security inspection.
5.7.2 Human security inspection field
Rayin innovatively integrates and expands a variety of detection methods based on traditional metal detectiontechnology, enriches data collection types, and better responds to the needs of different users for human detectionin different scenarios. With the sudden outbreak of the COVID-19 pandemic at the beginning of 2020, Rayinactively responded to the need for rapid screening of sudden epidemics. Starting from the Spring Festival, it hassuccessively released a number of walk through metal detector with temperature screening, which can quicklycomplete body temperature measurement without contact, providing portable metal detection for traffic operation,resumption of work and school opening, while adding the first line of defense for body temperature screening.
5.7.3 Industrial detection field
With the capability of X-ray penetration imaging X-ray detection technology has a very wide range ofapplication scenarios in industrial production. Rayin provides X-ray-based non-visible light detection products. Incombination with artificial intelligence technology, it actively explores the implementation of non-visible lightimaging technology in the industrial manufacturing field, hammers outoverall industrial detection solutions, andempowers business partners to jointly create new applications in industrial intelligent manufacturing.Based on its understanding of multiple business scenarios, Rayin will implement the full-spectrum IoT strategy,continue to increase R&D investment in non-visible light imaging technology, improve product performance,expand market coverage, tap application potential, and contribute to the creation of a safer, more convenient andbetter society.
5.8 Innovative business- HikImaging
HikImaging is committed to the research and development of micro-vision and audio-video interaction
technology. Based on related technologies such as visual imaging, video analysis, audio and video encoding anddecoding and transmission in professional scenarios, it provides professional hardware and software systems formany industries such as medical treatment and education.
There are many video application scenarios in medical, education and other industries, which have professionalrequirements for specific imaging effects. Real-time recording and transmission of high-quality audio and videodata are required. At the same time, the application in such industries possesses the characteristics of limited numberof single scenes, high degree of personalization and long productization cycle. Based on the technical accumulationin the video image field and the continuous R&D of the professional technical team, HikImaging has brokenthrough the key technologies of micro-vision, close-range imaging, and audio and video interaction, deeplyunderstood the needs of user scenarios, and has launched a series of professional technical solutions and productoptions such as micro-camera system, remote surgery demonstration , and professional practical training.
5.8.1 Facilitating the upgrade of the minimally invasive medical industry
Based on the foothold of serving minimally invasive medical product manufacturers, HikImaging providescustomers with technical solutions that have independent technical advantages and meet the video imagerequirements of specific scenarios in different departments. It continues to invest in basic video image technologyto promote the effective transformation of advanced video image technology in the minimally invasive medicalindustry and promote industrial upgrading. In 2019, HikImaging provided micro-camera system components tohelp minimally invasive medical product manufacturers and obtained the first 4K endoscopic camera systemregistration certificate in Zhejiang Province. In 2020, HikImaging further enriched its basic technologies, optimizedtechnical solutions, and assisted many minimally invasive medical product manufacturers to upgrade ultra-high-definition video image technology.
5.8.2 Facilitating the improvement of medical education informatization
The training of clinicians and medical students focuses on practical teaching, academic and scientific researchactivities. Aiming at medical practice scenarios, HikImaging provides surgical teaching systems including ultra-high-definition surgical vision cameras, video recording hosts, teaching software and other products, which supportmobile or fixed installation and deployment, and support local area network and public network applications. Formedical teaching scenarios, HikImaging provides video product solutions for specific teaching scenarios in medical
schools and training bases (nursing, clinical, traditional Chinese medicine, etc.), which can achieve dual-teacherapplication between medical schools and affiliated hospitals through the cloud interactive software platform, andaccelerates the spread and inheriting of superb medical skills.
5.8.3 Facilitating the improvement of vocational skills teaching quality
Vocational education mainly cultivates technical skills talents, and the Ministry of Education requires practicalteaching hours in vocational colleges to account for more than 50% of the total hours in principle. Based on audioand video interaction, recording and rebroadcasting, and close-range imaging technology, HikImaging provides atraining video teaching system for close-range/panoramic cameras, video terminals, training teaching software andother products. In response to the teaching requirements of segmented scenes, HikImaging has launchedprofessional video teaching product solutions for auto repair, cooking, electromechanical and other training scenes,which can realize cross-internet school-enterprise interactive teaching through the cloud interactive softwareplatform.HikImaging will continue to invest in the research and development capabilities of imaging detection, microvision, audio and video interaction and intelligent analysis in professional scenarios, statisfy the users and marketdemands, accelerate technology application and product transformation, and provide more professional producttechnical solutions for industry users and customers.
II. Significant changes in main assets
1. Major Changes in Main Assets
| Major assets | Explanation on Major Changes |
| Equity Assets | The increase of 140.18% was mainly due to increased investments in Hangzhou Haikang Intelligent Industrial Equity Investment Fund Partnership (L.P.) and China Electronic Technology Finance Co., Ltd. |
| Fixed Assets | No significant change |
| Intangible Assets | An increase of 19.61% was mainly due to the addition of land use rights to Nanchang Science and Technology Park and other multi-site science and technology parks. |
| Construction in Progress | Increased by 125.67%, mainly due to increased investment in the construction of Chengdu Science and Technology Park, Hangzhou Innovation Industry Park, and Chongqing Science and Technology Park Phase II Project |
2. Major Overseas Assets
□ Applicable √ Inapplicable
III. Analysis of core competitiveness
Hikvision sticks to the principle of taking its technology products as the root and empowering its customers asthe orientation, empowering application scenarios with AI and empowering enterprises in digital transformation andsmart city construction with big data-AI fusion, and to become a pragmatic practitioner of the real economy underthe intelligent era.
1) Continuous efforts in R&D inputs and technology innovation to drive the Company’s developmentThe intelligent IoT industry that Hikvision is engaged in features fragmented demands and product appllicationscenarios. The essence of business expansion depends on the establishment of products and technology systemsapplicable to the industry’s demands. The Company insists on the industry demands as its starting point to drive theupgrade and iteration of products and solutions, maintain increasing efforts in R&D inputs and construct profoundtechnology capabilities of the Company.
Hikvision has been developed from video collection, following the business expansion to continuously explorethe full spectral perception capability, extends information perception manners from visible light to far infrared, X-ray, millimeter wave and other fields, and continues to explore perception methods such as sound, temperature,humidity, pressure, magnetism, etc., polishes and iterates series of hardware equipment for signal processing,transmission display and etc., and expands the product application scenarios from security and intelligent IoT toindustrial automation, ADAS, fire protection and control, security check and many other scenarios. The annual salesof hardware equipment has reached 27,000 different models.
Starting with customers’ needs, Hikvision has drawn a layout of industrial solutions since 2009 to graduallycover public services and over various 10 large-scale and 70 small-scale industrial applications which are enterprise-business-related, and has formulated the unified software technology architecture since 2016 to safeguard theconsistency of software R&D in a normalized manner and exploit the reuse value of software resources, andpromotes the AI open platform by focusing on the practice needs of fragmented-scenario AI algorithm trainings andreduces marginal costs incurred by business expansion through reusability of technology instruments.
Hikvision has invested over RMB 20 billion in aggregate in R&D over the last 5 years, among which R&D
inputs in 2020 represented over 10% of total sales, with more than 20,000 R&D technical staff representing nearly50% of the Company’s staff in total. The long-term high-intensity technology investments centering on businessscenarios has provided strong support for the Company’s solid business development. The Company will continueto maintain its efforts in R&D inputs and closely focus on industrial demands to develop a strong technology systemof the Company.
2) Continuous optimization of domestic and overseas sales service system to jointly create value withpartnersHikvision has established 32 provincial business centers nationwide to advance business-decision making andsoftware customization development capability at local level, with over 300 city branches covering a majority ofcities over China to ensure the effective implementation of businesses. Hikvision has established 19 regionalfunction centers overseas, with 66 branches under it, building marketing, service and R&D capabilities on a nationalbasis, and providing services to 155 countries and regions.Hikvision has multiple-layer channel partners spreading broadly across markets of various types, and hasestablished close cooperations with over 6,000 distributors, 10,000 integrators, 300,000 project contractors, 400,000installers and over 1,000 service providers all over the world to jointly offer products and services to terminal users.The Company has carried out cooperations with over 30 universities and scientific research institutes and establishedjoint innovative laboratories with over 100 user units which are fully open to partners for mutual benefits, to jointlycreate an industrial innovation union.
3) Adhering to the core business philosophy to continuously enhance the management systemSince its inception, Hikvision has always been adhering to the business philosophy of "professionalism,honesty, and integrity”, which is always considered by the Company as the standard for guiding its businessdevelopment and has already become the faith of all staff in the Company to abide by, regardless of the changes ininternal and external environment and the circumstances of the times.Confronted with increasingly business development and changes, the Company also updates its resourceorganization and management methods accordingly. Regarding the business direction formulation, the Companyhas formed a comprehensive strategic planning method which is regularly refreshed and updated on a rolling basis,unified awareness. Each business and functional department communicate effectively and align on work assignmentto ensure clear goals and decompose in place. Regarding the process management, the Company conducts the
process management by centering on its customers and promotes over 100 reform projects of process managementeach year, to keep optimizing resource layout and smoothing coordination methods. The Company has expandedIT system to every aspects of business operation to effectively provide services and improve operating efficiency.Through big-data measures, the Company carries out identification, management and control of financial risks,constructs the digital and full-coordinated quality management system, improves the internal operation risk controlsystem, increases efforts in internal anti-corruption and integrity establishement, and respects and protectsintellectual property.
Hikvision expands its businesses with its unchanged original aspiration, adapts to the increasing evolvingbusiness environment through iterative organizations, and adapts into changes in development.
4) Guiding the supply chain system to adapt to changes and flexibly distributing production resources
Stable and reliable raw material supplies are the important foundation of the Company to provide the industrywith diversified products, while flexible and high-efficient production layout is the important ensurance for thesteady growth of the Company’s businesses.
Hikvision establishes solid and mutually beneficial cooperative relationship with suppliers and joins handswith over 1,000 suppliers around the world to jointly develop and improve the hardware underlying technologyplatform. In light of uncertainties on supply chains brought by politics and epidemic in recent two years, theCompany still maintains a high level of raw materials and adapts to changes and uncertainties in the externalenvironment through redundant inventories.
Hikvision has domestic manufacturing bases in Hangzhou Tonglu, Hangzhou Binjiang and Chongqing, hasproceeded with the manufacturing base in Wuhan and the expansion plans in Tonglu and Chongqing, whileestablishing local factories in India, Brazil and the United Kingdom, to support global product supply. Leveragingon over 180 SMT production lines and over 40 automatic assembly lines, the Company has built leading automaticproduction capabilities in the industry, and establishes a prompt, flexible and coordinative manufacturing system toachieve the production model of multiple variaties, small batches and large-scale mass customization.
5) Adhering to the long-term philosophy of “talent-focused, growing together” and gathering talents from
all over the world
Hikvision considers talents as the most important source of enterprise competitiveness and gathers talents from
all over the world, while adhering to the employment concept of “talent-focused, growing together”.To discover and cultivate talents and have a reasonable evaluation on them, the Company has formulated adual career development path consisting of management sequence and professional sequence, established aprofessional qualification evaluation system and a talent assessment system, and implemented a multi-level trainingmechanism, while making constant investments for the consolidation and upgrade of backbone talents as well asthe reservation and development of backup talents of the Company. The Company constantly improves theperformance evaluation mechanism, integrating talents recruitment, promotion and downgrading, training anddevelopment as well as salaries and benefits, to boost the morale and creativity of employees. The comprehensivereturn system for staff has been established which consists of remuneration benefits, share incentives and innovativebusiness co-investments. On one hand, share incentives and innovative business co-investment system, which aredesigned for and applicable to all consistent strivers drive the rapid development of businesses; on the other hand,long-term returns are also created for all staff who participate in co-investments, coordinating the long-termdevelopment of business with continuous growth of talents at the same pace.
The Company encourages its staff to organize hobby clubs freely, regularly holds diversified cultural and sportactivities to create an equal, open-minded and positive organizational atmosphere. Through theme events such as“Face-to-Face with Executives”, “Dialogue with Managers”, “Humanities Lecture Hall”, “Reading Club”, etc., ithas assisted the staff with comprehensive growth.
6) Continuously developing the global compliance system and safeguard the business’s development
Hikvision spreads its businesses all over the world and is required to put its efforts on the establishment of theglobal compliance system to carry out businesses in every region pursuant to local laws and regulations in order toensure the long-term sustainable development of the Company.
Hikvision has established the independent global compliance department in 2019, putting its efforts onachievement of the internationalized corporate governance system and risk management and control capability,willing to accept supervision from all parties. The Company’s compliance department cooperates with businessteams in each region to meticulously study the laws and regulations environment of each country and region,conducts a full-process compliance guidance during business operation, and regularly carries out internalcompliance education to enhance compliance awareness of each organizational department in the Company,facilitating the smooth implementation of the Company’s business operation.
Section IV Discussion and Analysis on Business Operation
I. Overview
In 2020, COVID-19 epidemic spread across the world, resulting in the lockdown of many nations and regionsand the occurrence of suspension and concession of their economy. The U.S. continued to stress on Chinesetechnology enterprises which led to the further intensive impact on the global supply chains. Facing variousuncertainties in the external environment, the Company continued to increase its efforts in R&D inputs, continuouslypromoted the Company’s steady and healthy operation through technology innovation, which is the most importantmeans of the Company’s sustainable development. During the reporting period, the Company achieved a totaloperating income of RMB 63.50 billion, with year-over-year growth of 10.14%; the net profits attributable toshareholders of the Company was RMB 13.39 billion, with year-over-year growth of 7.82%. The Company’s overallgross profit margin in 2020 was 46.53%, an increase of 0.54 percentage points compared with the same period ofthe prior year.II. Core business analysis
1. Overview
1) Increasing input in R&D, and coping with challenges and embracing opportunities through technology
innovation
In 2020, the Company’s R&D input was RMB 6.38 billion, which was equivalent to 10.04% of the Company’stotal operating income; the R&D expenses ratio of the Company has further increased; the Company had over20,000 R&D and technical service personnel.
During the reporting period, the Company continued to cope with challenges brought by uncertainties of globalsupply chains, and built up cooperations with more abundant alternative suppliers through adjustment, replacementand supplement of product design plans to further ensure the continuous stable supply of the Company’s products.During the reporting period, the Company upgraded its software and hardware products, enhanced itsadvantageous position of video products and actively conducted intelligent upgrade on non-video products, togradually build a comprehensive perception product system. Algorithm, components and module resources havebeen continuously accumulated. Edge node, edge domain, cloud center and Internet-application open platform were
optimized and iterated. The technology system of Hikvision, based on IoT perception, AI, and big data as its core,has been improved constantly.
2) Solidifying multi-dimensional perception technology basis and expanding business areasIn 2020, the Company continued to advance technology accumulation in fields such as visible light, far infrared,millimeter wave, X-ray, sound wave, etc., to accelerate the integration and application of various detectortechnology. At the beginning of 2020, HikRayin with X-ray detection business as its core was established. Takinginto account the business development and market integration, the Company adjusted the business of HikMicro.During the COVID-19 epidemic, leveraging on the advantages of self-developed thermal imaging chip of HikMicro,Hikvision quickly launched body temperature measurement products, while HikRayin quickly launchedtemperature-measurement human-body security check machines through the fusion application of thermal imagingand X-ray, to facilitate the control and prevention of the epidemic through technological measures.
Based on the strategic position of IoT perception business, Hikvision expands and covers a number of newbusiness fields as planned. The new perceptive measures will bring more abundant and flexible perceptive channelsfor the Company’s products. Long-term accumulation of technology reserves and product experience has helpedthe Company respond to emergency, react quickly and timely and effectively in developing new technology andnovel products to seize potential opportunities under urgent cases.
3）Continuously advancing the construction of domestic and overseas sales and service system and promotingdigital marketing
In 2020, the Company continued to propel the construction of sales service system. Currently, Hikvision hasestablished 32 provincial marketing centers nationwide with over 300 city branches and offices. The Company hasestablished 66 branches overseas to provide products and services to 155 countries and regions all over the world,with Marketing and service network presence in every corner of the market. Due to the impact of the epidemic, theCompany accelerated the pace of marketing in digitalization, upgraded fully digitalized sales management process,improved full-process management and control system on products and services, and enhanced comprehensivemanagement capabilities of R&D, manufacturing, sales and services.
4) Attaching high importance to the construction and maintenance of the supply system to Ensure thecontinuous stability of supplyIn 2020, confronted with uncertainties brought by overseas politics and epidemic, the Company continued thehigh-level inventory strategy for raw materials, realized stable progress of necessary material replacement, andcoordinated with all suppliers to ensure the stability of the supply chain. In addition, the supply chain continued topropel lean production, improve the level of intelligent manufacturing, optimize delivery efficiency, and ensure asolid business development.
5) Continuously promoting operation optimization and improving the level of internal management
The Company’s performance results were significantly influenced by the COVID-19 epidemic at the first halfof 2020. To cope with external stress, the Company adjusted its expenditure strategy in a timely manner, enhancedmanagement, control and optimization for expenditure, and advanced the improvement of internal operation. Underunfavorable external environment, the Company concentrated on the optimization of internal management work,paid attention to details and improved operational efficiency.
2. Operating incomes and operating costs
1) Operating income structure
Unit：RMB
| 2020 | 2019 | YoY Change (%) | |||
| Amount | Proportion to operating income | Amount | Proportion to operating income | ||
| Total operating income | 63,503,450,891.78 | 100% | 57,658,110,065.22 | 100% | 10.14% |
| Classified by industry | |||||
| Video products and video services | 63,503,450,891.78 | 100.00% | 57,658,110,065.22 | 100.00% | 10.14% |
| Classified by product | |||||
| Front-end equipment | 28,841,213,141.09 | 45.42% | 27,175,127,832.29 | 47.13% | 6.13% |
| Back-end equipment | 6,867,289,356.22 | 10.81% | 7,519,825,167.90 | 13.04% | -8.68% |
| Central control equipment | 10,146,396,260.19 | 15.98% | 8,822,675,802.63 | 15.30% | 15.00% |
| Constructions | 1,614,246,940.42 | 2.54% | 1,091,421,819.86 | 1.89% | 47.90% |
| Others | 9,865,958,856.89 | 15.54% | 8,612,324,560.21 | 14.94% | 14.56% |
| 2020 | 2019 | YoY Change (%) | |||
| Amount | Proportion to operating income | Amount | Proportion to operating income | ||
| Subtotal | 57,335,104,554.81 | 90.29% | 53,221,375,182.89 | 92.30% | 7.73% |
| Smart home business | 2,918,904,302.62 | 4.60% | 2,592,271,750.14 | 4.50% | 12.60% |
| Robotic business | 1,358,653,520.55 | 2.14% | 813,993,602.43 | 1.41% | 66.91% |
| Other innovative businesses1 | 1,890,788,513.80 | 2.97% | 1,030,469,529.76 | 1.79% | 83.49% |
| Subtotal | 6,168,346,336.97 | 9.71% | 4,436,734,882.33 | 7.70% | 39.03% |
| Classified by region | |||||
| Domestic | 45,806,567,913.73 | 72.13% | 41,419,508,094.09 | 71.84% | 10.59% |
| Overseas | 17,696,882,978.05 | 27.87% | 16,238,601,971.13 | 28.16% | 8.98% |
| 2020 | 2019 | YoY Change (%) | |
| PBG | 163.04 | 155.86 | 4.61% |
| EBG | 151.80 | 125.91 | 20.56% |
| SMBG | 96.83 | 93.56 | 3.50% |
| Total | 411.67 | 375.33 | 9.68% |
| 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 | 63,503,450,891.78 | 33,957,697,857.73 | 46.53% | 10.14% | 9.05% | 0.54% |
| Classified by product | ||||||
| Front-end equipment | 28,841,213,141.09 | 12,797,470,301.71 | 55.63% | 6.13% | -1.69% | 3.53% |
Other innovative businesses include products of the corresponding businesses of the innovative business subsidiary HikAuto,HikMicro, HikSemi, HikImaging, HikFire, Rayin and others. Same below.
Some innovative business products rely on the sales of the three major business groups. The sales statistics of the business groupsare divided by the sales responsible unit, but the sales statistics of the product / innovation business are divided by product forms.
| Operating income | Operating cost | Gross margin | YoY Change (%) of operating income | YoY Change (%) of operating cost | YoY Change (%) of gross margin | |
| Back-end equipment | 6,867,289,356.22 | 3,463,814,165.41 | 49.56% | -8.68% | -6.38% | -1.24% |
| Central control equipment | 10,146,396,260.19 | 5,587,909,127.42 | 44.93% | 15.00% | 30.28% | -6.45% |
| Constructions | 1,614,246,940.42 | 1,353,524,939.67 | 16.15% | 47.90% | 60.36% | -6.51% |
| Others | 9,865,958,856.89 | 6,887,430,103.27 | 30.19% | 14.56% | 6.29% | 5.43% |
| Subtotal | 57,335,104,554.81 | 30,090,148,637.48 | 47.52% | 7.73% | 6.21% | 0.75% |
| Smart home business | 2,918,904,302.62 | 1,772,362,386.38 | 39.28% | 12.60% | 12.54% | 0.03% |
| Robotic business | 1,358,653,520.55 | 703,671,619.41 | 48.21% | 66.91% | 85.10% | -5.09% |
| Other innovative businesses | 1,890,788,513.80 | 1,391,515,214.46 | 26.41% | 83.49% | 62.92% | 9.30% |
| Subtotal | 6,168,346,336.97 | 3,867,549,220.25 | 37.30% | 39.03% | 37.68% | 0.62% |
| Classified by region | ||||||
| Domestic | 45,806,567,913.73 | 25,226,610,746.84 | 44.93% | 10.59% | 12.87% | -1.11% |
| Overseas | 17,696,882,978.05 | 8,731,087,110.89 | 50.66% | 8.98% | -0.66% | 4.78% |
| Industry | Item | Unit | 2020 | 2019 | YoY Change (%) |
| Video products and video services | Sales volume | Per unit | 139,309,170 | 141,859,538 | -1.80% |
| Output volume | Per unit | 138,254,927 | 148,141,909 | -6.67% |
5) Operating cost structure
Classified by industry
Unit: RMB
| Industry | Item | 2020 | 2019 | Increase/ decrease over previous year | ||
| Amount | Proportion to operating cost | Amount | Proportion to operating cost | |||
| Video products and video services | Operating cost | 33,957,697,857.73 | 100% | 31,140,176,777.12 | 100% | 9.05% |
| Product | Item | 2020 | 2019 | Increase/ decrease over previous year | ||
| Amount | Proportion to operating cost | Amount | Proportion to operating cost | |||
| Front-end equipment | Operating cost | 12,797,470,301.71 | 37.69% | 13,018,006,201.14 | 41.80% | -1.69% |
| Back-end equipment | Operating cost | 3,463,814,165.41 | 10.20% | 3,700,043,734.49 | 11.88% | -6.38% |
| Central control equipment | Operating cost | 5,587,909,127.42 | 16.46% | 4,289,265,345.53 | 13.78% | 30.28% |
| Constructions | Operating cost | 1,353,524,939.67 | 3.99% | 844,074,602.62 | 2.71% | 60.36% |
| Others | Operating cost | 6,887,430,103.27 | 20.27% | 6,479,665,731.95 | 20.81% | 6.29% |
| Subtotal | Operating cost | 30,090,148,637.48 | 88.61% | 28,331,055,615.73 | 90.98% | 6.21% |
| Smart home business | Operating cost | 1,772,362,386.38 | 5.22% | 1,574,835,597.99 | 5.06% | 12.54% |
| Robotic business | Operating cost | 703,671,619.41 | 2.07% | 380,163,028.57 | 1.22% | 85.10% |
| Other innovative businesses | Operating cost | 1,391,515,214.46 | 4.10% | 854,122,534.83 | 2.74% | 62.92% |
| Subtotal | Operating cost | 3,867,549,220.25 | 11.39% | 2,809,121,161.39 | 9.02% | 37.68% |
8) Major customers and suppliers:
Sales to major customers of the Company
| Sales to top five customers (RMB) | 1,962,348,321.68 |
| Total sales to top five customers as a percentage of the total sales for the year (%) | 3.09% |
| Total sales to the related parties in top five customers as a percentage of the total sales of the year (%) | 0.00% |
| No. | Name of Customer | Sales Amount (RMB) | Percentage of total sales for the year |
| 1 | First | 823,238,525.43 | 1.30% |
| 2 | Second | 396,030,353.38 | 0.62% |
| 3 | Third | 257,714,277.63 | 0.40% |
| 4 | Fourth | 251,783,014.66 | 0.40% |
| 5 | Fifth | 233,582,150.58 | 0.37% |
| Total | -- | 1,962,348,321.68 | 3.09% |
| Total purchases from top five suppliers (RMB) | 8,411,002,227.23 |
| Total purchases from top five suppliers as a percentage of the total purchases for the year | 23.64% |
| Total purchases from the related parties in the top five suppliers as a percentage of the total purchases for the year | 0.00% |
| No. | Supplier Name | Purchase Amount (RMB) | Percentage of total purchase for the year |
| 1 | First | 4,488,262,380.13 | 12.62% |
| 2 | Second | 1,751,616,676.30 | 4.92% |
| 3 | Third | 807,975,634.31 | 2.27% |
| 4 | Fourth | 702,217,512.81 | 1.97% |
| 5 | Fifth | 660,930,023.68 | 1.86% |
| Total | -- | 8,411,002,227.23 | 23.64% |
3. Expenses
Unit: RMB
| 2020 | 2019 | Increase/decrease over previous year | Note of significant change | |
| Sales expenses | 7,377,790,744.58 | 7,256,781,486.68 | 1.67% | No significant changes |
| Administrative expenses | 1,790,013,088.76 | 1,822,464,442.07 | -1.78% | No significant changes |
| Financial expenses | 396,254,772.56 | -640,068,177.19 | 161.91% | Affected by foreign exchange rate fluctuations, foreign exchange losses increased |
| R&D expenses | 6,378,651,762.42 | 5,483,811,698.36 | 16.32% | Continue to increase R&D investments |
| 2020 | 2019 | Change Percentage | |
| Number of Engineers (ppl) | 20,597 | 19,065 | 8.04% |
| Engineers as percentage of Total headcount | 48.25% | 47.19% | 1.06% |
| Amount of R&D expenses (RMB) | 6,378,651,762.42 | 5,483,811,698.36 | 16.32% |
| R&D investment as a percentage of operating income | 10.04% | 9.51% | 0.53% |
| Capitalized R&D expenses (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D expenses as a percentage of R&D expenses | 0.00% | 0.00% | 0.00% |
5. Cash flow
Unit: RMB
| Item | 2020 | 2019 | Increase/decrease over previous year |
| Subtotal of cash inflows from operating activities | 72,871,160,858.85 | 64,478,744,263.94 | 13.02% |
| Subtotal of cash outflows from operating activities | 56,783,004,292.18 | 56,711,024,092.80 | 0.13% |
| Net cash flows from operating activities | 16,088,156,566.67 | 7,767,720,171.14 | 107.12% |
| Subtotal of cash inflows from investing activities | 1,904,368,743.55 | 668,070,675.20 | 185.05% |
| Subtotal of cash outflows from investing activities | 4,459,002,700.82 | 2,591,059,148.00 | 72.09% |
| Net cash flows from investing activities | -2,554,633,957.27 | -1,922,988,472.80 | -32.85% |
| Subtotal of cash inflows from financing activities | 7,057,371,569.92 | 9,615,811,861.82 | -26.61% |
| Subtotal of cash outflows from financing activities | 11,617,474,855.16 | 15,087,164,151.74 | -23.00% |
| Net cash flows from financing activities | -4,560,103,285.24 | -5,471,352,289.92 | 16.65% |
| Net increase in cash and cash equivalents | 8,509,169,869.91 | 484,656,274.51 | 1,655.71% |
| December 31st 2020 | January 1st 2020 | YoY Change (%) | Note of significant change | |||
| Amount | Percentage of total assets | Amount | Percentage of total assets | |||
| Cash and bank balances | 35,459,729,108.27 | 39.98% | 27,071,948,919.78 | 35.92% | 4.06% | Increase in sales collection |
| Accounts receivable | 21,979,380,716.86 | 24.78% | 21,307,927,200.28 | 28.28% | -3.50% | Increase as sales revenue grows |
| Inventories | 11,477,906,040.70 | 12.94% | 10,756,027,592.41 | 14.27% | -1.33% | No significant change |
| Long-term equity investment | 864,026,710.23 | 0.97% | 252,165,321.49 | 0.33% | 0.64% | Increased investment in associates and joint ventures |
| Fixed assets | 5,876,007,536.60 | 6.62% | 5,791,218,720.87 | 7.68% | -1.06% | No significant change |
| Construction in process | 1,425,235,193.72 | 1.61% | 631,555,479.06 | 0.84% | 0.77% | Increase in construction investment on Chengdu Science and Technology Park, Hangzhou Innovation Industry Park and Chongqing Science and Technology Park Phase 2 |
| Short-term loans | 3,999,246,634.59 | 4.51% | 2,640,082,485.15 | 3.50% | 1.01% | Increase in demands for temporary capital turnover |
| Long-term loans | 1,961,167,761.30 | 2.21% | 4,604,168,571.43 | 6.11% | -3.90% | Increase in project borrowings |
| Non-current liabilities due within one year | 3,507,680,339.78 | 3.95% | 86,123,154.06 | 0.11% | 3.84% | |
| Item | Opening balance | Profit or loss from change in fair value during the period | Difference on translation of financial statements dominated in foreign currency | Provision for decline in value during the current period | Purchased amount during the period | Sales during the period | Other changes | Closing balance |
| Financial assets | ||||||||
| 1. Derivative financial assets | 181.76 | 22,814,664.19 | -134,999.18 | 22,679,846.77 | ||||
| 2. Other non-current financial assets | 312,398,267.44 | 69,478,784.83 | 112,872,015.00 | -2,810,000.00 | 491,939,067.27 | |||
| Item | Opening balance | Profit or loss from change in fair value during the period | Difference on translation of financial statements dominated in foreign currency | Provision for decline in value during the current period | Purchased amount during the period | Sales during the period | Other changes | Closing balance |
| 3. Receivables for financing | 1,257,385,053.02 | 702,216,142.23 | 1,959,601,195.25 | |||||
| Subtotal of financial assets | 1,569,783,502.22 | 92,293,449.02 | -134,999.18 | 112,872,015.00 | 699,406,142.23 | 2,474,220,109.29 | ||
| Financial Liabilities | 652,428.18 | -6,835,239.48 | -81,896.51 | 7,405,771.15 |
| Item | Closing Book Value (RMB) | Reasons for being restricted |
| Monetary fund | 434,891,229.96 | Various cash deposits and other restricted funds |
| Notes receivable | 482,454,604.99 | Endorsed to suppliers |
| Notes receivable | 7,981,224.88 | Pledge for issuance of bank acceptance |
| Receivables for financing | 106,117,987.87 | Pledge for issuance of bank acceptance |
| Fixed assets | 45,330,337.75 | Fixed assets leased through financial lease |
| Long-term receivables | 1,770,160,748.25 | Pledge for long-term debts |
| Total | 2,846,936,133.70 |
| Investment during 2020 (RMB) | Investment during 2019 (RMB) | Fluctuation (%) |
| 2,666,845,621.23 | 2,214,804,834.61 | 20.41% |
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) |
| Chengdu Science and Technology Park Project | Self-built | YES | Video product and video service | 278,695,245.67 | 521,626,793.33 | Self-fund | 26.49% | None | September 23rd 2017 | Announcement on Investment and Construction of Chengdu Science and Technology Park Project in Chengdu (No. 2017-033) |
| Hangzhou Innovation Industry Park | Self-built | YES | Video product and video service | 224,283,067.91 | 337,821,702.49 | Specific Loan | 32.93% | None | September 23rd 2017 | Announcement on Investment and Construction of Hangzhou Innovation Industry Park Project in Hangzhou (No. 2017-034) |
| Chongqing Science and Technology Park Project-phase 2 | Self-built | YES | Video product and video service | 138,743,811.81 | 249,810,250.79 | Self-fund | 32.78% | None | September 23rd 2017 | Announcement on Investment and Construction of Chongqing Science and Technology Park in Chongqing (No. 2017-035) |
| Zhengzhou Science and Technology Park Project | Self-built | YES | Video product and video service | 13,435,069.91 | 13,529,409.53 | Self-fund | 2.79% | None | - | - |
| 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) |
| Xi’an Science and Technology Park Project | Self-built | YES | Video product and video service | 6,507,603.03 | 12,679,174.93 | Self-fund | 0.56% | None | September 23rd 2017 | Announcement on Investment and Construction of Xi’an Science and Technology Park in Xi’an (2017-031) |
| EZVIZ Industry Park | Self-built | YES | Video product and video service | 2,332,067.08 | 2,332,067.08 | Self-fund | 0.29% | None | - | - |
| Total | -- | -- | -- | 663,996,865.41 | 1,137,799,398.15 | -- | -- |
(2) Derivatives Investments
√ 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 | June 18th 2021 | 98,489.32 | 717,885.03 | 351,670.38 | 6.46% | 1,291.57 | ||
| Total | 98,489.32 | -- | -- | 98,489.32 | 717,885.03 | 351,670.38 | 6.46% | 1,291.57 | |||||
| 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 | For details of the risk analysis and control measures, please refer to the Announcement on Conducting Foreign Exchange Hedging Transactions | ||||||||||||
| but not limited to, market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) of holding derivatives during the reporting period | 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 |
| 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 |
2. Sale of significant equity:
□ Applicable √ Inapplicable
VII. Analysis of major subsidiaries and investeesInformation 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 |
| Kunming Hikvision Digital Technology Co., Ltd. | Cash contribution | Business development |
| Hangzhou Microimage Software Co., Ltd. | Cash contribution | Business development |
| Hangzhou Microimage Intelligent Technology Co., Ltd. | Cash contribution | Business development |
| Jinan Hikvision Digital Technology Co., Ltd. | Cash contribution | Business development |
| EZVIZ Europe B.V. | Cash contribution | Expand overseas sales channels |
| BK Grup? UAB | Transfer of equity in cash | Expand overseas sales channels |
| BK EESTI AKTSIASELTS | Transfer of equity in cash | Expand overseas sales channels |
| SIA “BK Latvia” | Transfer of equity in cash | Expand overseas sales channels |
| Hainan Hikvision System Technology Co., Ltd. | Liquidation & cancellation | Reorganization |
| Hangzhou Hikvision Investment Management Co., Ltd. | Liquidation & cancellation | Reorganization |
(2) As business models of perception, data and application are not limited by specific industry features, theCompany current businesses has covered over 70 industries. With the further division and maturity of industrialsolutions, the Company has opportunities to provide products, solutions and services to more industries.
(3) With the accumulation and development in the past 20 years, the Company is able to lay a solid foundationon software-hardware fusion, cloud-edge fusion, IoT-information network fusion and big data-AI fusion, whichfacilitates the Company meeting users’ needs by ample software and hardware products, solutions and applications,further drives the development of the Company through technology innovation, and strengthens and enlarges thecompetitive advantages.
2. The Company's development strategy
Hikvision is committed to become a provider of Intelligent IoT solutions and big data services with video asits core competence. The Company adheres to the business philosophy of "professionalism, honesty, and integrity”and the core corporate values of “dedicated to customers’ continual success, adding value to companies andcommunities, acting with honesty and integrity, pursuing excellence in every endeavor”. Through continuousinnovation, it provides global customers with high-quality products and services and creates value for customers.
With the corporate mission “to explore innovative ways to better perceive and understand the world, toempower vision for decision-makers and practitioners, and work together to enhance safety and advance sustainabledevelopment around the world”, the Company is committed to empower vision for the security and development ofthe world.
3. Key Operation Priorities in 2021
(1) Continue to consolidate R&D work on technologies, products and solutions based on technology innovation.
(2) Continue to promote the construction of sales and services network centering on cities domestically andcentering on nations overseas, empower local business teams, and drive the new growth of the Company.
(3) Maintain a solid and practical inventory management strategy, to maintain a diversified supply structureand ensure the safety of supply chains.
(4) Continue to propel the process reform and management reform, improve the cooperative ability betweenthe Company’s organizations and business strategies, and enhance operational efficiency.
(5) Comply with laws and regulations, strengthen internal education and propaganda on compliance, andcontinue to advance the construction of global compliance system.
X. Reception of activities including research, communication and interviews during the report period
1. Registration form for reception of research, communication, interviews and other activities during thereporting period
√ Applicable □ Inapplicable
| Time of reception | Location of reception | Method of reception | Type of reception object | Reception object | The main content of the discussion and the information provided | 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 | 14 investors including Citic Construction Securities-Shi Zeyu, etc. | The Company's operating conditions and future prospects | 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 | 44 investors including Naito Securities- Seijiro Naito, etc. | The Company's operating conditions and future prospects | 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 | 421 investors including Efund-Feng Bo, etc. | The Company's operating conditions and future prospects | 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 | 214 investors including Hongcheng Investment -Zhang Tao, etc | The Company's operating conditions and future prospects | 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 | 24 investors including Everbright Asset Management-Xu Deren, etc. | The Company's operating conditions and future prospects | 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 | 1,097 investors including CICC-Feng Da, etc. | The Company's operations in 2019 and the first quarter of 2020 | CNINF, Investor Relations Activity Record: April 25th 2020 |
| From April 27th 2020 to May 9th 2020 | Headquarters meeting room | Telephone communication | Institutional investors | 96 investos including APS-Zhang Qing,etc. | The Company's operating conditions | CNINF, Investor Relations Activity Record: From April 27th 2020 to May 9th 2020 |
| Time of reception | Location of reception | Method of reception | Type of reception object | Reception object | The main content of the discussion and the information provided | Index of basic situation of the research |
| of the Company | and future prospects | |||||
| From May 11th 2020 to May 22nd 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 81 investors including East Securities Asset Management-Wang Yanfei, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From May 11th 2020 to May 22nd 2020 |
| From May 23rd 2020 to June 5th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 144 investors including CITIC Securities HuYe Qianwen, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From May 23rd 2020 to June 5th 2020 |
| From June 8th 2020 to June 24th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 61 investors including Founder Securities-Luo Yiyang, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From June 8th 2020 to June 24th 2020 |
| July 25th 2020 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | 559 investors including GF Fund-Tian Wenzhou,etc. | The Company's operations in the first half of 2020 | CNINF, Investor Relations Activity Record: July 25th 2020 |
| From July 27th 2020 to August 10th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 190 investors including IDG Capital-Yun Nan, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From July 27th 2020 to August 10th 2020 |
| From August 11th 2020 to August 21st 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 80 investors including China Huitianfu Yuan Jianjun, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From August 11th 2020 to August 21st 2020 |
| Time of reception | Location of reception | Method of reception | Type of reception object | Reception object | The main content of the discussion and the information provided | Index of basic situation of the research |
| From August 24th 2020to September 4th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 15 investors including ABC Life Insurance and Feng Anming, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From August 24th 2020to September 4th 2020 |
| From September 7th 2020 to September 25th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 61 investors including Guotai Jun’an Securities-Junan Feng Dingcheng | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From September 7th 2020 to September 25th 2020 |
| October 24th 2020 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | 670 investors including Baoyin Investment-Zhou Junkai, etc. | The Company's operations in the third quarter of 2020 | CNINF, Investor Relations Activity Record: October 24th 2020 |
| From October 26th 2020 to November 6th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 295 investors including China Industrial Securities-Yao Kang, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From October 26th 2020 to November 6th 2020 |
| From November 9th 2020 to November 20th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 25 investors including Hillhouse Capital-Liang Din, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From November 9th 2020 to November 20th 2020 |
| From November 23rd 2020 to December 7th 2020 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 22 investors including Peshan Investment-Jiang Jianbo, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From November 23rd 2020 to December 7th 2020 |
| From December 8th 2020 to December 21st 2020 | Headquarters meeting room | Site Research and telephone | Institutional investors | 44 investors including Cathay Pacific Fund-Zhang | The Company's operating conditions | CNINF, Investor Relations Activity Record: From December 8th 2020 to December 21st 2020 |
| Time of reception | Location of reception | Method of reception | Type of reception object | Reception object | The main content of the discussion and the information provided | Index of basic situation of the research |
| of the Company | communication | Yang, etc. | and future prospects | |||
| From December 22nd 2020 to January 11th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 106 investors including China Life-Feng Guanlan, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From December 22nd 2020 to January 11th 2021 |
Section V Significant EventsI. Profit distribution of ordinary shares and capitalization of capital reservesProfit distribution policy of ordinary shares in the reporting period, especially the formulation, implementationand adjustment of cash dividend policy
□Applicable √Inapplicable
Profit distribution policy (proposal) and capitalizing of capital reserves policy (proposal) in last three years(including the current reporting period)
(1) Profit distribution for the year 2018：Based on the Company’s total share capital of 9,348,465,931
shares on the date of equity registration when the Company implements the distribution plan, theCompany distributed cash dividend of RMB 6 (tax inclusive) per each 10 shares to all shareholders,bonus share and share distribution from capital reserve is nil.
(2) Profit distribution for the year 2019：Based on the Company’s total share capital of 9,345,010,696
shares on the date of equity registration when the Company implements the distribution plan, theCompany distributed cash dividend of RMB 7 (tax inclusive) per each 10 shares to all shareholders,bonus share and share distribution from capital reserve is nil.
(3) Profit distribution proposal for the year 2020：Based on the Company’s current total share capital of
9,343,417,190 shares, the Company proposed to distribute cash dividend of RMB 8 (tax inclusive)per each 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil.
Cash dividend of ordinary shares in last 3 years (including the current reporting period)
Unit: RMB
| Year | Cash dividends (including tax) | Net profit attributable to shareholders of listed Company in consolidated statements | Ratio of net profit attributable to shareholder of Company in consolidated financial statements (%) | Amount of cash dividends in other methods (Such as share repurchase) | Ratio of cash dividends in other methods | Total cash dividends (including other methods) | The ratio of total cash dividends (including other methods) to the net profit attributable to common shareholders of listed companies in the consolidated statement |
| 2020 | 7,474,733,752.00 | 13,385,526,714.15 | 55.84% | 0.00 | 0.00% | 7,474,733,752.00 | 55.84% |
| 2019 | 6,541,507,487.20 | 12,414,587,690.45 | 52.69% | 0.00 | 0.00% | 6,541,507,487.20 | 52.69% |
| 2018 | 5,609,079,558.60 | 11,352,869,241.32 | 49.41% | 0.00 | 0.00% | 5,609,079,558.60 | 49.41% |
II. Profit distribution and capitalizing of capital Reserves for the current reporting period
| Bonus issue per 10 shares (share) | 0 |
| Cash dividend per 10 shares (RMB) (tax inclusive) | 8.00 |
| Additional shares converted from capital reserves for 10 shares (share) | 0 |
| Total capital shares as the basis for the distribution proposal (share) | 9,343,417,190 |
| Total cash dividend (RMB) (tax inclusive) | 7,474,733,752.00 |
| Distributable profits (RMB) | 31,327,891,058.77 |
| Percentage of cash dividends in the total distributed profit (%) | 23.86% |
| Cash dividend policy: | |
| The Company is in the development stage and has a substantial plan of cash expenditure. In the current profit distribution, cash dividends shall account for at least 20%. | |
| Details about the plan for profit distribution and capitalizing capital reserves into share capital | |
| As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, in 2020, the parent company of the Company realized net profit of RMB 12,671,388,440.50, the statutory surplus reserve is nil, adding the undistributed profit of the parent company at the beginning of the year of RMB 25,196,894,651.27, deducting the cash dividends of RMB 6,541,507,487.20 in 2019, adding back RMB 1,115,454.20 of the unpaid dividends for the repurchased restricted shares, as of December 31st 2020, the profits distributable to shareholders of the parent company amounted to RMB 31,327,891,058.77. As of December 31st 2020, the profits distributable to shareholders in the consolidated statement were RMB 35,806,523,826.37 (consolidated). To sum up, according to the principle of “whichever is lower”, the profits distributable to shareholders this year was RMB 31,327,891,058.77. Based on the Company’s current total share capital of 9,343,417,190 shares, the Company proposed to distribute cash dividend of RMB 8 (tax inclusive) per each 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil. The above scheme will distribute a total cash dividend of RMB 7,474,733,752.00, and the remaining undistributed profits will be transferred to the next year. | |
III. Performance of commitments
1. Complete and incomplete commitments of the Company and its actual controller, shareholders, related parties, acquirers, and other relatedparties for the commitments by the end of the reporting period.
√ Applicable □ Inapplicable
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| Commitments in offering documents or shareholding alterations | CETHIK Group Co., Ltd. | Commitments regarding horizontal competition and related party transactions | 1. Commitments in non-competition within the industry: In the period as controlling shareholders of the Hikvision, CETHIK and its controlling subsidiaries (excluding Hikvision and its subsidiaries, the same below) will not be engaged in such business that is competitive to Hikvision and its subsidiaries directly or indirectly. 2. Commitments in decrease and regulation of transactions with related party: Zhejiang Haikang Group Co., Ltd (hereinafter referred to as Haikang Group or actual controller) as the controlling shareholders of Hangzhou Hikvision Digital Technology Co., Ltd (hereinafter referred to as "Hikvision" or "Listed Company") are commited as below for the transactions with Hikvsion: (1) Haikang Group will not make use of the controlling power to offer more favorable conditions to Hikvision than those to any independent third party in any fair market transactions in the cooperation with Hikvision. (2) Haikang Group will not make use of the controlling power to obtain the prior right to complete the transaction with Hikvision. (3) Haikang Group will not deal with Hikvsion in not fair terms comparing to the market prices to prejudice the Company’s interests. For unavoidable related transactions, the Company will observe the principles of justice and fairness to deterimine prices according to the market on the basis of equality, | October 29th 2013 | Long-term | Strict performance |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| voluntarily. The Company will obey the Articles of Association and other regulatory documents related to the avoiding of issues about related transactions. The related transactions will go through approval procedures in accordance with related rules and complete legal procedures, fulfilling the information disclosure obligations in respect to the related transactions 3. Commitment to the maintenance of the independence of the listed Company 3.1 Commitment to Personnel Independence of the listed Company (1) Commitment that our general manager, deputy general manager, chief financial officer, secretary of the board and other members of senior management shall not assume any positions other than directors and supervisors or get any remuneration in CETHIK and/or any of its controlled entities; (2) Commitment in keeping the management of labor, human resources and issues related to remuneration of the listed Company independent from that of CETHIK; 3.2 Commitment to the independence of the asset of the listed Company (1) Commitment to independent and complete asset of the listed Company (2) Commitment free of unlawful use of cash and asset of the listed Company by the controlling shareholders 3.3 Commitment to financial independence of the listed Company (1) Commitment to an independent finance department with a team and accounting system; (2) Commitment to a regulated, independent accounting system and financial management system of the branches and subsidiaries (3) Commitment to maintaining accounts with banks independently of and not sharing any bank account with our |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| controlling shareholders (4) Commitment that the financial staff shall not assume any positions in CETHIK (5) Commitment to paying taxes independently according to the law; (6) Commitment to implementing financial decisions independently 3.4 The Company has set up an independent organizational structure which maintains its independent operations which is independent from that of CETHIK. 3.5 Commitment to business Independence of the listed Company (1) The Company has the asset, personnel, aptitude and management capability for independent and complete business operation. The Company has the ability to operate independently in the market. (2) Commitment in independence in both business and operations 4. Regarding plans for the development and relevant commitment for the listed Company, Haikang Group has committed as below for the subsequent development of Hikvsion according to the Securities Acts and relevant laws and rules, 4.1 Currently the Company has no plan to change or make significant adjustments for principal business in the next 12 months; 4.2 Currently the Company has no plan to sell, merge or operate with another Company for the assets and business of the listed Company or its subsidiaries in the next 12 months. 4.3 Currently the Company has no plan to alter the Board of |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| the Directors and senior management and no agreement with other shareholders about the appointment and removal of the directors or senior management. The team of Board of Directors and senior management will remain unchanged for the foreseeable future. 4.4 Currently the Company has no plan to make significant changes to the Articles of Association for the listed Company. 4.5 Currently the Company has no plan to make significant changes to the existing employee recruitment for the listed Company. 4.6 Currently the Company has no plan to make significant changes for the dividend distribution plan for the listed Company. 4.7 Currently the Company has no plan to make significant changes for business and organizational structure for the listed Company. | ||||||
| Commitments in Initial Public Offering or re-financing | Hangzhou Weixun Investment Management Limited Partnership（later renamed as Xinjiang Weixun Investment Management Limited Partnership） | Share restriction commitment | During Hu Yangzhong, Wu Weiqi, JiangHaiqing, Zhou Zhiping, Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan,、Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen Junke’s tenure of the Company’s board of directors, supervisors and senior management personnel, the annual transfer of Hikvision’s total shares should not exceed 25% of total number of shares held under Weixun; within 6 months after abovementioned personnel’s dimission, should not transfer Hikvision’s shares held under Weixun. | May 17th 2010 | Long term | Strict performance |
| Hangzhou Pukang Investment Limited | Share restriction | During Hu Yangzhong, Wu Weiqi, Gong Hongjia’s tenure of | May 17th | Long term | Strict |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| Partnership（later renamed as Xinjiang Pukang Investment Limited Partnership） | commitment | the Company’s board of directors, supervisors and senior management personne, the annual transfer of Hikvision’s total shares should not exceed 25% of total number of shares held under Pukang; whithin 6 months after abovementioned personnel’s dimission, should not transfer Hikvision’s shares held under Pukang. | 2010 | performance | ||
| The Company's directors, supervisors and executive: HuYangzhong,Wu Weiqi, Jiang Haiqing, Zhou Zhiping，Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen Junke | Share restriction commitment | During their tenure of the Company’s board of directors, supervisors and senior management personnel, the annual shares transfer should not exceed 25% of total number of shares held under Weixun; whthin 6 months after their dimission, they should not transfer their shares held under Weixun. | May 17th 2010 | Long term | Strict performance | |
| Directors, executive officers of the Company: Hu Yangzhong, Wu Weiqi | Share restriction commitment | During their tenure of the Company’s board of directors, supervisors and senior management personnel, the annual shares transfer should not exceed 25% of total number of shares held under Pukang; whthin 6 months after their dimission, they should not transfer their shares held under Pukang. | May 17th 2010 | Long term | Strict performance | |
| The Company’s director Gong Hongjia’s spouse, Chen Chunmei | Share restriction commitment | During Gong Hongjia’s tenure of the Company’s board of directors, supervisors and senior management personnel, Chen’s annual shares transfer should not exceed 25% of total number of shares held under Pukang; whthin 6 months after the dimission of Gong Hongjia,Chen should not transfer her shares held under Pukang. | May 17th 2010 | Long-term | Strict performance | |
| China Electronics Technology Group Corporation（later renamed as China | Commitment to avoid horizontal | To avoid any loss of the Company and other shareholders arising from any competing business, China Electronics | September 18th 2008 | Long term | Strict performance |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| Electronics Technology Group Co., Ltd.） | competition | Technology Group Corporation, the actual controller of the Company, issued Letters of non-competition on 18 September, 2008. | ||||
| Gong Hongjia； Hangzhou Weixun Investment Management Limited Partnership（later renamed as Xinjiang Weixun Investment Management Limited Partnership）； Hangzhou Pukang Investment Limited Partnership（later renamed as Xinjiang Pukang Investment Limited Partnership）；ZheJiang Orient Holdings Co., Ltd. | Commitment to avoid horizontal competition | To avoid any loss of the Company and other shareholders arising from any competing business, Gong Hongjia, Hangzhou WeiXun Investment Management Limited Partnership, ZheJiang Orient Holdings Co., Ltd and Hangzhou KangPu Investment Management Limited Partnership, the promoters of the Company, issued Commitment Letters of non-competition in the same industry on 10 July, 2008. | July 10th 2008 | Long term | Strict performance | |
| Other commitments to the Company's minority shareholders | Gong Hongjia | Share reduction commitment | Within six months after 15 trading days from the date of the disclosure of the Announcement on Pre-Disclosure of Shareholdings by Shareholders on May 23rd 2020, Gong Hongjia will reduce his holdings of shares not exceeding 2% of the Company's total share capital by means of centralized bidding. | May 23rd 2020 | Six months starting from June 15th 2020 | Completed on September 4th 2020 |
| Whether the commitments is fulfilled in time | Yes | |||||
2. Where any profit forecast was made for any of the Company’s assets or projects and the current reportingperiod is still within the forecast period, the Company shall explain whether the performance of the asset orproject reaches the profit forecast and why:
□ Applicable √ Inapplicable
IV. The Company’s funds used by the controlling shareholder or its related parties for non-operating purposes.
□ Applicable √ Inapplicable
No such case duiring the reporting period.V. Explanation given by the board of directors, supervisory committee and independent directors(if applicable) regarding the “non-standard auditor’s report” issued by the CPA firm for thecurrent reporting period
□ Applicable √ Inapplicable
VI. For changes in accounting policies, accounting estimates and accounting methods as comparedto the financial report for the prior year
√ Applicable □Inapplicable
Starting from January 1st 2020, the Company has adopted the Accounting Standards for Business EnterprisesNo. 14 – Revenue (hereinafter referred to as the “New Revenue Standard”, the revenue standard before theamendment is referred to as the "Original Revenue Standard") modified by the Ministry of Finance in 2017. TheNew Revenue Standard has introduced the 5-step method for recognition and measurement of revenue and addedmore instructions on specific transactions or events. For details of the accounting policies for recognition andmeasurement of revenue of the Company, please refer to Note (III). 26 to the financial statements. The New RevenueStandard requires the entity to adjust the retained earnings and the amounts of other relative items in the financialstatements at the beginning of initial adoption (i.e. January 1st 2020) of the new standards for the cumulative amountof impact, and not to adjust information in comparable period. In adopting the New Revenue Standard, the Companyonly adjusts the cumulative impact of contracts that have not been completed on the first execution date. For changesin contract incurred before the beginning of adoption of New Revenue Standard, the Company will make simplifiedtreatment, namely, the Company will identify the fulfilled and unfulfilled performance obligations, determinetransaction price and allocate the transaction price between the fulfilled and unfulfilled performance obligationsaccording to the final arrangement of contract changes.
The New Revenue Standard has no significant impact on the revenue recognition of various businesses of theCompany. Details of the impact of the adoption of the New Revenue Standard by the Company on January 1st 2020are set out in Note (III) 32.2 to the financial statements.
VII. Explanation for retrospective restatement of major accounting errors during the reportingperiod
□ Applicable √ Inapplicable
No such case during the reporting period.
VIII. Explanation for changes in scope of the consolidated financial statements as compared to thefinancial report for the prior year
√ Applicable □ Inapplicable
During the reporting period, the Company has newly set up three wholly-owned subsidiaries and four holdingsubsidiaries, acquired three subsidiaries, liquidated and cancelled two subsidiaries, which have caused the changein consolidation scope. For more details, please refer to Financial Report Note (VI) “Changes in consolidation scope”of the financial statement.IV. Engagement and disengagement of the CPA firmCPA firm engaged at present
| Name of the domestic CPA firm | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Remuneration for the domestic CPA firm (RMB’0000) | 365 |
| Consecutive years of the audit service provided by the domestic CPA firm | 5 |
| Name of the certified public accountants from the domestic CPA firm | Tang Lianjiong, Zhang Shushu |
| Consecutive years of the audit service provided by the certified public accountants from the domestic CPA firm | Tang Lianjiong has provided audit service for 2 consecutive year; Zhang Shushu has provided audit service for 4 consecutive years. |
XI. Bankruptcy and restructuring
□ Applicable √ Inapplicable
No such case during the reporting period.XII. Material litigation and arbitration
□ Applicable √ Inapplicable
No such case during the reporting period.XIII. Punishments and rectifications
□ Applicable √ Inapplicable
No such case during the reporting period.XIV. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Inapplicable
XV. The implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or other incentiveplans
√Applicable □Inapplicable
During the reporting period, the Company completed the second unlocking, repurchasing and cancelling sharesfor 2016 Restricted Share Incentive Scheme.
On December 24
th2019, Resolution for the Fulfillment of the Unlocking Conditions of the Second UnlockPeriod for the 2016 Restricted Share Incentive Schemes was approved by the 14
thmeeting of the fourth Board.Authorized by the second extraordinary general meeting for 2016, a total of 21,836,266 restricted shares of 2,726grantees were vested and circulated on January 20
th
2020. Meanwhile, 1,593,506 restricted shares held by a portionof grantees not fulfilling the incentive conditions were repurchased and cancelled. On December 16
th
2020,repurchase and cancelation process of the restricted shares was complete.
For details, please refer to in the Indicative Notice of Listing the Unlocked Shares during the Second UnlockingPeriod of 2016 Restricted Share Incentive Schemes (No. 2020-002) and the Notice of the Completion of the SecondRepurchase and Cancelation of Restricted Shares that Already Granted for 2016 Restricted Share Incentive Schemes(No. 2020-062) issued on January 17
th 2020 and December 17
th
2020 respectively.
By the end of the reporting period, the Company has a total of 143,170,198 granted and restricted shares,
accounts for 1.53% of the Company’s total share capital.The Company followed the Accounting Standard for Business Enterprises No. 11 – Share-based Payment andother accounting standards in relation to accounting treatment for Restricted Share Incentive Schemes. Costs inrelation to the shares granted under 2016 Restricted Share Incentive Schemes and 2018 Restricted Share IncentiveSchemes are amortized over the waiting period for vesting.During the reporting period, costs amortized in relation to the shares granted under the 2016 Restricted ShareIncentive Schemes and shares granted under 2018 Restricted Share Incentive Schemes of the Company have nomaterial impact on the financial position and operating results of the Company. For details, please refer to Footnnote(XI) - Share-based Payments.
XVI. 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 | 82,684 | 2.32% | 90,000 | No | Payment on delivery | July 25th 2020 | Announcement on increasing the projections on 2020 related-party transactions arising from routine operations (No：2020-045） |
| Shanghai Fullhan Micro Co., Ltd. | The Company’s shareholder who holds more than 5% of the Company’s shares, The Company’s director, Gong Hongjia is the director of the related party | Procurement | 24,390 | 0.69% | 50,000 | No | Payment on delivery | April 25th 2020 | |||
| Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries | Wu Weiqi, director of the Company, served as director of this company | Procurement | 2,035 | 0.06% | 13,000 | No | Payment on delivery | Announcement on projections on 2020 related-party |
| 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 |
| transactions arising from routine operations (No：2020-017） | |||||||||||
| Wuhu Sensor Technology Co., Ltd.and its subsidiaries | Wu Weiqi, director of the Company, served as director of this company | Procurement | 6,171 | 0.17% | 14,000 | No | Payment on delivery | ||||
| Zhiguang Hailian Big Data Technology Co., Ltd. and its subsidiaries | An associated company held by the company | Procurement | 14 | 0.00% | 1,000 | No | Payment on delivery | - | - | ||
| Zhejiang Haishi Huayue Digital Technology Co., Ltd. | A joint venture company held by the company; The Company’s senior management is appointed as this company’s chairman | Procurement | 174 | 0.00% | 200 | No | Payment on delivery | - | - | ||
| Shenzhen Hikvision City Service Operation Co., Ltd. and its subsidiaries | A joint ventures held by the company | Procurement | 36 | 0.00% | 100 | No | Payment on delivery | - | - |
| 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. | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 35,056 | 0.55% | 75,000 | No | Payment on delivery | April 25th 2020 | Announcement on projections on 2020 related-party transactions arising from routine operations (No：2020-017） |
| Daishan Hailai Yunzhi Technology Co., Ltd. | A joint ventures held by the company | Sales | 2,985 | 0.05% | 4,000 | No | Payment on delivery | ||||
| Wuhu Sensor Technology Co., Ltd.and its subsidiaries | Wu Weiqi, director of the Company, served as director of this company | Sales | 191 | 0.00% | 2,000 | No | Payment on delivery | ||||
| Zhejiang Haishi Huayue Digital Technology Co., Ltd. | A joint venture company held by the company; The Company’s senior management is appointed as this company’s chairman | Sales | 369 | 0.01% | 1,000 | No | Payment on delivery | ||||
| Sanmenxia Xiaoyun Vision Technology Co., Ltd. | An associated company held by the company | Sales | 375 | 0.01% | 1,500 | No | Payment on delivery | ||||
| Shenzhen Wanyu Security Service | Senior executives of the Company serve as | Sales | 20 | 0.00% | 500 | No | Payment on delivery |
| 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 |
| Technology Co., Ltd. and its subsidiaries | directors of this company | ||||||||||
| Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries | Wu Weiqi, director of the Company, served as director of this company | Sales | 15 | 0.00% | 500 | No | Payment on delivery | ||||
| Hangzhou Confirmware Technology Co., Ltd. | The former Company executive Jia Yonghua served as a director of this company. Jia Yonghua resigned in October 2019. Within 12 months after his departure, Hangzhou Confirmware was still identified as the Company's related party. | Sales | 59 | 0.00% | 500 | No | Payment on delivery | ||||
| Qinghai Qingtang Big Data Co., Ltd. | An associated company held by the company | Sales | 149 | 0.00% | 1,000 | No | Payment on delivery | ||||
| Zhiguang Hailian Big Data Technology Co., Ltd. and its subsidiaries | An associated company held by the company | Sales | 1,437 | 0.02% | 8,000 | No | Payment on delivery | July 25th 2020 | Announcement on increasing the projections on 2020 related-party |
| 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 |
| Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. | An associated company held by the company | Sales | 3,820 | 0.06% | 8,000 | No | Payment on delivery | transactions arising from routine operations (No：2020-045） | |||
| Xuzhou Kangbo Urban Operation Management Service Co., Ltd. | A joint ventures held by the company | Sales | 315 | 0.00% | 1,000 | No | Payment on delivery | - | - | ||
| Guangxi Haishi Urban Operation Management Co., Ltd. and its subsidiaries | A joint ventures held by the company | Sales | 177 | 0.00% | 200 | No | Payment on delivery | - | - | ||
| Zhejiang City Digital Technology Co., Ltd. | A joint ventures held by the company | Sales | 1,376 | 0.02% | 1,500 | No | Payment on delivery | - | - | ||
| Shenzhen Hikvision City Service Operation Co., Ltd. and its subsidiaries | A joint ventures held by the company | Sales | 5 | 0.00% | 10 | No | Payment on delivery | - | - | ||
| Yunnan Yinghai Parking Service Co., Ltd. | A joint ventures held by the company | Sales | 1,826 | 0.03% | 2,000 | No | Payment on delivery | - | - | ||
| Total | 163,679 | 275,010 | - | - | - | - | |||||
| Details on significant sales return | None | ||||||||||
| 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 |
| The amount of related-party purchases incurred with Zhiguang Hailian Big Data Technology Co., Ltd. and its subsidiaries, Zhejiang Haishi Huayue Digital Technology Co., Ltd., Shenzhen Hikvision City Service Operation Co., Ltd. and its subsidiaries; and the amount of related-party sales incurred with Xuzhou Kangbo Urban Operation Management Service Co., Ltd., Guangxi Haishi City Operation Management Co., Ltd. and its subsidiaries, Zhejiang City Digital Technology Co., Ltd., Shenzhen Hikvision City Service Operation Co., Ltd. and its subsidiaries, Yunnan Yinghai Parking Service Co., Ltd. have been approved by the chairman of the board in accordance with the Company's Related-Party Transaction Management System. | |
| Reasons on significant difference between trading price and market referencing price (if applicable) | Not applicable |
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 October 18
th 2019, the 12
th meeting of the 4
thBoard of Directors passed the Proposal on Investment andEstablishment of Industrial Investment Fund Partnership and the Related Transactions and authorized the Companyto co-invest in and establish the Hangzhou Haikang Intelligent Industrial Investment Fund Partnership (L.P.)(“Hikvision Intelligent Fund”). On December 9
th
2019, the 13
th meeting of the 4
thBoard of Directors passed theProposal on Adjusting Some of the Fund Providers of Hangzhou Haikang Intelligent Industrial Investment FundPartnership (L.P.). The Company was authorized to adjust some of the fund providers in the Hikvision IntelligentFund. During the reporting period, Hikvision Intelligent Fund has completed the registration of private equity fundsand raised a total of RMB 1.00 billion.
On April 23
rd
2020, 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 at
thmeeting of the fourth session of the Board, agreeing that the Company enters into a financial leasing contractwith China Electronics Technology Leasing Co. Ltd. to commence financial leasing related-party transactions. Theaforesaid related-party transactions mainly included the design of financing solutions, financial leasing and otherconsulting services relating to procurement, taxation, finance and asset management in connection with financialleasing, with the total amount of financing not exceeding RMB 500 million (excluding tax). On May 15
th
2020, theCompany 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.Disclosure website for provisional reports on significant related-party transactions:
| Title of provisional repo/rts | Disclosure date | Disclosure website |
| Announcement on the Investment and Establishment of Industrial Investment Fund Partnerships and Related-party Transactions "( No. 2019-052) | October 19th 2019 | www.cninfo.com.cn |
| Announcement on Adjusting Some Capital Contributors of Hangzhou Haikang Smart Industrial Investment Fund Partnership (Limited Partnership and Related-party Transactions (No. 2019-060) | December 10th 2019 | www.cninfo.com.cn |
| Announcement on Completion of Registration of Industrial Investment Fund that the Company Participated in the Establishment (No. 2020-003) | February 12th 2020 | www.cninfo.com.cn |
| 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 |
| Announcement on the Completion of Fundraising of the Industrial Investment Fund that the Company Participated in the Establishment (No. 2020-058) | November 4th 2020 | www.cninfo.com.cn |
(2) Contracting
□ Applicable √ Inapplicable
No such case in the reporting period.
(3) Leasing
√ Applicable □Inapplicable
On December 3
rd2018, the Proposal on Carrying out Financial Leasing Related Party Transactions betweenthe Holding Innovative Business Subsidiary and China Electronics Technology Leasing Co. Ltd. was approved atthe 7th meeting of the 4
thBoard of Directors of the Company. In 2019, the Company's holding subsidiary HangzhouHikMicro Sensing Technology Ltd. and China Electronics Technology Leasing Co. Ltd. signed the FinancialLeasing Contract, where HIKMICRO used some of its own equipment to start leaseback business with ChinaElectronics Technology Leasing Co. Ltd.; the financing amount was RMB 70 million, term of lease 48 months andannual lease rate 3.80%. See the details in Financial Statement Note (V) 33- Long-term payables.
Projects that brought the company's profits and losses to more than 10% of the company's total profit during thereporting period
□Applicable√ Inapplicable
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 | 280,660.64 | Joint guarantee | 2019.01.18- 2021.01.18 | No | Yes |
| Hangzhou Hikvision Electronics Co., Ltd. | April 25th 2020 | 287,500 | May 1st 2020 | 19,181.55 | Joint guarantee | 2020.05.01- 2021.04.30 | No | Yes |
| Hikvision International Co., Ltd. | April 25th 2020 | 462,500 | December 20th 2017 | 6,728.99 | Joint guarantee | 2017.12.20- 2020.12.20 | No | Yes |
| Chongqing Hikvision Technology Co., Ltd. | April 25th 2020 | 155,000 | July 5th 2019 | 41,443.40 | Joint guarantee | 2019.07.05- 2020.08.08 | No | Yes |
| Hangzhou Hikvision System Technology Co., Ltd. | April 25th 2020 | 190,000 | May 1st 2020 | 8,808.59 | 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 | 28,063.86 | 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 | 18,280.00 | Joint guarantee | 2019.03.26- 2035.03.26 | No | Yes |
| Pi Shan HaiShi Yong An Electronic | April 25th 2020 | 30,000 | March 26th 2019 | 22,378.00 | Joint guarantee | 2019.03.26- | No | Yes |
| 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 |
| Technology Co., Ltd. | 2040.06.26 | |||||||
| Luo Pu HaiShi Ding Xin Electronic Technology Co., Ltd. | April 25th 2020 | 30,000 | March 26th 2019 | 22,800.00 | 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 | 9,560.00 | Joint guarantee | 2019.03.26- 2034.03.26 | No | Yes |
| Hikvision Singapore Pte. Ltd | April 25th 2020 | 100,000 | September 15th 2020 | 6,433.00 | Joint guarantee | 2020.09.15-2023.12.31 | 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 | April 25th 2020 | 23,000 | Not happened during the reporting period | |||||
| 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 | |
| Technology Co., Ltd. | |||||||||
| 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) | 3,279,500.00 | Total actual guarantee amount for subsidiaries during the reporting period(B2) | 837,552.87 | ||||||
| Total approved guarantee cap for subsidiaries at the end of the reporting period(B3) | 3,279,500.00 | Total actual guarantee balance for subsidiaries at the end of the reporting period(B4) | 464,338.03 | ||||||
| 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 amount provided by the Company (total of the above-mentioned 3 kinds of guarantees) [During the reporting period, the Company did not have any external guarantees or guarantees from subsidiaries to subsidiaries, so there is only item B, no items A and C] | |||||||||
| Total guarantee cap approved during the reporting period（A1+B1+C1） | 3,279,500.00 | Total actual guarantee amount during the reporting period（A2+B2+C2） | 837,552.87 | ||||||
| Total approved guarantee cap at the end of reporting period（A3+B3+C3） | 3,279,500.00 | Total actual guarantee balance at the end of the reporting period（A4+B4+C4） | 464,338.03 | ||||||
| Portion of the total actual guarantee (A4+B4+C4) amount in net assets of the Company | 8.63% | ||||||||
| 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) | 420,354.89 | ||||||||
| 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) | 420,354.89 | ||||||||
(2) Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
No such case in the reporting period.
3. Entrust others to conduct cash asset management
(1) Entrusted financial management situation
□ Applicable √ Inapplicable
No entrusted finance during the reporting period
(2) Entrusted loan situation
□ Applicable √ Inapplicable
No entrusted loan during the reporting period
4. Significant contracts for daily operations
□ Applicable √ Inapplicable
Significant contract progress differs materially from the contract agreement and affects the contract amount by morethan 30%.
□ Applicable √ Inapplicable
5. Other significant contracts
□ Applicable √ Inapplicable
No such case in the reporting period.XVIII. Social responsibility
1. Fulfillment of social responsibilities
For details, please refer to the Company’s 2020 Annual Social Responsibility Report disclosed on CNINFO(www.cninfo.com.cn)
2. Fulfillment of the social responsibility of targeted poverty alleviationThe Company did not conduct any targeted poverty alleviation during the current reporting period and had nofuture arrangement for targeted poverty alleviation.
3. Environmental protection
Whether the Company or any of its subsidiarids should be categorized as a critical pollutant enterprisespublished by national environmental protection departmentNo.XIX. 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 administrativemeasures 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
th2020. 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
th
session 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 upon
the 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%, which was due and completed on December 1
st2020. For details, please refer to the Announcementon the Issuance Results of the 2020 First Tranche of Short-term Commercial Paper (SCP) (Announcement No.:
2020-037) issued by the Company on June 6
th2020, Announcement on the Completion of the Payment of the 2020First Tranche of Short-term Commercial Paper (SCP) (Announcement No. 2020-060) issued on December 2
nd2020,and the Note (V) 31- Other Current Liabilities in the financial statements herein.
XX. Significant events of the Company’s subsidiaries
□ Applicable √ Inapplicable
Section VI Changes in Shares and Information about Shareholders
I. 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% | -28,676,701 | -28,676,701 | 1,248,025,260 | 13.36% | |||
| 1)State holdings | |||||||||
| 2)Shares held by State-owned corporate | |||||||||
| 3) Other domestic shares | 335,144,656 | 3.59% | -28,656,361 | -28,656,361 | 306,488,295 | 3.28% | |||
| Including: held by domestic corporates | |||||||||
| held by domestic natural person | 335,144,656 | 3.59% | -28,656,361 | -28,656,361 | 306,488,295 | 3.28% | |||
| 4) Foreign shares | 941,557,305 | 10.07% | -20,340 | -20,340 | 941,536,965 | 10.08% | |||
| Including:held by overseas corporates | |||||||||
| held by overseas natural person | 941,557,305 | 10.07% | -20,340 | -20,340 | 941,536,965 | 10.08% | |||
| 2. Shares without restriction | 8,068,308,735 | 86.34% | 27,083,195 | 27,083,195 | 8,095,391,930 | 86.64% | |||
| 1) RMB ordinary shares | 8,068,308,735 | 86.34% | 27,083,195 | 27,083,195 | 8,095,391,930 | 86.64% | |||
| 2) Domestically listed foreign shares | |||||||||
| 3) Foreign shares listed overseas | |||||||||
| 4) Others | |||||||||
| 3. Total | 9,345,010,696 | 100.00% | -1,593,506 | -1,593,506 | 9,343,417,190 | 100.00% |
Approval for changes in share capital
√Applicable □Inapplicable
On December 24
th
2019, Resolution for the Second Repurchase and Cancelation of the Restricted Shares that Already Granted for 2016 Restricted ShareIncentive Schemes was approved by the 14
thmeeting of the fourth Board. Authorized by the second extraordinary general meeting for 2016, the board agreed torepurchase and cancel a total of 1,593,506 restricted shares held by a portion of grantees not fulfilling the stock incentive conditions. On May 15
th2020, Resolutionfor the Second Repurchase and Cancelation of the Restricted Shares that Already Granted for 2016 Restricted Share Incentive Schemes was reviewed and approvedby the 2019 annual general meeting.
Transfer for changes in share capital
√Applicable □Inapplicable
On December 16
th
2020, repurchase and cancelation process of the restricted shares for 2016 Restricted Share Incentive Scheme was complete. The Company’stotal share capital decreased by 1,593,506 shares from 9,345,010,696 shares to 9,343,417,190 shares.
Information about the implementation of share repurchase
□Applicable √Inapplicable
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 |
| 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 |
| Grantees of restricted share incentive plan (consolidated) | 166,599,970 | 0 | 21,836,266 | 143,170,198 | Equity Incentive Restricted Shares | January 20th 2020 |
| Jiang Haiqing | 11,317,082 | 36,900 | 2,847,721 | 8,506,261 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | April 24th 2020 |
| Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| 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 | According to the relevant provisions of shares management for senior executives |
| Jia Yonghua | 5,635,544 | 32,850 | 1,425,311 | 4,243,083 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | April 24th 2020 |
| Li Pan | 5,634,368 | 47,850 | 1,425,017 | 4,257,201 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | April 24th 2020 |
| Huang Fanghong | 219,375 | 0 | 0 | 191,875 | 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 |
| 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 | |
| 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 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 |
| Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
| 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 | |
| Wang Qiuchao | 26,250 | 0 | 0 | 26,250 | Restricted shares for senior executives | |
| Qu Liyang | 11,812 | 0 | 0 | 11,812 | Restricted shares for senior executives | |
| Pu Shiliang | 130,785 | 19,820 | 0 | 150,605 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Jin Duo | 16,425 | 32,850 | 0 | 49,275 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Cai Changyang | 16,425 | 32,850 | 0 | 49,275 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Bi Huijuan | 22,500 | 14,250 | 0 | 36,750 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Jin Yan | 26,100 | 24,700 | 0 | 50,800 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
| Total | 1,276,701,961 | 478,620 | 27,534,315 | 1,248,025,260 | -- | -- |
2. The difference of 1,593,506 shares between ending balance of restricted shares of total incentive restricted shares (consolidated) for grantees and the calculatedbalance (opening balance + increased restricted shares - unlocked shares) was due to repurchasing and cancelling of 1,593,506 shares on December 16
th2020.
3. The three executives Jiang Haiqing, Jia Yonghua and Li Pan have left office on October 25
th
2019. The original term of office expires on March 20
th2021, and theshares held by them are kept restricted in in accordance with the relevant regulations.
4. The difference of 27,500 shares between Ms. Huang Fanghong's closing balance of restricted shares and the calculated balance (opening balance + increased restrictedshares - unlocked shares) was due to the 110,000 restricted shares received on January 18
th2019 and the corresponding increase in the transferable quota of 27,500shares during the current reporting period.
II. Issuance and listing of securities
1. Securities (exclude preferred share) issued during the reporting period
□Applicable √Inapplicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and liabilities
√ Applicable □ Inapplicable
During the reporting period, the Company completed the second repurchasing and cancelling shares for 2016 Restricted Share Incentive Scheme, the total capitalshares were decreased by 1,593,506 shares from 9,345,010,696 shares to 9,343,417,190 shares. The structure of shareholder structure, assets and liabilities of theCompany did not change significantly after completing the above mentioned items.
3. Existent shares held by internal staff of the Company
□ Applicable √ Inapplicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: Share
| Total number of common shareholders at the end of the reporting period | 199,030 | Total number of preferred shareholders (if any) whose voting rights have been recovered at the end of the reporting period | 234,089 | |||||
| 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 | |
| Share Status | Amount | |||||||
| China Electronics Technology HIK Group Co., Ltd. | State-owned corporation | 38.88% | 3,632,897,256 | 0 | 0 | 3,632,897,256 | Pledged | 50,000,000 |
| Gong Hongjia | Overseas individual | 10.88% | 1,016,614,814 | -238,441,886 | 941,292,525 | 75,322,289 | Pledged | 375,950,000 |
| Xinjiang Weixun Investment Management Limited Partnership | Domestic non-state- owned corporation | 4.82% | 450,795,176 | 0 | 0 | 450,795,176 | Pledged | 90,948,998 |
| Hong Kong Securities Clearing Company Ltd.(HKSCC) | Overseas corporation | 3.60% | 336,429,990 | -252,164,200 | 0 | 336,429,990 | - | - |
| Shanghai Gaoyi Asset Management Partnership (Limited Partnership) - Gaoyi Adjacent Mountain 1 Yuanwang Fund | Other | 2.68% | 250,000,000 | 250,000,000 | 0 | 250,000,000 | - | - |
| Xinjiang Pukang Investment Limited Partnership | Domestic non-state-owned corporation | 1.95% | 182,510,174 | 0 | 0 | 182,510,174 | - | - |
| Hu Yangzhong | Domestic Individual | 1.95% | 182,186,477 | 0 | 136,639,858 | 45,546,619 | Pledged | 8,150,000 | ||
| The 52nd Research Institute at China Electronics Technology Group Corporation | State-owned corporation | 1.93% | 180,775,044 | 0 | 0 | 180,775,044 | - | - | ||
| CITIC Securities Company Limited | Domestic non-state- owned corporation | 1.14% | 106,692,148 | 10,094,085 | 0 | 106,692,148 | - | - | ||
| Bank of China Co., Ltd. - Efunds Blue Chip Select Hybrid Securities Investment Fund | Other | 0.75% | 70,000,025 | 70,000,025 | 0 | 70,000,025 | - | - | ||
| 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 shareholders holding shares that are not subject to trading restriction(s) | ||||||||||
| Name of shareholder | Number of 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 | |||||||
| Xinjiang Weixun Investment Management Limited Partnership | 450,795,176 | RMB ordinary shares | 450,795,176 | |||||||
| Hong Kong Securities Clearing Company Ltd.(HKSCC) | 336,429,990 | RMB ordinary shares | 336,429,990 | |||||||
| Shanghai Gaoyi Asset Management Partnership (Limited Partnership) - Gaoyi Adjacent Mountain 1 Yuanwang Fund | 250,000,000 | RMB ordinary shares | 250,000,000 |
| Xinjiang Pukang Investment Limited Partnership | 182,510,174 | RMB ordinary shares | 182,510,174 |
| The 52nd Research Institute at China Electronics Technology Group Co. Ltd. | 180,775,044 | RMB ordinary shares | 180,775,044 |
| CITIC Securities Company Limited | 106,692,148 | RMB ordinary shares | 106,692,148 |
| Gong Hongjia | 75,322,289 | RMB ordinary shares | 75,322,289 |
| Bank of China Co., Ltd. - Efunds Blue Chip Select Hybrid Securities Investment Fund | 70,000,025 | RMB ordinary shares | 70,000,025 |
| Central Huijin Investment Co., Ltd. | 65,818,800 | RMB ordinary shares | 65,818,800 |
| Explanation on associated relationship and concerted actions among top ten shareholders holding outstanding shares without trading restrictions, and among top ten shareholders and top ten shareholders holding outstanding shares 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. | ||
| Name of controlling shareholder | Legal Representative /People in charge | Date of establishment | Organization code | Business scope |
| China Electronics Technology HIK Group Co., Ltd. | Chen Zongnian | November 29th, 2002 | 9133000014306073XD | Industrial investment; R&D of environmental protection products, network products, intelligent products and electronic products; technology transfer, technical services, manufacturing and sales; business consulting services, rental services of self-owned real estate; import and export businesses. |
| Shares held by the controlling shareholder in other listed companies through controlling or holding during the reporting period | Indirect control of domestic listed company Phoenix Optical Co. Ltd., | |||
| Name of the actual controller | Legal Representative /People in charge | Date of establishment | Organization code | Business scope |
| China Electronics Technology Group Ltd. | Chen Zhaoxiong | February 25th 2002 | 91110000710929498G | The Company is responsible for the development and manufacturing of military electronic equipment and systems integration, electronic equipment for weapon platform, military software and electronic basic products; and the construction of national defense electronic information infrastructure and safeguard conditions; construction of national major electronic information system; the research, development, production and sales of civil electronic information software, materials, components, equipment and system integration and related common technology; self-operated and agent import and export business of various commodities and technologies (except for goods and technologies that are restricted or restricted by the state-limited company); operating feed processing and "three comes one supplement" business; operating counter trade and entrepot trade; Industrial investment; asset management; engaged in e-commerce information services; organization of enterprises in the industry to go abroad, participate in exhibitions. |
| Name of the actual controller | Legal Representative /People in charge | Date of establishment | Organization code | Business scope |
| Shares held by the actual controlling shareholder in other listed companies through controlling or holding during the reporting period | China Electronics Technology Group Ltd is the actual controller of nine domestic listed companies including An’hui Sun Create Electronic Co., Ltd, Shanghai East China Computer Co., Ltd, Chengdu Westone Information Industry Co., Ltd., GCI Science & Technology Co., Ltd., Tai’ji Computer Corporation Limited, GLARUN Technology Co., Ltd. , Phoenix Optics Co., Ltd., Chengdu Tianao Electronic Co., Ltd. and CETC Energy Co., Ltd., and etc. | |||
Section VII Information of Preferred Shares
□ Applicable √ Inapplicable
There is no preferred share existed for the Company during the current reporting period.
Section VIII Information about Convertible Corporate Bonds
□ Applicable √ Inapplicable
There is no convertible corporate bond existed for the Company during the current reporting period.
Section IX Information about Directors, Supervisors, Senior Management and EmployeesI. Shareholding changes of directors, supervisors, senior management personnel
| Name | Title | Tenure status | Gender | Age | Commencement of term of office | Termination of term of office | 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) |
| Chen Zongnian | Chairman | Incumbent | Male | 56 | June 19th 2008 | March 4th 2024 | 0 | 0 | 0 | 0 |
| Gong Hongjia | Vice Chairman | Incumbent | Male | 56 | June 19th 2008 | March 5th 2021 | 1,255,056,700 | 0 | 238,441,886 | 1,016,614,814 |
| Qu Liyang | Director | Incumbent | Male | 57 | March 7th 2018 | March 4th 2024 | 15,750 | 0 | 0 | 15,750 |
| Hu Yangzhong | Director, General Manager (CEO) | Incumbent | Male | 56 | December 28th 2001 | March 4th 2024 | 182,186,477 | 0 | 0 | 182,186,477 |
| Wu Weiqi | Director, Standing Deputy General Manager | Incumbent | Male | 57 | March 1st 2003 | March 4th 2024 | 11,371,389 | 0 | 0 | 11,371,389 |
| Cheng Tianzong | Independent Director | Incumbent | Male | 69 | March 6th 2015 | March 5th 2021 | 0 | 0 | 0 | 0 |
| Lu Jianzhong | Independent Director | Incumbent | Male | 67 | March 6th 2015 | March 5th 2021 | 0 | 0 | 0 | 0 |
| Name | Title | Tenure status | Gender | Age | Commencement of term of office | Termination of term of office | 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) |
| Wang Zhidong | Independent Director | Incumbent | Male | 54 | March 6th 2015 | March 5th 2021 | 0 | 0 | 0 | 0 |
| Hong Tianfeng | Independent Director | Incumbent | Male | 55 | December 22nd 2016 | March 5th 2021 | 0 | 0 | 0 | 0 |
| Cheng Huifang | Supervisor Chairman | Incumbent | Female | 68 | March 6th 2015 | March 5th 2021 | 0 | 0 | 0 | 0 |
| Wang Qiuchao | Supervisor | Incumbent | Male | 70 | March 6th 2015 | March 5th 2021 | 35,000 | 0 | 0 | 35,000 |
| Xu Lirong | Supervisor; person in charge of internal audit | Incumbent | Male | 58 | March 21st 2018 | March 11th 2024 | 303,000 | 0 | 0 | 303,000 |
| He Hongli | Senior Deputy General Manager | Incumbent | Female | 48 | December 18th 2005 | March 11th 2024 | 331,500 | 0 | 0 | 331,500 |
| Fu Baijun | Senior Deputy General Manager | Incumbent | Male | 49 | January 20th 2009 | March 12th 2021 | 495,000 | 0 | 0 | 495,000 |
| Cai Changyang | Senior Deputy General Manager | Incumbent | Male | 50 | April 8th 2016 | March 11th 2024 | 109,500 | 0 | 0 | 109,500 |
| Xu Ximing | Senior Deputy General Manager | Incumbent | Male | 48 | October 11th 2016 | March 11th 2024 | 197,000 | 0 | 0 | 197,000 |
| Bi Huijuan | Senior Deputy General Manager | Incumbent | Female | 50 | October 11th 2016 | March 11th 2024 | 273,000 | 0 | 0 | 273,000 |
| Name | Title | Tenure status | Gender | Age | Commencement of term of office | Termination of term of office | 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) |
| Jiang Yufeng | Senior Deputy General Manager | Incumbent | Male | 50 | December 18th 2005 | March 12th 2021 | 325,500 | 0 | 0 | 325,500 |
| Pu Shiliang | Senior Deputy General Manager | Incumbent | Male | 44 | March 21st 2018 | March 11th 2024 | 393,900 | 0 | 98,000 | 295,900 |
| Jin Duo | Senior Deputy General Manager | Incumbent | Male | 56 | March 10th 2015 | March 11th 2024 | 109,500 | 0 | 0 | 109,500 |
| Jin Yan | Senior Deputy General Manager, Person in charge of finance | Incumbent | Female | 42 | July 22nd 2015 | March 11th 2024 | 284,000 | 0 | 0 | 284,000 |
| Huang Fanghong | Senior Deputy General Manager, Board Secretary | Incumbent | Female | 39 | April 8th 2016 | March 11th 2024 | 402,500 | 0 | 0 | 402,500 |
| Chen Junke | Senior Deputy General Manager | Incumbent | Male | 50 | March 21st 2018 | March 11th 2024 | 0 | 0 | 0 | 0 |
| Total | -- | -- | 1,451,889,716 | 0 | 238,539,886 | 1,213,349,830 |
independent directors of the Company at termination of term of office, Cheng huifang resigned as the board supervisor of the Company at termination of term ofoffice. Wang Qiuchao was elected as a director of the Company's fifth board of directors, Hong Tianfeng and Lu Jianzhong were elected as supervisors of theCompany's fifth supervisory board.
(3) On March 12
th2021, Gong Hongjia, Fu Baijun and Jiang Yufeng resigned from the Company’s senior management positions. Xu Lirong resigned from theCompany’s person in charge of internal audit.
II. Changes of directors, supervisors and senior management personnel
□Applicable √Inapplicable
III. Positions and Incumbency
1. Directors
Mr Chen Zongnian (陈宗年): Born in 1965, Chen holds a PhD of business administration and has served as deputy general manager Shenzhen Gao Ke Run Electronics,director and general manager of Zhejiang Haikang Information Technology Co., Ltd. and Zhejiang Haikang Group Co., Ltd. He also served as an assistant of the head,deputy head, and the head of 52
nd Research Institute at China Electronics Technology Group Corporation (52
ndResearch Institute). Chen currently serves as thechairman of China Electronics Technology HIK Group Co., Ltd. (CETHIK), the chairman of Phoenix Optics Co., Ltd. and the chairman of the Company.
Mr. Gong Hongjia (龚虹嘉): Born in 1965, Hong Kong permanent resident. Gong holds a bachelor degree of engineering, technology entrepreneur, and angel investor.He has established and invested over 10 enterprises including TECSUN Co. Ltd., AsiaInfo Dekang, Funian Technology, and Woqi Data, and etc. He took part in theestablishment of the Company in November 2001 and served as a director (left after the expiry of his tenure on March 5
th
2021) and vice chairman (left after theexpiry of his tenure on March 12
th2021) of the Company. Gong currently serves as a vice chairman of the Company.
Mr. Qu Liyang (屈力扬): Born in 1964, bachelor degree of engineering, researcher-level senior engineer. He served as the director, deputy director, party secretaryand deputy director of the 52
ndResearch Institute, and chairman of the board of supervisors of CETHIK. He is currently a member of the Strategy Committee of ChinaElectronic Technology Group Co., Ltd., director of the Science and Technology Innovation Committee of CETHIK, and a director of the Company.
Mr. Hu Yangzhong (胡扬忠): Born in 1965, master degree of engineering, senior research engineer. He served as an engineer of the 52
ndResearch Institute from June1989 to December 2001. He has been appointed as a director of the Company and general manager of the company since December 2001. Hu currently serves as adirector and the general manager of the Company.
Mr. Wu Weiqi (邬伟琪): Born in 1964, bachelor degree of engineering, senior engineer. Wu held various positions at the 52
ndResearch Institute, including technician,engineer associate, engineer and senior engineer, from July 1986 to December 2001. Since November 2001, He has been appointed as a deputy general manager, astanding deputy general manager, and a director of Hikvision. Wu currently serves as a director and standing deputy general manager of the Company.
Mr. Cheng Tianzong (程天纵): Born in 1952, Taiwanese, master degree in business administration. Cheng served as president and a director of Hewlett-PackardDevelopment Company, L.P. (China) from 1992 to 1997; served as the president of the Asia Pacific of Texas Instruments Incorporated (德州仪器) from 1997 to 2007;served as a vice-president of Hon Hai Corporation (鸿海集团) from July 2007 to 2012, and the chief executive officer of FIH Mobile Limited, a subsidiary of Hon HaiCorporation (鸿海集团), a company listed on the Hong Kong Stock Exchange in 2011. He retired in June 2012 and devoted himself to China Maker Campaign (中国创客运动) to help and guide those start-up companies in September 2013. Cheng served as an independent director of the Company (left after the expiry of his tenureon March 5
th2021)
Mr. Lu Jianzhong (陆建忠): Born in 1954, holds bachelor degree in economics and CPA certificate. Lu served as a lecturer and an associate professor of finance andaccounting department at Shanghai Maritime University (上海海事大学) from September 1986 to September 1997; he was a CPA and a partner of the auditingdepartment of PricewaterhouseCoopers, from October 1997 to June 2012; he was a chartered accountant of Shanghai De’an Certified Public Accountants LLP (上海德安会计师事务所) from July 2012 to July 2013; he was a chartered accountant of the Shanghai branch of PKF Daxin Certified Public Accountants LLP (大信会计师事务所上海分所), from August 2013 to July 2014；He was a partner and a chartered accountant and a partner of Zhongxinghua Certificated Public AccountantsLLP (中兴华会计师事务所) from August 2014 to January 2016. Lu has served as an independent director of Hikvision. Lu currently serves as a chartered accountantof Dahua Certificated Public Accountants LLP (大华会计师事务所), MPAcc/Maud Enterprise Mentor of Antai College of Economics & Management,Shanghai JiaoTong University (上海交通大学安泰管理学院), and a supervisor of the Company. (On March 5
th
2021, Mr. Lu was elected as a supervisor of the Company at theCompany's 2021 first interim general meeting of shareholders).
Mr. Wang Zhidong (王志东): Born in 1967, Hong Kong permanent resident, bachelor degree of science. He served as a deputy general manager and chief engineerof Beijing Haidian District Suntendy Electronic Technology Research Institute (北京新天地电子信息技术研究所) from April 1992 to August 1993; He served as ageneral manager of Beijing Richwin Information Technology Co., Ltd. (四通利方信息技术有限公司), and served as chief executive officer and a director of SINACorporation (新浪网) from December 1993 to June 2001; He served as chairman and chief executive officer of Beijing Dianji Technology, Ltd. (北京点击科技有限公司) from December 2001 to July 2013. Mr. Wang has served as an independent director of the Company (left after the expiry of his tenure on March 5
th2021). Hecurrently serves as chairman and chief executive officer of Beijing Yilianyisheng Techonology Co. Ltd.(北京易连忆生科技有限公司).
Mr. Hong Tianfeng (洪天峰): Born in 1966, master degree in engineering. Hong was an engineer in Nanjing University of Posts and Telecommunication (南京邮电大学) from July 1990 to June 1993; He served as an executive deputy general manager, chief executive of Operation and Delivery, chairman of investment decision
committee, and vice chairman of Huawei Technologies Co., Ltd. (华为技术有限公司) from July 1993 to September 2011. Hong has served as an independent directorof the Company. Hong currently serves as a managing partner of Suzhou Fangguang Venture Investment Management (Limited Partnership)(苏州方广创业投资管理合伙企业（有限合伙）), an executive director of Shanghai Fangguang Venture Investment Management Co., Ltd. (上海方广创业投资管理有限公司), and supervisorof the Company. (On March 5
th2021, Mr. Hong was elected as a supervisor of the Company at the Company's 2021 first interim general meeting of shareholders).
Mr. Wu Xiaobo (吴晓波): born in 1960, a PhD of business administration, Professor, Ph.D. Tutor. In February 1982, he joined the Energy Saving Office of theMinistry of Forestry, Zhejiang Energy Conservation Technology Service Center, and joined the School of Management of Zhejiang University in July 1992,successively served as an executive vice dean and dean. He is currently the Director of the Department of Social Sciences of Zhejiang University, the Director of theNational Philosophy and Social Science Innovation Base - Research on Innovation Management and Sustainable Competitiveness of Zhejiang University, the ChineseDirector of the Joint Research Center for Global Manufacturing and Innovation Management of Zhejiang University-Cambridge University, the Co-Director of theRuihua Institute of Innovation Management, and an independent director of the Company (elected at the Company’s first extraordinary general meeting for 2021 heldon March 5
th2021).
Mr. Hu Ruimin (胡瑞敏): born in 1964, a PhD in engineering, Second-level Professor, doctoral tutor, Luojia distinguished scholar, recipient of SpecialGovernment Grants from the State Council, Senior Member of IEEE (Institute of Electrical and Electronics Engineers), fellow of China Institute of Communications,distinguished member of China Computer Federation. He has successively served as Vice Chairman of the Academic Committee of Wuhan University, Director of theNational Multimedia Software Engineering Technology Research Center, Director of Hubei Provincial Key Laboratory of Multimedia Network CommunicationEngineering, First Executive Dean of National Cyber Security College and Dean of School of Computer Science of Wuhan University. From January 2010 to January2016, he served as the first dean of Hikvision Research Institute. He is currently a professor of Wuhan University and an independent director of the Company (electedat the Company’s first extraordinary general meeting for 2021 held on March 5
th2021).
Mr. Li Shuhua (李树华)： born in 1971, a PhD in accounting, non-practicing member of the China Institute of Certified Public Accountants, National-levelcandidates for the New Century Hundreds and Thousands of Talents Project, National Leading Talents in Accounting, and National Leading Talents in Shenzhen. Hehas successively served as Deputy Director of the Audit Division of the Accounting Department of the China Securities Regulatory Commission (presiding), DeputyDirector of the General Office (presiding), Director of the Financial and Budget Management Department and Director of the General Office, a member of the ExecutiveCommittee and Chief Financial Officer, Chief Risk Officer and Chief Compliance Officer of China Galaxy Securities Co., Ltd. He concurrently served as a PE professorand master’s tutor at the National Accounting Institute (Xiamen), Peking University, Shanghai Institute of Advanced Finance, Shanghai Jiaotong University, andTsinghua University. He is currently the Managing Partner of Shenzhen Oriental Fortune Capital Investment Management Co., Ltd. (OFC), Chairman of ChangzhouNRB Corporation (常州光洋軸承股份有限公司), and an independent director of the Company (elected at the Company’s first extraordinary general meeting for 2021held on March 5
th2021).
Mr. Guan Qingyou (管清友): born in 1977, a holder of Ph.D. in economics, Young Economist. He has successively served as the former vice president ofMinsheng Securities and the president of the research institute; He is currently the President and Chief Economist of the Institute of Finance, Vice President of theChina Private Economic Research Association, Professor of the School of Economics of Hainan University, Chief Economist of Zhongguancun Private Equity &Venture Capital Association (ZVCA) and Guangdong Province Venture Capital Association, and an independent director of the Company (elected at the Company’sfirst extraordinary general meeting for 2021 held on March 5
th
2021).
2. Supervisors
Ms. Cheng Huifang (程惠芳): Born in 1953, PhD in international finance. She was a member of the 8
th and 9th
Zhejiang CPPCC (浙江省政协). Cheng has served asa supervisor of the Company (left after the expiry of her tenure on March 5
th2021). Cheng currenly serve as dean of the Global Development Research Institute ofZhejiang Businesses under Zhejiang University of Technology (浙江工业大学全球浙商发展研究院), professor (level II), president of Zhejiang Yangtze River Deltaof the Institute of Innovation Management (浙江长三角创新管理研究院), president of the Zhejiang Financial Engineering Society (浙江省金融工程学会).
Mr. Wang Qiuchao (王秋潮): Born in 1951, master degree in law. Wang served as director of Zhejiang Tiance Law Firm (浙江天册律师事务所), chairman of theZhejiang Lawyers Association (浙江省律师协会) , vice-president of the Zhejiang Law Society (浙江省法学会), and a supervisor of the Company.. Wang currentlyserves as honorary partner of Zhejiang Tiance Law Firm, arbitrator of the China International Economic and Trade Arbitration Commission (中国国际经济贸易仲裁委员会, “CIETAC”) , an arbitrator of Shanghai International Arbitration Center (上海国际仲裁中心) and Shenzhen International Economic and Trade ArbitrationCommission (深圳国际仲裁中心), and a director of the Company (On March 5
th
2021, Mr. Wang was elected as a director of the Company at the Company's 2021first interim general meeting of shareholders).
Mr. Xu Lirong (徐礼荣): Born in 1963, master degree of engineering, senior engineer. In January 2002, he joined Hikvision and served as manager of developmentdivision under the R&D center, secretary of the board of directors, the person in charge of internal audit, and a deputy general manager of the Company. He is currentlythe employee representative supervisor.
3. Senior management personnel
Mr. Hu Yangzhong (胡扬忠): Please refer to his profile in preceding part of the report.
Mr Wu Weiqi (邬伟琪): Please refer to his profile in preceding part of the report.
Ms. He Hongli (何虹丽): Born in 1973, master degree in business administration. She joined Hikvision in December 2001 and served as an assistant to the generalmanager and a deputy general manager. Ms. He currently serves as a senior deputy general manager of the Company.
Mr. Fu Baijun (傅柏军): Born in 1972, bachelor degree in economics, Chinese Certificated Public Accountant, professor-level senior accountant. He served as anaccountant of the accounting division of the 52
nd Research Institute and a deputy general manager of Zhejiang Haikang Information Co. Ltd. (浙江海康信息技术股份有限公司) from July 1996 to December 2008. He joined Hikvision in January 2009, and served as a deputy general manager and the person in charge of finance andaccounting department, a deputy general maanger, and a senior deputy general manager of the Company (left after the expiry of his tenure on March 12
th2021).
Mr. Cai Changyang (蔡昶阳): born in 1971, bachelor degree in engineering. He joined Hikvision in 2004, and held various positions of the Company, includinggeneral manager of Beijing branch, director for government and enterprise corporation department, director of investment department, director of strategy and marketingdepartment, and a deputy general manager of the Company. Mr. Cai currently serves as senior deputy general manager of the Company.
Mr. Xu Ximing (徐习明): born in 1973, bachelor degree in engineering. From July 1996 to September 2016, he held various positions in IBM, including engineer,department manager, director，partner of consulting service, senior partner of consulting service, and a vice president. He joined Hikvision in September 2016, andserved as a deputy general manager of the Company. Mr. Xu currently serves as a senior deputy general manager of the Company.
Ms. Bi Huijuan (毕会娟): born in 1971, PhD in engineering, senior research engineer. From April 1999 to August 2016, she held various positions in the 15
thResearch
Institute at China Electronics Technology Group Corporation (CETC), including engineer, senior engineer, senior research engineer, head of R&D department, vicechief engineer, and deputy director. She joined Hikvision in August 2016, and served as a deputy general manager of the Company. Ms. Bi currently serves as a seniordeputy general manager of the Company.
Mr. Jiang Yufeng (蒋玉峰): born in 1971, bachelor degree of engineering, an engineer. He joined Hikvision in January 2005 and held various positions in theCompany, including general manager of Beijing branch, marketing director, assistant to general manager, deputy general manager and marketing director, a deputygeneral manager, and a senior deputy general manager of the Company (left after the expiry of his tenure on March 12
th
2021).
Mr. Pu Shiliang (浦世亮): born in 1977, doctor of engineering, a senior engineer. He joined Hikvision in April 2006 and held various positions in the Company,including R&D engineer, R&D manager, R&D director, dean of the R&D institute, and chief expert. He currently serves as a senior deputy general manager of theCompany.
Mr. Jin Duo (金铎): born in 1965, bachelor degree in engineering, a senior engineer. He served as a technician, assistant to engineers, an engineer and a senior engineerof the 52
ndResearch Institute from July 1986 to June 2004. He joined Hikvision in July 2004 and served as general manager of Hangzhou Branch, and a deputy generalmanager of the Company. Mr. Jin currently serves as a senior deputy general manager of the Company.
Ms. Jin Yan (金艳): born in 1979, master degree in management, an accountant. She joined Hikvision in 2004 and held various positions at the Company, includingfinancial manager, the general manager of the Financial Management Center, and a deputy general manager and the person in charge of finance and accounting. Ms.Jin currently serves as a senior deputy general manager and the person in charge of finance and accounting of the Company.
Ms. Huang Fanghong (黄方红): born in 1982, bachelor degree in law. She joined Hikvision in June 2009 and held various positions at the Company including legaldepartment manager, internal audit manager, internal control director, and a deputy general manager and the board secretary. Ms. Huang currently serves as a seniordeputy general manager, and board secretary of the Company.
Mr. Chen Junke (陈军科): Born in 1971, bachelor degree in engineering, senior engineer. Chen held various positions in the 52
nd
Research Institute from 1994 to2001, including assistant engineer, engineer and senior engineer. He joined the Company in 2001 and served as the technology director of the Digital Video Recorder(DVR) Division of the Technology Management Center, general manager of supply chain management center, employee representative supervisor. Chen currentlyserves as senior deputy general manager of the Company.
Mr. Xu Peng (徐鹏): born in 1976, bachelor of engineering, senior engineer. From 1998 to 2004, he successively served as an assistant engineer and engineer of No.52 institute, and in 2004, he joined Hikvision, where he served as camera research and development manager, research and development director, product director,general manager of front-end product business, and deputy general manager of the Company. He is currently the senior deputy general manager of the Company(appointed at the first meeting of the 5
th Board of Directors on March 12
th2021).
Mr. Guo Xudong (郭旭东): born in 1972, bachelor of engineering. In July 2002, he joined Hikvision, and successively served as general manager of Shenzhen Branch,marketing director of domestic marketing center and deputy general manager of domestic marketing center. He is currently the senior deputy general manager of theCompany (appointed at the first meeting of the 5
th
Board of Directors on March 12
th2021).
Position held in shareholders’ entities
√Applicable □ Inapplicable
| Name | Shareholder's entity | Position in shareholders’ entities | Commencement of the term | Termination of the term | Compensation and allowance from the shareholders' entity |
| Chen Zongnian | China Electronics Technology HIK Group Ltd. | Chairman, Secretary of party committee | November 2013 | Y | |
| Hu Yangzhong | China Electronics Technology HIK Group Ltd. | Director | December 2013 | N | |
| Xu Lirong | China Electronics Technology HIK Group Ltd. | Supervisor, Member of Commission for Discipline Inspection | December 2013 | N |
| Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
| Cheng Zongnian | Zhejiang Intelligent IoT Technology Magazine | Legal Representative | February 2004 | N | |
| Cheng Zongnian | CETC Finance Ltd. | Director | December 2012 | January 2021 | N |
| Cheng Zongnian | Phoenix Optics Co., Ltd. | Chaiman | Demcember 2019 | N | |
| Gong Hongjia | Furong Technology Ltd. | Director | October 1999 | N | |
| Gong Hongjia | Hangzhou FunVio Ltd. | Chairman | February 2004 | N | |
| Gong Hongjia | Funian Technology Ltd. | Chairman of the Board | October 2007 | N | |
| Gong Hongjia | Beijing Funian Technology Ltd. | Legal Representative | November 2011 | N | |
| Gong Hongjia | Shanghai Fullhan Microelectronics Co., Ltd. | Director | April 2013 | N | |
| Gong Hongjia | Shenzhen Innovation Valley Investment Management Ltd. | Director | July 2014 | N | |
| Gong Hongjia | Shanghai Pukun Information Technology Ltd. | Director | September 2014 | N | |
| Gong Hongjia | FuCe Holdings Ltd. | Director | October 2014 | N | |
| Gong Hongjia | Chuangjia Venture Capital Investment Ltd | Director | October 2014 | N | |
| Gong Hongjia | Shenzhen Jiadao Valley Investment Management Ltd. | Legal Representative | October 2014 | Y |
| Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
| Gong Hongjia | Shenzhen Jiadao Gongcheng Equity Investment Fund (Limited Partnership) | Executive Partner | November 2014 | N | |
| Gong Hongjia | JiuBaYi Health Technology Ltd. | Director | November 2014 | N | |
| Gong Hongjia | Beijing JiaBoWen Biotechnology Ltd. | Director | March 2015 | N | |
| Gong Hongjia | Wuhan YouXin Technology Co., Ltd. | Director | January 2016 | N | |
| Gong Hongjia | QingKe Management Consulting Group Ltd. | Director | February 2017 | N | |
| Gong Hongjia | Shenzhen JiadaoFangzhi Education Industry Investment Enterprise (Limited Partnership) | Executive Partner | June 2017 | N | |
| Gong Hongjia | Shenzhen Jiadao Successful Investment Enterprise (Limited Partnership) | Executive Partner | August 2017 | N | |
| Gong Hongjia | Shanghai AoYuan Medical Supplies Ltd. | Chairman | September 2017 | N | |
| Gong Hongjia | Sichuan JiaDao BoWen Ecological Technology Ltd. | Chairman | December 2017 | N | |
| Gong Hongjia | Beijing JiaDaoGu Management Consulting Ltd. | Supervisor | April 2018 | N | |
| Gong Hongjia | Sichuan Five-Plus-One Ecological Agriculture Technology Service Ltd. | Chairman | November 2018 | N | |
| Gong Hongjia | Sichuan JiaBoWen Biological Technology Ltd. | Chairman | November 2018 | N | |
| Gong Hongjia | Shenzhen Zhongke Science and Technology Achievements Transformation Equity | Director | December 2019 | N |
| Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
| Investment Fund Management Ltd. | |||||
| Gong Hongjia | ZhongYuan Concord Cell Genetic Engineering Co., Ltd. | Legal Representative Chairman | December 2018 | N | |
| Gong Hongjia | Shenzhen Guotai Data Technology Ltd. | Chairman | April 2019 | N | |
| Gong Hongjia | Tianjin Deyuan Investment Development Ltd. | Director | July 2019 | N | |
| Gong Hongjia | Yong Tai Hong Kan Holding Group Ltd. | Vice Chairman | October 2019 | N | |
| Wu Weiqi | Xinjiang Pukang Investment Management Limited Partnership | Executive Partner | May 2011 | N | |
| Wu Weiqi | Wuhu Sensor Tech Intelligent Technology Ltd. | Director | January 2017 | N | |
| Wu Weiqi | Maxio Technology (Hangzhou) Ltd. | Director | May 2017 | N | |
| Wang Zhidong | Beijing YiLianSheng Science and Technology Ltd. | Chaiman and CEO | October 2013 | Y | |
| Cheng Tianzong | Hechun Technology Co., Ltd. | Director | June 2014 | Y | |
| Cheng Tianzong | Zuozhen Co., Ltd. | Director | January 2015 | Y | |
| Cheng Tianzong | Wenhui Technology Co., Ltd. | Independent Director | June 2016 | Y | |
| Lu Jianzhong | Dahua Certificated Public Accountants LLP | Chartered Accountant | January 2016 | N | |
| Lu Jianzhong | ChangShu FengFan Electric Power Equipment Co., Ltd. | Independent Director | September 2015 | Y | |
| Lu Jianzhong | Ningbo Lehui International Construction Equipment Co., Ltd. | Independent Director | March 2016 | Y | |
| Lu Jianzhong | COSCO Maritime Transport Development | Independent Director | January 2018 | Y |
| Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
| Co., Ltd. | |||||
| Lu Jianzhong | Shanghai Xinnanyang Angli Education Technology Co., Ltd. | Independent Director | January 2019 | Y | |
| Hong Tianfeng | Shanghai Fangguang Investment Management Ltd. | Executive Director | February 2012 | Y | |
| Hong Tianfeng | Shanghai Fangguang Venture Investment Management Partnership Enterprise (Limited Partnership) | Managing Partner | February 2012 | N | |
| Hong Tianfeng | Shanghai Fangguang Venture Investment Partnership Enterprise (Limited Partnership) | Managing Partner | August 2012 | N | |
| Hong Tianfeng | Shanghai Fangguang Erqi Venture Investment Partnership Enterprise (Limited Partnership) | Managing Partner | September 2016 | N | |
| Hong Tianfeng | Suzhou Fangguang Venture Investment Management Partnership Enterprise (Limited Partnership) | Managing Partner | September 2012 | N | |
| Hong Tianfeng | Suzhou Fangguang Venture Investment Partnership Enterprise (Limited Partnership) | Managing Partner | September 2012 | N | |
| Hong Tianfeng | Suzhou Fangguang Venture Investment Phase 2 Partnership Enterprise (Limited Partnership) | Managing Partner | July 2016 | N | |
| Hong Tianfeng | Shenzhen Pengfenghui Venture Investment Ltd. | Executive Director & General Manager | June 2014 | N | |
| Hong Tianfeng | Shenzhen Fangguang Enterprise Management Consulting Ltd. | Executive Director & General Manager | May 2016 | N | |
| Hong Tianfeng | Sannuo Biology Sensor | Director | September 2013 | Y |
| Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
| Co., Ltd. | |||||
| Hong Tianfeng | Shenzhen YunZhiXun Network Technology Ltd. | Director | May 2014 | N | |
| Hong Tianfeng | Jiangsu JiTaiKe Electrics Co., Ltd. | Director | July 2015 | N | |
| Hong Tianfeng | Zhongwei Dahe Cloud Connection Network Technology Ltd. | Director | November 2016 | N | |
| Hong Tianfeng | Shenzhen DongFengMingTu Enterprise Management Ltd. | Supervisor | August 2016 | N | |
| Hong Tianfeng | CETC Huayun Information Technology Ltd. | Director | March 2017 | N | |
| Hong Tianfeng | Beijing ZhiZhangYi Sicence and Technology Ltd. | Director | December 2016 | N | |
| Hong Tianfeng | Guangzhou Smart Software Ltd. | Director | March 2018 | N | |
| Hong Tianfeng | Shanghai Daxian Intelligent Science and Technology Ltd. | Director | June 2018 | N | |
| Hong Tianfeng | Shenzhen Chip and Semi-conductor Technology Ltd. | Director | February 2018 | N | |
| Hong Tianfeng | Shenzhen YingFeiYuan Technology Ltd. | Director | October 2017 | N | |
| Hong Tianfeng | Shenzhen BiYi Micro-electronics Ltd. | Director | September 2019 | July 2020 | N |
| Cheng Huifang | Zhejiang FuRun Co., Ltd | Independent Director | April 2014 | May 2020 | Y |
| Cheng Huifang | Hangzhou Oxygenerator Group Co., Ltd. | Independent Director | January 2016 | December 2020 | Y |
| Cheng Huifang | Zhejiang HuaCe Media Co., Ltd. | Independent Director | February 2016 | Y | |
| Cheng Huifang | Zhejiang Commercial | External Supervisor | June 2016 | Y |
| Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
| Bank Co., Ltd. | |||||
| Cheng Huifang | Quzhou NanGaoFeng Chemical Co., Ltd. | Independent Director | March 2017 | Y | |
| Cheng Huifang | Zhejiang China Textile City Group Co., Ltd | Independent Director | November 2020 | Y | |
| Wang Qiuchao | Zhejiang T&C Law Firm | Partner | August 1993 | Y | |
| Wang Qiuchao | Zhejiang KaiShan Compressor Co., Ltd. | Independent Director | May 2015 | Y | |
| Wang Qiuchao | Botsy Technology Co., Ltd | Independent Director | May 2020 | Y | |
| Xu Ximing | Shenzhen Wangyu Security Service Science and Technology Co., Ltd. | Director | November 2019 | N | |
| Fu Baijun | Shenzhen Hikvision City Service and Operation Co., Ltd. | Director | Demceber 2019 | July 2020 | N |
| Fu Baijun | Shenzhen Hikvision Urban Service Operation Co., Ltd. | Chairman | July 2020 | N | |
| Fu Baijun | Daishan Hailai Yunzhi Technology Co., Ltd. | Legal representative and chairman of the board of directors | September 2019 | N | |
| Jin Duo | Zhejiang Haishi Huayue Digital Technology Co., Ltd | Legal representative and chairman of the board of directors | January 2020 | N | |
| Wu Xiaobo | Shanghai Yirui Management Consultants Co., Ltd | Director | April 2004 | N | |
| Wu Xiaobo | Hangzhou Co-Rui Enterprise Management Consulting Co., Ltd | Director | April 2011 | N | |
| Wu Xiaobo | Ruihua Innovation Management Research Institute (Hangzhou) Co., Ltd | Director | November 2019 | N | |
| Wu Xiaobo | Ningbo Industrial Internet Research Institute Co., Ltd | Independent director | May 2018 | Y |
| Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
| Wu Xiaobo | Eddy Co., Ltd | Independent director | August 2018 | Y | |
| Wu Xiaobo | Zhongliang Holdings Group Co., Ltd | Independent director | June 2019 | Y | |
| Wu Xiaobo | Yousse Technology Co., Ltd | Independent director | June 2020 | Y | |
| Li Shuhua | Xi'an Shaanxi Power Co., Ltd | Independent director | May 2018 | Y | |
| Li Shuhua | Luoyang Yuchuan Yuye Group Co., Ltd | Independent director | August 2018 | Y | |
| Li Shuhua | Bomenko Marine Engineering Co., Ltd | Independent director | December 2018 | Y | |
| Li Shuhua | Changzhou Guangyang Holdings Co., Ltd | Director and CEO | August 2019 | N | |
| Li Shuhua | Changzhou Guangyang Bearing Co., Ltd | Chairman | Ocotober 2019 | Y | |
| Li Shuhua | Weihai Shiyi Electronics Co., Ltd | Legal representative and chairman of the board of directors | December 2020 | N | |
| Guan Qingyou | Beijing Minjin Information Consulting Services Co., Ltd | Supervisor | September 2017 | N | |
| Guan Qingyou | Rushi Institute of Finance | Chairman | September 2017 | Y | |
| Guan Qingyou | Media Group Co., Ltd. | Independent director | August 2018 | Y | |
| Guan Qingyou | Beijing Xincai Zhibei Information Technology Co., Ltd | Supervisor | October 2018 | N | |
| Guan Qingyou | South China Futures Co., Ltd | Independent director | March 2019 | Y | |
| Guan Qingyou | Shanxi International Trust Co., Ltd | Independent director | July 2019 | Y | |
| Guan Qingyou | Beijing Film Spectrum Technology Co., Ltd | Independent director | March 2019 | Y | |
| Guan Qingyou | Shandong Province Road Bridge Group Co., Ltd | Independent director | January 2021 | Y |
| Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
| Description of the status of employment in other units | 1) Fu Baijun left at the end of his tenure on March 12th 2021; 2) Wu Xiaobo, Li Shuhua and Guan Qingyou were elected as independent directors of the Company at the Company's 2021 first interim general meeting of shareholders. | ||||
| Name | Title | Gender | Age | Tenure status | Total remuneration from the Company (RMB'0,000) | Remuneration from related parties (Y/N) |
| Chen Zongnian | Chairman | M | 56 | Incumbent | 0 | Y |
| Gong Hongjia | Vice Chairman | M | 56 | Incumbent | 0 | Y |
| Qu Liyang | Director | M | 57 | Incumbent | 0 | Y |
| Hu Yangzhong | Director, General Manager | M | 56 | Incumbent | 308.57 | N |
| Wu Weiqi | Director, Standing Deputy General Manager | M | 57 | Incumbent | 293.55 | N |
| Cheng Tianzong | Independent Director | M | 69 | Incumbent | 30.00 | N |
| Lu Jianzhong | Independent Director | M | 67 | Incumbent | 30.00 | N |
| Wang Zhidong | Independent Director | M | 54 | Incumbent | 30.00 | N |
| Hong Tianfeng | Independent Director | M | 55 | Incumbent | 30.00 | N |
| Cheng Huifang | Supervisor Chairman | F | 68 | Incumbent | 20.00 | N |
| Wang Qiuchao | External Supervisor | M | 70 | Incumbent | 20.00 | N |
| Name | Title | Gender | Age | Tenure status | Total remuneration from the Company (RMB'0,000) | Remuneration from related parties (Y/N) | |
| Xu Lirong | Employee Supervisor, Person in charge of internal audit | M | 58 | Incumbent | 158.56 | N | |
| He Hongli | Senior Deputy General Manager | F | 48 | Incumbent | 278.57 | N | |
| Fu Baijun | Senior Deputy General Manager | F | 49 | Incumbent | 240.57 | N | |
| Cai Changyang | Senior Deputy General Manager | M | 50 | Incumbent | 237.94 | N | |
| Xu Ximing | Senior Deputy General Manager | M | 48 | Incumbent | 415.65 | N | |
| Bi Huijuan | Senior Deputy General Manager | F | 50 | Incumbent | 397.62 | N | |
| Jiang Yufeng | Senior Deputy General Manager | M | 50 | Incumbent | 240.56 | N | |
| Pu Shiliang | Senior Deputy General Manager | M | 44 | Incumbent | 278.57 | N | |
| Jin duo | Senior Deputy General Manager | M | 56 | Incumbent | 268.57 | N | |
| Chen Junke | Senior Deputy General Manager | M | 50 | Incumbent | 238.55 | N | |
| Jin Yan | Senior Deputy General Manager, person in charge of finance and accounting | F | 42 | Incumbent | 248.57 | N | |
| Huang Fanghong | Senior Deputy General Manager Board Secretary | F | 39 | Incumbent | 248.57 | N | |
| Total | -- | -- | -- | -- | 4,014.42 | -- | |
| Other information on positions and incumbency | 1) On March 5th 2021, Gong Hongjia left as a director of the Company, Cheng Tianzong and Wang Zhidong left as independent directors of the Company, and Cheng Huifang left as a supervisor of the Company at the end of thier tenure. Wang Qiuchao was elected as a director of the Company's fifth board of directors, and Hong Tianfeng and Lu Jianzhong were elected as supervisors of the company's fifth supervisory board. 2) On March 12th 2021, Gong Hongjia, Fu Baijun and Jiang Yufeng left their senior management positions after expires of their tenures. | ||||||
| Name | Title | Restricted Shares held at the beginning of the period | Shares vested in the current period | Shares newly granted in the current period | Price for restricted shares granted (RMB per share) | Restricted Shares held at period-end |
| Hu Yangzhong | Director, General Manager | 96,300 | 48,150 | - | - | 48,150 |
| Wu Weiqi | Director, Standing Deputy General Manager | 89,100 | 44,550 | - | - | 44,550 |
| He Hongli | Senior Deputy General Manager | 82,800 | 41,400 | - | - | 41,400 |
| Fu Baijun | Senior Deputy General Manager | 222,900 | 58,950 | - | - | 163,950 |
| Xu Lirong | Supervisor, person in charge of internal audit | 65,700 | 32,850 | - | - | 32,850 |
| Jiang Yufen | Senior Deputy General Manager | 73,800 | 36,900 | - | - | 36,900 |
| Jin Duo | Senior Deputy General Manager | 65,700 | 32,850 | - | - | 32,850 |
| Jin Yan | Senior Deputy General Manager, person in charge of finance | 214,400 | 52,200 | - | - | 162,200 |
| Cai Changyang | Senior Deputy General Manager | 65,700 | 32,850 | - | - | 32,850 |
| Bi Huijuan | Senior Deputy General Manager | 213,000 | 45,000 | - | - | 168,000 |
| Pu Shiliang | Senior Deputy General Manager | 189,640 | 44,820 | - | - | 144,820 |
| Huang Fanghong | Senior Deputy General Manager, Secretary of the board | 110,000 | 0 | - | - | 110,000 |
| Xu Ximing | Senior Deputy General Manager | 197,000 | 0 | - | - | 197,000 |
| Total | -- | 1,686,040 | 470,520 | - | 1,215,520 |
V. Staff in the Company
1. Statistics of employees, professional structure of the staff, and educational background
| Number of incumbent employees in the parent Company | 18,392 | |
| Number of incumbent employees in major subsidiaries | 24,293 | |
| Number of incumbent employees | 42,685 | |
| Number of employees receiving salaries in current period | 42,685 | |
| Number of retired employees requiring the parent Company and its subsidiaries to bear costs | 0 | |
| Professional structure | ||
| Tier | Number of employees | |
| Managerial personnel | 697 | |
| Production staff | 11,751 | |
| Sales staff | 8,164 | |
| Engineers | 20,597 | |
| Financial staff | 321 | |
| Administrative Staff | 1,155 | |
| Total | 42,685 | |
| Educational background | ||
| Education background | Number of employees | |
| Master and/or doctor/or above | 7,952 | |
| Bachelor | 21,838 | |
| Junior College (professional training) | 2,880 | |
| Other | 10,015 | |
| Total | 42,685 | |
3. Staff training plans
The company is focused on long-term development strategies and works for the goal of supporting businessdevelopment and people development and has planned and implemented a set of training programs and courses.In 2019, the Company continued to optimize the training system, with priority placed on creating onlinelearning platform, optimizing courses system and cultivating internal trainers. In order to better accumulate andreproduce the experiences of the organization and provide the employees with premium training courses of variousfields, the Company has introduced detailed arrangements for systematic management in 5 categories andimplemented certification and level-by-level management of the courses from the aspects of course quality andreproducibility, and etc. The company has enacted the standard for Hikvision's internal trainers’ growth,development and capabilities, clarified the capability requirements and enabling courses for the internal trainers interms of "demand analysis, course design, course development, lecturing and course evaluation", and completed theSOP process for internal trainers certification. The Company provides standardized certification procedure coveringapplication, qualification review, selection, certification and employment and will further improve certificationefficiency by implementing online management.The Human Resources Department interacts with the front-line business personnel and assists the businessexperts in gleaning inter-organization experiences to design and implement large-scale training-practice programs.We are striving to better facilitate ability enhancement of the employees in critical positions during businesstransformation and thoroughly implement the concept of "learning in practice".
In 2020, the Company continued to work on the goal of business development and talent development andcontinue optimizing the systems and resources, to facilitate strategic transformation and prepare the talent pool andenhance their capabilities for the critical activities during business development.
In 2021, the Company will continue the "system and resources" construction, while focusing on the annualstrategic completion of several key posts, to carry out targeted capacity improvement projects.
4. Labor outsourcing
□ Applicable √ Inapplicable
Section X Corporate GovernanceI. Basic situation of corporate governance
Since the inception of the Company, we have been strictly following relevant laws and regulations such as the“Company Law”, “Securities Law”, “Code of Corporate Governance of Listed Companies”, “Rules Governingthe Listing of Shares on Shenzhen Stock Exchange”, and “Guidelines for the Standardized Operation of ListedCompanies on the Shenzhen Stock Exchange” as well as the requirements of the regulations and regulatorydocuments of the regulatory authorities, set up a “3+1” corporate governance structure comprising shareholders’meeting, the board of directors, the board of supervisors, and the senior management taking into consideration theactual situation of the Company, and disclosed information in a true, accurate, complete, timely and impartialmanner; we have also established and improved internal management and control system, maintained the healthyand stable development, and ensured the legitimate rights and interests of the Company and investors. During thereporting period, the basic details of corporate governance is as follows:
1. Shareholders and shareholders’ meeting
We have ensured the equal status and full rights for all shareholders, especially small and medium shareholders.During the reporting period, the Company’s shareholders’ meetings were convened by the board of directors, andwitnessed by lawyers on-site with legal opinions issued. Proposals were reviewed in compliance with legalprocedures to ensure that all shareholders have the right to know, participate, and vote on major issues of theCompany and to fully exercise their legal rights.
2. The controlling shareholders and listed company
The Company’s controlling shareholders had no improper conduct and have never directly or indirectlyinterfered with the Company’s decision-making and operating activities overriding shareholders’ meeting. Thereare no such cases that controlling shareholders occupy the Company's funds or the Company provides guaranteesfor controlling shareholders. The Company, with its own complete business system and management capabilities,has been independent of controlling shareholders in terms of business, personnel, assets, institutions, and finances.The Company's board of directors, board of supervisors and internal institutions has been operating separately toensure that major company decisions are made and implemented by the Company.
3. Directors and the board of directors
The Company's board of directors, operating in a normalized way, has performed its functions invested by the“Articles of Association” and relevant laws and regulations, and implemented the relevant decisions of theshareholders’ meeting. The number and composition of the Company's board of directors comply with therequirements of laws and regulations. There are four special committees for strategy, audit, nomination,remuneration and appraisal under it. Each committee has a clear division of labor, clear powers and responsibilities,and effective operation. All directors of the Company have performed their duties with integrity, loyalty, diligence,professionalism and due diligence, and earnestly safeguard the legitimate rights and interests of the Company andall shareholders with a view to the interests of the Company and all shareholders. During the reporting period, thecompany convened 6 board meetings, reviewed and approved 38 proposals including the “Annual Report 2019 andIts Summary”, “Proposal on Revising the Performance Appraisal Indicators of the Company under the RestrictedStock Plan in 2018”, and “Proposal on Revising < Management Measures for Core Staff’s Co-investment intoInnovative Business >”, etc.
4. Supervisors and board of supervisors
The number and composition of the Company’s board of supervisors meet the requirements of laws andregulations; the Company’s supervisors have diligently performed their duties and obligations, and carried outsupervision and inspection functions being responsible to shareholders, and supervised the Company’s financialstatus, operating conditions and related transactions, and the performance of duties by directors and senior managersto fully protect the legal rights and interests of the Company and all shareholders.
5. Performance appraisal and incentive and restraint mechanism
The Company has established a complete performance appraisal system and remuneration system. Theappointment procedures for senior management personnel are open and transparent, and comply with relevant lawsand regulations. The remuneration and appraisal committee under the Company's board of directors is responsiblefor performance appraisal of the Company's senior management at the end of the year to determine theirremuneration. To further set up and improve the Company’s incentive mechanism and strengthen the concept ofsustainable development of both the Company and employees, the Company has adopted a restricted share plan andthe plan of core staff’s co-investment into innovation business to achieve its development strategy and businessobjectives, and realize sustainable health development.
6. Information disclosure and transparency
The Company has strictly followed the relevant laws and regulations and the “Company InformationDisclosure Management Measures” to disclose relevant information truthfully, accurately, completely, timely and
impartially, and thoroughly implemented the “Company Information Insider Registration Management System” toregister insiders and file to further standardize inside information management and to ensure that all shareholdersand other stakeholders of the Company have equal access to company information. During the reporting period, theCompany disclosed 4 periodic reports and 68 temporary announcements. The Company's information disclosurehas been recognized by the regulatory authorities: the company has been rated as Level A by the Shenzhen StockExchange for 10 consecutive years in the SMEs board listed company information disclosure assessment.
7. Investor relations activities
The Company has proactively organized performance briefings after the disclosure of regular reports, regularlyheld investor reception day activities to actively listens to investors’ opinions and suggestions, and released the“Investor Relations Activity Record” after the event to ensure fair access to company information by all investors.In daily work, the Company has kept in touch with investors through multiple channels such as telephone, e-mail,and irm.cninfo.com.cn to effectively interact and communicate with investors. The Company’s efforts to maintaininvestor relations has been recognized by the capital market: the Securities Times’ 14th China Most Valuable ListedCompany Selection “SMEs Board Top 50”, “SMEs Board Top 10 Management Teams”, and “Best Listed Company”by New Fortune; CBN 2020 China Capital Annual Conference-Valuable Company Selection “2020 Top 15Valuable Companies in China”, “2020 Top 30 Valuable Companies - New Leader of the Security Industry”; Wind2020 List of Listed Companies by Market Value “Market Value List Top 50”, “Top 5 in Hardware EquipmentIndustry”, “Top 50 Listed Companies Most Favored by Institutions”.
Any significant incompliance for the relevant regulatory documents issued by China Securities RegulatoryCommission in respect of the Company’s corporate governance:
□ Yes √ No
There is no significant incompliance for the relevant regulatory documents issued by China Securities RegulatoryCommission in respect of the Company’s corporate governance.II. Company’s Independence in Businesses, Management, Assets, Institutions and Finance from ControllingShareholders
The Company is completely independent in business, management, assets, organization, and finance from itsshareholders. The Company has established a sound internal control system, being capable of operating
independently with its complete and independent business.
(1) Business independence: The Company has its own production, purchases and sales systems, which
are completely independent from controlling shareholders. Therefore, there is no competition amongthe Company, controlling shareholders, and related parties.
(2) Personnel independence: The Company has independent personnel. The management has set up
various independent departments, including R&D, production, administration, finance and operationmanagement divisions, etc., and established complete management methods for labor, personnel, andsalary management. Personnel of the Company are independent from controlling shareholders, e.g.the Chairman is elected through the general meetings of the Board. In addition, the General Manager,Senior Deputy General Managers, the Secretary of the Board, CFO, and other senior managementpersonnel of the Company are only employed and remunerated by the Company, and do not hold anyposition in controlling shareholders and is not remunerated by controlling shareholders. Directors,Supervisors and Senior Management Personnel are appointed through legal procedures strictly inaccordance with relevant regulations stipulated in Company Law and Articles of Association. There isno controlling shareholder intervention in the Company’s personnel decisions in general meetings ofthe Board or shareholders.
(3) Asset Completeness: The property rights of assets are explicitly between the Company and the
controlling shareholders, and no assets, funds, or other resources owned by the Company are illegallyand irregularly occupied or controlled by the controlling shareholders. Assets of the Company areintegrated, including complete property rights of fixed assets for production, supporting assets forproduction, and intangible assets of patents, etc. The Company has the full control and ownership ofall assets.
(4) Independence in organizations: The Company’s Board, Supervisor Committee, Management and
other internal organizations operates independently, and each functional department is independentfrom controlling shareholders in duty and personnel. There is no superior-subordinate relationbetween functional departments of controlling shareholders and those of the Company, which wouldhave an impact on the Company’s independent operations.
(5) Financial Independence: The Company has established an independent financial department, as well
as a sound and independent financial and accounting system. The Company makes financial decisionsindependently. There is no controlling shareholder intervention in the Company’s financial andaccounting activities. The Company has maintained accounts with banks independently of and do notshare any bank account with our Controlling Shareholders. The Company has undertaken independenttax registration in accordance with applicable laws, and paid tax independently.
III. Horizontal competition
□ Applicable √ Inapplicable
IV. Annual General Meeting and Extraordinary General Meetings convened during the ReportingPeriod
1. Annual General Meeting convened during the reporting period
| Meeting | Nature | Proportion of participating investors | Convened Date | Disclosure Date | Disclosure Index |
| 2019 Annual General Meeting | Annual General Meeting | 71.59% | May 15th 2020 | May 16th 2020 | Public Announcement: No. 2020-032 |
| Attendance of independent directors in board meetings and general meetings | |||||||
| Name of Independent Director | Board meeting presence required in the reporting period (times) | Board meeting presence on site (times) | Board meeting presence by telecom- communication (times) | Board meeting presence through a proxy (times) | Board meeting absence (times) | Board meeting not attend in person for two consecutive times | Presence of independent directors in general meetings (times) |
| Cheng Tianzong | 6 | 1 | 5 | 0 | 0 | N | 0 |
| Lu Jianzhong | 6 | 1 | 5 | 0 | 0 | N | 0 |
| Wang Zhidong | 6 | 1 | 5 | 0 | 0 | N | 1 |
| Hong Tianfeng | 6 | 1 | 5 | 0 | 0 | N | 0 |
Were there any objections on related issues of the Company from independent directors?
□ Yes √ No
During the reporting period, there is no objections on related issues of the Company from independent directors.
3. Other details about the performance of duties by independent directors
Were there any suggestions from independent directors accepted by the Company?
√ Yes □ No
Details: During the Reporting Period, independent directors strictly followed related rules, regulations,including Company Act, Guidance of Board of Directors for Listed Compaies, Shenzhen Stock Exchange ListedCompanies Standard Operation Guidelines, the Articles Association, and Regulations on Independent Directors.They focused on the Company operation, carried out their duties independently and imparted considerableprofessional advice on improving the Company’s systems, daily operations and decision making. They providedfair advice during the Reporting Period and played an effective role in improving the Company supervisory systemsand protecting the legal rights of the Company and the shareholders as a whole. For details, please refer toIndependent Directors’ 2020 Debriefings disclosed on www.cninfo.com.cn.
VI．Performance of duties by special committees under the Board during the Reporting Period
1. Strategy Committee
During the reporting period, the Strategy Committee, based on the domestic and foreign economic conditions,the global epidemic situation of the Covid-19, and the characteristics of the industry in which the Company carriesout business, conducted research into and offered suggestions on the Company's assets operation projects and majorinvestment decisions and examined and assessed the implementation of the aforesaid matters. Besides, the StrategyCommittee listened to the reports of the management executives on operation and management of the Company'sbusiness modules and explored the Company's future long-term strategic development plan based on the Company'scurrent development conditions and the extent to which regions are affected by the COVID-19 outbreak, to informthe Company's sustainable and healthy development with strategic insights.
2. Audit Committee
The Audit Committee mainly maintains communication between internal auditors and external auditors and
also inspects and supervises external audits. During the reporting period, the audit committee reviewed the annualaudit work summary report by the external audit institution, and offered suggestions and opinions on the selectionand employment of the external audit institution. It has also listened to the relevant reports by the internal auditdepartment, and made valuable suggestions on the internal audit department's team issues, division of labor andarrangements, and work plan and summary. In addition, it has seriously reviewed the Company’s financialinformation and its disclosure, carried out daily audits on the subsidiaries, and gotten the information on theCompany’s and its subsidiaries’ operation, management and internal control status, and provided guidance from aprofessional perspective; checked and supervised the scientificity, reasonability, effectiveness and implementationof the internal control system of the Company. Meanwhile, the audit committee also organized special workmeetings to track the implementation of major projects of the financial center and internal audit department, andput forward relevant requirements for the Company's internal control compliance.
3. Nomination Committee
The primary responsibility of the Nomination Committee is to examine and audit the criteria and procedure forselecting directors, senior managerial staff and other personnel and offer suggestions. During the reporting period,the Nomination Committee carefully investigated the criteria and procedure for selecting the Company's directorsand senior managerial staff, communicated with the relevant departments, cautiously audited the resume andqualification of directors and senior managerial staff, thus practically fulfilling the Nomination Committee'sresponsibility.
4. Remuneration and Appraisal Committee
During the reporting period, the Remuneration and Appraisal Committee prudently examined the remunerationfor the senior managerial staff and the overall remuneration policy and scheme of the Company and offeredprofessional suggestions on the appraisal criteria for the aforesaid personnels. They deliberated on the 2020Remuneration and Performance Appraisal Plan of the Company and also tracked and supervised implementation ofthis plan. They deliberated on the matters concerning the relevant matters related to the adjustment of theperformance appraisal of the third unlocking period of the 2016 Restricted Incentive Shares Scheme, the mattersrelated to the third unlocking, repurchase and write-off of 2016 restricted shares, the first unlocking, repurchase andwrite-off of 2018 restricted shares, and the amendments of the Management Measures for Core Staff Investment in
Innovative Businesses, and guidance were provided.
VII. Performance of duties by the Supervisory CommitteeWere there any risks to the Company identified by Supervisory Committee when performing its duties during theReporting Period?
□ Yes √ No
VIII. Assessment and incentive mechanism for the senior managementThe Company has established a fairly sophisticated mechanism on employees’ evaluation and incentiverestraint, and has established a fair and transparent appraisal and incentive mechanism on senior managementpersonnel and other various level management personnel and employees. The Company’s board of directors hascarried out annual appraisals of senior management members mainly based on annual target achievement index.The Board is responsible for appraisals of the general manager on the general manager’s duty, capacity andperformance of operation; and the general manager carried out appraisals of other senior management members ontheir operational management and implementation of relevant assignments. In 2020, senior management personnelcarried out their duties diligently with good performance, and fairly completed their objectives and missions set outat the beginning of the year.IX. Evaluation report on internal control
1. Any significant internal control deficiencies during the reporting period
□ Yes √ No
2. Self-evaluation report on internal control
| Disclosure date of full text of self-evaluation report on internal control | April 17th 2021 |
| Disclosure index of full text of self-evaluation report on internal control | www.cninfo.com.cn |
| Proportion of assets evaluated in total assets | 100.00% |
| Proportion of revenue evaluated in total revenue per consolidated financial statement | 100.00% |
| Recognition standard of deficiencies | |
| Nature | Financial report level | Non-financial report level |
| Qualitative criteria | Significant deficiency: A deficiency or a combination of deficiencies in internal control may prevent significant errors in financial reports from being identified or prevented, e.g.: A. Invalid internal control environment; B. Fraud of directors, supervisors and senior management personnel on the financial report ; C. Significant errors identified by external auditors but not identified during the Company is operating; D. Invalid supervision of audit committee and internal audit system; E. Other deficiencies that may lead to the wrong judgement of financial statement reporter. Important deficiency: A deficiency or a combination of deficiencies in internal control may prevent errors in financial report from being identified or prevented, although such deficiency is not significant, but require attention of the Board and Management, e.g.: A. Application of accounting policies does not follow the enterprise accounting standard; B. No internal control systems for fraud; C. No control systems or system not effective for unusual or special transactions or no compensatory relevant control; D. One or more deficiencies which prevent the preparation of true and fair financial statements. Normal deficiency: Not significant and not important deficiency. | Internal control deficiencies at non-financial report level are mainly identified by the likelihood of occurrence and the extent of impacts on operating effective in business. Significant deficiency: the high likelihood leading to significant reduction of working efficiency, or significant increase of uncertainty, or significant deviation from the expected target; Important deficiency: a higher likelihood leading to remarkable reduction of working efficiency, or remarkable increase of uncertainty, or remarkable deviation from the expected target; Normal deficiency: a low likelihood leading to reduction of working efficiency, or increase of uncertainty, or deviation from the expected target; |
| Quantitative criteria | Significant deficiency: potential errors 5% or more of total profits Important deficiency:potential errors 2% or more but below 5% of total profits Normal deficiency: potential errors is 2% or less of total profits | Significant deficiency: direct losses of assets is 5% or more of total profits Important deficiency: direct losses of assets is2% or more but below 5% of total profits Normal deficiency: direct losses of assets is below 2% of total profits |
| Number of significant deficiencies in financial report level | 0 | |
| Number of significant deficiencies in non-financial report level | 0 | |
| Number of important deficiencies in financial report level | 0 | |
| Number of important deficiencies in non-financial report level | 0 | |
Section XI 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
Section XII Financial Report
I. Audit report
| Audit Opinion | Standard unqualified audit opinion |
| Audit Report sign-off Date | April 15th 2021 |
| Audit Institution Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Audit Report Number | Deloitte Auditors’ Report (Audit) No. 21- P02773 |
| Certified Public Accounts Name | Tang Lianjiong, Zhang Shushu |
(I) Recognition of Sales Revenues
Description:
As shown in Note (V) 43, the operating revenue in 2020 in the consolidated financial statements of the Group forthe year ended December 31
st
2020 is RMB 63,503,450,891.78. The product sales revenue, a key performance indicator,reaches RMB 60,287,664,582.89, accounting for 94.94% of the operating revenue, which is a significant and has asignificant influence on results of operations. The product sales revenue models include product domestic sales andproduct export sales by domestic companies and the overseas sales of overseas subsidiaries; the domestic sales of productsby domestic companies and the overseas sales of overseas subsidiaries are completed when the control of the goods istransferred, i.e. when the products are delivered to the other party’s designated location, or the other party completedacceptance; while for the export of products of domestic companies, the delivery of the goods to the carrier designated bythe other party at the port of shipment specified in the contract within the specified time limit is the time point for thetransfer of control of the goods. The timing of the transfer of control rights under each revenue model is different, andimproper determination of the timing of completion of performance obligations may result in a material misstatement ofrevenue recognition. Therefore, we regard the occurrence of sales revenue as a key audit matter.
Audit Measures:
Main audit procedures that we perform for the aforesaid key audit matters include:
(1) Understanding and evaluating design and implementation of key internal control in relation to revenue recognition,
and testing the effectiveness of its operation;
(2) For revenues under different sales models, selecting a sample to check a sales contract, reviewing its main transactionterms, evaluating whether revenue recognition complies with requirements of accounting policies of the Group andthe Accounting Standards for Business Enterprises; conducting a background investigation of important customers tocheck whether there is any indication of existence of abnormal customers.
(3) Analyzing revenues and gross profits, based on product types, to understand whether there are abnormal fluctuationsin the revenues and gross profits for the year, and conducting a test of details for identified specific transactions,through systematic analysis of revenue data, and reviewing relevant supporting documents;
(4) Selecting sample(s) from product sales revenues recorded for the year, checking invoices, sales contracts or orders,
shipping orders, signature forms, and other supporting documents; for the sample(s) of income under the export modelof the selected domestic companies, additional inspections will be made to the customs declaration record andshipment record.
(II) Provision for Decline in Value of Inventories
Description:
As shown in Note (V) (8), as of December 31
st2020, the carrying balance of inventory other than contractperformance costs in the Group’s Consolidated Financial Statements is RMB 11,535,395,160.86, and the provision fordiminution in value of inventories was RMB 613,100,101.53. The carrying value of the Group’s inventories is relativelyhigh, so the provision for diminution in value of inventories has a relatively significant influence on the financialstatements. As shown in Note (III) 12.3 and Note (III) 31 to the financial statements, inventories are measured at the lowerof cost and net realizable value, on the balance sheet date. The provision for impairment of inventories is made when thenet realizable value is lower than the cost. Net realizable value is the estimated selling price for inventories less estimatedcosts of completion to be incurred, estimated costs to make the sale and relevant taxes. As the management needs to usecritical accounting estimates in determining the net realizable value of inventories and the amount is significant, we treatthe provision for diminution in value of inventories as a key audit matter.
Audit Measures:
Main audit procedures that we perform for the aforesaid key audit matters include:
(1) Understanding and evaluating design and implementation of key internal control in relation to provision fordiminution in value of inventories by the Group’s management, and testing the effectiveness of its operation;
(2) Understanding the Group’s accounting policies for the provision for diminution in value of inventories, and evaluatethe rationality of the methods and assumptions used by the management of the Group to estimate the provision fordiminution in value of inventories;
(3) Performing the supervision and selective examination procedure for inventory-taking of the Group, with focus ondefective, obsoleted or slow-moving inventories, and checking whether there are inventories with an indication ofimpairment which are not provided for diminution in value of inventories.
(4) Selecting sample(s) from inventories to test the net realizable value. For the selected raw material samples, the bookcost of the raw material is compared with the actual purchase price of the latest or later period; For the selectedunfinished product samples, comparing the book cost of the unfinished product with the actual selling price of themost recent period or the later period for the finished goods after subtracting the estimated cost of the same kind ofproducts from the current period to completion, estimated sales expenses and related taxes, and evaluating thereasonableness of the estimated costs, sales expenses and related taxes and fees that will occur until completion; Forthe selected sample of finished products, compare the book cost of the finished product with the actual selling priceof the latest or future period minus the estimated sales expenses and related taxes, and evaluating the reasonablenessof the the estimated sales expenses and related taxes
（III）Provision for credit loss of accounts receivable
Description:
As disclosed in Note (V)-4 to the consolidated financial statements of the Group, as of December 31
st2020, thebalance of accounts receivable amounted to RMB 23,491,775,903.07, and the balance of provision for credit loss ofaccounts receivable amounted to RMB 1,512,395,186.21. The book value of the Group’s accounts receivable isrelatively high, and the provision for credit loss of accounts receivable has a significant impact on the financialstatements. As shown in Note (III) 10.2 and Note (III) 31 of the financial statements, the Group makes provisions forcredit losses for accounts receivable at an amount equivalent to expected credit losses during the entire duration. Foraccounts receivable with significant individual amount and when the debtor has major financial difficulties, etc., theGroup recognizes its credit losses based on individual assets, and classifies other accounts receivable into differentcombinations based on common credit risk characteristics and calculates expected credit losses on a portfolio basis.
For accounts receivable classified into portfolios, the Group uses impairment matrix to determine the expectedcredit loss provision for accounts receivable. The expected credit loss provision ratio for each portfolio by usingimpairment matrix is determined based on the Group’s historical overdue ratio and default and with reference to theforward-looking information of the industry. In measuring expected credit loss, the Company is required to classifythe customers with similar credit risk characteristics into a same portfolio, and classify them by appropriate overduestage and comparable expected credit loss rate. The accounting estimates above are subject to a high level ofuncertainties. Therefore, we identify the recognition of credit loss provision for accounts receivable on a portfoliobasis as a key audit matter.
Audit Measures:
Main audit procedures that we perform for the aforesaid key audit matters include:
(1) Understanding and evaluating design and implementation of key internal control in relation to expectedcredit loss provision for accounts receivable by the Group’s management, and testing the effectiveness ofits operation;
(2) Understanding the Group’s accounting policies for expected credit loss on accounts receivable; for themodel where the Group’s management estimates expected credit loss provision for accounts receivable ona portfolio basis, we mainly performed the following procedures;
- Assessing the rationality of measurement method by using impairment matrix model, and the rationalityof the key parameters and assumptions used in the impairment matrix model, including classification ofdifferent portfolios, classification of stage, forward-looking adjustment, etc.;
- Obtaining the historical default data used by the Group’s management in determining the historical lossrate of accounts receivable, and evaluating the accuracy thereof;
- Selecting samples to test the accuracy of the classification of portfolio and stage by the Group’smanagement;
- Recalculating the expected credit loss provision based on default loss percentage.
IV. Other Information
Management of Hikvision shall be responsible for other information. Other information includes the informationcovered in the annual report, excluding the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information and we do not express any form ofauthentication conclusion on other information.
In connection with our audit of the financial statements, our responsibility is to read other information and to considerwhether other information is significantly misstated or materially inconsistent with the financial statements or theinformation we learned during the audit.
Based on the works we have performed, if we determine that there is a material misstatement in other information,we should report the fact. In this respect, we have nothing to report.
V. Responsibility of the Management and Governance for the Financial Statements
The management of Hikvision is responsible for the preparation of financial statements in accordance withAccounting Standards for Business Enterprises to achieve fair presentation, and design, implementation and maintenanceof necessary internal control to enable the financial statements are free from material misstatement, whether due to fraudor error.
When preparing the financial statements, the management is responsible for assessing the going-concern ability ofHikvision, disclosing issues related to going-concern as applicable, and applying going-concern assumptions, unless themanagement plans to liquidate Hikvision, terminate operation or has no other realistic choice.
The governance is responsible for supervising financial reporting processes of Hikvision.
VI. Responsibility of Certified Public Accountants on Audit of the Financial Statements
Our objective is to obtain reasonable assurance as to whether the overall financial statements are free from materialmisstatement, whether due to fraud or error, and to issue audit report that contain audit opinions. Reasonable assurance isa high level of assurance, but could not guarantee that an audit performed in accordance with the Auditing Standards can
always figure out any existing material misstatements. Misstatements may be caused by fraud or error. Misstatement isgenerally considered to be material if it is reasonably expected that the misstatement, alone or aggregated, may affect theusers’ financial decisions based on the financial statements.
In performing the audit in accordance with the Auditing Standards, we applied professional judgment and maintainedprofessional skepticism. Meanwhile, we also perform the following duties:
(1) Identify and evaluate the risk of material misstatement of financial statements due to fraud or error; design andimplement audit procedures to cope with these risks, and obtain adequate and appropriate audit evidence as thebasis for expressing audit opinions. As fraud may involve collusion, forgery, willful omission, misrepresentationor override of internal control, the risk of not discovering a material misstatement due to fraud is higher thanthe risk of not discovering a material misstatement due to error.
(2) Understand the internal control related to auditing as a way to design appropriate audit procedures, but thepurpose is not to express opinions on the effectiveness of the company’s internal control.
(3) Evaluate the properness of accounting policy selected by the management and the rationality of accountingestimate and related disclosure.
(4) Reach a conclusion on whether the going concern assumption adopted by the management is appropriate.Meanwhile, based on the audit evidence obtained, reach a conclusion on whether there are material uncertaintiesin the events or conditions that may cast significant doubts on Hikvision's ability to continue as a going concern.If we reach a conclusion that there is a material uncertainty, the Auditing Standards require us to call the attentionof the users of the report to the relevant disclosures in the financial statements in the audit report. If the disclosureis insufficient, we should issue modified audit opinions. Our conclusion is based on the information availableup to the date of the audit report. However, future events or conditions may result in the failure of Hikvision tocontinue as a going concern.
(5) Evaluate the overall presentation (including the disclosure), structure and content of the financial statementsand evaluate whether the financial statements fairly reflect the related transactions and events.
(6) Obtain adequate and appropriate audit evidence on the financial information of entity or business activities ofHikvision so as to express audit opinions on the financial statements. We are responsible for directing,supervising and executing the audit on the Group, and assume full responsibility for the audit opinions.
We communicated with the governance about the scope of the audit, the schedule and major audit findings, includingthe notable shortcomings of internal control identified during the auditing.
We also provide statement to the governance on the independence-related work ethics we follow, and communicatewith the governance on all relations and other matters that might be reasonably deemed to influence our independence aswell as relevant precautionary measures (as applicable).
We determine which of the matters we communicated with the governance are of the greatest importance to the auditof financial statements of the current period so as to make them key matters. We describe the matters in the audit report.We decide not to communicate on such matters in the audit report unless the laws and regulations forbid the publicdisclosure of such matters, or, in rare circumstances, if the negative consequence of communication of matters in the auditreport is reasonably expected to exceed the benefit of the public interest.
At December 31
st2020
Consolidated Balance Sheet
Unit: RMB
| Item | Notes | On December 31st 2020 | On December 31st 2019 |
| Current Assets: | |||
| Cash and bank balances | (V)1 | 35,459,729,108.27 | 27,071,948,919.78 |
| Held-for-trading financial assets | (V)2 | 22,679,846.77 | 181.76 |
| Notes receivable | (V)3 | 1,303,252,705.19 | 973,236,789.02 |
| Accounts receivable | (V)4 | 21,979,380,716.86 | 21,307,927,200.28 |
| Receivables for financing | (V)5 | 1,959,601,195.25 | 1,257,385,053.02 |
| Prepayments | (V)6 | 296,334,689.86 | 309,685,733.32 |
| Other receivables | (V)7 | 519,143,350.82 | 555,246,545.48 |
| Inventories | (V)8 | 11,477,906,040.70 | 11,267,986,843.11 |
| Contract assets | (V)9 | 245,754,510.98 | |
| Non-current assets due within one year | (V)10 | 1,001,208,813.83 | 528,469,701.75 |
| Other current assets | (V)11 | 497,914,506.64 | 754,456,821.72 |
| Total Current Assets | 74,762,905,485.17 | 64,026,343,789.24 | |
| Non-current Assets: | |||
| Long-term receivables | (V)12 | 2,105,570,004.53 | 1,382,536,761.22 |
| Long-term equity investment | (V)13 | 864,026,710.23 | 252,165,321.49 |
| Other non-current financial assets | (V)14 | 491,939,067.27 | 312,398,267.44 |
| Fixed assets | (V)15 | 5,876,007,536.60 | 5,791,218,720.87 |
| Construction in progress | (V)16 | 1,425,235,193.72 | 631,555,479.06 |
| Intangible assets | (V)17 | 1,251,317,923.69 | 1,046,122,507.64 |
| Goodwill | (V)18 | 274,203,665.20 | 273,611,961.96 |
| Long-term deferred expenses | (V)19 | 108,584,686.85 | 87,611,490.75 |
| Deferred tax assets | (V)20 | 820,380,954.86 | 688,849,263.70 |
| Other non-current assets | (V)21 | 721,511,156.08 | 865,586,676.92 |
| Total Non-current Assets | 13,938,776,899.03 | 11,331,656,451.05 | |
| Total Assets | 88,701,682,384.20 | 75,358,000,240.29 |
At December 31
st
2020
Consolidated Balance Sheet-continued
Unit: RMB
| Item | Notes | On December 31st 2020 | On December 31st 2019 |
| Current Liabilities: | |||
| Short-term borrowings | (V)22 | 3,999,246,634.59 | 2,640,082,485.15 |
| Held-for-trading financial liabilities | (V)23 | 7,405,771.15 | 652,428.18 |
| Notes payable | (V)24 | 1,036,920,229.85 | 1,239,584,016.70 |
| Accounts payable | (V)25 | 13,593,884,790.19 | 12,700,075,307.70 |
| Receipts in advance | - | 1,020,989,460.61 | |
| Contract liabilities | (V)26 | 2,161,166,671.26 | |
| Payroll payable | (V)27 | 2,877,786,430.71 | 2,359,674,640.12 |
| Taxes payable | (V)28 | 1,770,057,908.62 | 991,342,805.91 |
| Other payables | (V)29 | 1,525,053,355.95 | 1,568,744,599.94 |
| Non-current liabilities due within one year | (V)30 | 3,507,680,339.78 | 86,123,154.06 |
| Other current liabilities | (V)31 | 745,711,579.57 | 913,534,538.26 |
| Total Current Liabilities | 31,224,913,711.67 | 23,520,803,436.63 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)32 | 1,961,167,761.30 | 4,604,168,571.43 |
| Long-term payables | (V)33 | 39,595,459.35 | 50,181,416.72 |
| Provisions | (V)34 | 151,443,871.02 | 90,570,669.01 |
| Deferred income | (V)35 | 190,878,987.69 | 333,589,831.30 |
| Deferred tax liabilities | (V)20 | 92,979,823.89 | 51,088,103.96 |
| Other non-current liabilitie | (V)36 | 560,959,368.74 | 1,234,739,326.10 |
| Total non-current liabilities | 2,997,025,271.99 | 6,364,337,918.52 | |
| Total liabilities | 34,221,938,983.66 | 29,885,141,355.15 | |
| Owners’ Equity | |||
| Share capital | (V)37 | 9,343,417,190.00 | 9,345,010,696.00 |
| Capital reserves | (V)38 | 5,178,777,462.09 | 4,126,943,698.96 |
| Less: Treasury shares | (V)39 | 1,121,918,737.47 | 2,148,273,864.36 |
| Other comprehensive income | (V)40 | (84,993,926.94) | (53,541,146.99) |
| Surplus reserves | (V)41 | 4,672,505,348.00 | 4,672,505,348.00 |
| Retained earnings | (V)42 | 35,806,523,826.37 | 28,961,389,145.22 |
| Total owners' equity attributable to owner of the Company | 53,794,311,162.05 | 44,904,033,876.83 | |
| Minority equity | 685,432,238.49 | 568,825,008.31 | |
| Total owners' equity | 54,479,743,400.54 | 45,472,858,885.14 | |
| Total liabilities and owners' equity | 88,701,682,384.20 | 75,358,000,240.29 |
At December 31
st2020
Balance sheet of the parent company
Unit: RMB
| Item | Notes | On December 31st 2020 | On December 31st 2019 |
| Current Assets: | |||
| Cash and bank balances | 23,476,606,330.08 | 16,851,590,525.05 | |
| Notes receivable | 107,411,912.35 | 149,703,073.98 | |
| Accounts receivable | (XV)1 | 24,193,392,179.36 | 25,107,965,925.08 |
| Receivables for financing | 12,216,215.65 | 84,839,695.67 | |
| Prepayments | 62,946,087.75 | 160,688,588.99 | |
| Other receivables | (XV)2 | 726,703,133.65 | 921,275,388.15 |
| Inventories | 204,216,250.73 | 171,243,815.97 | |
| Contract assets | 3,311,250.08 | ||
| Non-current assets due within one year | 71,208,685.76 | 4,513,795.81 | |
| Other current assets | 10,110,869.86 | 23,117,398.50 | |
| Total Current Assets | 48,868,122,915.27 | 43,474,938,207.20 | |
| Non-current Assets: | |||
| Long-term accounts receivable | 47,762,348.01 | 681,568.43 | |
| Long-term equity investment | (XV)3 | 6,727,373,453.97 | 5,074,018,030.44 |
| Other non-current financial assets | 489,054,847.27 | 309,504,047.44 | |
| Fixed assets | 2,762,700,997.83 | 2,831,295,145.61 | |
| Construction in progress | 388,903,828.81 | 153,416,054.28 | |
| Intangible assets | 158,917,438.86 | 188,362,883.75 | |
| Long-term deferred expenses | 43,264,691.73 | 34,199,446.06 | |
| Deferred tax assets | 110,066,596.99 | 126,357,792.34 | |
| Other non-current assets | 2,740,576.47 | 21,619,464.07 | |
| Total Non-current Assets | 10,730,784,779.94 | 8,739,454,432.42 | |
| Total Assets | 59,598,907,695.21 | 52,214,392,639.62 |
At December 31
st2020
Balance sheet of the parent company - continued
Unit: RMB
| Item | Notes | On December 31st 2020 | On December 31st 2019 |
| Current Liabilities: | |||
| Short-term borrowings | 1,431,233,375.00 | 2,001,781,388.89 | |
| Accounts payable | 540,664,512.60 | 450,983,270.08 | |
| Receipts in advance | - | 227,242,328.23 | |
| Contract liabilities | 240,629,015.92 | ||
| Payroll payable | 1,618,357,135.99 | 1,564,304,003.49 | |
| Taxes payable | 1,539,095,196.97 | 796,890,945.83 | |
| Other payables | 659,214,959.62 | 533,325,191.05 | |
| Non-current liabilities due within one year | 3,219,794,958.37 | 9,539,251.98 | |
| Other current liabilities | 589,167,743.26 | 913,534,538.26 | |
| Total Current Liabilities | 9,838,156,897.73 | 6,497,600,917.81 | |
| Non-current Liabilities: | |||
| Long-term borrowings | - | 3,126,200,000.00 | |
| Provisions | 85,230,299.84 | 62,863,096.83 | |
| Deferred Income | 122,455,935.44 | 162,018,728.45 | |
| Other non-current liabilities | 560,959,368.74 | 1,234,739,326.10 | |
| Total non-current liabilities | 768,645,604.02 | 4,585,821,151.38 | |
| Total liabilities | 10,606,802,501.75 | 11,083,422,069.19 | |
| Owners’ Equity | |||
| Share capital | 9,343,417,190.00 | 9,345,010,696.00 | |
| Capital reserves | 4,770,210,334.16 | 4,064,833,739.52 | |
| Less: Treasury shares | 1,121,918,737.47 | 2,148,273,864.36 | |
| Surplus reserves | 4,672,505,348.00 | 4,672,505,348.00 | |
| Retained earnings | 31,327,891,058.77 | 25,196,894,651.27 | |
| Total owners' equity | 48,992,105,193.46 | 41,130,970,570.43 | |
| Total liabilities and owners' equity | 59,598,907,695.21 | 52,214,392,639.62 |
For the reporting period from January 1
st 2020 to December 31
st
2020
Consolidated Income Statement
Unit: RMB
| Item | Notes | Amount for the current period | Amount for the prior period |
| I. Total operating income | (V)43 | 63,503,450,891.78 | 57,658,110,065.22 |
| Less：Total operating costs | (V)43 | 33,957,697,857.73 | 31,140,176,777.12 |
| Business taxes and surcharges | (V)44 | 416,263,349.55 | 417,318,543.55 |
| Selling expenses | (V)45 | 7,377,790,744.58 | 7,256,781,486.68 |
| Administrative expenses | (V)46 | 1,790,013,088.76 | 1,822,464,442.07 |
| Research and Development (R&D) expenses | (V)47 | 6,378,651,762.42 | 5,483,811,698.36 |
| Financial expenses | (V)48 | 396,254,772.56 | (640,068,177.19) |
| Including：Interest expenses | 202,415,502.10 | 192,739,975.98 | |
| Interest income | 719,662,082.74 | 699,779,882.35 | |
| Add: Other Income | (V)49 | 2,303,581,705.81 | 1,892,323,306.29 |
| Investment income | (V)50 | 169,277,048.95 | 36,649,237.09 |
| Including: Investment gains in associated enterprise and joint-venture enterprise | 6,361,388.74 | 7,743,476.93 | |
| Gains from changes in fair values | (V)51 | 85,458,209.54 | 15,321,889.63 |
| Credit impairment losses | (V)52 | (185,940,325.74) | (222,009,426.18) |
| Impairment losses of assets | (V)53 | (363,109,513.99) | (197,891,311.27) |
| Asset disposal income | 628,505.02 | 5,535,663.32 | |
| II. Operating profit | 15,196,674,945.77 | 13,707,554,653.51 | |
| Add: Non-operating income | (V)54 | 99,273,303.50 | 65,032,501.54 |
| Less: Non-operating expenses | (V)55 | 22,976,971.41 | 17,124,407.28 |
| III. Total profit | 15,272,971,277.86 | 13,755,462,747.77 | |
| Less: Income tax expenses | (V)56 | 1,594,651,805.69 | 1,290,278,445.12 |
| IV. Net profit | 13,678,319,472.17 | 12,465,184,302.65 | |
| 4.1 Classification by continuous operation | |||
| (a) Net profit on continuous operation | 13,678,319,472.17 | 12,465,184,302.65 | |
| (b) Net loss on terminated operation | - | - | |
| 4.2 Classification by attribution of ownership | |||
| (a) Profit or loss attributable to minority shareholders | 292,792,758.02 | 50,596,612.20 | |
| (b) Net profit attributable to owners of parent company | 13,385,526,714.15 | 12,414,587,690.45 | |
| V. Other comprehensive income, net of income tax | (V)40 | (34,145,243.17) | (4,658,993.77) |
| Other comprehensive income attributable to owners of the Company, net of tax | (31,452,779.95) | (3,964,795.89) | |
| (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 | (31,452,779.95) | (3,964,795.89) |
| Item | Notes | Amount for the current period | Amount for the prior period |
| 1. Exchange differences arising on conversion of financial statements denominated in foreign currencies | (31,452,779.95) | (3,964,795.89) | |
| Other comprehensive income attributable to minority interests, net of tax | (2,692,463.22) | (694,197.88) | |
| VI. Total comprehensive income | 13,644,174,229.00 | 12,460,525,308.88 | |
| Total comprehensive income attributable to owners of the parent company | 13,354,073,934.20 | 12,410,622,894.56 | |
| Total comprehensive income attributable to minority shareholders | 290,100,294.80 | 49,902,414.32 | |
| VII. Earnings per share | |||
| (I) Basic earnings per share | (XVI)2 | 1.445 | 1.343 |
| (II) Diluted earnings per share | (XVI)2 | 1.444 | 1.343 |
For the reporting period from January 1
st 2020 to December 31
st
2020
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 | 26,311,987,347.40 | 25,712,466,601.80 |
| Less: Total operating Cost | (XV)4 | 7,177,407,215.45 | 7,728,486,855.67 |
| Business taxes and surcharges | 293,578,888.80 | 274,273,500.24 | |
| Selling expenses | 2,854,822,255.21 | 3,101,749,832.98 | |
| Administrative expenses | 783,395,117.26 | 725,281,640.65 | |
| Research and Development (R&D) expenses | 4,554,003,406.39 | 4,012,212,610.85 | |
| Financial expenses | (278,380,172.69) | (506,021,681.46) | |
| Including : Interest expenses | 85,828,434.69 | 107,400,998.19 | |
| Interest income | 527,732,109.92 | 579,879,330.28 | |
| Add: Other income | 1,847,575,953.90 | 1,542,338,077.01 | |
| Investment income | (XV)5 | 1,095,486,482.55 | 25,026,089.44 |
| Including: Investment gains in associated enterprise and joint-venture enterprise | 13,424,897.92 | 5,089,008.14 | |
| Gains from changes in fair values | 69,478,784.83 | 17,547,234.44 | |
| Credit impairment gains (losses) | (35,765,705.73) | 656,135,180.29 | |
| Gains on asset impairment | 2,397,952.77 | 51,593,292.77 | |
| Asset disposal income | 16,966.03 | 4,072,096.18 | |
| II. Operating profit | 13,906,351,071.33 | 12,673,195,813.00 | |
| Add: Non-operating income | 18,924,477.37 | 17,287,915.50 | |
| Less: Non-operating expenses | 4,678,775.95 | 8,974,800.59 | |
| III. Total profit | 13,920,596,772.75 | 12,681,508,927.91 | |
| Less: Income tax expenses | 1,249,208,332.25 | 999,092,917.90 | |
| IV. Net profit | 12,671,388,440.50 | 11,682,416,010.01 | |
| V. Other comprehensive income, net of income tax | - | - | |
| VI. Total comprehensive income | 12,671,388,440.50 | 11,682,416,010.01 |
For the reporting period from January 1
st 2020 to December 31
st2020
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 | 68,169,017,614.45 | 59,405,106,132.63 | |
| Receipts of tax refunds | 3,274,552,890.75 | 3,084,090,410.43 | |
| Other cash receipts relating to operating activities | (V)57(1) | 1,427,590,353.65 | 1,989,547,720.88 |
| Sub-total of cash inflows from operating activities | 72,871,160,858.85 | 64,478,744,263.94 | |
| Cash payments for goods purchased and services received | 37,257,220,824.09 | 37,422,764,103.72 | |
| Cash paid to and on behalf of employees | 10,247,824,582.96 | 8,934,696,624.52 | |
| Payments of various types of taxes | 4,901,863,280.18 | 5,192,433,698.75 | |
| Other cash payments relating to operating activities | (V)57(2) | 4,376,095,604.95 | 5,161,129,665.81 |
| Sub-total of cash outflows from operating activities | 56,783,004,292.18 | 56,711,024,092.80 | |
| Net Cash flows from Operating Activities | (V)58(1) | 16,088,156,566.67 | 7,767,720,171.14 |
| II. Cash flows from Investing Activities: | |||
| Cash receipts from recovery of investments | 1,693,378,691.26 | 548,141,227.41 | |
| Cash receipts from investment income | 150,000,000.00 | 17,355,010.13 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 14,793,178.49 | 85,339,813.21 | |
| Other cash receipts relating to investing activities | (V)57(3) | 46,196,873.80 | 17,234,624.45 |
| Sub-total of cash inflows from investing activities | 1,904,368,743.55 | 668,070,675.20 | |
| Net cash paid to aquire subsidiaries and other business units | (V)58(2) | 48,918,168.58 | 16,095,782.07 |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 2,003,628,270.01 | 1,927,278,918.86 | |
| Cash paid to acquire investments | 2,405,456,262.23 | 644,715,663.25 | |
| Other cash payments relating to investing activities | (V)57(4) | 1,000,000.00 | 2,968,783.82 |
| Sub-total of cash outflows from investing activities | 4,459,002,700.82 | 2,591,059,148.00 | |
| Net cash flows from Investing Activities | (2,554,633,957.27) | (1,922,988,472.80) | |
| III. Cash flows from financing activities: | |||
| Cash receipts from capital contributions | 173,897,986.67 | 123,530,000.00 | |
| Including: cash receipts from capital contributions from minority owners of subsidiaries | 173,897,986.67 | 123,530,000.00 | |
| Cash receipts from borrowings | 5,883,973,583.25 | 9,492,281,861.82 | |
| Cash receipts from issuance of bonds and SCP | 999,500,000.00 | - | |
| Sub-total of cash inflows from financing activities | 7,057,371,569.92 | 9,615,811,861.82 | |
| Cash repayments of borrowings | 4,834,813,277.12 | 9,305,661,321.88 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 6,704,954,160.69 | 5,754,605,713.66 | |
| Including : Dividends and profits paid by subsidiaries to minority shareholders | 40,000,000.00 | 2,100,000.00 | |
| Other cash payments relating to financing activities | (V)57(5) | 77,707,417.35 | 26,897,116.20 |
| Sub-total of cash outflows from financing activities | 11,617,474,855.16 | 15,087,164,151.74 | |
| Net cash flows from Financing Activities | (4,560,103,285.24) | (5,471,352,289.92) | |
| IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | (464,249,454.25) | 111,276,866.09 | |
| V. Net Increase in Cash and Cash Equivalents | (V)58(1) | 8,509,169,869.91 | 484,656,274.51 |
| Add: Opening balance of Cash and Cash Equivalents | (V)58(1) | 26,515,668,008.40 | 26,031,011,733.89 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)58(3) | 35,024,837,878.31 | 26,515,668,008.40 |
For the reporting period from January 1
st 2020 to December 31
st2020
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 | 30,589,118,989.08 | 20,043,914,998.81 | |
| Receipts of tax refunds | 1,609,506,273.14 | 1,364,269,467.87 | |
| Other cash receipts relating to operating activities | 728,754,897.93 | 880,611,125.32 | |
| Sub-total of cash inflows from operating activities | 32,927,380,160.15 | 22,288,795,592.00 | |
| Cash payments for goods acquired and services received | 8,265,995,701.20 | 8,911,851,425.42 | |
| Cash payments to and on behalf of employees | 5,227,053,043.52 | 4,809,105,203.79 | |
| Payments of various types of taxes | 3,096,614,910.29 | 3,547,737,881.19 | |
| Other cash payments relating to operating activities | 1,827,804,822.26 | 2,273,874,546.47 | |
| Sub-total of cash outflows from operating activities | 18,417,468,477.27 | 19,542,569,056.87 | |
| Net Cash flows from Operating Activities | (XV)8(1) | 14,509,911,682.88 | 2,746,226,535.13 |
| II. Cash flows from Investing Activities: | |||
| Cash receipts from recovery of investments | 6,450,064.33 | 33,241,636.07 | |
| Cash receipts from investment income | 210,000,000.00 | 18,757,220.31 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 22,605,893.13 | 92,098,125.61 | |
| Cash receipts from disposal of subsidiaries and other business units | 848,151,116.16 | - | |
| Other cash receipts relating to investing activities | 44,165,378,335.06 | 16,718,160,478.21 | |
| Sub-total of cash inflows from investing activities | 45,252,585,408.68 | 16,862,257,460.20 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 446,640,144.49 | 513,878,473.24 | |
| Cash payments to acquire investments | 1,572,003,054.15 | 633,438,441.87 | |
| Other cash payments relating to investing activities | 43,940,319,202.39 | 17,142,547,258.27 | |
| Sub-total of cash outflows from investing activities | 45,958,962,401.03 | 18,289,864,173.38 | |
| Net Cash flows from Investing Activities | (706,376,992.35) | (1,427,606,713.18) | |
| III. Cash flows from Financing Activities | |||
| Cash receipts from borrowings | 2,480,000,000.00 | 7,279,240,000.00 | |
| Cash receipts from issuance of bonds and SCP | 999,500,000.00 | - | |
| Other cash receipts relating to financing activities | 6,971,777,752.17 | 7,534,930,948.45 | |
| Sub-total of cash inflows from financing activities | 10,451,277,752.17 | 14,814,170,948.45 | |
| Cash repayments of borrowings | 4,049,244,293.61 | 5,372,727,888.37 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 6,547,520,501.67 | 5,679,184,068.78 | |
| Other cash payments relating to financing activities | 6,910,848,212.28 | 7,471,674,598.52 | |
| Sub-total of cash outflows from financing activities | 17,507,613,007.56 | 18,523,586,555.67 | |
| Net Cash flows from Financing Activities | (7,056,335,255.39) | (3,709,415,607.22) | |
| IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | (138,534,267.16) | 47,889,908.40 | |
| V. Net increase (decrease) in cash and cash equivalents | (XV)8(1) | 6,608,665,167.98 | (2,342,905,876.87) |
| Add: Opening balance of cash and cash equivalents | (XV)8(1) | 16,656,028,410.72 | 18,998,934,287.59 |
| VI. Closing Balance of Cash and Cash Equivalents | (XV)8(2) | 23,264,693,578.70 | 16,656,028,410.72 |
At December 31
st2020
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
| 项目 | Amount for 2020 | |||||||
| Owner’s equity attributable to the parent company | Minority interests | Total owners' equity | ||||||
| Share capital | Capital reserves | Less: Treasury share | Other comprehensive income | Surplus reserve | Retained profits | |||
| I. 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 |
| II. Increase or decrease in the current period | (1,593,506.00) | 1,051,833,763.13 | (1,026,355,126.89) | (31,452,779.95) | - | 6,845,134,681.15 | 116,607,230.18 | 9,006,884,515.40 |
| (I) Total comprehensive income | - | - | - | (31,452,779.95) | - | 13,385,526,714.15 | 290,100,294.80 | 13,644,174,229.00 |
| (II) Owners’ contributions and reduction in capital | (1,593,506.00) | 1,051,833,763.13 | (925,020,534.09) | - | - | - | (135,943,064.62) | 1,839,317,726.60 |
| 1. Capital contribution from shareholders | - | - | - | - | - | - | 173,897,986.67 | 173,897,986.67 |
| 2. Share-based payment recognized in owners’ equity | - | 752,504,023.39 | - | - | - | - | 65,602,599.80 | 818,106,623.19 |
| 3. Others | (1,593,506.00) | 299,329,739.74 | (925,020,534.09) | - | - | - | (375,443,651.09) | 847,313,116.74 |
| (III) Profit distribution | - | - | (101,334,592.80) | - | - | (6,540,392,033.00) | (37,550,000.00) | (6,476,607,440.20) |
| 1. Transfer to surplus reserves | - | - | - | - | - | - | - | - |
| 2. Distributions to shareholders | - | - | (101,334,592.80) | - | - | (6,540,392,033.00) | (37,550,000.00) | (6,476,607,440.20) |
| 3. Others | - | - | - | - | - | - | - | - |
| III. Closing balance of the current period | 9,343,417,190.00 | 5,178,777,462.09 | 1,121,918,737.47 | (84,993,926.94) | 4,672,505,348.00 | 35,806,523,826.37 | 685,432,238.49 | 54,479,743,400.54 |
At December 31
st2020
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
| Item | Amount for 2019 | |||||||
| Owner’s equity attributable to the parent 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: Business merger under common control | - | - | - | - | - | (736,986.11) | (491,324.07) | (1,228,310.18) |
| II. Opening balance of the current period | 9,227,270,473.00 | 1,956,139,660.52 | 364,984,759.94 | (49,576,351.10) | 4,460,712,358.45 | 22,359,856,271.42 | 373,490,413.89 | 37,962,908,066.24 |
| III. Increase or decrease in the current period | 117,740,223.00 | 2,170,804,038.44 | 1,783,289,104.42 | (3,964,795.89) | 211,792,989.55 | 6,601,532,873.80 | 195,334,594.42 | 7,509,950,818.90 |
| (I) Total comprehensive income | - | - | - | (3,964,795.89) | - | 12,414,587,690.45 | 49,902,414.32 | 12,460,525,308.88 |
| (II) Owners’ contributions and reduction in capital | 117,740,223.00 | 2,170,804,038.44 | 1,885,322,227.42 | - | - | - | 147,532,180.10 | 550,754,214.12 |
| 1. Capital contribution from shareholders | 121,195,458.00 | 1,936,703,418.84 | 2,057,898,876.84 | - | - | - | 123,530,000.00 | 123,530,000.00 |
| 2. Share-based payment recognized in owners’ equity | - | 257,542,500.80 | - | - | - | - | 10,767,293.62 | 268,309,794.42 |
| 3. Amount formed by business combination not under common control | - | - | - | - | - | - | 13,234,886.48 | 13,234,886.48 |
| 4. Others | (3,455,235.00) | (23,441,881.20) | (172,576,649.42) | - | - | - | - | 145,679,533.22 |
| (III) Profit distribution | - | - | (102,033,123.00) | - | 211,792,989.55 | (5,813,054,816.65) | (2,100,000.00) | (5,501,328,704.10) |
| 1. Transfer to surplus reserves | - | - | - | - | 211,792,989.55 | (211,792,989.55) | - | - |
| 2. Distributions to shareholders | - | - | (102,033,123.00) | - | - | (5,601,261,827.10) | (2,100,000.00) | (5,501,328,704.10) |
| 3. Others | - | - | - | - | - | - | - | - |
| IV. Closing 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 |
At December 31
st2020
Statement of Changes in Owners' Equity of the parent company
Unit: RMB
| Item | Amount for 2020 | |||||
| Share capital | Capital reserves | Less: Treasury share | 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 |
| II. Increase or decrease in the current period | (1,593,506.00) | 705,376,594.64 | (1,026,355,126.89) | - | 6,130,996,407.50 | 7,861,134,623.03 |
| (I) Total comprehensive income | - | - | - | - | 12,671,388,440.50 | 12,671,388,440.50 |
| (II) Owners’ contributions and reduction in capital | (1,593,506.00) | 705,376,594.64 | (925,020,534.09) | - | - | 1,628,803,622.73 |
| 1. Capital contribution from shareholders | - | - | - | - | - | - |
| 2. Share-based payment recognized in owners’ equity | - | 717,200,505.99 | - | - | - | 717,200,505.99 |
| 3. Others | (1,593,506.00) | (11,823,911.35) | (925,020,534.09) | - | - | 911,603,116.74 |
| (III) Profit distribution | - | - | (101,334,592.80) | - | (6,540,392,033.00) | (6,439,057,440.20) |
| 1.Transfer to surplus reserve | - | - | - | - | - | - |
| 2.Distributions to shareholders | - | - | (101,334,592.80) | - | (6,540,392,033.00) | (6,439,057,440.20) |
| 3. Others | - | - | - | - | - | - |
| III. Closing balance of the current period | 9,343,417,190.00 | 4,770,210,334.16 | 1,121,918,737.47 | 4,672,505,348.00 | 31,327,891,058.77 | 48,992,105,193.46 |
At December 31
st2020
Statement of Changes in Owners' Equity of the parent company-continued
Unit: RMB
| Item | Amount for 2019 | |||||
| Share capital | Capital reserves | Less: Treasury share | 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 |
| II. Increase or decrease in the current period | 117,740,223.00 | 2,181,571,332.06 | 1,783,289,104.42 | 211,792,989.55 | 5,869,361,193.36 | 6,597,176,633.55 |
| (I) Total comprehensive income | - | - | - | - | 11,682,416,010.01 | 11,682,416,010.01 |
| (II) Owners’ contributions and reduction in capital | 117,740,223.00 | 2,181,571,332.06 | 1,885,322,227.42 | - | - | 413,989,327.64 |
| 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 | - | 268,309,794.42 | - | - | - | 268,309,794.42 |
| 3. Others | (3,455,235.00) | (23,441,881.20) | (172,576,649.42) | - | - | 145,679,533.22 |
| (III) Profit distribution | - | - | (102,033,123.00) | 211,792,989.55 | (5,813,054,816.65) | (5,499,228,704.10) |
| 1.Transfer to surplus reserve | - | - | - | 211,792,989.55 | (211,792,989.55) | - |
| 2.Distributions to shareholders | - | - | (102,033,123.00) | - | (5,601,261,827.10) | (5,499,228,704.10) |
| 3. Others | - | - | - | - | - | - |
| III. Closing 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 |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 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.
On December 17
th2020, authorized by the Company’s second Extraordinary General Meeting in 2016, the Companycompleted procedures of repurchase and cancellation of some of the 1,593,506 restricted stocks that did not meet theincentive conditions, and the total share capital of the Company was adjusted to 9,343,417,190 shares. Please refer to Note(V)-37 for share capital details.
As of December 31
st2020, the Company’s total registered capital is RMB 9,343,417,190, with total capital shares of9,343,417,190 shares (face value RMB 1 per share), of which restricted A-shares were 1,248,025,260 shares, A-shareswithout restriction are 8,095,391,930 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 and control products, big data and IoT software and hardware products, aircraft, robot,intelligent equipment and intelligent system, real-time communication system, auto parts and accessories, and electricalsignal equipment for vehicle, and servers and supporting hardware and software products ; sales of self-manufacturedproducts; technical service, electronic technology consulting service, training service (excluding class training), electronicequipment installation, electronic engineering, and design, construction and maintenance of intelligent systems. For detailsabout business 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 2
nd
meeting of the 5
thsessionBoard of Directors of the Company on April 15
th2021.
For consolidation scope of the financial statements of the current fiscal year, please refer to Note (VII) “Interest inother entities”. For changes in consolidation scope of the financial statements during the current fiscal year, please referto “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 Group
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
has 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 December 31
st
2020, and there isno factor 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.
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
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 December 31
st
2020; and the Company's and consolidated resultsof operations, the Company’s and consolidated changes in shareholders' equity, and the Company’s and consolidated cashflows for the 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. Overseassubsidiaries of the Company determine their functional currency on the basis of the primary economic environment inwhich it operates. For functional currency of overseas subsidiaries of the Company, see Note (V) 60. 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
Notes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
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.
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.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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.
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
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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) "15.3.2 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.
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.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
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 closing balances of the prior year and the actual amount of the prior year are presented at the converted amounts ofthe prior year's financial statements.
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over a foreign operation due todisposal of certain interest in it or other reasons, the Group transfers the accumulated exchange differences arising onconversion of financial statements of this foreign operation attributable to the owners' equity of the Company 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 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
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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, Confirmation 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, other receivables (except for tax refundreceivable) 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 principaland 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 an
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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2020 to December 31
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investment 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:
? 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.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
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 incomeis 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, contract assets, lease receivables, and financial guarantee contracts that do not meet theconditions for termination of recognition due to the transfer of financial assets or continue to be involved in financialliabilities formed by the transferred financial assets, the Group will handle impairment on the basis of expected credit lossand recognize loss provision.
The Group’s consideration of contract assets, notes receivable and accounts receivable that are generated by transactionsregulated by revenue standards and do not contain significant financing components or that do not consider financingcomponents in contracts that are not more than one year old, as well as those operating lease receivables formed fromtransactions that are defined by the Accounting Standards for Business Enterprises No. 21-Leasing, the loss reserve shallbe measured based on the amount of the expected credit loss during the entire duration.
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.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 whichthe debtor operates.
(7) Whether significant changes have occurred in the value of security pledged for the debt or the quality of guarantee
or 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, if any contractual payment for anyfinancial instrument that overdue for over (including) 30 days, it indicates the credit risks of that financial instrument haveincreased 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.
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
The evidence of credit impairment occurred in a financial asset includes the following observable information:
(1) Material financial difficulties have occurred in the issuer or debtor;
(2) Breach of contract by the debtor, such as default or overdue for the payment of interest or repayment of principal;
(3) Due to economic or contractual considerations relating to financial difficulties of the debtor, the creditor has grantedconcession to the debtor under no other circumstances;
(4) The debtor is likely to go bankrupt or carry out other financial restructuring;
(5) The financial difficulties of the issuer or debtor have caused the disappearance of the active market for the financialasset;
(6) The purchase or generation of a financial asset at a large discount, such discount reflects the fact of occurrence of creditloss.
10.2.3 Confirmation of expected credit loss
The Group’s accounts receivable, other receivables (except for tax refund receivables), contract assets, lease receivablesand long-term receivables, that are individually significant and the debtor has serious financial difficulties, are determinedon the basis of individual for its credit loss. For the remaining accounts receivable, other receivables (except for tax refundreceivables), contract assets, lease receivables and long-term receivables, an impairment matrix is used to determine thecredit losses of relevant financial instruments on a portfolio basis.The Group determines credit losses by assessing theprobability of breach and loss given default based on the credit ratings on a portfolio basis of notes receivable andreceivables. On the basis of common risk characteristics, the Group places financial instruments in different groups. Thecommon credit risk characteristics adopted by the Group include: financial instrument type, credit risk rating, initialrecognition 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 cashflow that the group should receive and the cash flow that it expects to receive.? In respect of lease receivables, the credit loss is the present value of the difference between the contractual cash
flow that the group should receive and the cash flow that it expects to receive.? 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 balance
of the book value of such financial asset and the present value of the estimated future cash flows discounted by
the original effective interest rate.
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-
Notes to Financial StatementsFor the reporting period from January 1
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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.
For full transfer, which does not satisfy the conditions of derecognition, of the financial assets, the Group will continue to
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
recognize 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, confirmation 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, confirmation 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 instrumentsunder 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 included
Notes to Financial StatementsFor the reporting period from January 1
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st2020
previously 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 ofcontinuous involvement in transferred financial assets, as well as the financial guarantee contracts, the other financialliabilities will be classified as financial liabilities measured at amortized cost, subsequent measurement will be based onamortized cost, gains or losses on derecognition or amortization will be accounted in the profit and loss of the currentperiod.
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
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 and foreign exchange option contract, etc. Derivatives are measuredat fair value initially on the date of signing the relevant contract and will be measured at fair value for subsequentmeasurement.
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.
(1) The economic characteristics and risks of the embedded derivative are not closely connected to the economic
characteristics and risks of the master contract.
(2) A separate instrument containing the same terms as the embedded derivative fits the definition of a derivative.
(3) The hybrid contract is not measured at fair value and changes in fair value are accounted through profit and loss of
the 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
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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2020 to December 31
st2020
(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 inventory mainly includes finished products, products in process and raw materials held in daily activities.Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and otherexpenditures incurred in bringing the inventories to 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 realizablevalue 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
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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. Assets held for sale
Non-current assets and disposal groups are classified as held for sale category when the Group recovers the book valuethrough a sale (including an exchange of non-monetary assets that has commercial substance) rather than continuing use.
Non-current assets or disposal groups classified as held for sale are required to satisfy the following conditions at the sametime: (1) the asset or disposal group is available for immediate sale in its present condition subject to terms that are usualand customary for sales of such asset or disposal group; (2) the sale is highly probable, i.e. the Group has made a resolutionabout a selling plan and obtained a confirmed purchase commitment and the sale is expected to be completed within oneyear.
Non-current assets or disposal groups classified as held for sale are measured at the lower of the book value and the netamount of the fair value less the cost of disposal. Where the carrying amount is higher than the net amount of fair valueless the cost of disposal, the carrying amount should be reduced to the net amount of fair value less the cost of disposal,and such reduction is recognized as impairment loss of assets and included in profit or loss for the period. In the meantime,provision for impairment of held-for-sale assets is made. When there is an increase in the net amount of fair value of non-current assets held for sale less the cost of disposal at the subsequent balance sheet date, the original deduction should bereversed from impairment loss of assets recognized after the classification as held for sale, and the reversed amount isincluded in profit or loss for the period. The impairment loss of assets recognized before the classification as held for saleis not reversed.
Non-current assets or non-current assets within disposal groups classified as held for sale are not depreciated or amortized,and the interests and other costs of liabilities of disposal group classified as held for sale continue to be recognized.
All or part of equity investments in an associate or joint venture are classified as held-for-sale assets. For the part that isclassified as held for sale, it is no longer accounted through equity method since the date of the classification.
15. Long-term Equity Investment
15.1 Basis for determining joint control and significant influence over investee
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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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.
15.2 Determination of initial investment cost
For a long-term equity, investment acquired through a business combination involving enterprises under common control,the shares of merged party's book value of owners' equity in the final controlling party consolidated financial statementsobtained on the merger date shall be considered as the initial investment cost of long-term equity investment. Thedifferences between the initial investment cost of long-term equity investment and the paid cash, the 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.
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.
Long-term equity investment obtained by other means other than long-term equity investment formed by businesscombination shall be initially measured at cost.
15.3 Subsequent measurement and recognition of profit or loss
15.3.1 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 issued
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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by the investee.
15.3.2 Long-term equity investment accounted for using the equity method
Except for investments in associates and joint ventures that are wholly or partly classified as holding assets for sale, theGroup accounts for investment in associates and joint ventures using the equity method. An associate is an entity overwhich the Group has significant influence and a joint venture is an entity over which the Group can only exercise jointcontrol 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 ofthe 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.
15.4 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.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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16. Fixed Assets
16.1 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.
16.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one inwhich it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate of eachcategory of fixed assets are as follows:
| Class | Depreciation period (years) | Residual value rate (%) | Annual depreciation rate (%) |
| Buildings and Constructions | 20 years | 10 | 4.5 |
| General-purpose equipment | 3-5 years | 10 | 18.0-30.0 |
| Special-purpose equipment | 3-5 years | 10 | 18.0-30.0 |
| Means of transportation | 5 years | 10 | 18.0 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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ownership of the leased asset at the end of the lease term, the leased asset is depreciated over the shorter of the lease termand its useful life.
16.4 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, thefixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds ondisposal of the asset net of the carrying amount and related taxes is recognized in profit or loss for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied atleast once at each financial year-end, and account for any change as a change in an accounting estimate.
17. Construction in Process
Construction in progress is measured at its actual costs. The actual costs include various construction expenditures duringthe construction period, borrowing costs capitalized before it is ready for intended use and other relevant costs.Construction in progress is not depreciated. Construction in progress is transferred to a fixed asset when it is ready forintended use.
18. 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.
19. Intangible Assets
19.1 Intangible Assets Valuation Method and Service Life
Intangible assets include land use right, intellectual property (IP), application software, and franchiseetc, etc.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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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 | Franchised operating period | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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in the profit and loss statement before the capitalization conditions are available during development of the same intangibleasset, no adjustment will be made.
20. 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.
21. Long-term deferred expenses
Long-term deferred expenses are the expenses that are already incurred but will be shared in the current reporting periodand later periods with amortization term of more than one year, mainly for the expenses on betterment of leased fixedassets. Long-term deferred expenses are evenly amortized in installments in three years during the expected benefit period.
22. Contract liabilities
Contract liabilities refer to the obligation of the Group to transfer goods or services to customers for consideration receivedor receivable from customers. Contract assets and contract liabilities under the same contract are presented in net terms.
23. Employee compensation
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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23.1 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.
23.2 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.
23.3 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.
24. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency such as products qualityassurance, etc. And it is probable that an outflow of economic benefits will be required to settle the obligation, and theamount of the obligation can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation atthe balance sheet date, taking into account factors pertaining to a contingency such as the risks, uncertainties and timevalue of money. Where the effect of the time value of money is material, the amount of the provision is determined bydiscounting the related future cash outflows.
25. Share-based Payment
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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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.
25.1 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.
25.2. 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.
26. Revenue
26.1 Accounting policies applied in revenue recognition and measurement
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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The revenue of the Group is mainly generated from business types as follows:
(1) Revenue from sale of products
Product sales revenue is the revenue from sales of video surveillance products, smart home products, robotics productsand other products of the Group.
(2) Project construction revenue
Project construction revenue is the revenue from constructions related to intelligent security solution projects providedby the Group.
(3) Cloud service and other service revenue
Revenue from cloud services and other services refers to cloud services such as storage services, video services, andtelephone services provided by the Group, maintenance services related to security projects, and other services, etc.
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 output method to determine the progress of performance, that is, the progress of contractperformance is determined according to the value of the goods or services that have been transferred to the customer inthe view of the customer. When the performance progress cannot be reasonably determined, and the costs incurred can beexpected to be compensated, the Group recognizes revenue based on the amount of costs incurred until the performanceprogress 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 uncertainty
Notes to Financial StatementsFor the reporting period from January 1
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is eliminated. At each balance sheet date, the Group re-estimates the amount of variable consideration that should beincluded in the transaction price.
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 additional purchase option of customers includes customer reward incentives. With respect to the additional purchaseoption with material rights provided to customers, the Group regards it as a single performance obligation, and recognizesrelevant revenue upon obtaining the control over relevant goods or services by the customers who exercise the purchaseoption in future or upon lapse of such option. If a stand-alone selling price of the additional purchase option of customersis not directly observable, the Group shall consider all relevant information including the difference in discount obtainedwith and without the exercise of such option by customers and the possibility of exercising such option by customersduring estimation.
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.
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.
When the Group collects amounts of sold goods or services in advance from the customer, the Group will firstly recognizethe amounts as a liability and then transfer to revenue until satisfying relevant performance obligations. When the advancesfrom customers is non-refundable and the customer may give up all or part of contract right, and the Group is expected tobe entitled to obtain amounts associated with contract rights given up by the customer, the above amounts shall beproportionally recognized as revenue in accordance with the model of exercising contract rights by the customer; otherwise,the Group will transfer the relevant balance of the above liability to revenue only when the probability is extremely lowfor the customer to satisfy remaining performance obligations.
27. Cost of contract
27.1 Cost of obtaining a contract
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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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.
27.2 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.
The Group’s asset in relation to contract costs are mainly contract performance costs, and they are included in inventoriesbased on their current nature.
27.3 Impairment of contract costs
In determining impairment losses on assets related to contract costs, impairment losses are first determined for other assetsrecognized in accordance with other relevant ASBEs and related to the contract; then, for assets related to contract costswhose carrying value is higher than the difference between the following two items, the Group makes provision forimpairment for the excess to be recognized as asset impairment losses: (1) the remaining amount of consideration that theGroup expects to receive as a results of transfer of goods or services to which the asset relates; (2) the estimated costs tobe incurred in connection with the transfer of relevant goods or services.
After the provision for impairment for the asset related to contract costs is made, if the difference between the above twoitems is higher than the carrying amount of the asset due to changes in the factors of impairment in previous periods, theoriginal provision for impairment of the asset is reversed and included in the current profit or loss, but the carrying amountof the asset after the reversal shall not exceed the carrying amount of the asset on the reversal date assuming no provisionfor impairment is made.
28. Types of governmental subsidies and accounting treatment methods
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.
28.1 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.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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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.
28.2 Judgment basis and accountant treatment of government subsidy related to income
The 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, tax refunds, andValue-Added-Tax deductions, etc. which are used to compensate the group-related costs or losses, and therefore arecategorized as government 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, if 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.
29. Deferred Tax Assets / Deferred Tax Liabilities
The income tax expenses include current income tax and deferred income tax.
29.1. 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.
29.2 Deferred Tax Assets and Deferred 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 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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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.
29.3 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.
30. 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.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
30.1 Accounting treatment of operating Lease
30.1.1 The Group as lessee under operating leases
Operating lease payments are recognized on a straight-line basis over the term of the relevant lease, and are 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.
30.1.2 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.
30.2. Accounting treatment of the finance lease
30.2.1 The Group as lessee under finance leases
For relevant accounting treatment, refer to Note (III) 16.3 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.
30.2.2 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.
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
31. 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.
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
Except for contract performance costs, inventories are measured at the lower of cost or net realizable value. For rawmaterials, the latest or future actual purchase price is used as the basis for determining the net realizable value; For productsin progress, the actual selling price of the latest or future finished product minus the estimated costs and costs that will beincurred when similar products are completed in the current period, the estimated selling expenses and related taxes to beincurred, is used as the basis for determining the net realizable value; For finished products, the actual selling price of thelatest or future finished product minus the estimated selling expenses and related taxes will be incurred, is used as the basisfor determining the net realizable value. The Group will regularly conduct a comprehensive stocktaking to review theimpairment circumstances on defective, obsoleted or slow-moving inventory if any; in addition, the Group's managementwill regularly review the impairment circumstance of inventory with long storage time according to the inventory aginglist. The review procedure includes the comparison between book value of defective, obsoleted or slow-moving inventoriesand inventory with long storage time and its corresponding net realizable value in order to determine whether to withdrawprovisions on the defective, obsoleted or slow-moving inventory and inventory with long storage time. Based on the aboveprocedure, the Group's management deems that the full provision amounts have been withdrawn for inventory.
Impairment of accounts receivable
Except for accounts receivable whose credit losses are determined on the basis of individual basis, the Group adopts animpairment matrix to determine its expected credit loss provision. Based on the historical loss rate, the Group determinesthe proportion of corresponding loss reserves for various types of accounts receivable with similar risk characteristics. Theimpairment matrix is determined based on the historical overdue ratio and default of the Group, taking into accountreasonable and well-founded industry forward-looking information. As of December 31
st2020, the Group has reassessedthe historically observable overdue ratio and considered changes in forward-looking information.The amount of theprovision for expected credit losses will change as the estimation of the Group. The details on the provision for expectedcredit losses of the accounts receivable of the Group are given in Note (V). 4.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 costs and expenses incurred to meet the established standards ofproduct quality assurance obligations to customers in accordance with the product contract; the Group made such anestimation according to the predicted repair and replacement cost of relevant products. The estimation considers theproduct claim rate trend, historic defect rate, industry practice and other major estimations. The management deems thatthe current estimation on accrued liabilities of product quality warranty is reasonable, however, the Group will continueto review the conditions of product repairs, and will conduct adjustment if any sign indicating the need to make adjustmentson accounting estimates.
Deferred tax assets and deferred tax liabilities
Deferred income tax assets and deferred income tax liabilities are measured at the applicable income tax rate during theperiod when the relevant asset is expected to be recovered or the relevant debt is expected to be paid off. The expectedapplicable income tax rate is determined according to the relevant current tax regulations and the actual situation of theGroup. If the estimated income tax 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 might be adjusted and confirmedin the 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
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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).
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
32. Significant alternation in accounting policy and accounting estimations
32.1 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”, the revenue standard before the amendment is referred to as the "Original 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). 26. 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 only adjusts the cumulative impact of contracts that have not been completed on the first execution date. 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. The New Revenue Standard has no significant impact on the revenue recognition of various businesses of the Group. For details of the impact of the Group’s adoption of the New Revenue Standard on January 1st 2020, please refer to Note (III). 32.2. | Such alternations in accounting policy were approved by the Group at board of director general meeting. | None |
| Item | Original Revenue Standard | Reclassified (Note) | New Revenue Standard |
| Current Assets: | |||
| Inventories | 11,267,986,843.11 | (511,959,250.70) | 10,756,027,592.41 |
| Contract assets | - | 511,959,250.70 | 511,959,250.70 |
| Current Liabilities: | |||
| Receipts in advance | 1,020,989,460.61 | (1,020,989,460.61) | - |
| Contract liabilities | - | 1,277,556,117.60 | 1,277,556,117.60 |
| Other payables | 1,568,744,599.94 | (223,641,465.91) | 1,345,103,134.03 |
| Other current liabilities | 913,534,538.26 | 74,324,355.92 | 987,858,894.18 |
| Non-current Liabilities: | |||
| Deferred income | 333,589,831.30 | (107,249,547.00) | 226,340,284.30 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
reclassified the prepaid product sales amount and prepaid construction settlement payments that were originally includedin advance receipts of RMB 946,665,104.69 and RMB 74,324,355.92 to contract liabilities and other current liabilities,respectively; and reclassified cloud storage service income of RMB 107,249,547.00 originally included in deferred incomeand part of the accrued expenses of RMB 223,641,465.91 originally included in other payables into contract liabilities.
The impact of the implementation of the New Revenue Standards on the relevant items of the parent company’sbalance sheet at the beginning of this year is listed below:
Unit: RMB
| Item | Original Revenue Standard | Reclassified (Note) | New Revenue Standard |
| Current Assets: | |||
| Inventories | 171,243,815.97 | (10,824,732.70) | 160,419,083.27 |
| Contract assets | - | 10,824,732.70 | 10,824,732.70 |
| Current Liabilities: | |||
| Receipts in advance | 227,242,328.23 | (227,242,328.23) | - |
| Contract liabilities | - | 201,581,177.56 | 201,581,177.56 |
| Other current liabilities | 913,534,538.26 | 25,661,150.67 | 939,195,688.93 |
| Item | Original Revenue Standard | Reclassified (Note) | New Revenue Standard |
| Current Assets: | |||
| Inventories | 11,723,660,551.68 | (245,754,510.98) | 11,477,906,040.70 |
| Contract assets | - | 245,754,510.98 | 245,754,510.98 |
| Current Liabilities: | |||
| Receipts in advance | 1,545,407,782.59 | (1,545,407,782.59) | - |
| Contract liabilities | - | 2,161,166,671.26 | 2,161,166,671.26 |
| Other payables | 2,187,414,432.38 | (662,361,076.43) | 1,525,053,355.95 |
| Other current liabilities | 560,959,368.73 | 184,752,210.84 | 745,711,579.57 |
| Non-current Liabilities: | |||
| Deferred income | 329,029,010.77 | (138,150,023.08) | 190,878,987.69 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Unit: RMB
| Item | Original Revenue Standard | Reclassified (Note) | New Revenue Standard |
| Current Assets: | |||
| Inventories | 207,527,500.81 | (3,311,250.08) | 204,216,250.73 |
| Contract assets | - | 3,311,250.08 | 3,311,250.08 |
| Current Liabilities: | |||
| Receipts in advance | 272,352,315.20 | (272,352,315.20) | - |
| Contract liabilities | - | 240,629,015.92 | 240,629,015.92 |
| Other current liabilities | 557,444,443.98 | 31,723,299.28 | 589,167,743.26 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
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%, 13% and simple collection rate of 5%, 3% (Note 3) |
| 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% |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
(5) In accordance with the Notice on Publishing the List of Third Batch of Proposed Identified High-tech Enterprises ofShanghai in 2020 issued by Shanghai High-tech Enterprise Identification Office on November 20
th2020, theCompany’s wholly-owned subsidiary, Shanghai Goldway Intelligent Transportation System Co., Ltd. (“ShanghaiGoldway”) was identified as the high-tech enterprise with a valid term of 3 years, from 2020 to 2022. Therefore, itscorporate income tax is at a reduced rate of 15% this year. (2019:15%)
(6) In accordance with the Letter of Reply on Publishing the List of Identified High-tech Enterprises of Zhejiang Provincein 2020 (Guo Ke Huo Zi [2020] No. 251) issued by the Leading Group Office of National High-tech EnterpriseIdentification Management on December 29
th2020, the Company’s joint-venture subsidiary, Hangzhou HikrobotTechnology Co., Ltd. (“Hangzhou Robotic Technology”) were identified as the high-tech enterprises with a valid termof 3 years, from 2020 to 2022. Therefore, the enterprise income tax in the current reporting period is at a reduced rateof 15%. (2019:15%)
(7) In accordance with the Letter of Reply on Publishing the List of Identified High-tech Enterprises of Zhejiang Province
in 2020 (Guo Ke Huo Zi [2020] No. 32) issued by the Leading Group Office of National High-tech EnterpriseIdentification Management on January 20
th2020, the Company’s joint-venture subsidiary, Hangzhou HikmicroSensing Technology Co., Ltd. (“Hangzhou Hikmicro”) were identified as the high-tech enterprises with a valid termof 3 years, from 2019 to 2021.
According to the Notice of State Administration of Taxation and Ministry of Finance on the Enterprise Income TaxPolicy for Further Incentivizing Software Industry and Integrated Circuit Industry (Cai Shui [2012] No. 27) and Noticeon Issues Related to Enterprise Income Tax Preferential Policies for Software and Integrated Circuit Industry (CaiShui [2016] No. 49), Hangzhou HikMicro is an integrated circuit manufacturer that was founded before December
st2017 and has not made profit and that produces the integrated circuit with line width <0.8 micrometers (incl.), soit is exempted from enterprise income tax in the first and second years after start of profiting and pays enterpriseincome tax at half of the 25% statutory tax rate in the third to fifth years. As of the approval date of this report,Hangzhou HikMicro had not profited in 2020.
(8) In accordance with the Announcement on Promoting the Income Tax Policies of High-quality Developed Enterprises
in the Integrated Circuit Industry and the Software Industry (Announcement [2020] No. 45 jointly by the MOF, SAT,NDRC and MIIT), enterprises engaging in integrated circuit design, equipment, materials, packaging, testing andsoftware encouraged by the state are entitled to exemption from enterprise income tax in the first and second yearsafter start of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the third to fifth years.The Company’s joint venture subsidiaries, Hangzhou EZVIZ Software Co., Ltd. (“EZVIZ Software”) and HangzhouMicroimage Software Co., Ltd. (“Microimage Software”), are qualified software companies and are entitled toexemption from enterprise income tax in 2020 (2019: 25%).
Note 2: In accordance with the requirements of the Notice on Software Product Value-added Tax Policy (Cai Shui [2011]No. 100) promulgated by the Ministry of Finance and the State Administration of Taxation, as for self-developed softwareproducts sales of the Company, Hangzhou System, the Company’s joint-venture subsidiaries such as HangzhouHikRobotic Technology, Hangzhou HikAuto Software Co., Ltd. (“HikAuto”), Hangzhou EZVIZ Software, Wuhan HikStorage Technology Co., Ltd., Hangzhou HikStorage Technology Ltd. (“HikStorage”), Hangzhou Hikmed ImagingTechnology Co., Ltd., Hangzhou Hikfire Technology C o., Ltd. (“Hikfire”), Hangzhou Rayin Technology Co., Ltd.(“Rayin”), Microimage Software and Hangzhou Kuangxin, the VAT shall be calculated and paid with tax rate of 17% atfirst, then the portion with actual tax bearing excess 3% shall be refunded after State Administration of Taxation reviews.
Note 3: In accordance with the Announcement on Relevant Policies for Deepening the Value-Added Tax Reform (JointAnnouncement [2019] No. 39) jointly issued by the Ministry of Finance, the State Administration of Taxation and theGeneral Administration of Customs, from April 1
st 2019 to December 31
st2021, taxpayers in the production and livingservices industry are allowed to deduct an additional 10% of the current deductible input tax to deduct the tax payable(“Additional Deduction Policy”), the Company’s joint venture subsidiaries, Henan Hua’An Bao Quan IntelligentDevelopment Co., Ltd. (“Hua’an Baoquan Intelligent”), Henan Hua’an Security Services Co., Ltd. (“Hua’an SecurityServices”), Henan Haikang Hua’An BaoQuan Electronics Co., Ltd. (“Hua’An BaoQuan Electronics”), Hangzhou EZVIZTechnology Co., Ltd. (“EZVIZ Technology”), engaging in information technology service industry, and their sales ofinformation technology services accounted for more than 50% of its total sales, are complying with the provisions of the
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Additional Deduction Policy and were entitled to additional deduction preferential tax policy of input tax since April 1
st
2019.
Based on the Joint Announcement [2019] No. 39, since April 1
st
2019, taxpayers are subject to VAT taxable sales orimported goods, the VAT rates had been adjusted from 16% and 10% to 13% and 9% respectively.
The VAT rate for the services provided by the Company’s taxpayers is 6%, and part of taxable service income is applicableto the simple collection rate of 5% and 3%.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 | - | - | 17,959.62 | - | - | 26,573.64 |
| EUR | 71,638.34 | 8.0250 | 574,897.70 | 9,121.04 | 7.8155 | 71,285.50 |
| INR | 2,504,019.19 | 0.0891 | 223,108.11 | 2,522,598.05 | 0.0975 | 245,953.31 |
| USD | 32,776.72 | 6.5249 | 213,864.82 | 18,379.06 | 6.9762 | 128,216.03 |
| GBP | 6,341.78 | 8.8903 | 56,380.33 | 6,402.60 | 9.1501 | 58,584.43 |
| Other currencies | - | - | 18,836.93 | - | - | 26,816.77 |
| Bank balance： | ||||||
| RMB | - | - | 27,789,108,210.05 | - | - | 18,788,528,237.06 |
| USD | 941,351,972.89 | 6.5249 | 6,142,227,487.92 | 961,564,878.01 | 6.9762 | 6,708,068,901.97 |
| EUR | 52,026,066.91 | 8.0250 | 417,509,186.97 | 52,283,961.33 | 7.8155 | 408,625,299.77 |
| RUB | 1,742,132,380.50 | 0.0877 | 152,785,009.77 | 620,006,016.25 | 0.1126 | 69,812,677.43 |
| INR | 1,203,270,539.96 | 0.0891 | 107,211,405.11 | 1,970,579,846.87 | 0.0975 | 192,131,535.07 |
| GBP | 11,204,897.40 | 8.8903 | 99,614,899.38 | 10,626,622.96 | 9.1501 | 97,234,662.71 |
| BRL | 54,535,451.03 | 1.2551 | 68,447,444.59 | 19,927,461.93 | 1.7312 | 34,498,422.09 |
| AED | 36,263,518.29 | 1.7761 | 64,407,634.83 | 6,881,653.06 | 1.8992 | 13,069,635.49 |
| CAD | 5,383,485.44 | 5.1161 | 27,542,449.88 | 55,723.62 | 5.3421 | 297,681.15 |
| PLN | 12,359,893.85 | 1.7520 | 21,654,534.02 | 38,087,521.72 | 1.8324 | 69,791,574.80 |
| JPY | 336,505,067.09 | 0.0632 | 21,267,120.24 | - | - | - |
| HKD | 13,632,862.61 | 0.8416 | 11,473,417.17 | 414,424.94 | 0.8958 | 371,241.86 |
| AUD | 2,279,274.45 | 5.0163 | 11,433,524.41 | 1,809,291.16 | 4.8843 | 8,837,120.83 |
| ZAR | 14,765,683.20 | 0.4458 | 6,582,541.57 | 30,300,402.08 | 0.4943 | 14,977,488.75 |
| KRW | 855,655,685.00 | 0.0060 | 5,133,934.11 | 1,047,156,352.79 | 0.0060 | 6,316,447.12 |
| THB | 14,687,508.85 | 0.2328 | 3,419,252.06 | 15,437,877.88 | 0.2328 | 3,593,937.97 |
| Other currencies | - | - | 18,195,337.35 | - | - | 31,353,569.84 |
| Other currency funds: | ||||||
| RMB | - | - | 463,887,119.07 | - | - | 552,442,631.48 |
| USD | 3,101,420.39 | 6.5249 | 20,236,457.90 | 9,370,708.66 | 6.9762 | 65,371,937.73 |
| EUR | 465,821.33 | 8.0250 | 3,738,216.17 | 601,625.37 | 7.8155 | 4,702,003.07 |
| Other currencies | - | - | 2,748,878.19 | - | - | 1,366,483.91 |
| Total | 35,459,729,108.27 | 27,071,948,919.78 | ||||
| Including: deposited in overseas banks | 782,389,029.81 | 1,045,878,239.66 | ||||
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st
2020
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 | - | - | 8,484.61 | - | - | 121,763,423.06 |
| Deposits for letter of guarantee | - | - | 44,417,713.65 | - | - | 60,758,739.37 |
| Deposits for letter of Credit in BRL | 283,313.18 | 1.2551 | 355,586.37 | 271,326.91 | 1.7312 | 469,721.15 |
| Tax Operation Margin for India | 120,305.95 | 0.0891 | 10,719.26 | 120,306.05 | 0.0975 | 11,729.83 |
| Other security deposit | 60,000.00 | 4.7050 | 282,300.00 | - | - | 505,730.42 |
| Other capitals with limitations | - | - | 389,816,426.07 | - | - | 372,771,567.55 |
| Subtotal | 434,891,229.96 | 556,280,911.38 | ||||
| Capitals without limitations: | ||||||
| Deposit in Alipay, Tenpay, etc. | - | - | 25,263,562.38 | - | - | 65,519,585.97 |
| Other currency funds in USD | 4,662,441.59 | 6.5249 | 30,421,965.14 | 298,523.39 | 6.9762 | 2,082,558.84 |
| Other currency funds in ZAR | 23,875.03 | 0.0877 | 2,093.84 | - | - | - |
| Other currency funds in EUR | 3,965.11 | 8.0250 | 31,820.01 | - | - | - |
| Subtotal | 55,719,441.37 | 67,602,144.81 | ||||
| Total | 490,610,671.33 | 623,883,056.19 | ||||
| Item | Closing Balance | Opening Balance |
| Financial assets measured at fair value through current gain and loss | 22,679,846.77 | 181.76 |
| Including: derivative financial assets | 22,679,846.77 | 181.76 |
| Total | 22,679,846.77 | 181.76 |
| Category | Closing Balance | Opening Balance |
| Bank acceptance bill | 1,003,388,157.28 | 696,453,713.94 |
| Commercial acceptance bill | 299,864,547.91 | 276,783,075.08 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
| Category | Closing Balance | Opening Balance |
| Total | 1,303,252,705.19 | 973,236,789.02 |
| Category | Pledged amount at the end of the current reporting period |
| Bank acceptance bill | 7,981,224.88 |
| Total | 7,981,224.88 |
| Category | Derecognized amount by December 31st 2020 | Amount not derecognized by December 31st 2020 |
| Bank acceptance bill Note (V)-29.3 | - | 482,454,604.99 |
| Total | - | 482,454,604.99 |
| Category | Amounts transferred into accounts receivable by December 31st 2020 |
| Commercial Acceptance Bill | 17,014,737.60 |
| Total | 17,014,737.60 |
| Item | Closing Balance | ||
| Accounts receivable | Credit loss provision | Proportion (%) | |
| Within credit period | 14,002,517,652.87 | 58,299,025.51 | 0.42 |
| Within 1 year after exceeding credit period | 6,758,932,090.02 | 255,864,496.09 | 3.79 |
| 1-2 years after exceeding credit period | 1,578,112,326.35 | 372,980,005.92 | 23.63 |
| 2-3 years after exceeding credit period | 733,996,553.54 | 447,320,322.82 | 60.94 |
| 3-4 years after exceeding credit period | 255,513,263.37 | 215,227,318.95 | 84.23 |
| Over 4 years after exceeding credit period | 162,704,016.92 | 162,704,016.92 | 100.00 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
| Item | Closing Balance | ||
| Accounts receivable | Credit loss provision | Proportion (%) | |
| Subtotal | 23,491,775,903.07 | 1,512,395,186.21 | 6.44 |
| Category | Closing Balance | ||||
| Carrying amount | Credit loss provision | Book Value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | |
| Provision for credit loss on a single basis | - | - | - | - | - |
| Provision for credit loss by portfolios | 23,491,775,903.07 | 100.00 | 1,512,395,186.21 | 6.44 | 21,979,380,716.86 |
| Total | 23,491,775,903.07 | 100.00 | 1,512,395,186.21 | 6.44 | 21,979,380,716.86 |
| Category | Beginning Balance | ||||
| Carrying amount | Credit loss provision | Book Value | |||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | |
| Provision for credit loss on a single basis | - | - | - | - | - |
| Provision for credit loss by portfolios | 22,740,426,638.25 | 100.00 | 1,432,499,437.97 | 6.30 | 21,307,927,200.28 |
| Total | 22,740,426,638.25 | 100.00 | 1,432,499,437.97 | 6.30 | 21,307,927,200.28 |
| Customer | Closing balance | ||
| Carrying amount | Credit loss provision | Proportion (%) | |
| Portfolio A | 3,741,372,760.83 | 99,390,940.21 | 2.66 |
| Portfolio B | 14,498,803,998.36 | 1,286,607,985.18 | 8.87 |
| Portfolio C | 5,251,599,143.88 | 126,396,260.82 | 2.41 |
| Total | 23,491,775,903.07 | 1,512,395,186.21 | 6.44 |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
As of December 31
st 2020 and January 1
st
2020, 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 | Credit loss provision | Book value | Estimated average loss rate (%) | Carrying value | Credit loss provision | Book value | |
| Within credit period | 0.02 | 2,971,260,488.09 | 604,959.50 | 2,970,655,528.59 | 0.02 | 3,012,605,457.25 | 597,158.52 | 3,012,008,298.73 |
| Within 1 year after exceeding credit period | 2.02 | 640,220,646.55 | 12,955,798.75 | 627,264,847.80 | 6.11 | 624,571,039.13 | 38,185,783.11 | 586,385,256.02 |
| 1-2 years after exceeding credit period | 51.50 | 82,533,903.30 | 42,503,136.38 | 40,030,766.92 | 52.96 | 42,580,562.72 | 22,551,710.14 | 20,028,852.58 |
| 2-3 years after exceeding credit period | 90.10 | 40,717,280.97 | 36,686,603.66 | 4,030,677.31 | 100.00 | 10,567,300.34 | 10,567,300.34 | - |
| 3-4 years after exceeding credit period | 100.00 | 5,809,507.07 | 5,809,507.07 | - | 100.00 | 361,945.19 | 361,945.19 | - |
| Over 4 years after exceeding credit period | 100.00 | 830,934.85 | 830,934.85 | - | 100.00 | 970,003.96 | 970,003.96 | - |
| Total | 2.66 | 3,741,372,760.83 | 99,390,940.21 | 3,641,981,820.62 | 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 | Credit loss provision | Book value | Estimated average loss rate (%) | Carrying value | Credit loss provision | Book value | |
| Within credit period | 0.76 | 6,294,425,956.16 | 48,017,503.05 | 6,246,408,453.11 | 0.79 | 6,328,262,502.43 | 50,248,953.36 | 6,278,013,549.07 |
| Within 1 year after exceeding credit period | 3.77 | 5,727,639,925.20 | 216,155,232.48 | 5,511,484,692.72 | 5.56 | 5,693,144,197.77 | 316,684,963.73 | 5,376,459,234.04 |
| 1-2 years after exceeding credit period | 20.69 | 1,426,493,413.08 | 295,122,043.56 | 1,131,371,369.52 | 33.24 | 1,204,463,575.15 | 400,380,049.11 | 804,083,526.04 |
| 2-3 years after exceeding credit period | 57.51 | 665,262,321.85 | 382,616,768.44 | 282,645,553.41 | 69.87 | 359,638,419.88 | 251,294,454.87 | 108,343,965.01 |
| 3-4 years after exceeding credit period | 83.09 | 238,233,041.29 | 197,947,096.87 | 40,285,944.42 | 88.54 | 111,524,139.09 | 98,742,193.82 | 12,781,945.27 |
| Over 4 years after exceeding credit period | 100.00 | 146,749,340.78 | 146,749,340.78 | - | 100.00 | 86,854,139.13 | 86,854,139.13 | - |
| Total | 8.87 | 14,498,803,998.36 | 1,286,607,985.18 | 13,212,196,013.18 | 8.74 | 13,783,886,973.45 | 1,204,204,754.02 | 12,579,682,219.43 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
As of December 31
st 2020 and January 1
st2020, 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 | Credit loss provision | Book value | Estimated average loss rate (%) | Carrying value | Credit loss provision | Book value | |
| Within credit period | 0.20 | 4,736,831,208.62 | 9,676,562.96 | 4,727,154,645.66 | 0.25 | 4,542,156,207.09 | 11,532,655.19 | 4,530,623,551.90 |
| Within 1 year after exceeding credit period | 6.84 | 391,071,518.27 | 26,753,464.86 | 364,318,053.41 | 11.63 | 607,354,998.31 | 70,646,073.52 | 536,708,924.79 |
| 1-2 years after exceeding credit period | 51.18 | 69,085,009.97 | 35,354,825.98 | 33,730,183.99 | 50.83 | 86,416,837.18 | 43,926,740.35 | 42,490,096.83 |
| 2-3 years after exceeding credit period | 100.00 | 28,016,950.72 | 28,016,950.72 | - | 100.00 | 12,516,916.97 | 12,516,916.97 | - |
| 3-4 years after exceeding credit period | 100.00 | 11,470,715.01 | 11,470,715.01 | - | 100.00 | 10,418,437.21 | 10,418,437.21 | - |
| Over 4 years after exceeding credit period | 100.00 | 15,123,741.29 | 15,123,741.29 | - | 100.00 | 6,019,959.45 | 6,019,959.45 | - |
| Total | 2.41 | 5,251,599,143.88 | 126,396,260.82 | 5,125,202,883.06 | 2.95 | 5,264,883,356.21 | 155,060,782.69 | 5,109,822,573.52 |
| Credit loss provision | Total |
| Balance on January 1st 2020 | 1,432,499,437.97 |
| Provision/(reverse) during the current fiscal year | 106,051,544.54 |
| Derecognition of financial assets (including direct write-downs) and transfer out | (22,005,239.96) |
| Difference arised from foreign currency statement translation | (4,150,556.34) |
| Balance on December 31st 2020 | 1,512,395,186.21 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Actual write-off of accounts receivable during current reporting period:
In the current reporting period, the amount of actual accounts receivable write-off is RMB 25,171,302.50, and RMB3,166,062.54 is recollected after writing-off.
4.4 Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
| Name of the Party | Relationship with the Company | Book value balance of accounts receivable | Closing balance for credit loss provision | Proportion (%) |
| CETC’s subsidiary company A (Note) | Related Party | 501,007,644.51 | 96,125,402.52 | 2.13 |
| Third Party A | Third party | 310,077,741.68 | 1,486,228.93 | 1.32 |
| Third Party B | Third party | 126,881,081.38 | 151,276.86 | 0.54 |
| Third Party C | Third party | 107,295,716.59 | 3,377,737.34 | 0.46 |
| Third Party D | Third party | 89,559,375.68 | 1,090,145.30 | 0.38 |
| Total | 1,134,821,559.84 | 102,230,790.95 | 4.83 |
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 1,959,601,195.25 | 1,257,385,053.02 |
| Total- | 1,959,601,195.25 | 1,257,385,053.02 |
| Item | Pledged amounts at the end of the reporting period |
| Bank acceptance bill | 106,117,987.87 |
| Total- | 106,117,987.87 |
| Item | Derecognized amount at December 31st 2020 (note) | Amount not derecognized at December 31st 2020 |
| Bank acceptance bill | 1,176,321,996.01 | - |
| Total- | 1,176,321,996.01 | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
6. Prepayments
6.1 Prepayments by aging analysis
Unit: RMB
| Aging | Closing Balance | Opening Balance | ||
| Carrying amount | Proportion (%) | Carrying amount | Proportion (%) | |
| Within 1 year | 264,692,469.55 | 89.33 | 288,005,514.00 | 93.00 |
| 1-2 years | 20,302,314.17 | 6.85 | 15,571,671.02 | 5.03 |
| 2-3 years | 9,021,070.25 | 3.04 | 5,931,322.30 | 1.92 |
| Over 3 years | 2,318,835.89 | 0.78 | 177,226.00 | 0.05 |
| Total | 296,334,689.86 | 100.00 | 309,685,733.32 | 100.00 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
7. Other receivables
7.1 Other receivables by aging
Unit: RMB
| Item | Closing Balance | ||
| Other receivables | Bad debt provision | Proportion (%) | |
| Within contract period | 393,767,306.19 | 3,092,760.15 | 0.79 |
| Within 1 year | 82,543,774.90 | 3,484,470.34 | 4.22 |
| 1-2 years | 30,360,130.36 | 6,333,574.44 | 20.86 |
| 2-3 years | 36,308,366.49 | 16,055,559.67 | 44.22 |
| 3-4 years | 19,994,220.62 | 14,864,083.14 | 74.34 |
| Over 4 years | 7,472,685.05 | 7,472,685.05 | 100.00 |
| Subtotal | 570,446,483.61 | 51,303,132.79 | 8.99 |
| Item | Closing Balance | Opening Balance |
| Temporary payments for receivables | 294,409,377.31 | 289,318,820.48 |
| Guarantee deposits | 173,447,240.76 | 189,230,714.51 |
| Tax rebates | 67,714,444.77 | 63,470,351.07 |
| Investment intention fund | 1,000,000.00 | 2,968,783.82 |
| Others | 33,875,420.77 | 36,238,521.79 |
| Total | 570,446,483.61 | 581,227,191.67 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st
2020
7.3 Provision for credit loss
Unit: RMB
| Category | Opening balance | Amount of changes in the current reporting period | Difference resulted from foreign currency statements Conversion | Closing balance | ||
| Provision or reverse | Recollect | Resell or write off | ||||
| Other receivables | 25,980,646.19 | 27,043,173.31 | - | (977,181.94) | (743,504.77) | 51,303,132.79 |
| Total | 25,980,646.19 | 27,043,173.31 | - | (977,181.94) | (743,504.77) | 51,303,132.79 |
| 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 | (1,212,041.34) | 1,212,041.34 | - | - |
| -- Transfer into stage 3 | - | (4,892,634.45) | 4,892,634.45 | - |
| --provision/(reverse) in the current reporting period | 3,836,264.92 | 8,606,003.44 | 14,600,904.95 | 27,043,173.31 |
| -- Derecognition of financial assets (including direct write-down) and transfer out | - | - | (977,181.94) | (977,181.94) |
| Other changes | (743,504.77) | - | - | (743,504.77) |
| Balance on December 31st 2020 | 3,092,760.15 | 9,818,044.78 | 38,392,327.86 | 51,303,132.79 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
7.5 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 other receivables (%) | Closing balance for credit loss provision |
| Third party E | Third party | Guarantee deposits | 13,305,682.50 | With in the contract period | 2.33 | 157,007.05 |
| Third party F | Third party | Guarantee deposits | 6,927,179.05 | With in the contract period | 1.21 | 81,740.71 |
| Third party G | Third party | Temporary payments for receivables | 5,513,580.00 | With in the contract period | 0.97 | 65,060.24 |
| Third party H | Third party | Temporary payments for receivables | 4,492,118.45 | With in the contract period | 0.79 | 53,007.00 |
| Third party I | Third party | Guarantee deposits | 3,738,423.66 | 1-2 years | 0.66 | 797,405.77 |
| Total | 33,976,983.66 | 5.96 | 1,154,220.77 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
8. Inventories
8.1 Categories of inventories
Unit: RMB
| 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 | 5,307,099,264.63 | 96,173,520.97 | 5,210,925,743.66 | 4,900,229,585.04 | 36,718,275.26 | 4,863,511,309.78 |
| Work-in-progress | 364,831,525.62 | - | 364,831,525.62 | 280,637,734.52 | - | 280,637,734.52 |
| Finished goods | 5,863,464,370.61 | 516,926,580.56 | 5,346,537,790.05 | 5,801,082,843.92 | 405,129,709.25 | 5,395,953,134.67 |
| Contract performance cost | 555,610,981.37 | - | 555,610,981.37 | 215,925,413.44 | - | 215,925,413.44 |
| Total | 12,091,006,142.23 | 613,100,101.53 | 11,477,906,040.70 | 11,197,875,576.92 | 441,847,984.51 | 10,756,027,592.41 |
| 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 | 61,888,587.98 | - | 2,433,342.27 | - | 96,173,520.97 |
| Finished goods | 405,129,709.25 | 299,338,888.22 | - | 174,888,235.50 | (12,653,781.41) | 516,926,580.56 |
| Subtotal | 441,847,984.51 | 361,227,476.20 | - | 177,321,577.77 | (12,653,781.41) | 613,100,101.53 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
9. Contract assets
9.1 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 | |
| Constructions | 179,392,556.16 | 1,363,383.44 | 178,029,172.72 | 511,959,250.70 | - | 511,959,250.70 |
| Maintainence services | 68,243,992.61 | 518,654.35 | 67,725,338.26 | - | - | - |
| Total | 247,636,548.77 | 1,882,037.79 | 245,754,510.98 | 511,959,250.70 | - | 511,959,250.70 |
| Items | Closing Balance | ||||
| Carrying amount | Provisions for impairment | Book value | |||
| Amount | Proportion (%) | Amount | Provision proportion (%) | Amount | |
| Provision for impairment on a single item | - | - | - | - | - |
| Provision for impairment by portfolio | 247,636,548.77 | 100.00 | 1,882,037.79 | 0.76 | 245,754,510.98 |
| Total | 247,636,548.77 | 100.00 | 1,882,037.79 | 0.76 | 245,754,510.98 |
| Credit loss provision | Expected credit loss during the whole duration (No credit impairment occurred) | Expected credit loss during the whole duration (Credit impairment occurred) | Total |
| Balance on January 1st 2020 | - | - | - |
| Provision/(reverse) during the current fiscal year | 1,882,037.79 | - | 1,882,037.79 |
| Balance on December 31st 2020 | 1,882,037.79 | - | 1,882,037.79 |
| Item | Closing Balance | Opening Balance |
| Long-term receivables due within one year (Note (V) 12) | 1,001,208,813.83 | 528,469,701.75 |
| Total | 1,001,208,813.83 | 528,469,701.75 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
11. Other current assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible VAT input | 391,898,131.26 | 616,239,842.99 |
| Prepaid corporate income tax | 41,520,799.46 | 80,344,406.42 |
| Prepaid tariff | 22,446,422.69 | 16,702,795.64 |
| Others | 42,049,153.23 | 41,169,776.67 |
| Total | 497,914,506.64 | 754,456,821.72 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
12. Long-term receivables
12.1 Details of long-term receivables
Unit: RMB
| Item | Closing balance | Opening balance | Range of discount rate | ||||
| Carrying amount | Provision for credit loss | Book value | Carrying amount | Provision for credit loss | Book value | ||
| Financial leases receivables | 332,860,621.51 | 21,387,061.50 | 311,473,560.01 | 361,658,264.68 | 16,387,726.08 | 345,270,538.60 | 0.54%-6.05% |
| Including: Unrealized income from financing | 20,751,939.07 | - | 20,751,939.07 | 17,093,256.64 | - | 17,093,256.64 | - |
| Installments for selling goods | 2,890,406,667.71 | 95,101,409.36 | 2,795,305,258.35 | 1,612,991,061.26 | 47,255,136.89 | 1,565,735,924.37 | 4.24%-6.45% |
| Including: Unrealized income from financing | 738,142,438.88 | - | 738,142,438.88 | 399,492,567.10 | - | 399,492,567.10 | - |
| Less: Non-current assets due within one year (Note (V) 10) | 1,092,345,496.98 | 91,136,683.15 | 1,001,208,813.83 | 580,682,032.92 | 52,212,331.17 | 528,469,701.75 | - |
| Total | 2,130,921,792.24 | 25,351,787.71 | 2,105,570,004.53 | 1,393,967,293.02 | 11,430,531.80 | 1,382,536,761.22 | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Unit: RMB
| Age | Closing balance | ||
| Amounts | Credit loss provision | Estimated average loss rate (%) | |
| Within credit period | 2,677,352,505.22 | 31,592,759.56 | 1.18 |
| Within 1 year after exceeding credit period | 358,008,398.69 | 16,181,979.62 | 4.52 |
| 1-2 years after exceeding credit period | 127,457,418.27 | 27,186,667.32 | 21.33 |
| 2-3 years after exceeding credit period | 28,298,355.18 | 12,513,532.66 | 44.22 |
| 3-4 years after exceeding credit period | 12,899,178.33 | 9,762,098.16 | 75.68 |
| Over 4 years after exceeding credit period | 19,251,433.53 | 19,251,433.54 | 100.00 |
| Total | 3,223,267,289.22 | 116,488,470.86 | 3.61 |
| Credit loss 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 |
| On January 1st 2020, the book balance of long-term accounts receivable in the current year | ||||
| Transfer into stage 2 | (13,978,436.59) | 13,978,436.59 | - | - |
| Transfer into stage 3 | - | (2,587,059.16) | 2,587,059.16 | - |
| Provision/(reverse) during the current reporting period | 31,592,759.56 | 21,252,848.33 | - | 52,845,607.89 |
| Balance on December 31st 2020 | 31,592,759.56 | 43,368,646.94 | 41,527,064.36 | 116,488,470.86 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
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 | ||||
| 1. Joint venture companies | |||||||||||
| Hangzhou Haikang Intelligent Industrial Equity Investment Fund Partnership (L.P.) (note 1) | 50,000,000.00 | 550,000,000.00 | - | 12,479,371.62 | - | - | - | - | - | 612,479,371.62 | - |
| Daishan Hailai Yunzhi Technology Co., Ltd. | 13,320,000.00 | - | - | 1,933,091.76 | - | - | - | - | - | 15,253,091.76 | - |
| Zhejiang City Digital Technology Co., Ltd. (Note 2) | - | 11,500,000.00 | - | 364,018.37 | - | - | - | - | - | 11,864,018.37 | - |
| Zhejiang Haishi Huayue Digital Technology Co., Ltd. (Note 3) | - | 10,200,000.00 | - | (214,422.68) | - | - | - | - | - | 9,985,577.32 | - |
| Shenzhen Hikvision Urban Service Operation Co., Ltd. (Note 4) | - | 8,000,000.00 | - | (1,970,430.31) | - | - | - | - | - | 6,029,569.69 | - |
| Guangxi Haishi Urban Operation Management Co., Ltd. (Note 5) | - | 6,000,000.00 | - | (703,304.64) | - | - | - | - | - | 5,296,695.36 | - |
| Yunnan Yinghai Parking Service Co., Ltd. (Note 6) | - | 4,900,000.00 | - | (58,939.24) | - | - | - | - | - | 4,841,060.76 | - |
| Xuzhou Kangbo Urban Operation Management Service Co., Ltd. (Note 7) | - | 4,900,000.00 | - | (268,713.42) | - | - | - | - | - | 4,631,286.58 | - |
| Subtotal | 63,320,000.00 | 595,500,000.00 | - | 11,560,671.46 | - | - | - | - | - | 670,380,671.46 | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
| 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 | ||||
| 2. Associated Companies | |||||||||||
| Wuhu Sensor Technology Co., Ltd. | 48,420,966.46 | - | - | 10,070,297.96 | - | - | - | - | - | 58,491,264.42 | - |
| Maxio Technology (Hangzhou) Co., Ltd. | 109,929,732.09 | - | - | (17,974,093.48) | - | - | - | - | - | 91,955,638.61 | - |
| Zhiguang Hailian Big Data Technology Co., Ltd. | 8,684,859.27 | 10,000,000.00 | - | 2,568,199.60 | - | - | - | - | - | 21,253,058.87 | - |
| Sanmenxia Xiaoyun Vision Technology Co., Ltd. | 4,317,157.18 | - | - | (645,660.25) | - | - | - | - | - | 3,671,496.93 | - |
| Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. | 7,699,011.20 | - | - | 780,120.07 | - | - | - | - | - | 8,479,131.27 | - |
| Qinghai Qingtang Big Data Co., Ltd. | 9,793,595.29 | - | - | 1,853.38 | - | - | - | - | - | 9,795,448.67 | - |
| Subtotal | 188,845,321.49 | 10,000,000.00 | - | (5,199,282.72) | - | - | - | - | - | 193,646,038.77 | - |
| Total | 252,165,321.49 | 605,500,000.00 | - | 6,361,388.74 | - | - | - | - | - | 864,026,710.23 | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
Industrial Equity Investment Fund Partnership (L.P.) and, on December 10
th
2019, founded the Hangzhou Haikang Intelligent Industrial Equity Investment FundPartnership (L.P.) (Haikang Intelligent Fund) under joint contribution. Haikang Intelligent Fund is a limited partnership, with subscribed capital contribution ofRMB 1,000,010,000, and completed registration at Asset Management Association of China (AMAC) on February 5
th2020. CET Management as the fundmanager and the general partner contributes RMB 10,000 and holds 0.0010% shares. The Group, Hangzhou High-tech, CET Partnership and CETHIK, as limitedpartners, have respectively contributed RMB 600 million, RMB 200 million, RMB 100 million and RMB 100 million in currency, and their shareholding ratiosare respectively 59.9994%, 19.9998%, 9.9999% and 9.9999%. In 2020, the Group has paid in RMB 550 million. As of the end of the year, the Group has paid inall of the capital. The Investment Decision Committee of Haikang Intelligent Fund comprises five members, and all investment matters are subject to approvalby more than half of the representatives. Over half of the representatives of the Investment Decision Committee of Haikang Intelligent Fund are assigned by theGroup and the related party CET Partnership has one-vote veto power over any resolution of the Investment Decision Committee of Haikang Intelligent Fund,therefore the Group and the related party CET Partnership jointly control Haikang Intelligent Fund.
Note 2: During the current fiscal year, the Group and the independent third parties, Ningbo Urban Construction Investment Holding Co., Ltd. (Ningbo Urban Investment)
and Ningbo YongCheng Asset Management Co., Ltd. (YongCheng Asset Management), have signed the agreement for jointly establishing the Zhejiang UrbanDigital Technology Co., Ltd. (Zhejiang Urban Digital Technology), of which, the Group, Ningbo Urban Investment and Yong Cheng Asset Managementrespectively contribute RMB 23 million, RMB 24.5 million and RMB 2.5 million, and their shareholding ratios are respectively 46%, 49% and 5%. As of the endof the current fiscal year, the Group has paid in RMB 11.50 million as stipulated in the agreement and controlled 46% of the equity, which is commensurate withthe Group’s voting power in the board of shareholders of Zhejiang Urban Digital Technology. The board of directors of Zhejiang Urban Digital Technologyconsists of five directors, one of whom is assigned by the Group. According to the Articles of Association of Zhejiang Urban Digital Technology, any majormatters related to finance and operation decisions are subject to approval by the shareholders representing over two thirds of the voting powers. Therefore, theGroup, Ningbo Urban Investment and Yong Cheng Asset Management jointly control Zhejiang Urban Digital Technology.
Note 3: During the current fiscal year, the Group and the independent third parties, Taizhou Huangyan Broadcast & TV Network Co., Ltd. (Huangyan Broadcast & TV)
and Taizhou Huangyan Technology Innovation Investment Co., Ltd. (Huangyan Technology Innovation), have signed the agreement for jointly establishing theZhejiang Hai Shi Hua Yue Digital Technology Ltd. (Hai Shi Hua Yue), of which, the Group, Huangyan Broadcast & TV and Huangyan Technology Innovationrespectively contribute RMB 10.20 million, RMB 5.80 million and RMB 4.00 million, and their shareholding ratios are respectively 51%, 29% and 20%. As ofthe end of the current fiscal year, the Group has paid in all of the capital and controlled 51% of the equity, which is commensurate with the Group’s voting powerin the board of shareholders of HaiShi HuaYue. The board of directors of HaiShi HuaYue consists of five directors, three of whom are assigned by the Group.According to the Articles of Association of Hai Shi Hua Yue, all matters are subject to approval by the shareholders representing over two thirds of the votingpowers. Therefore, the Group, Huangyan Broadcast & TV and Huangyan Technology Innovation jointly control HaiShi HuaYue.
Note 4: During the year, the Group and the independent third party Shenzhen Harzone Borui Technology Co., Ltd. (Harzone Borui) have signed the agreement for jointly
establishing the Shenzhen Hikvision City Service and Operation Co., Ltd. (Shenzhen City Service), of which, the Group and Harzone Borui respectively contributeRMB 20.00 million and RMB 30.00 million, and their shareholding ratios are respectively 40% and 60%. As of the end of the current fiscal year, the Group haspaid in RMB 8.00 million as stipulated in the agreement and controlled 40% of the equity, which is commensurate with the Group’s voting power in the board ofshareholders of Shenzhen City Service. The board of directors of Shenzhen City Service consists of three directors, one of whom is assigned by the Group.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
According to the Articles of Association of Shenzhen City Service, any major matters related to finance and operation decisions are subject to approval by theshareholders representing over two thirds of the voting powers. Therefore, the Group and Harzone Borui jointly control Shenzhen City Service.
Note 5: During the year, the Group and the independent third party Guangxi Yibo Investment Management Partnership (Yibo Investment) have signed the agreement for
jointly establishing the Guangxi HaiShi City Operation and Management Co., Ltd. (Guangxi Hai Shi), of which, the Group and Yibo Investment respectivelycontribute RMB 20.00 million and RMB 30.00 million, and their shareholding ratios are respectively 40% and 60%. As of the end of the current fiscal year, theGroup has paid RMB 6.00 million as stipulated in the agreement and controlled 40% of the equity, which is commensurate with the Group’s voting power in theboard of shareholders of Guangxi HaiShi. The board of directors of Guangxi HaiShi consists of three directors, one of whom is assigned by the Group. Accordingto the Articles of Association of Guangxi HaiShi, any major matters related to finance and operation decisions are subject to approval by all shareholders.Therefore, the Group and Yibo Investment jointly control Guangxi HaiShi.
Note 6: During the current fiscal year, the Group and the independent third party Jianshui County Yinghui Development and Investment Co., Ltd. (Yinghui Investment)
have signed the agreement for jointly establishing the Yunnan Yinghai Parking Services Ltd. (Yunnan Yinghai), of which, the Group and Yinghui Investmentrespectively contribute RMB 4.90 million and RMB 5.10 million, and their shareholding ratios are respectively 49% and 51%. As of the end of the current fiscalyear, the Group has paid in all of the capital and controlled 49% of the equity, which is commensurate with the Group’s voting power in the board of shareholdersof Yunnan Yinghai. The board of directors of Yunnan Yinghai consists of five directors, two of whom are assigned by the Group. According to the Articles ofAssociation of Yunnan Yinghai, any major matters related to finance and operation decisions are subject to approval by the shareholders representing over twothirds of the voting powers. Therefore, the Group and Yinghui Investment jointly control Yunnan Yinghai.
Note 7: During the current fiscal year, the Group and the independent third parties, Xuzhou Parking Technology Co., Ltd. (Parking Technology) and Xuzhou Citizen Card
Company Co., Ltd. (Citizen Card Company), have signed the agreement for jointly establishing the Xuzhou Kangbo City Operation and Management ServicesCo., Ltd. (Xuzhou Kangbo), of which, the Group, Parking Technology and Citizen Card Company respectively contribute RMB 9.80 million, RMB 9.20 millionand RMB 1.00 million, and their shareholding ratios are respectively 49%, 46% and 5%. As of the end of the current fiscal year, the Group has contributed RMB
4.90 million as stipulated in the agreement and controlled 49% of the equity, which is commensurate with the Group’s voting power in the board of shareholdersof Xuzhou Kangbo. The board of directors of Xuzhou Kangbo consists of five directors, of which two are assigned by the Group and two by Parking Technology.According to the Articles of Association of Xuzhou Kangbo, any major matters related to finance and operation decisions are subject to approval by theshareholders representing over two thirds of the voting powers. Therefore, the Group and Parking Technology jointly control Xuzhou Kangbo.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
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 | 112,872,015.00 | - | 63,254,815.75 | 423,435,737.20 |
| Hangzhou Confirmware Technology Co., Ltd. | 9.52% | 28,732,009.18 | - | - | 2,360,023.44 | 31,092,032.62 |
| Zhejiang Tuxun Technology Co.,Ltd. (Zhejiang Tuxun) | 8.13% | 28,358,818.81 | - | - | 3,863,945.64 | 32,222,764.45 |
| 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 | 112,872,015.00 | (2,810,000.00) | 69,478,784.83 | 491,939,067.27 |
| Items | Building and construction | General-purpose equipment | Special-purpose equipment | Transportation vehicles | Total |
| I. 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 | 290,038,021.04 | 200,342,860.19 | 329,720,963.55 | 11,169,837.29 | 831,271,682.07 |
| 1) purchase | 111,173,014.46 | 196,976,721.66 | 271,178,967.52 | 11,169,837.29 | 590,498,540.93 |
| 2) transferred from construction in progress | 178,865,006.58 | 2,054,230.79 | 58,407,353.86 | - | 239,326,591.23 |
| 3）Increase due to business combination not under common control | - | 1,311,907.74 | 134,642.17 | - | 1,446,549.91 |
| 3.Decrease in the current reporting period | - | 25,020,616.02 | 41,675,783.29 | 6,140,826.91 | 72,837,226.22 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st
2020
| 1) disposal or write-off | - | 25,020,616.02 | 41,675,783.29 | 6,140,826.91 | 72,837,226.22 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | (6,039,423.60) | (6,284,853.71) | (7,936,383.67) | (437,978.06) | (20,698,639.04) |
| 5.Closing Balance | 5,100,087,402.39 | 942,058,072.93 | 2,137,845,181.17 | 96,077,396.86 | 8,276,068,053.35 |
| II. 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 | 229,496,408.86 | 163,413,431.03 | 306,084,325.88 | 14,638,909.16 | 713,633,074.93 |
| (1) accrual | 229,496,408.86 | 163,413,431.03 | 306,084,325.88 | 14,638,909.16 | 713,633,074.93 |
| 3.Decrease in the current reporting period | - | 17,007,542.08 | 32,569,223.85 | 5,257,664.57 | 54,834,430.50 |
| (1) disposal or write- off | - | 17,007,542.08 | 32,569,223.85 | 5,257,664.57 | 54,834,430.50 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | (852,994.41) | (2,608,249.93) | (2,122,197.55) | (268,201.46) | (5,851,643.35) |
| 5.Closing balance | 992,312,042.71 | 368,166,922.57 | 984,560,686.51 | 55,020,864.96 | 2,400,060,516.75 |
| III. 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 | - | - | - | - | - |
| IV. Total book value | |||||
| Closing balance on book value | 4,107,775,359.68 | 573,891,150.36 | 1,153,284,494.66 | 41,056,531.90 | 5,876,007,536.60 |
| 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 |
| Special-purpose equipment | 92,164,518.65 | 46,834,180.90 | - | 45,330,337.75 |
| Item | Carrying amount | Reason for certificates of title not granted |
| Office building for branches | 24,734,446.00 | In the process of obtaining the real estate certificates |
| Fuzhou High-tech Zone Innovation Park | 102,456,967.05 | In the process of obtaining the real estate certificates after transferred to fixed assets |
| Total | 127,191,413.05 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
16. Construction in progress
16.1 Details of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision | Book value | Carrying amount | Provision | Book value | |
| Chengdu Science and Technology Park Project | 521,626,793.33 | - | 521,626,793.33 | 242,931,547.66 | - | 242,931,547.66 |
| Hangzhou Innovation Industry Park | 337,821,702.49 | - | 337,821,702.49 | 113,538,634.58 | - | 113,538,634.58 |
| Chongqing Science and Technology Park Phase II Project | 249,810,250.79 | - | 249,810,250.79 | 111,066,438.98 | - | 111,066,438.98 |
| Others | 315,976,447.11 | - | 315,976,447.11 | 164,018,857.84 | - | 164,018,857.84 |
| Total | 1,425,235,193.72 | - | 1,425,235,193.72 | 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 Park Project | 196,900.00 | 242,931,547.66 | 278,695,245.67 | - | - | - | 521,626,793.33 | 26.49% | 26.49% | - | - | - | Self- financing |
| Hangzhou Innovation Industry Park | 102,600.00 | 113,538,634.58 | 224,283,067.91 | - | - | - | 337,821,702.49 | 32.93% | 32.93% | 53,686,015.19 | 58,884,747.25 | 0.85% | Special loan |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st
2020
Note 1: Other reductions during the year were the completion of the construction of financial leasing project assets and transferred to long-term receivables.
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 December 31
st2020, 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 Park project- phase 2 | 76,200.00 | 111,066,438.98 | 138,743,811.81 | - | - | - | 249,810,250.79 | 32.78% | 32.78% | - | - | - | Self- financing |
| Zhengzhou Science and Technology Park Project | 48,500.00 | 94,339.62 | 13,435,069.91 | - | - | - | 13,529,409.53 | 2.79% | 2.79% | - | - | - | Self- financing |
| Xi’an Science and Technology Park project | 227,800.00 | 6,171,571.90 | 6,507,603.03 | - | - | - | 12,679,174.93 | 0.56% | 0.56% | - | - | - | Self- financing |
| EZVIZ Industry Park | 79,800.00 | - | 2,332,067.08 | - | - | - | 2,332,067.08 | 0.29% | 0.29% | - | - | - | Self- financing |
| Others | - | 157,752,946.32 | 399,106,638.93 | (239,326,591.23) | (3,744,572.05) | (26,352,626.40) | 287,435,795.57 | - | - | - | - | - | Self- financing |
| Total | 731,800.00 | 631,555,479.06 | 1,063,103,504.34 | (239,326,591.23) | (3,744,572.05) | (26,352,626.40) | 1,425,235,193.72 | - | - | 53,686,015.19 | 58,884,747.25 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
17. Intangible assets
17.1 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 | 251,850,478.79 | 5,394,189.23 | 24,738,514.02 | 13,091,615.51 | 295,074,797.55 |
| (1) Purchase | 251,850,478.79 | 5,394,189.23 | 24,535,277.43 | 13,091,615.51 | 294,871,560.96 |
| (2) Increase in business merger not under common control | - | - | 203,236.59 | - | 203,236.59 |
| 3.Decreased | - | 2,218,158.40 | 6,222,967.65 | - | 8,441,126.05 |
| (1)Disposal or write-off | - | 2,218,158.40 | 6,222,967.65 | - | 8,441,126.05 |
| 4.Effect on conversion of financial statements denominated in foreign currencies | - | (125,431.46) | (599,314.89) | - | (724,746.35) |
| 5.Closing balance | 1,224,893,932.49 | 70,044,034.88 | 298,812,867.42 | 13,091,615.51 | 1,606,842,450.30 |
| Total accumulated amortization | |||||
| 1.Opening balance | 53,291,064.90 | 51,532,190.15 | 169,987,762.46 | - | 274,811,017.51 |
| 2.Increased | 23,321,497.39 | 10,836,131.28 | 51,730,781.87 | 1,126,160.47 | 87,014,571.01 |
| (1)Accrual | 23,321,497.39 | 10,836,131.28 | 51,730,781.87 | 1,126,160.47 | 87,014,571.01 |
| 3.Decreased | - | 1,603,085.50 | 4,210,982.42 | - | 5,814,067.92 |
| (1)Disposal or write-off | - | 1,603,085.50 | 4,210,982.42 | - | 5,814,067.92 |
| 4.Effect on conversion of financial statements denominated in foreign currencies | - | (46,755.83) | (440,238.16) | - | (486,993.99) |
| 5. Closing balance | 76,612,562.29 | 60,718,480.10 | 217,067,323.75 | 1,126,160.47 | 355,524,526.61 |
| Provision for decline in value | |||||
| 1.Opening balance | - | - | - | - | - |
| 2.Increased | - | - | - | - | - |
| 3. Decreased | - | - | - | - | - |
| 4.Closing balance | - | - | - | - | - |
| Total book value | |||||
| Closing balance on book value | 1,148,281,370.20 | 9,325,554.78 | 81,745,543.67 | 11,965,455.04 | 1,251,317,923.69 |
| Opening balance on book value | 919,752,388.80 | 15,461,245.36 | 110,908,873.48 | - | 1,046,122,507.64 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
17.2 At the end of the year, the intangible assets of the Group that have not completed the title certificate are as
follows：
Unit: RMB
| Item | Carrying value | Reasons for not getting the title certificate |
| Land use right of Nanchang Science and Technology Park | 103,774,766.90 | The land certificate is still in process |
| Total | 103,774,766.90 |
| The name of the investee or the matter that forming a goodwill | 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 | - | - | (9,054,133.14) | 130,320,174.19 |
| HuaAn Baoquan Intelligence 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 |
| BK EESTI AKTSIASELTS(Note) | - | 4,718,796.04 | - | 107,470.90 | 4,826,266.94 |
| SIA “BK Latvia”(Note) | - | 4,712,247.69 | - | 107,321.75 | 4,819,569.44 |
| 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 | 9,431,043.73 | - | (8,839,340.49) | 274,203,665.20 |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
19. Long-term deferred expenses
Unit: RMB
| Invested unit | Opening Balance | Increased | Amortized | Difference of foreign currency translation | Closing balance |
| Improvement expenditure for leased fixed asset | 87,611,490.75 | 68,051,877.78 | 44,742,828.97 | (2,335,852.71) | 108,584,686.85 |
| Total | 87,611,490.75 | 68,051,877.78 | 44,742,828.97 | (2,335,852.71) | 108,584,686.85 |
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for impairment losses of assets | 439,119,363.43 | 118,145,320.66 | 272,015,493.85 | 72,480,367.65 |
| Provision for credit loss | 1,539,163,635.55 | 317,826,951.61 | 1,409,847,170.59 | 292,275,236.58 |
| Payroll payables | 340,995,206.97 | 67,364,166.74 | 353,810,837.41 | 55,990,855.40 |
| Share-based payment | 395,569,612.03 | 63,817,274.43 | 273,114,847.21 | 43,340,918.66 |
| Provisions | 125,721,860.51 | 20,746,514.91 | 78,353,085.64 | 15,477,040.83 |
| Expenditure without invoice | 343,485,705.59 | 79,499,747.08 | 228,359,902.54 | 52,419,606.75 |
| Unrealized profit from inter-group transactions | 1,332,036,632.93 | 203,654,079.47 | 1,157,820,970.68 | 187,268,546.98 |
| Changes in the fair value of derivative financial instruments | 4,862,446.50 | 1,215,611.63 | 652,428.18 | 163,107.05 |
| Deferred income | 175,339,879.57 | 28,307,816.27 | 288,449,840.21 | 51,155,882.21 |
| Total | 4,696,294,343.08 | 900,577,482.80 | 4,062,424,576.31 | 770,571,562.11 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
20.2 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 | 792,868,727.84 | 155,188,912.37 | 680,837,730.59 | 129,970,264.62 |
| Difference in amortization of intangible assets | 2,077,910.40 | 311,686.57 | 1,386,714.30 | 208,007.14 |
| Changes in the fair value of derivative financial instruments | 18,487,400.00 | 4,621,850.00 | 181.76 | 45.44 |
| Changes in fair value of other non-current financial assets | 87,026,019.27 | 13,053,902.89 | 17,547,234.44 | 2,632,085.17 |
| Total | 900,460,057.51 | 173,176,351.83 | 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 | 80,196,527.94 | 820,380,954.86 | 81,722,298.41 | 688,849,263.70 |
| Deferred tax liabilities | 80,196,527.94 | 92,979,823.89 | 81,722,298.41 | 51,088,103.96 |
| Item | Closing balance | Opening balance |
| Deductible temporary difference | 788,077,425.69 | 306,240,573.47 |
| Deductible losses | 2,881,025,358.37 | 2,630,277,858.25 |
| Total | 3,669,102,784.06 | 2,936,518,431.72 |
| Year | Closing balance | Opening balance |
| 2020 | - | 3,636,058.38 |
| 2021 | 39,781,118.30 | 90,274,644.51 |
| 2022 | 318,339,826.45 | 331,787,605.27 |
| 2023 | 490,824,542.00 | 490,824,542.00 |
| 2024 | 1,289,599,782.28 | 1,713,755,008.09 |
| 2025 | 742,480,089.34 | - |
| Total | 2,881,025,358.37 | 2,630,277,858.25 |
| Item | Closing balance | Opening balance |
| Contract assets | 600,392,481.02 | 751,457,739.44 |
| Prepayments for acquisition of land | 79,046,571.00 | 818,200.00 |
| Prepayments for equipment | 26,838,623.06 | 85,573,983.95 |
| Prepayments for infrastructure | 15,233,481.00 | 13,942,203.53 |
| Prepayments for equity investment | - | 13,794,550.00 |
| Total | 721,511,156.08 | 865,586,676.92 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
22. Short-term borrowings
22.1 Categories of short-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Fiduciary loan | 3,999,246,634.59 | 2,640,082,485.15 |
| Total | 3,999,246,634.59 | 2,640,082,485.15 |
| Item | Closing balance | Opening balance |
| Financial liabilities measured at fair value through current profits and losses | 7,405,771.15 | 652,428.18 |
| Including: derivative financial liabilities | 7,405,771.15 | 652,428.18 |
| total | 7,405,771.15 | 652,428.18 |
| Item | Closing balance | Opening balance |
| Bank acceptance Bill | 1,036,920,229.85 | 1,239,584,016.70 |
| Total | 1,036,920,229.85 | 1,239,584,016.70 |
| Item | Closing balance | Opening balance |
| Payments for goods | 13,461,766,461.74 | 12,526,135,911.98 |
| Payables on equipment | 132,118,328.45 | 173,939,395.72 |
| Total | 13,593,884,790.19 | 12,700,075,307.70 |
| Item | Closing balance | Opening balance |
| Advanced receipts from sales of products | 1,605,290,145.88 | 719,153,423.32 |
| Advanced receipts for construction settlement payment | 401,866,195.59 | 451,153,147.28 |
| Advanced receipts from services | 154,010,329.79 | 107,249,547.00 |
| Total | 2,161,166,671.26 | 1,277,556,117.60 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
26.2 Qualitative and Quantitative Analysis on the Above Contract Liabilities:
According to the New Revenue Standards which has been implemented since January 1st 2020, the Group reclassified theobligation to transfer goods to a customer for which consideration has been received into contract liabilities as detailed inNote (III) 32.
Advanced receipts for product sales include prepayments for goods by customers and sales rebates provided to distributors.Product sales revenue of the Group is recognized when the control of such product is transferred to the customers. Duringthe transaction, prepayments for goods by customers are recognized as a contract liability till the goods are shipped ordelivered to the customers. Sales rebates to distributors of the Group may be accumulated when they purchase productsfrom the Group, and are deductible for payments for goods to be purchased in the future. Such sales rebates enabledistributors to enjoy discounts in their future purchase of goods, which are not available to the same type of customers.Therefore, the commitment to offer such discounts to distributors on their future purchase prices is a separate performanceobligation. Such commitment is recognized as a contract liability based on the transaction price allocated on the basis ofthe fair value of rebates when the sales transaction takes place, and is recognized as revenue when distributors use thesales rebates for deduction of purchase prices.
The Group provides construction works and maintenance services based on the construction works and maintenanceservice contracts with customers, and recognizes revenue based on the performance progress during the term of thecontracts. The Group’s customers make milestone payments for the construction works and maintenance services of theGroup as provided in the contracts. For the portion where the Group has obtained an unconditional right to the payment,it will be recognized as accounts receivable, while the remaining portion will be recognized as contract assets; where thecontract price received or receivable by the Group exceeds the performance obligation completed to date, the excessportion will be recognized as contract liabilities. The Group presents contract assets and contract liabilities under the samecontract on a net basis.
The Group provides cloud services including storage service, video service, and telephone service to its customers. Suchservices are performance obligations to be satisfied during a period of time, and revenue is recognized based on theperformance progress over the period in which such services are rendered. As customers have prepaid for cloud servicesat the time of purchase, at the time of transaction, the Group recognizes as a contract liability for the payments that wouldbe received for cloud services, and recognizes revenue based on the performance progress over the period in which suchservices are rendered.
26.3 On January 1
st
2020, contract liabilities with a book value of RMB 1,277,556,117.60 have been recognized asrevenue in 2020, including RMB 719,153,423.32 of contract liabilities arising from advanced receipts for product sales,RMB 451,153,147.28 of contract liabilities arising from advanced receipts for construction settlement amounts, andRMB 107,249,547.00 of contract liabilities arising from advanced receipts for cloud services. As of December 31
st
2020,RMB 2,161,166,671.26 of contract liabilities are expected to be recognized as revenue within the next fiscal year.
27. Payroll payable
27.1 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 | 10,301,532,329.56 | 9,793,161,156.45 | 2,858,597,482.49 |
| 2. Termination benefits – defined contribution scheme | 9,448,330.74 | 464,404,043.99 | 454,663,426.51 | 19,188,948.22 |
| Total | 2,359,674,640.12 | 10,765,936,373.55 | 10,247,824,582.96 | 2,877,786,430.71 |
| 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 | 9,182,646,162.58 | 8,706,122,709.43 | 2,671,062,392.28 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
2.Staff welfare
| 2.Staff welfare | 74,284.72 | 142,891,180.65 | 142,951,164.55 | 14,300.82 |
| 3.Social insurance contributions | 746,726.43 | 375,957,975.97 | 365,477,160.47 | 11,227,541.93 |
| Including: Medical insurance | 671,240.08 | 360,762,800.40 | 350,581,697.41 | 10,852,343.07 |
| Injury insurance | 24,637.32 | 7,622,958.77 | 7,317,340.46 | 330,255.63 |
| Maternity insurance | 50,849.03 | 7,572,216.80 | 7,578,122.60 | 44,943.23 |
| 4.Housing funds | 132,910.00 | 467,536,191.39 | 467,522,907.38 | 146,194.01 |
| 5.Labor union and education fund | 154,733,449.10 | 132,500,818.97 | 111,087,214.62 | 176,147,053.45 |
| Subtotal | 2,350,226,309.38 | 10,301,532,329.56 | 9,793,161,156.45 | 2,858,597,482.49 |
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1.Basic pension insurance | 9,009,304.85 | 448,873,230.48 | 439,217,131.24 | 18,665,404.09 |
| 2.Unemployment insurance | 439,025.89 | 15,530,813.51 | 15,446,295.27 | 523,544.13 |
| Subtotal | 9,448,330.74 | 464,404,043.99 | 454,663,426.51 | 19,188,948.22 |
| Item | Closing balance | Opening balance |
| Enterprise income tax | 1,403,744,369.98 | 553,486,554.42 |
| Value-added tax | 294,728,811.39 | 331,490,538.56 |
| City construction and maintenance tax | 17,924,699.09 | 21,992,627.00 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Item
| Item | Closing balance | Opening balance |
| Education surcharges | 7,547,297.38 | 9,283,542.86 |
| Local education surcharges | 5,437,435.12 | 6,385,473.76 |
| Others | 40,675,295.66 | 68,704,069.31 |
| Total | 1,770,057,908.62 | 991,342,805.91 |
| Item | Closing balance | Opening balance |
| Dividend payable | 205,898,523.84 | 108,129,385.24 |
| Other payables | 1,319,154,832.11 | 1,236,973,748.79 |
| Total | 1,525,053,355.95 | 1,345,103,134.03 |
| Item | Closing balance | Opening balance |
| Dividends of incentive restricted shares | 205,898,523.84 | 105,679,385.24 |
| Dividends of common shares | - | 2,450,000.00 |
| Total | 205,898,523.84 | 108,129,385.24 |
| Item | Closing balance | Opening balance |
| Unexpired commercial acceptance bills that were endorsed (Note (V)-3) | 482,454,604.99 | 329,309,522.17 |
| Accrued expenses | 337,678,697.37 | 384,494,722.84 |
| Guarantee and deposit fees | 298,869,865.03 | 240,507,892.79 |
| Collection and payment on behalf | 157,485,875.39 | 220,858,972.11 |
| Investment payable | - | 12,400,000.00 |
| Other expense payable | 42,665,789.33 | 49,402,638.88 |
| Total | 1,319,154,832.11 | 1,236,973,748.79 |
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year (Note (V) 32) | 3,486,243,087.91 | 69,893,081.33 |
| Long-term payables due within one year (Note (V) 33) | 21,437,251.87 | 16,230,072.73 |
| Total | 3,507,680,339.78 | 86,123,154.06 |
| Item | Closing balance | Opening balance |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Subscription payment of restricted shares
| Subscription payment of restricted shares | 560,959,368.73 | 913,534,538.26 |
| Outpur VAT to be transferred | 184,752,210.84 | 74,324,355.92 |
| Short-term commercial paper (SCP) | - | - |
| Total | 745,711,579.57 | 987,858,894.18 |
| Item | Opening balance | Issued during the current fiscal year | Repaid during the current fiscal year | Interest payable this year | Closing balance |
| Short-term commercial paper (SCP) (Note) | - | 1,000,000,000.00 | 1,000,000,000.00 | - | - |
| Total | - | 1,000,000,000.00 | 1,000,000,000.00 | - | - |
| Item | Closing balance | Opening balance |
| Pledged loan (Note 1) | 1,556,927,316.08 | 1,348,034,851.48 |
| Fiduciary loan (Note 2) | 3,700,483,533.13 | 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) | 3,486,243,087.91 | 69,893,081.33 |
| Total | 1,961,167,761.30 | 4,604,168,571.43 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
325,000,000.00 of the loan is 4.445%, and the annual interest rate of RMB 219,000,000.00 of the loan is 4.345%.
Note 2: As of December 31
st
2020, the credit loan with a book value of RMB 3,210,000,000.00 was 400 million euros incredit loans, which was mainly used for the investment and construction of the Company's Hangzhou Innovation IndustrialPark project and Xi'an Science and Technology Park project, the maturity date is December 14
th2021, and the interest rateis 0.85%.
The book value of the credit loan is RMB 480,000,000.00, which is mainly used for the acquisition of the thermal imagingdivision asset group by Hangzhou HikMicro Sensing Technology Co., Ltd., a subsidiary of the Group, and the maturitydates are September 28
th2022 and September 27
th2023, respectively.and the annual interest rate is 3.20%.
Note 3: During 2016, the Group entered into an agreement with CDB Development Fund Ltd. (CDBDF) to jointly injectcapital into Hikvision Electronics Co., Ltd. ("Hangzhou Electronics"), a subsidiary of the Group. Pursuant to the capitalinjection agreement, CDBDF would not participate in senior management personnel such as directors, and it would eithertake 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 December 31
st2020, CDBDF has aggregately invested RMB190 million (December 31
st
2019: RMB 190 million).
33. Long-term payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Payables for financial leasing | 23,052,993.27 | 42,181,416.72 |
| Purchase goods in installments | 8,542,466.08 | - |
| Borrowing | 8,000,000.00 | 8,000,000.00 |
| Total | 39,595,459.35 | 50,181,416.72 |
| Details of financial lease payables in long-term payables | Closing balance | Opening balance |
| 1st year after the balance sheet date | 21,389,896.88 | 19,265,287.22 |
| 2nd year after the balance sheet date | 14,374,551.20 | 21,387,869.19 |
| 3rd year after the balance sheet date | 10,420,815.85 | 14,137,481.89 |
| Future years | - | 10,420,815.85 |
| Total minimum lease payments | 46,185,263.93 | 65,211,454.15 |
| Unrecognized financing costs | 3,829,657.27 | 6,799,964.70 |
| Finance lease payable | 42,355,606.66 | 58,411,489.45 |
| Including: Finance lease payable due within 1 year | 19,302,613.39 | 16,230,072.73 |
| Finance lease payable due after 1 year | 23,052,993.27 | 42,181,416.72 |
| Item | Closing balance | Opening balance |
| Product quality warranty | 151,443,871.02 | 90,570,669.01 |
| Total | 151,443,871.02 | 90,570,669.01 |
| Item | Opening balance | Increase in current reporting period | Decrease in current reporting period | Closing balance | Details |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
Government Subsidies
| Government Subsidies | 226,340,284.30 | 46,112,100.00 | 81,573,396.61 | 190,878,987.69 | Note |
| Total | 226,340,284.30 | 46,112,100.00 | 81,573,396.61 | 190,878,987.69 |
| 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 Park construction | 79,254,065.44 | - | 2,418,930.00 | - | 76,835,135.44 | 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 | - | 10,650,914.29 | - | 32,815,600.80 | Related to assets |
| Other special subsidies | 40,791,840.76 | 46,112,100.00 | 5,675,689.31 | - | 81,228,251.45 | Related to incomes |
| Subtotal | 226,340,284.30 | 46,112,100.00 | 81,573,396.61 | - | 190,878,987.69 |
| Item | Closing balance | Opening balance |
| Subscription for restricted stocks | 560,959,368.74 | 1,234,739,326.10 |
| Total | 560,959,368.74 | 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 (Note) | Subtotal | |||
| 2020 | |||||||
| Total shares | 9,345,010,696.00 | - | - | - | (1,593,506.00) | (1,593,506.00) | 9,343,417,190.00 |
| 2019 | |||||||
| Total shares | 9,227,270,473.00 | 121,195,458.00 | - | - | (3,455,235.00) | 117,740,223.00 | 9,345,010,696.00 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
Item
| Item | Opening balance | Increase in the current reporting period (Note 1) | Decrease in the current reporting period (Note 2) | Closing balance |
| 2020 | ||||
| Share premium | 3,834,418,853.06 | 985,668,869.46 | 72,278,815.14 | 4,747,808,907.38 |
| Other capital reserves | 292,524,845.90 | 782,471,622.99 | 644,027,914.18 | 430,968,554.71 |
| Total | 4,126,943,698.96 | 1,768,140,492.45 | 716,306,729.32 | 5,178,777,462.09 |
| 2019 | ||||
| Share premium | 1,828,917,545.39 | 2,039,710,482.49 | 34,209,174.82 | 3,834,418,853.06 |
| Other capital reserves | 127,222,115.13 | 268,309,794.42 | 103,007,063.65 | 292,524,845.90 |
| Total | 1,956,139,660.52 | 2,308,020,276.91 | 137,216,238.47 | 4,126,943,698.96 |
| Item | Opening Balance | Increase in the current reporting period (Note 1) | Decrease in the current reporting period (Note 2) | Closing balance |
| 2020 | ||||
| Restricted shares incentive scheme | 2,148,273,864.36 | - | 1,026,355,126.89 | 1,121,918,737.47 |
| Total | 2,148,273,864.36 | - | 1,026,355,126.89 | 1,121,918,737.47 |
| 2019 | ||||
| Restricted shares incentive scheme | 364,984,759.94 | 2,057,898,876.84 | 274,609,772.42 | 2,148,273,864.36 |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Total
| Total | 364,984,759.94 | 2,057,898,876.84 | 274,609,772.42 | 2,148,273,864.36 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
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 | |||||||
| Other incomes that may be reclassified subsequently to profit or loss | (53,541,146.99) | (34,145,243.17) | - | - | (31,452,779.95) | (2,692,463.22) | (84,993,926.94) |
| Included: Effect on conversion of financial statements denominated in foreign currencies | (53,541,146.99) | (34,145,243.17) | - | - | (31,452,779.95) | (2,692,463.22) | (84,993,926.94) |
| Other comprehensive income | (53,541,146.99) | (34,145,243.17) | - | - | (31,452,779.95) | (2,692,463.22) | (84,993,926.94) |
| 2019 | |||||||
| Other incomes that may be reclassified subsequently to profit or loss | (49,576,351.10) | (4,658,993.77) | - | - | (3,964,795.89) | (694,197.88) | (53,541,146.99) |
| Included: Effect on conversion of financial statements denominated in foreign currencies | (49,576,351.10) | (4,658,993.77) | - | - | (3,964,795.89) | (694,197.88) | (53,541,146.99) |
| Other comprehensive income | (49,576,351.10) | (4,658,993.77) | - | - | (3,964,795.89) | (694,197.88) | (53,541,146.99) |
| Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 2020 | ||||
| Statutory surplus reserves (Note) | 4,672,505,348.00 | - | - | 4,672,505,348.00 |
| Total | 4,672,505,348.00 | - | - | 4,672,505,348.00 |
| 2019 | ||||
| Statutory surplus reserves (Note) | 4,460,712,358.45 | 211,792,989.55 | - | 4,672,505,348.00 |
| Total | 4,460,712,358.45 | 211,792,989.55 | - | 4,672,505,348.00 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
a statutory surplus reserve of RMB 4,672,505,348.00, which has reached 50% of the Company's share capital, so nosubsequent statutory surplus reserve will be accrued in the current fiscal year.
The statutory surplus reserve can be used to make up for losses or increase the share capital after approval.
42. Retained earnings
Unit: RMB
| Item | 2020 | 2019 |
| 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 | 13,385,526,714.15 | 12,414,587,690.45 |
| Subtract: Statutory surplus reserves | - | 211,792,989.55 |
| Dividends payable on common shares (Note) | 6,540,392,033.00 | 5,601,261,827.10 |
| Retained earnings at the end of the current reporting period | 35,806,523,826.37 | 28,961,389,145.22 |
| Item | 2020 | 2019 | ||
| Revenue | Cost | Revenue | Cost | |
| Operating income | 62,879,112,889.36 | 33,607,174,664.31 | 57,080,710,049.95 | 30,823,984,977.93 |
| Other operating income | 624,338,002.42 | 350,523,193.42 | 577,400,015.27 | 316,191,799.19 |
| Total | 63,503,450,891.78 | 33,957,697,857.73 | 57,658,110,065.22 | 31,140,176,777.12 |
| Item | 2020 | |
| Revenue | Cost | |
| Product sales | 60,287,664,582.89 | 32,012,524,098.76 |
| Construction contract | 1,614,246,940.42 | 1,353,524,939.67 |
| Provide services | 977,201,366.05 | 241,125,625.88 |
| Total | 62,879,112,889.36 | 33,607,174,664.31 |
| Item | 2020 | |
| Revenue | Cost | |
| Recognized at some point | 60,287,664,582.89 | 32,012,524,098.76 |
| Recognition took place within a certain period of time | 2,591,448,306.47 | 1,594,650,565.55 |
| Total | 62,879,112,889.36 | 33,607,174,664.31 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
43.4 Operating business (By product or business type)
Unit: RMB
| Item | 2020 | |
| Revenue | Cost | |
| Front-end equipment | 28,841,213,141.09 | 12,797,470,301.71 |
| Back-end equipment | 6,867,289,356.22 | 3,463,814,165.41 |
| Central control equipment | 10,146,396,260.19 | 5,587,909,127.42 |
| Constructions | 1,614,246,940.42 | 1,353,524,939.67 |
| Others | 9,241,620,854.47 | 6,536,906,909.85 |
| Subtotal | 56,710,766,552.39 | 29,739,625,444.06 |
| Smart home business | 2,918,904,302.62 | 1,772,362,386.38 |
| Robotic business | 1,358,653,520.55 | 703,671,619.41 |
| Other innovative businesses | 1,890,788,513.80 | 1,391,515,214.46 |
| Subtotal | 6,168,346,336.97 | 3,867,549,220.25 |
| Total | 62,879,112,889.36 | 33,607,174,664.31 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
performance progress over the period in which such services are rendered. As customers have prepaid for cloud servicesat the time of purchase, the Group recognizes the payments for cloud services received at the time of transaction as acontract liability, and recognizes revenue based on the performance progress over the period in which such services arerendered.
Sales rebates to distributors of the Group may be accumulated when they purchase products from the Group, and aredeductible for payments for goods to be purchased in the future. Such sales rebates enable distributors to enjoy discountsin their future purchase of goods, which are not available to the same type of customers. Therefore, the commitment tooffer such discounts to distributors on their future purchase prices is a separate performance obligation. Such commitmentis recognized as a contract liability based on the transaction price allocated on the basis of the fair value of rebates whenthe sales transaction takes place, and is recognized as revenue when distributors use the sales rebates for deduction ofpurchase prices.
The Group provides quality assurance for the sold video surveillance products, smart home products, robotic products andother products and related accessories, as well as the assets constructed. The quality assurance related to the products soldby the Group cannot be purchased separately, and is a guarantee to customers that the products sold meet the establishedstandards, therefore, the Group conducts accounting treatment in accordance with the Accounting Standards for BusinessEnterprises No. 13 - Contingencies, please refer to Note (V), 34 for details.
For sales to end consumers through the online trading platform, a 7-day or 30-day right of return is provided accordingly.At the time of revenue recognition, a return payable is recognized for the goods expected to be returned according to theamount expected to be returned due to the sales return; in addition, a return cost receivable is recognized according to thebalance of the book value of the goods expected to be returned at the time of transfer net of the estimated cost of recoveringthe goods, and carrying over costs according to net amount of book value of the transferred goods at the time of transfernet of the cost of the aforementioned assets. The Group estimates the number of returns at the portfolio level with itsaccumulated historical experience and adopting the expected value method. In view of the stable return rate in previousyears, it is most unlikely that there will be a significant reversal for the accumulated recognized revenue.
Descriptions of allocation to the remaining performance obligations:
As of December 31
st
2020, all the remaining performance obligations are part of the contracts with original expectedcontract term not exceeding one year. The Group expects to recognize all of them as revenue within the next year.
44. Business Taxes and Surcharges
Unit: RMB
| Items | 2020 | 2019 |
| City construction and maintenance tax | 189,386,771.55 | 193,991,607.90 |
| Education surcharges | 82,442,008.19 | 83,931,204.13 |
| Local education surcharges | 54,915,581.40 | 56,338,987.32 |
| Stamp duty | 30,560,972.35 | 27,143,633.24 |
| Real estate tax | 20,330,766.80 | 36,404,025.90 |
| Tax on use of land | 3,992,258.37 | 5,196,493.82 |
| Vehicle and vessel tax | 151,291.55 | 171,445.08 |
| Others | 34,483,699.34 | 14,141,146.16 |
| Total | 416,263,349.55 | 417,318,543.55 |
| Items | 2020 | 2019 |
| Payroll | 4,322,277,210.83 | 3,887,374,487.37 |
| Marketing Expenses | 1,156,331,130.68 | 1,189,955,197.73 |
| Shipping, transportation, and vehicle expense | 711,448,510.07 | 743,840,798.66 |
| Travelling expenses | 216,729,012.52 | 419,804,042.73 |
| Office expenses | 201,748,056.17 | 209,868,651.76 |
| Business hospitality expenses | 183,005,835.09 | 209,295,672.81 |
| Rental expenses | 193,697,802.86 | 177,800,427.54 |
| Professional Intermediary expenses | 158,620,553.03 | 161,222,028.36 |
| Depreciation and amortization expenses | 89,216,922.78 | 74,726,169.24 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Others
| Others | 144,715,710.55 | 182,894,010.48 |
| Total | 7,377,790,744.58 | 7,256,781,486.68 |
| Items | 2020 | 2019 |
| Payroll | 1,155,570,756.22 | 973,611,772.00 |
| Office expenses | 180,626,249.71 | 207,809,854.24 |
| Depreciation and amortization expenses | 164,558,720.85 | 124,598,148.82 |
| Professional Intermediary expenses | 74,792,204.76 | 72,435,016.26 |
| Travelling expenses | 37,760,312.22 | 59,312,055.12 |
| Shipping, transportation, utility expense | 41,419,386.33 | 56,959,599.18 |
| Rental expenses | 6,827,268.39 | 29,478,819.26 |
| Business hospitality expenses | 9,193,300.21 | 10,658,155.86 |
| Others | 119,264,890.07 | 287,601,021.33 |
| Total | 1,790,013,088.76 | 1,822,464,442.07 |
| Items | 2020 | 2019 |
| Payroll | 5,154,824,934.62 | 3,984,322,782.34 |
| Consumables and service fees | 533,761,090.55 | 563,641,365.06 |
| Depreciation and amortization expenses | 218,167,957.47 | 235,693,987.33 |
| Office expenses | 190,693,619.45 | 213,060,797.71 |
| Intermediate testing fees | 145,698,114.33 | 164,302,894.56 |
| Travelling expenses | 68,264,094.55 | 139,847,661.42 |
| New product design fees | 20,416,472.49 | 77,948,833.47 |
| Rental expenses | 10,791,884.40 | 9,242,161.63 |
| Others | 36,033,594.56 | 95,751,214.84 |
| Total | 6,378,651,762.42 | 5,483,811,698.36 |
| Items | 2020 | 2019 |
| Interest expenses | 223,386,660.79 | 263,960,347.94 |
| Less：Interest income | 722,845,909.92 | 720,921,071.27 |
| Foreign exchange losses/ (gains) | 927,956,362.97 | (183,930,899.01) |
| Less﹕Capitalized specific loan interests and foreign exchange differences on specific loan | 58,884,747.25 | 28,013,146.25 |
| Others | 26,642,405.97 | 28,836,591.40 |
| Total | 396,254,772.56 | (640,068,177.19) |
| Item | 2020 | 2019 |
| VAT Rebates | 1,739,193,206.86 | 1,481,554,615.35 |
| Special subsidies | 530,334,411.76 | 405,744,665.57 |
| Tax relief | 32,596,557.71 | 5,024,025.37 |
| Value-added tax deduction | 1,457,529.48 | - |
| Total | 2,303,581,705.81 | 1,892,323,306.29 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
50. Investment income
Unit: RMB
| Item | 2020 | 2019 |
| Long-term equity investment losses based on equity method | 6,361,388.74 | 7,743,476.93 |
| Investment income from other non-current financial assets during the holding period | 150,000,000.00 | 17,357,220.31 |
| Investment income from disposal of held-for-trading financial assets | 12,915,660.21 | 11,550,750.03 |
| Investment losses for derecognition of financial assets measured at amortized cost | - | (2,210.18) |
| Total | 169,277,048.95 | 36,649,237.09 |
| Sources of gains/losses from changes in fair values | 2020 | 2019 |
| Held-for-trading financial assets | 22,814,664.19 | (1,863,915.06) |
| Including: gains (losses) on the changes in fair value of derivative financial instruments | 22,814,664.19 | (1,863,915.06) |
| Gains from changes in fair value of other non-current financial assets | 69,478,784.83 | 17,547,234.44 |
| Held-for-trading financial liabilities | (6,835,239.48) | (361,429.75) |
| Including: losses on the changes in fair value of derivative financial instruments | (6,835,239.48) | (361,429.75) |
| Total | 85,458,209.54 | 15,321,889.63 |
| Items | 2020 | 2019 |
| Credit impairment losses of accounts receivable | (106,051,544.54) | (202,855,091.00) |
| Credit impairment losses of other receivables | (27,043,173.31) | 44,488,527.79 |
| Credit impairment losses of long-term receivables | (52,845,607.89) | (63,642,862.97) |
| Total | (185,940,325.74) | (222,009,426.18) |
| Items | 2020 | 2019 |
| Losses on inventory devaluation | (361,227,476.20) | (197,891,311.27) |
| Contract assets impairment loss | (1,882,037.79) | |
| Total | (363,109,513.99) | (197,891,311.27) |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
54. Non-operating income
Unit: RMB
| Item | 2020 | 2019 | The amount booked into current period non-recurring profits and looses |
| Fines and confiscations | 66,127,109.32 | 48,610,859.46 | 66,127,109.32 |
| Special subsidies | 8,333,888.90 | 3,318,626.10 | 8,333,888.90 |
| Tax reduction | 138,798.93 | 23,979.90 | 138,798.93 |
| Income from business merger not under common control (Note) | 281,193.50 | - | 281,193.50 |
| Others | 24,392,312.85 | 13,079,036.08 | 24,392,312.85 |
| Total | 99,273,303.50 | 65,032,501.54 | 99,273,303.50 |
| Item | 2020 | 2019 | Related to assets/Related to incomes |
| Other special subsidies | 8,333,888.90 | 3,318,626.10 | Related to incomes |
| Tax reduction | 138,798.93 | 23,979.90 | Related to incomes |
| Total | 8,472,687.83 | 3,342,606.00 |
| Item | 2020 | 2019 | The amount booked into current period non-recurring profits and looses |
| Losses on disposal of non-current assets | 6,465,180.38 | 7,589,538.54 | 6,465,180.38 |
| Local water conservancy construction fund | 1,672,431.96 | 842,983.10 | 1,672,431.96 |
| Others | 14,839,359.07 | 8,691,885.64 | 14,839,359. 07 |
| Total | 22,976,971.41 | 17,124,407.28 | 22,976,971.41 |
| Item | 2020 | 2019 |
| Income tax for the current reporting period | 2,140,449,306.26 | 1,731,388,650.59 |
| Deferred income tax expenses | (89,684,430.19) | (103,112,225.43) |
| Differences in filing and payment of income tax in previous reporting years | (456,113,070.38) | (337,997,980.04) |
| Total | 1,594,651,805.69 | 1,290,278,445.12 |
| Item | 2020 | 2019 |
| Total profit | 15,272,971,277.86 | 13,755,462,747.77 |
| Income tax expenses calculated at applicable tax rates of 15% | 2,290,945,691.68 | 2,063,319,412.17 |
| Impact of non-deductible costs, expenses and losses | 30,860,096.48 | 16,237,180.91 |
| Tax effect of non-taxable income | (3,054,060.62) | (2,603,583.05) |
| Impact of deductible temporary differences or deductible losses for which | 160,270,373.80 | 270,139,191.78 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
Item
| Item | 2020 | 2019 |
| no deferred income tax assets is recognized for the current period | ||
| Impact of using deductible temporary differences or deductible losses for which no deferred income tax assets was recognized for the prior periods | (27,124,409.54) | (50,147,289.55) |
| Differences of income tax annual filing (Note) | (456,113,070.38) | (337,997,980.04) |
| Impact by different tax rates applicable to different subsidiaries | 65,427,121.90 | 169,030,658.26 |
| Impact of additional deduction of R&D expenses | (498,716,838.03) | (597,165,564.68) |
| Others | 32,156,900.40 | (240,533,580.68) |
| Income tax expenses | 1,594,651,805.69 | 1,290,278,445.12 |
| Item | 2020 | 2019 |
| Interest income | 639,105,287.46 | 695,228,454.23 |
| Government subsidies | 503,207,004.05 | 397,596,487.11 |
| Others | 285,278,062.14 | 896,722,779.54 |
| Total | 1,427,590,353.65 | 1,989,547,720.88 |
| Item | 2020 | 2019 |
| Advertising and Selling services | 1,106,345,645.08 | 1,012,053,513.83 |
| Office expenses and business expenses | 997,386,647.41 | 1,194,981,715.54 |
| Shipping and transportation expense | 778,093,845.68 | 823,922,007.09 |
| R&D expense | 561,674,056.35 | 720,903,726.16 |
| Travelling expense | 322,753,419.29 | 618,963,759.27 |
| Outsourcing service fees, fees for hiring intermediaries, etc. | 301,671,589.85 | 410,388,242.46 |
| Rental expense | 211,316,955.65 | 216,521,408.43 |
| Deposits to restricted monetary funds | 62,196,400.89 | 109,697,678.52 |
| Others | 34,657,044.75 | 53,697,614.51 |
| Total | 4,376,095,604.95 | 5,161,129,665.81 |
| Item | 2020 | 2019 |
| Receipts of financing lease payments | 46,196,873.80 | 17,234,624.45 |
| Total | 46,196,873.80 | 17,234,624.45 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Unit: RMB
| Item | 2020 | 2019 |
| Cash payments for investment intention funds | 1,000,000.00 | 2,968,783.82 |
| Total | 1,000,000.00 | 2,968,783.82 |
| Item | 2020 | 2019 |
| The consideration paid for the acquisition of minority shareholders' equity | 64,290,000.00 | - |
| Repurchase of restricted shares | 13,417,417.35 | 26,897,116.20 |
| Total | 77,707,417.35 | 26,897,116.20 |
| Supplementary information | 2020 | 2019 |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 13,678,319,472.17 | 12,465,184,302.65 |
| Add: Impairment of assets | 363,109,513.99 | 197,891,311.27 |
| Provision for credit losses | 185,940,325.74 | 222,009,426.18 |
| Fixed assets depreciation | 713,633,074.93 | 559,888,586.31 |
| Amortization of intangible assets | 87,014,571.01 | 114,901,556.25 |
| Long-term deferred expenses amortization | 44,742,828.97 | 24,002,044.87 |
| Losses (Gains) on disposal of fixed assets, intangible assets and other long-term assets | 5,836,675.36 | (5,535,663.32) |
| Gains from changes in fair value | (85,458,209.54) | (15,321,889.63) |
| Financial expenses | 598,966,581.29 | 174,491,026.21 |
| Investment income | (169,277,048.95) | (36,649,237.09) |
| Share-based payment based on equity settlement | 818,106,623.19 | 268,309,794.42 |
| Decrease (increase) of restricted funds | 121,389,681.42 | (27,617,192.34) |
| Increase in deferred income tax assets | (131,576,150.12) | (154,200,329.39) |
| Increase in deferred income tax liabilities | 41,891,719.93 | 51,088,103.96 |
| Increase in inventories | (496,228,965.62) | (5,742,789,862.91) |
| Decrease of operating other non-current assets | 151,065,258.42 | 501,950,002.84 |
| Increase in operating receivables | (2,794,429,636.26) | (4,673,231,938.92) |
| Increase in operating payables | 3,098,102,287.85 | 3,802,939,387.61 |
| Increase (decrease) in deferred income | (142,710,843.61) | 40,410,742.17 |
| Others | (281,193.50) | - |
| Net cash flows from operating activities | 16,088,156,566.67 | 7,767,720,171.14 |
| 2. Significant investing and financing activities not involving cash receipts and payments: | ||
| 3. Net changes in cash and cash equivalents: | ||
| Ending balance of cash | 35,024,837,878.31 | 26,515,668,008.40 |
| 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 increase in cash and cash equivalents | 8,509,169,869.91 | 484,656,274.51 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
58.2 Net cash paid for obtaining subsidiaries and other business units during the current yearThe current reporting period:
Unit: RMB
| Amounts | |
| Cash or cash equivalents paid for the business combination in this year | 62,585,784.41 |
| Incuding: BK Grup? UAB | 25,684,141.43 |
| BK EESTI AKTSIASELTS | 21,566,307.77 |
| SIA "BK Latvia" | 15,335,335.21 |
| Less: Cash and cash equivalents held by the Company on the day of purchase | 13,667,615.83 |
| Incuding: BK Grup? UAB | 6,190,791.43 |
| BK EESTI AKTSIASELTS | 5,875,032.31 |
| SIA "BK Latvia" | 1,601,792.09 |
| Net cash paid for obtaining the subsidiary | 48,918,168.58 |
| Item | Closing balance | Opening balance |
| Cash | 35,024,837,878.31 | 26,515,668,008.40 |
| Including: Cash on hand | 1,105,047.51 | 557,429.68 |
| Bank deposit for payment at any time | 34,968,013,389.43 | 26,447,508,433.91 |
| Other monetary capital for payment at any time | 55,719,441.37 | 67,602,144.81 |
| Cash equivalents | - | - |
| Closing balance of cash and cash equivalents | 35,024,837,878.31 | 26,515,668,008.40 |
| Item | Book value at the end of the current reporting period | Cause of restriction |
| Monetary fund(s) | 434,891,229.96 | Various guarantee deposits and other restricted funds |
| Notes receivable | 482,454,604.99 | Endorsed to suppliers |
| Notes receivable | 7,981,224.88 | Pledged for issuing bank acceptance bills |
| Receivables for financing | 106,117,987.87 | Pledged for issuing bank acceptance bill |
| Fixed assets | 45,330,337.75 | Fixed assets leased through financial lease |
| Long-term receivables | 1,770,160,748.25 | Pledged for long-term borrowings |
| Total | 2,846,936,133.70 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Unit: RMB
| 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 | 936,545,445.72 | 6.5249 | 6,110,865,378.79 |
| EUR | 46,813,175.16 | 8.0250 | 375,675,730.67 |
| AED | 36,263,373.59 | 1.7761 | 64,407,377.83 |
| GBP | 4,959,769.90 | 8.8903 | 44,093,842.34 |
| RUB | 305,930,485.18 | 0.0877 | 26,830,103.55 |
| JPY | 336,505,067.09 | 0.0632 | 21,267,120.24 |
| PLN | 11,441,152.13 | 1.7520 | 20,044,898.53 |
| HKD | 13,443,127.64 | 0.8416 | 11,313,736.22 |
| AUD | 1,539,441.34 | 5.0163 | 7,722,299.59 |
| KRW | 394,701,420.00 | 0.0060 | 2,368,208.52 |
| UZS | 1,358,540,144.69 | 0.0007 | 995,266.51 |
| ZAR | 1,335,503.68 | 0.4458 | 595,367.54 |
| NZD | 48,072.09 | 4.7050 | 226,179.18 |
| SGD | 20,756.90 | 4.9314 | 102,360.58 |
| TRY | 270.72 | 1.1729 | 317.53 |
| INR | 1,698.20 | 0.0891 | 151.31 |
| Accounts receivable | |||
| Including: USD | 155,116,482.71 | 6.5249 | 1,012,119,538.03 |
| EUR | 137,647,553.28 | 8.0250 | 1,104,621,615.07 |
| Short-term borrowing | |||
| Including: GBP | 6,582,913.66 | 8.8903 | 58,524,077.31 |
| EUR | 8,052,220.91 | 8.0250 | 64,619,072.80 |
| Accounts Payable | |||
| Including: USD | 289,121,715.41 | 6.5249 | 1,886,490,280.88 |
| Long-term loans due within one year | |||
| Including: EUR | 401,220,555.56 | 8.0250 | 3,219,794,958.41 |
| 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 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Name of overseas subsidiaries
| Name of overseas subsidiaries | Main overseas operational office | Recording Currency | Basis of selection |
| Hikvision France SAS | France | EUR | Selection based on local economic environment |
| Hikvision Singapore Pte. Ltd | Singapore | SGD | Selection based on local economic environment |
| Hikvision South Africa (Pty) Ltd. | South Africa | ZAR | Selection based on local economic environment |
| Hikvision FZE | Dubai | USD | Selection based on local economic environment |
| Hikvision Poland Spolka Z ograniczona Odpowiedzialnoscia. | Poland | PLN | Selection based on local economic environment |
| Hikivision do Brasil Comercio de Equipamentos de Seguran?a Ltda. | Brazil | BRL | Selection based on local economic environment |
| Hikvision LLC | Russia | RUB | Selection based on local economic environment |
| EZVIZ Inc. | USA | USD | Selection based on local economic environment |
| Cooperative Hikvision Europe U.A. | Netherlands | USD | Selection based on local economic environment |
| Hikvision Korea Limited | Korea | KRW | Selection based on local economic environment |
| Hikvision Colombia SAS | Columbia | COP | Selection based on local economic environment |
| Hikvision Kazakhstan limited liability partnership | Kazakhstan | KZT | Selection based on local economic environment |
| Pyronix Ltd | UK | GBP | Selection based on local economic environment |
| Microwave Solutions Limited | UK | GBP | Selection based on local economic environment |
| Secure Holdings limited | UK | GBP | Selection based on local economic environment |
| Hikvision Turkey Technology And Security Systems Commerce Corporation | Turkey | TRY | Selection based on local economic environment |
| ZAO Hikvision | Russia | RUB | Selection based on local economic environment |
| Hikvision Hungary Limited | Hungary | HUF | Selection based on local economic environment |
| Hikvision New Zealand Limited | New Zealand | NZD | Selection based on local economic environment |
| Hikvision Czech s.r.o. | Czech | CZK | Selection based on local economic environment |
| Hikvision Deutschland GmbH | Germany | EUR | Selection based on local economic environment |
| Hikvision Kenya (Pty) Ltd | Kenya | KES | Selection based on local economic environment |
| LLC Hikvision Tashkent | Uzbekistan | UZS | Selection based on local economic environment |
| Hikvision (Malaysia) SDN. BHD | Malaysia | MYR | Selection based on local economic environment |
| Hikvision USA,Inc. | USA | USD | Selection based on local economic environment |
| Hikvision Canada INC. | Canada | CAD | Selection based on local economic environment |
| Hikvision Mexico S.A.de C.V. | Mexico | MXN | Selection based on local economic environment |
| Hikvision Panama Commercial S.A. | Panama | USD | Selection based on local economic environment |
| Hikvision Pakistan (SMC-Private) Limited | Pakistan | PKR | Selection based on local economic environment |
| Hikvision Peru Closed Stock Company | Peru | PEN | Selection based on local economic environment |
| Hikvision 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 |
| Hikvision Technology Israel Ltd | Israel | ILS | Selection based on local economic environment |
| EZVIZ Europe B.V. | Netherlands | EUR | Selection based on local economic environment |
| BK Grup? UAB | Lithuania | EUR | Selection based on local economic environment |
| BK EESTI AKTSIASELTS | Estonia | EUR | Selection based on local economic environment |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Name of overseas subsidiaries
| Name of overseas subsidiaries | Main overseas operational office | Recording Currency | Basis of selection |
| SIA "BK Latvia" | Latvia | EUR | Selection based on local economic environment |
| Category | Amount | Financial Report Items | Amount booked in current profit and loss |
| VAT Rebate | 1,739,193,206.86 | Other Income | 1,739,193,206.86 |
| Special subsidies | 729,547,288.35 | ||
| Including: other special subsidies | 587,465,359.90 | Deferred income / Other income/ Non-operating income | 473,421,507.65 |
| core electronic devices, high-end universal chip and basic software product projects | 62,827,863.01 | Deferred income / Other income | 62,827,863.01 |
| Chongqing Manufacture Park construction subsidies | 79,254,065.44 | Deferred income / Other income | 2,418,930.00 |
| Tax Refund/Reduction | 34,192,886.12 | Other income/ Non-operating income | 34,192,886.12 |
| Total | 2,502,933,381.33 | 2,312,054,393.64 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
VI. Changes in consolidation scope
1. Business mergers not involving enterprises under the common control
(1) Business mergers not under common control during the current reporting period
BK Grup? UAB (“BK Lithuania”), BK EESTI AKTSIASELTS (“BK Estonia”) and SIA "BK Latvia" (“BK Latvia”) (collectively referred as to “Subject Companies or Three BK Companies”)
On June 30
th2020, Hikvision Singapore Pte. Ltd (“Hikvision Singapore”), a wholly-owned subsidiary of the Company, entered into the SHARES SALE AND PURCHASE AGREEMENT (“BK AcquisitionAgreement”) with the original shareholders of Subject Companies, to acquire 100% equity of the Subject Companies in total held by four independent third parties at an agreed consideration of EUR 7,976,471.00.From June to October 2020, the above acquisition completed the filing or approval of the board of directors of CETHIK, Ministry of Commerce of the People’s Republic of China, National Development andReform Commission of the People’s Republic of China and State Administration of Foreign Exchange of the People’s Republic of China (Branch of Zhejiang Province). The acquisition of the equity of thoseThree BK Companies, namely BK Lithuania, BK Estonia and BK Latvia was completed on November 5
th 2020, October 29
th 2020 and November 2
nd2020, respectively, and therefore, the Group will incorporatethe Subject Companies into consolidation scope from the acquisition dates, which are November 5
th 2020, October 29
th 2020 and November 2
nd 2020. As of December 31
st2020, the Company has made theequity transfer payment of EUR 7,976,471.00, which is equivalent to approximately RMB 62,585,784.41 exchanged at spot foreign exchange rate.
Unit:RMB
| Name of the acquiree | Time of equity acquisition | Equity acquisition cost | Equity acquisition ratio (%) | Equity acquisition method | Date of acquisition | Basis for determining the acquisition date | Income of acquiree from acquisition data to the end of the reporting period | Net profit of acquiree from acquisition data to the end of the reporting period |
| Lithuania BK | November 2020 | 25,684,141.43 | 100.00 | Cash Payments | November 5th 2020 | Equity delivery date for obtaining control of the purchased party | 26,550,867.59 | 2,419,560.41 |
| Estonia BK | October 2020 | 21,566,307.77 | 100.00 | Cash Payments | October 29th 2020 | Equity delivery date for obtaining control of the purchased party | 9,535,154.53 | 433,971.22 |
| Latvia BK | November 2020 | 15,335,335.21 | 100.00 | Cash Payments | November 2nd 2020 | Equity delivery date for obtaining control of the purchased party | 8,858,903.31 | 877,192.86 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Cost of business merger
| Cost of business merger | Lithuania BK | Estonia BK | Latvia BK |
| -Cash | 25,684,141.43 | 21,566,307.77 | 15,335,335.21 |
| Total cost of business merger | 25,684,141.43 | 21,566,307.77 | 15,335,335.21 |
| Less: The fair value share of identifiable net assets obtained | 25,965,334.93 | 16,847,511.73 | 10,623,087.52 |
| Goodwill/The amount that the merger cost is less than the amount of the fair value share of the identifiable net assets obtained | (281,193.50) | 4,718,796.04 | 4,712,247.69 |
| Lithuania BK | Estonia BK | Latvia BK | ||||
| Book value on the date of acquisition | Fair value on the date of acquisition | Book value on the date of acquisition | Fair value on the date of acquisition | Book value on the date of acquisition | Fair value on the date of acquisition | |
| Aseets: | ||||||
| Cash | 6,190,791.43 | 6,190,791.43 | 5,875,032.31 | 5,875,032.31 | 1,601,792.09 | 1,601,792.09 |
| Accounts receivable | 14,018,545.29 | 14,018,545.29 | 6,123,134.67 | 6,123,134.67 | 4,505,689.13 | 4,505,689.13 |
| Prepayments | 2,519,198.67 | 2,519,198.67 | 143,883.10 | 143,883.10 | 313,532.58 | 313,532.58 |
| Inventories | 37,744,183.07 | 37,744,183.07 | 15,123,419.43 | 15,123,419.43 | 10,150,107.30 | 10,150,107.30 |
| Fixed assets | 544,603.52 | 544,603.52 | 543,197.70 | 543,197.70 | 358,748.69 | 358,748.69 |
| Intangible assets | 203,236.59 | 203,236.59 | - | - | - | - |
| Other assets | 1,058,521.81 | 1,058,521.81 | 138,429.76 | 138,429.76 | 103,534.83 | 103,534.83 |
| Liabilities: | ||||||
| Accounts payable | 28,906,897.26 | 28,906,897.26 | 10,063,328.87 | 10,063,328.87 | 4,422,565.19 | 4,422,565.19 |
| Tax payable | 4,750,116.59 | 4,750,116.59 | 560,697.54 | 560,697.54 | 778,626.80 | 778,626.80 |
| Payroll payable | 2,006,861.02 | 2,006,861.02 | 467,878.64 | 467,878.64 | 814,277.64 | 814,277.64 |
| Other liabilities | 649,870.58 | 649,870.58 | 7,680.19 | 7,680.19 | 394,847.47 | 394,847.47 |
| Net assets acquired | 25,965,334.93 | 25,965,334.93 | 16,847,511.73 | 16,847,511.73 | 10,623,087.52 | 10,623,087.52 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
2. 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 |
| Kunming Hikvision Digital Technology Co., Ltd. ("Kunming Hikvision") (Note 2) | July 2020 | RMB 50 mn | RMB 50 mn | 100 |
| Hangzhou Microimage Software Co., Ltd. (Note 3) | July 2020 | RMB 20 mn | RMB 12 mn | 60 |
| Hangzhou Microimage Intelligent Technology Co., Ltd. (Note 4) | July 2020 | RMB 50 mn | RMB 30 mn | 60 |
| Jinan Hikvision Digital Technology Co., Ltd. ("Jinan Hikvision") (Note 2) | August 2020 | RMB 50 mn | RMB 50 mn | 100 |
| Hikvision Morocco LLC (Moroccan subsidiary) | March 2020 | MAD 1,800,000 | MAD 1,800,000 | 100 |
| EZVIZ Europe B.V.(EZVIZ Europe)(Note 2) | August 2020 | EUR 800,000 | EUR 480,000 | 60 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
The subsidiaries cancelled in the current reporting period and no longer included in the scope of consolidation are as follows:
| Company Name | Date of equity disposition | Proportion of shareholding (%) |
| Hainan Hikvision System Technology Co., Ltd. | November 2020 | 100 |
| Hangzhou Hikvision Investment Management Co., Ltd. | December 2020 | 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 B.V. | 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 Equipamentos de Seguran?a | Brazil | Brazil | Sales | 95.00 | 5.00 | Establishment |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| 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 Transportation 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 Baoquan Intelligent Development Co., Ltd. (Note 2) | Zhengzhou | Zhengzhou Henan | Construction | 93.86 | - | Business combination not involving enterprises under common control |
| Henan Hua’an Security Services Co., Ltd. (Note 2) | Zhengzhou | Zhengzhou Henan | Services | - | 84.47 | Business combination not involving enterprises under common control |
| 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 | Technology development | 60.00 | - | Establishment |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Zhejiang | ||||||
| Hangzhou Hikvision Investment Management Co., Ltd. (Note 4) | 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 |
| 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 Hikrobot Intelligent Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology Development | - | 60.00 | Establishment |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Wuhan HikStorage Technology Co., Ltd. | Wuhan | Wuhan Hubei | 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 | - | Establishment |
| Hikvision Czech s.r.o. | Czech | Czech | Sales | - | 100.00 | Establishment |
| Hikvision (Malaysia) SDN. BHD | Malaysia | Malaysia | Sales | - | 100.00 | Establishment |
| Hikvision Deutschland GmbH | Germany | Germany | Sales | - | 100.00 | Establishment |
| Hikvision Xi’an Xueliang Construction Project Management 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 5) | Wuhan | Wuhan Hubei | Sales | - | 60.00 | Establishment |
| Hainan Hikvision System Technology Co., Ltd. （Note 4） | Lingshui | 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 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| 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. (Note 6) | 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 | Technology development, sales | 100.00 | - | Establishment |
| Nanchang Hikvision Digital Technology Co., Ltd. | Nanchang | Nanchang Jiangxi | Technology development | 100.00 | - | Establishment |
| Zhejiang Hiksafety Technology Co., Ltd. (Note 5) | 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 |
| Fuzhou Hikvision Digital Technology Co., Ltd. | Fuzhou | Fuzhou Fujian | System integration | 100.00 | - | Establishment |
| Anhui Hikvision Urban Operation Service Co., Ltd. (Note 7) | Xuancheng | 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. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
| PT. Hikvision Technology Indonesia | Indonesia | Indonesia | Sales | - | 100.00 | Establishment |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Name
| Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
| Direct | Indirect | |||||
| Ezviz International Limited | Hongkong | Hongkong China | Sales | - | 100.00 | 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 |
| Kunming Hikvision Digital Technology Co., Ltd. | Kunming | Kunming Yunnan | Sales | 100.00 | - | Establishment |
| Hangzhou Microimage Software Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | - | 60.00 | Establishment |
| Hangzhou Microimage Intelligent Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | - | 60.00 | Establishment |
| Jinan Hikvision Digital Technology Co., Ltd. | Jinan | Jinan Shandong | Sales | 100.00 | - | Establishment |
| Hikvision Morocco LLC | Morocco | Morocco | Sales | - | 100.00 | Establishment |
| EZVIZ Europe B.V. | Netherland | Netherland | Sales | - | 60.00 | Establishment |
| BK Grup? UAB (Note 8) | Lithuania | Lithuania | Sales | - | 100.00 | Business merger not involving enterprises under the common control |
| BK EESTI AKTSIASELTS (Note 8) | Estonia | Estonia | Sales | - | 100.00 | Business merger not involving enterprises under the common control |
| SIA “BK Latvia” (Note 8) | Latvia | Latvia | Sales | - | 100.00 | Business merger not involving enterprises under the common control |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
Note 1: Fuyang Baotai is a subsidiary controlled by Hangzhou System, who holds 51% equity interests. According to the Articles of Association of the Company, Hangzhou System hasa 50% dividend payout ratio in the said company (Fuyang Baotai).
Note 2: In 2020, the Group acquired a 42.86% minority stake in each of its subsidiaries, Hua’an Baoquan Intelligent and Hua’an Baoquan Electronics, and its shareholding in the twocompanies was changed from 51% to 93.86%. The shareholding ratio of Huaan Baoquan Service, a subsidiary of Huaan Baoquan Intelligent Company, has changed from indirect holding
45.9% to indirect holding 84.47%. For details, please refer to Note (VII), 2.
Note 3: The remaining 28.70% equity interests of Hangzhou Hikvision Electronics Co., Ltd. is held by China Development Bank Fund. Please refer to Note (V) 32 for details.
Note 4: Hangzhou Hikvision Investment Management Co., Ltd. and Hainan Hikvision System Technology Co., Ltd. have been deregistered by the industry and commerce in 2020.
Note 5: In order to integrate the intelligent fire protection and control business, the Group transferred 100% of the equity of Wuhan Fire Proction and Zhejiang Fire Protection and Control(formerly known as Zhejiang Hikvision Fire Protection and Control Technology Co., Ltd.) to its holding subsidiary Hangzhou HikFire in 2020. After the completion of the transfer, theGroup’s shareholding in the two companies changed from direct holding 100% to indirect holding 60%.
Note 6: The Group controls Hangzhou EZVIZ Technology Co., Ltd. through an entrusted management agreement and does not directly or indirectly hold its shares.
Note 7: Ningguo Hikvision City Operation Service Co., Ltd. has been renamed to Anhui Hikvision City Operation Service Co., Ltd. in 2020.
Note 8: Hikvision Singapore, a wholly-owned subsidiary of the Group, acquired 100% of the shares of Lithuania BK, Estonia BK and Latvia BK through cash settlement in 2020. Pleaserefer to Note (VI)-1 for details.
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
2. Transaction in which the share of owner’s equity in the subsidiaries has been changed and the subsidiaries are still under control
(1) Description of changes in the share of owner’s equity in the subsidiaries
Acquisition of minority equity of Hua’An Bao Quan Intelligent and Hua’An Bao Quan Electronics
On December 31
st2019, the Company entered into an agreement in relation to the Equity Transfer of Henan Hua’An Bao Quan Intelligent Development Ltd. and Henan Haikang Hua’An Bao Quan ElectronicsLtd. with the original minority shareholders of Hua’An Bao Quan Intelligent and Hua’An Bao Quan Electronics, holding subsidiaries of the Company, to acquire each of 42.86% minority equity of Hua’An BaoQuan Intelligent and Hua’An Bao Quan Electronics held by original shareholders at an agreed consideration of RMB 30,859,200.00 and RMB 33,430,800.00, respectively. Upon the completion of the transaction,the Company holds a total of 93.86% of the shares of Hua’An Bao Quan Intelligent and Hua’An Bao Quan Electronics. As of December 31
st2020, the Company has made the equity transfer payment of RMB64,290,000 and the equity transfer has been completed.
Unit: RMB
| Purchase cost | Hua’an Baoquan Intelligence | Hua’an Baoquan Electronics |
| -Cash | 30,859,200.00 | 33,430,800.00 |
| Total purchase cost | 30,859,200.00 | 33,430,800.00 |
| Less: Subsidiary's share of net assets calculated according to the proportion of acquired equity | 29,031,021.70 | 4,771,674.11 |
| Difference | 1,828,178.30 | 28,659,125.89 |
| Of which: adjusted capital reserve | 1,828,178.30 | 28,659,125.89 |
| Disposal consideration | Zhejiang Fire Protection and Control | Wuhan Fire Protection and Control |
| - Cash | - | - |
| Total disposal cost | - | - |
| Less: the difference of the subsidiary's net assets share calculated based on the proportion of the | (2,379,712.83) | (795.98) |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Disposal consideration
| Disposal consideration | Zhejiang Fire Protection and Control | Wuhan Fire Protection and Control |
| - Cash | - | - |
| disposed equity | ||
| Difference | (2,379,712.83) | (795.98) |
| Of which: adjusted capital reserve | (2,379,712.83) | (795.98) |
| Closing balance / Amount for 2020 | Opening balance / Amount for 2019 | |
| Associates： | ||
| The aggregate carrying amount of investments in associates | 193,646,038.77 | 188,845,321.49 |
| The aggregate amount of the following items calculated based on the Company’s equity share percentage of the associates | ||
| - Net income (loss) | (5,199,282.72) | 7,743,476.93 |
| - Other comprehensive income | - | - |
| --Net income (loss) and total comprehensive income (loss) | (5,199,282.72) | 7,743,476.93 |
| Joint Ventures: | ||
| Total investment book value | 670,380,671.46 | 63,320,000.00 |
| The sum of the following items calculated according to the shareholding ratio | ||
| - Net income | 11,560,671.46 | - |
| - Other comprehensive income | - | - |
| - Net income and comprehensive income | 11,560,671.46 | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
VIII. Risks associated with financial instrument
The Group's principal financial instruments include cash and bank balances, other non-current financial assets, notesreceivable, accounts receivable, receivables for financing, other receivables (except for tax refund receivable), long-termreceivables, borrowings, notes payable, accounts payable, other payables, other current liabilities, long-term payables,derivative financial instruments, etc. Details of these financial instruments are set out in Note (V). Below are the risksassociated with such financial instruments and the risk management policies adopted by the Group to mitigate such risks.The management of the Group manages and monitors such risk exposures to ensure such risks are contained within aprescribed scope.
1. Classification of financial instruments
Unit: RMB
| 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 | 22,679,846.77 | 181.76 |
| Other non-current financial assets | 491,939,067.27 | 312,398,267.44 |
| Measured at fair value through other comprehensive income | ||
| Receivables for financing | 1,959,601,195.25 | 1,257,385,053.02 |
| Measured at amortized cost | ||
| Cash and bank balances | 35,459,729,108.27 | 27,071,948,919.78 |
| Notes receivable | 1,303,252,705.19 | 973,236,789.02 |
| Accounts receivable | 21,979,380,716.86 | 21,307,927,200.28 |
| Other receivables (except for tax refund receivable) | 451,428,906.05 | 491,776,194.41 |
| Long-term receivables | 2,105,570,004.53 | 1,382,536,761.22 |
| Financial liabilities | ||
| Measured at fair value through current profit and loss | ||
| Held-for-trading financial liabilities | 7,405,771.15 | 652,428.18 |
| Measured at amortized cost | ||
| Short-term borrowings | 3,999,246,634.59 | 2,640,082,485.15 |
| Notes payable | 1,036,920,229.85 | 1,239,584,016.70 |
| Accounts payable | 13,593,884,790.19 | 12,700,075,307.70 |
| Other payables | 1,525,053,355.95 | 1,568,744,599.94 |
| Non-current liabilities due within one year | 3,507,680,339.78 | 86,123,154.06 |
| Other current liabilities | 560,959,368.73 | 913,534,538.26 |
| Long-term borrowings | 1,961,167,761.30 | 4,604,168,571.43 |
| Long-term payables | 39,595,459.35 | 50,181,416.72 |
| Other non-current liabilities | 560,959,368.74 | 1,234,739,326.10 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
2. Objectives and policies of risk management
The Group engages in risk management with the aim of achieving an appropriate balance between risk and return, wherethe negative effects of risks against the Group’s operating results are minimized, in order to maximize the benefits ofshareholders and other stakeholders. Based on such objective in risk management, the underlying strategy of the Group’srisk management is to ascertain and analyze all types of risks exposures of the Group, establish appropriate risk tolerancethresholds, carry out risk management procedures and perform risk monitoring on all kinds of risks in a timely and reliablemanner, thus containing risk exposures within a prescribed scope.
2.1 Market risks
2.1.1 Foreign exchange risks
Foreign exchange risks refer to the risk that losses will occur because of changes in foreign exchange rates. The Companyis primarily exposed to risks relating to the currencies such as USD and EUR. The Group’s subsidiaries in the mainlandof China whose procurement, sales and financing are denominated in RMB, USD and EUR, other principal activities aresettled in RMB. The Group’s subsidiaries in Hong Kong and outside China are principally engaged in procurement, sales,financing and other major business activities in local currencies such as USD, EUR, GBP, RUB, and etc.
As of December 31
st2020, except for monetary items of foreign currencies set out in Note (V) 60, the Group mainlyadopted the functional currency of each of its subsidiary to present the balance of its assets and liabilities. The foreignexchange risks arising from assets and liabilities denominated in USD and EUR (which has been converted into RMB) asfollows may generate significant impact on the operating results of the Group.
Unit: RMB
| Currencies | Assets | Liabilities | ||
| Closing balance | Opening balance | Closing balance | Opening balance | |
| USD | 7,122,984,916.85 | 8,990,808,097.16 | 1,886,490,280.88 | 2,680,807,278.88 |
| EUR | 1,480,297,345.67 | 396,683,098.55 | 3,284,414,031.21 | 3,135,739,251.94 |
| Change in foreign exchange rates | 2020 | 2019 | ||
| Effect on profit | Effect on shareholders’ equity | Effect on profit | Effect on shareholders’ equity | |
| 5% appreciation of USD against functional currency | 261,824,731.80 | 261,824,731.80 | 315,500,040.91 | 315,500,040.91 |
| 5% depreciation of USD against functional currency | (261,824,731.80) | (261,824,731.80) | (315,500,040.91) | (315,500,040.91) |
| 5% appreciation of EUR against functional currency | (90,205,834.28) | (90,205,834.28) | (136,952,807.67) | (136,952,807.67) |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Change in foreign exchange rates
| Change in foreign exchange rates | 2020 | 2019 | ||
| Effect on profit | Effect on shareholders’ equity | Effect on profit | Effect on shareholders’ equity | |
| 5% depreciation of EUR against functional currency | 90,205,834.28 | 90,205,834.28 | 136,952,807.67 | 136,952,807.67 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
the Group reviews the recovery of financial assets on each balance sheet date to ensure that sufficient credit loss provisionsare made for relevant financial assets. Therefore, the management of the Group believes that the credit risk exposure ofthe 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, contract assets and long-term receivables, the Group has put in place relevant policies to controlcredit risk exposure. The Group assesses credit quality of customers and sets corresponding credit period based on thecustomer’s financial status, the possibility of obtaining guarantees from third parties, credit history and other factors suchas current market conditions. The Group will regularly monitor the credit history of its customers. For customers withpoor credit history, the Group takes various measures, such as written payment reminders, shorten or cancel the creditperiod, to ensure that the overall credit risk of the Group is maintained in a controllable range. For accounts receivableand contract assets, the Group uses a simplified method, that is, to measure the loss provision based on the amountequivalent to the expected credit loss for the entire duration. For details of the relevant expected credit loss measurement,see (Note (V). 4 & Note (V)-9). For long-term receivables, the Group calculates the expected credit losses based on theexpected credit loss rate in the next 12 months or the entire duration based on the default risk exposure. For details of therelated 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 (except for tax refund receivable), the Group regularly monitors the debtor’s credit history. Fordebtors with poor credit history, the Group takes various measures such as written payment reminders to ensure that theGroup’s overall credit risk is maintained in a controllable range. For other receivables (except for tax refund receivable),the Group calculates the expected credit loss based on the expected credit loss ratio in the next 12 months or the entireduration based on the default risk exposure. For details of the relevant 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.
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
| December 31st 2020 | ||||
| Within one year | 1-5 years | More than five years | Total | |
| Non-derivative financial liabilities | ||||
| Short-term borrowings | 4,064,285,416.93 | - | - | 4,064,285,416.93 |
| Notes payable | 1,036,920,229.85 | - | - | 1,036,920,229.85 |
| Accounts payable | 13,593,884,790.19 | - | - | 13,593,884,790.19 |
| Other payables | 1,525,053,355.95 | - | - | 1,525,053,355.95 |
| Other current liabilities | 560,959,368.73 | - | - | 560,959,368.73 |
| Other non-current liabilities | - | 560,959,368.74 | - | 560,959,368.74 |
| Long-term debt (including those due within one year) | 3,720,856,676.22 | 1,012,468,505.00 | 1,277,492,929.04 | 6,010,818,110.26 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
December 31
st
2020
| December 31st 2020 | ||||
| Within one year | 1-5 years | More than five years | Total | |
| Long-term payables (including those due within one year) | 23,524,535.36 | 33,337,833.13 | 8,000,000.00 | 64,862,368.49 |
| Derivative financial instruments | ||||
| Forward foreign exchange contracts- settled in the gross amount | ||||
| - Cash inflow | 2,382,536,343.19 | - | - | 2,382,536,343.19 |
| - Cash outflow | 2,370,937,267.57 | - | - | 2,370,937,267.57 |
| - Net cash outflow | (11,599,075.62) | - | - | (11,599,075.62) |
| Items | Closing fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Continuous fair value measurement | - | 1,974,875,270.87 | 491,939,067.27 | 2,466,814,338.14 |
| (I) Financial assets measured at fair value through profit and loss | ||||
| 1. Held-for-trading Financial Assets | - | 22,679,846.77 | - | 22,679,846.77 |
| -- Derivative financial assets | - | 22,679,846.77 | - | 22,679,846.77 |
| 2. Other non-current financial assets | - | - | 491,939,067.27 | 491,939,067.27 |
| (II) Receivables for financing | - | 1,959,601,195.25 | - | 1,959,601,195.25 |
| Total assets measured continuously at fair value | - | 1,982,281,042.02 | 491,939,067.27 | 2,474,220,109.29 |
| (III) Financial liabilities measured at fair value through profit and loss | ||||
| 1. Held-for-trading Financial Liabilities | 7,405,771.15 | - | 7,405,771.15 | |
| - Derivative financial liabilities | - | 7,405,771.15 | - | 7,405,771.15 |
| Total liabilities measured continuously at fair value | - | 7,405,771.15 | - | 7,405,771.15 |
| Fair value at December 31st 2020 | Estimation technique | Inputs | |
| Forward Foreign Exchange Contracts (Assets) | 22,679,846.77 | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparty |
| Forward Foreign Exchange Contracts (Liabilities) | (7,405,771.15) | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparty |
| Receivables for financing | 1,959,601,195.25 | Discounted cash flow approach | Discounted rate that reflects the credit risk of counterparty |
| Items | Fair value at December 31st 2020 | Valuation techniques | Inputs |
| Other non-current financial assets-- Investment in equity instruments of private companies | 491,939,067.27 | Market approach /Income approach | Comparable public companies’ PB (price/book value) ratio within the same industry /Future cash flows, Discount rate |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
Other non-current financial assets
| Other non-current financial assets | Amount |
| Book value on January 1st 2020 | 312,398,267.44 |
| Increase in the current reporting period | 112,872,015.00 |
| Decrease in the current reporting period | (2,810,000.00) |
| Changes in fair value booked into profit and loss during the current reporting period | 69,478,784.83 |
| Book value on December 31st 2020 | 491,939,067.27 |
| 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-Tech Intelligent Technology Co., Ltd. (Wuhu SensorTech) and its subsidiaries | 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 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. (Haishi JiaAn)
| Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. (Haishi JiaAn) | Associated company |
| Qinghai Qingtang Big Data Co., Ltd. (Qingtang Big Data) | Associated company |
| Sanmenxia Xiaoyun Vision Technology Co., Ltd. (Xiaoyun Vision Technology) | Associated company |
| Daishan Hailai Yunzhi Technology Co., Ltd. (Daishan Hailai) | Joint venture |
| Guangxi Haishi and its subsidiaries | Joint venture |
| Shenzhen City Service and its subsidiaries | Joint venture |
| Xuzhou Kangbo | Joint venture |
| Yunan Yinghai | Joint venture |
| Zhejiang City Digital Technology | Joint venture |
| Haishi Huayue | Joint venture |
| 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) |
| Shenzhen Wanyu Security Service Technology Co., Ltd. (Shenzhen Wanyu Security Service) and its subsidiaries | The Group’s senior management serve(s) as director(s) of this company |
| Confirmware Technology(Hangzhou) Co., Ltd. (Hangzhou Confirmware) | The Group’s senior management serve(s) as director(s) of this company (Note 1) |
| Zhejiang Tuxun Technology Co.,Ltd. (Zhejiang Tuxun) | 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 |
| Related party | Transaction type | Amount occurred in 2020 | Amount occurred in 2019 |
| Subsidiaries of CETE | Purchase of materials and receiving of services | 826,842,233.14 | 385,462,257.69 |
| Shanghai Fullhan Micro | Purchase of materials and receiving of services | 243,902,272.09 | 366,576,874.81 |
| Wuhu SensorTech | Purchase of materials and receiving of services | 61,712,356.51 | 63,261,094.03 |
| Maxio Technology and its subsidiaries | Purchase of materials and receiving of services | 20,353,951.20 | 49,188,682.39 |
| Haishi Huayue | Purchase of materials and receiving of services | 1,743,775.22 | - |
| Shenzhen City Service and its subsidiaries | Purchase of materials and receiving of services | 357,000.00 | - |
| Zhiguang Hailian and its subsidiaries | Purchase of materials and receiving of services | 135,782.26 | - |
| Total | 1,155,047,370.42 | 864,488,908.92 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Sales of commodities / rendering of services:
Unit: RMB
| Related party | Transaction content | Amount occurred in 2020 | Amount occurred in 2019 |
| Subsidiaries of CETE | Sales of products and rendering of services | 350,558,721.59 | 481,423,053.77 |
| Haishi JiaAn | Sales of products and rendering of services | 38,199,938.50 | 488,565.32 |
| Daishan Hailai | Sales of products and rendering of services | 29,854,444.59 | - |
| Yunnan Yinghai | Sales of products and rendering of services | 18,259,614.17 | - |
| Zhiguang Hailian and its subsidiaries | Sales of products and rendering of services | 14,374,052.45 | 4,099,860.19 |
| Zhejiang City Digital Technology | Sales of products and rendering of services | 13,760,843.37 | - |
| Xiaoyun Vision Technology | Sales of products and rendering of services | 3,748,314.02 | 8,014,997.11 |
| Haishi Huayue | Sales of products and rendering of services | 3,685,281.81 | - |
| Xuzhou Kangbo | Sales of products and rendering of services | 3,150,603.57 | - |
| Wuhu Sensor Tech and its subsidiaries | Sales of products and rendering of services | 1,906,811.54 | 4,130,770.44 |
| Guangxi Haishi and its subsidiaries | Sales of products and rendering of services | 1,769,911.50 | - |
| Qingtang Big Data | Sales of products and rendering of services | 1,492,966.38 | - |
| Hangzhou Confirmware | Sales of products and rendering of services | 589,159.33 | 112,261.40 |
| Maxio Technology and its subsidiaries | Sales of products and rendering of services | 153,465.93 | 160,288.14 |
| Wanyu Security and its subsidiaries | Sales of products and rendering of services | 198,230.06 | - |
| Shenzhen City Service and its subsidiaries | Sales of products and rendering of services | 46,006.90 | - |
| Zhejiang Tuxun | Sales of products and rendering of services | Not applicable | 449,431.44 |
| Total | 481,748,365.71 | 498,879,227.81 |
| Related Party | Content of related party transaction | Amount occurred in the 2020 | Balance at the end of the current reporting period | Amount occurred in 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 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
As required by the project owner, China Electronics Technology Group Co., Ltd. has provided a joint guarantee toresponsibility and duties of construction projects of “Safe Chongqing, Emergency Control System Digital ConstructionProject”, including 41 districts and counties, signed by the Group’s subsidiary Chongqing Hikvision System TechnologyLtd. (Chongqing System) Meanwhile, the Company, Hikvision, provides a counter guarantee to China ElectronicsTechnology Group Co., Ltd.
(3) Compensation for key managers
Unit: RMB
| Item | Amount occurred in 2020 | Amount occurred in 2019 |
| Compensation for key managers | 38,952,000.00 | 44,518,667.00 |
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Accounts receivable | Subsidiaries of CETE | 694,163,118.90 | 108,859,842.53 | 761,252,308.57 | 54,524,384.59 |
| Accounts receivable | Haishi JiaAn | 29,762,113.04 | 975,776.51 | 541,468.80 | 21,296.76 |
| Accounts receivable | Daishan Hailai | 16,387,257.40 | 194,920.07 | - | - |
| Accounts receivable | Zhejiang City Digital Technology | 12,427,421.59 | 561,604.39 | - | - |
| Accounts receivable | Xiaoyun Vision Technology | 10,929,211.22 | 412,855.37 | 6,896,577.22 | 382,760.04 |
| Accounts receivable | Zhiguang Hailian and its subsidiaries | 9,436,662.00 | 111,434.71 | 4,270,910.00 | 47,006.81 |
| Accounts receivable | Haishi Huayue | 2,112,591.44 | 42,509.22 | - | - |
| Accounts receivable | Wuhu Sensor Tech and its subsidiaries | 823,165.40 | 37,207.08 | 4,486,674.99 | 249,010.46 |
| Accounts receivable | Xuzhou Kangbo | 786,702.90 | 35,558.97 | - | - |
Notes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
Item
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Accounts receivable | Qingtang Big Data | 660,000.00 | 29,832.00 | - | - |
| Accounts receivable | Hangzhou Confirmware | 83,150.00 | 981.17 | - | - |
| Accounts receivable | Maxio Technology and its subsidiaries | 45,667.50 | 538.88 | 158,025.60 | 1,295.81 |
| Accounts receivable | Zhejiang Tuxun | Not applicable | Not applicable | 130,838.99 | 1,072.88 |
| Total | 777,617,061.39 | 111,263,060.90 | 777,736,804.17 | 55,226,827.35 | |
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Notes receivable | Subsidiaries of CETE (Note) | 78,876,284.35 | - | 162,553,909.93 | - |
| Notes receivable | Haishi JiaAn | 9,147,466.00 | - | - | - |
| Notes receivable | Zhiguang Hailian and its subsidiaries | 1,120,000.00 | - | 244,719.00 | - |
| Total | 89,143,750.35 | - | 162,798,628.93 | - | |
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Other receivables | Subsidiaries of CETE | 132,459.00 | 1,563.02 | - | - |
| Other receivables | Haishi Huayue | 279,452.11 | 3,297.53 | - | - |
| Other receivables | Shenzhen City Service and its subsidiaries | 140,000.00 | 1,652.00 | - | - |
| Total | 551,911.11 | 6,512.55 | - | - | |
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Long-term receivables (including those due within one year) | Subsidiaries of CETE | 73,512,305.64 | 2,015,923.07 | 20,000,000.00 | 164,000.00 |
| Long-term receivables (including those due within one year) | Yunnan Yinghai | 21,444,096.16 | 253,040.33 | - | - |
| Long-term receivables (including those due within one year) | Xuzhou Kangbo | 1,581,135.63 | 29,277.25 | - | - |
| Long-term receivables | Xiaoyun Vision Technology | 2,295.00 | 103.73 | - | - |
| Total | 96,539,832.43 | 2,298,344.38 | 20,000,000.00 | 164,000.00 | |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Unit: RMB
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Prepayments | Subsidiaries of CETE | 4,339,675.60 | - | 1,399,872.38 | - |
| Total | 4,339,675.60 | - | 1,399,872.38 | - | |
| Item | Related Party | Closing balance | Opening balance |
| Accounts payable | Subsidiaries of CETE | 360,026,227.41 | 226,498,160.40 |
| Accounts payable | Shanghai Fullhan Micro | 117,676,674.67 | 143,284,053.29 |
| Accounts payable | Wuhu Sensor Tech and its subsidiaries | 6,286,164.42 | 9,203,484.14 |
| Accounts payable | Maxio Technology and its subsidiaries | 545,124.36 | 12,763,683.98 |
| Total | 484,534,190.86 | 391,749,381.81 |
| Item | Related Party | Closing balance | Opening balance |
| Notes Payable | Subsidiaries of CETE | 17,301,547.82 | 13,054,828.27 |
| Notes Payable | Shanghai Fullhan Micro | 3,648,820.00 | 7,110,446.00 |
| Total | 20,950,367.82 | 20,165,274.27 |
| Item | Related Party | Closing balance | Opening balance |
| Contract liabilities | Subsidiaries of CETE | 10,507,934.92 | 7,172,635.75 |
| Contract liabilities | Xuzhou kangbo | 201,887.56 | - |
| Contract liabilities | Zhiguang Hailian and its subsidiaries | 57,630.00 | - |
| Contract liabilities | Daishan Hailai | 688.00 | - |
| Total | 10,768,140.48 | 7,172,635.75 |
| Item | Related Party | Closing balance | Opening balance |
| Other payables | Subsidiaries of CETE | 47,056,334.07 | 56,022,589.40 |
| Other payables | Shanghai Fullhan Micro | 100,000.00 | 100,000.00 |
| Other payables | Wuhu Sensor Tech | - | 51,200.00 |
| Total | 47,156,334.07 | 56,173,789.40 |
| Item | Related Party | Closing balance | Opening balance |
| Long-term payables (including those due within one year) | Subsidiaries of CETE | 49,213,376.81 | 55,814,753.72 |
| Total | 49,213,376.81 | 55,814,753.72 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
the 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.
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 December 23
rd2016, 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 SubjectShares 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. As of December 31
st2020, all restrictedshares awarded in 2016 have been closed.
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 | 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 | 21,204,645 | 21,836,266 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
2016 Share Incentive Scheme
| 2016 Share Incentive Scheme | 2020 | 2019 |
| Total of equity instruments forfeited during the current reporting period (Note) | 770,095 | 1,593,506 |
| Total of equity instruments outstanding at the end of the reporting period | - | 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 & 24 months |
| 2018 Share Incentive Scheme | 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 | 45,591,794 | - |
| Total of equity instruments forfeited during the current reporting period | 6,840,981 | - |
| Total of equity instruments outstanding at the end of the reporting period | 68,762,683 | 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 & 36 months | RMB 16.98 per share & 48 months |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
are comprised of core and full-time staff from innovative business subsidiaries, and could participate in investment oninnovative business subsidiaries where they serve. The Co-Investment Platform will increase capitals annually, thecorresponding increased equity of which will be distributed to core staff who meets investment conditions pursuant toparticular rules.The lock-up period shall be five years after equity of Co-Investment Platform is held by the staff, which will be unlockedin one-off manner when due. Within the lock-up period, if the labor relationship between the grantees and the Companyor its subsidiaries is released or terminated, equity of Co-Investment Platform held by the grantees shall be refunded andsettled by the labor union at an agreed price pursuant to the Provisions.
The Co-Investment Platform grants Co-Investment Staff additional equity annually. The Group determines whether share-based payment shall be constituted based on the fair value of equity instruments newly obtained by the Group’s staff inCo-Investment Platform on each granting date. During the year, the Group recognized share-based payment of RMB152,253,261.12 in aggregate based on the fair value of services obtained by the Group.
2. Information of the share-based payment through equity settlements
Restrictive Share Incentive Sheme
Unit: RMB
| 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 |
| Recognition basis of the number of the equity instruments qualified for vesting | 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 | Performance conditions for vesting the restricted shares have been revised this year, as detailed in Note (XI)- 4, Restricted Shares Incentive Scheme |
| Accumulative amount of share-based payment through equity settlement and further included in the capital reserve | 345,213,163.42 | 852,748,384.69 |
| Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period | 24,136,568.62 | 641,716,793.45 |
| Share Incentive Scheme of Staff Co-Investment in Innovative Businesses | |
| Method of determining the fair value of equity instruments at the grant date | Evaluated and determined based on income method at the grant date |
| Recognition basis of the number of the equity instruments qualified for vesting | Estimated and determined based on the performance result conditions of each vesting period |
| Accumulative amount of share-based payment through equity settlement and further included in the capital reserve | 116,618,260.92 |
| Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period | 152,253,261.12 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
4. Revision and termination of share-based payment
Restrictive Share Incentive Scheme
The 2018 share incentive performance evaluation indicators were revised at the 2019 annual general meeting convenedon May 15
th
2020 by approval of the Proposal on Revision to the Company’s Performance Evaluation Indicators for the2018 Restricted Share Incentive Scheme. The historical comparison value of the compounded operating income growthrate and the benchmark companies’ comparison value over the same period will be used as alternative evaluation indicators,that is, if either of the two indicators were satisfied, the Company’s performance evaluation indicator for the currentunlocking period is considered to be satisfied. The particulars of the revision are set out as follows: the performanceevaluation indicators set out in the Company’s 2018 Restricted Share Incentive Scheme (Revision to the Draft) that “thecompounded operating income growth rate at the year before the time of unlocking is no less than 20% and no less than
th
percentiles level of growth rate of the benchmark companies at the same period as compared to those at the year beforethe time of grant” was revised to be that “the compounded operating income growth rate at the year before the time ofunlocking is no less than 20% or no less than 75
thpercentiles level of growth rate of benchmark companies at the sameperiod as compared to those at the year before the time of grant”.
The Company believes that current operating environment has changed materially as compared to that when 2018Restrictive Share Scheme was formulated, and therefore, the Company had revised the performance evaluation indicatorsset out in the 2018 Share Incentive Scheme during the current fiscal year.
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
To adapt to the new changes brought by the proposed spin-off of a subsidiary, EZVIZ Network for its listing, fromHikvision, Co-Investment Staff and Hikvision Labor Union executed the Supplemental Agreement to the EntrustedInvestment Agreement (hereafter referred to as “Supplemental Agreement”) in December 2020. On December 25
th2020,Hikvision convened the 20
th meeting of the 4
th
session of the Board to consider and approve the Proposal on Revision toManagement Measures for Core Staff Co-Investment in Innovative Businesses. The new version of Management Measuresfor Core Staff Co-Investment in Innovative Businesses (hereafter referred to as “Management Measures (New Version)”)has added the authentic right for equity shares of co-investment plan held by staff and equity shares of innovative businesssubsidiaries indirectly held by them, specified the processing measures of investment equity shares held by staff after theylose the qualification or are cancelled to be qualified for co-investment, and added the systems of management committee,and etc.
On December 31
st2020, co-investment plan execution and management committee approved the ImplementationProvisions for Management Measures for Core Staff Co-Investment in Innovative Businesses (hereafter referred to as“Provisions (New Version)”). Pursuant to the Management Measures (New Version) and Provisions (New Version), theLock-up Period in respect of plan A’s equity shares with the authentic right shall last for a period of a full-five years duringwhich the staff has served for the Company or its subsidiaries; the Lock-up Period in respect of plan B’s equity with theauthentic right shall last for a period of a full-five years during which the staff has served for the corresponding innovativebusiness subsidiary or its subsidiaries.
XII. Commitments and contingencies
1. Significant commitments
(1) Capital commitments
Unit: RMB’000
| Closing balance | Opening balance | |
| Contracted but not yet recognized in financial statements | ||
| - Commitment on construction of long-term assets | 9,573,577 | 10,905,300 |
| - Commitment on external investments | 42,400 | 550,000 |
| Total | 9,615,977 | 11,455,300 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
(2) Operating lease commitments
As of the balance sheet date, the Group had the following external commitments in respect of non-cancellable operatingleases:
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st
2020
Unit: RMB’000
| Closing balance | Opening balance | |
| Minimum lease payments under non-cancellable operating leases: | ||
| First year subsequent to the balance sheet date | 179,814 | 235,585 |
| Second year subsequent to the balance sheet date | 98,860 | 154,430 |
| Third year subsequent to the balance sheet date | 76,606 | 92,851 |
| Subsequent years | 53,532 | 129,063 |
| Total | 408,812 | 611,929 |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Item
| Item | 2020 | 2019 |
| External revenue generated in domestic area | 45,806,567,913.73 | 41,419,508,094.09 |
| External revenue generated in overseas area | 17,696,882,978.05 | 16,238,601,971.13 |
| Total | 63,503,450,891.78 | 57,658,110,065.22 |
| Item (Note) | On December 31st 2020 | On January 1st 2020 |
| Non-current assets in domestic area | 9,202,175,652.66 | 8,401,009,239.65 |
| Non-current assets in overseas area | 454,684,509.48 | 294,697,597.55 |
| Total | 9,656,860,162.14 | 8,695,706,837.20 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
XV. Notes to major items of financial statements of the parent company
1. Accounts receivable
1.1 Disclosure by age
Unit: RMB
| Aging | Closing Balance | ||
| Accounts receivable | Credit loss provision | Proportion (%) | |
| Within credit period | 7,543,457,533.96 | 16,846,435.26 | 0.22 |
| Within 1 year after exceeding credit period | 16,299,894,312.09 | 73,843,384.42 | 0.45 |
| 1-2 years after exceeding credit period | 432,048,595.19 | 94,372,538.40 | 21.84 |
| 2-3 years after exceeding credit period | 141,983,528.60 | 60,423,474.75 | 42.56 |
| 3-4 years after exceeding credit period | 56,374,022.37 | 34,879,980.02 | 61.87 |
| Over 4 years after exceeding credit period | 76,533,747.78 | 76,533,747.78 | 100.00 |
| Subtotal | 24,550,291,739.99 | 356,899,560.63 | 1.45 |
| Category | Closing balance | Opening balance | ||||||||
| Carrying balance | Credit loss provision | Book value | Carrying balance | Credit loss provision | Book value | |||||
| Amount | Percentage (%) | Amount | Percentage (%) | Amount | Amount | Percentage (%) | Amount | Percentage (%) | Amount | |
| Provision for credit loss on a single basis | - | - | - | - | - | - | - | - | - | - |
| Provision for credit loss by portfolios | 24,550,291,739.99 | 100.00 | 356,899,560.63 | 1.45 | 24,193,392,179.36 | 25,454,740,943.40 | 100 | 346,775,018.32 | 1.36 | 25,107,965,925.08 |
| Total | 24,550,291,739.99 | 100.00 | 356,899,560.63 | 1.45 | 24,193,392,179.36 | 25,454,740,943.40 | 100 | 346,775,018.32 | 1.36 | 25,107,965,925.08 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
Accounts receivable provision for credit loss by portfolios
Unit: RMB
| Customer | Closing balance | ||
| Carrying balance | Credit loss provision | Proportion (%) | |
| Subsidiaries’ customers | 20,623,636,081.76 | - | - |
| Portfolio A | 1,211,153.19 | 9,301.19 | 0.77 |
| Portfolio B | 3,925,238,885.86 | 356,684,640.26 | 9.09 |
| Portfolio C | 205,619.18 | 205,619.18 | 100.00 |
| Total | 24,550,291,739.99 | 356,899,560.63 | 1.45 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
1.4 Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
| Name of the Party | Relationship with the Company | Book value balance of accounts receivable | Closing balance for credit loss provision | Proportion (%) |
| Subsidiary A | Subsidiary | 20,546,447,737.45 | - | 83.69 |
| CETC’s subsidiary company A | Related party | 181,223,569.28 | 23,284,283.90 | 0.74 |
| Third party C | Third party | 107,295,716.59 | 3,719,250.50 | 0.44 |
| Third party J | Third party | 55,367,861.68 | 3,073,260.09 | 0.23 |
| Third party K | Third party | 46,229,159.05 | 1,993,747.65 | 0.19 |
| Total | 20,936,564,044.05 | 32,070,542.14 | 85.29 |
| Category | Closing balance | Opening Balance |
| Dividends receivable | 22,910,404.14 | 2,550,000.00 |
| Other receivables | 703,792,729.51 | 918,725,388.15 |
| Total | 726,703,133.65 | 921,275,388.15 |
| Investees | Closing balance | Opening Balance |
| Subsidiaries of CETE | 22,910,404.14 | 2,550,000.00 |
| Total | 22,910,404.14 | 2,550,000.00 |
| Item | Closing Balance | ||
| Other receivables | Credit loss provision | Proportion (%) | |
| Within contract period | 634,509,005.61 | 1,648,559.06 | 0.26 |
| Within 1 year | 50,953,297.06 | 2,233,096.83 | 4.38 |
| 1-2 years | 12,926,792.49 | 2,713,664.99 | 20.99 |
| 2-3 years | 17,863,896.99 | 7,899,415.25 | 44.22 |
| 3-4 years | 6,637,912.12 | 4,829,679.73 | 72.76 |
| Over 4 years | 2,319,368.31 | 2,093,127.21 | 90.25 |
| Subtotal | 725,210,272.58 | 21,417,543.07 | 2.95 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
(2) Other receivables by nature of the payment
Unit: RMB
| Nature | Closing balance | Opening balance |
| Payments by related parties within the Group | 454,474,087.76 | 678,798,902.79 |
| Temporary payments for receivables | 219,103,746.42 | 196,954,698.49 |
| Guarantee deposit | 47,835,041.47 | 45,527,954.39 |
| Others | 3,797,396.93 | 7,240,271.59 |
| Total | 725,210,272.58 | 928,521,827.26 |
| The name of entity | Relationship with the Company | Nature | Closing balance | Aging | Percentage to total other receivables (%) | Closing balance for credit loss provision |
| Subsidiary B | Subsidiary | Internal Payment | 170,708,595.23 | Within contract period | 23.54 | - |
| Subsidiary C | Subsidiary | Internal Payment | 73,356,492.91 | Within contract period | 10.12 | - |
| Subsidiary D | Subsidiary | Internal Payment | 61,302,093.00 | Within contract period | 8.45 | - |
| Subsidiary E | Subsidiary | Internal Payment | 21,867,738.77 | Within contract period | 3.02 | - |
| Subsidiary F | Subsidiary | Internal Payment | 13,039,051.12 | Within contract period | 1.80 | - |
| Total | 340,273,971.03 | 46.93 | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
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 | 5,912,831,208.01 | - | 5,912,831,208.01 | 4,878,400,682.40 | - | 4,878,400,682.40 |
| Inestments in associated enterprises and joint ventures | 814,542,245.96 | - | 814,542,245.96 | 195,617,348.04 | - | 195,617,348.04 |
| Total | 6,727,373,453.97 | - | 6,727,373,453.97 | 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 | 71,995,980.21 | - | 848,272,492.62 | - | - |
| Hangzhou Hikvision Security Equipment Leasing Services Co., Ltd. | 200,000,000.00 | - | - | 200,000,000.00 | - | - |
| Shanghai Goldway Intelligent Transportation 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 | 52,592,512.43 | - | 61,742,747.98 | - | - |
| Hangzhou Haikang Zhicheng Investment and Development Co., | 24,000,000.00 | - | - | 24,000,000.00 | - | - |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 | 15,359,226.18 | - | 138,957,632.99 | - | - |
| Hangzhou Hikvision Investment Management Co., Ltd. | 100,000.00 | - | 100,000.00 | - | - | - |
| Hangzhou HikAuto Technology Co., Ltd. | 183,723,427.59 | 2,765,128.01 | - | 186,488,555.60 | - | - |
| Hangzhou Hikvision Communication Technology Co., Ltd. | 7,000,000.00 | - | - | 7,000,000.00 | - | - |
| Hangzhou Hikmicro Sensing Technology Co., Ltd. | 120,513,668.74 | 61,687,768.80 | - | 182,201,437.54 | - | - |
| 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 | - | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
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 | 1,777,592.36 | - | 102,318,598.74 | - | - |
| 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 | 32,912,506.85 | - | 1,066,917,232.70 | - | - |
| Hangzhou Hikvision Electronics Co., Ltd. | 401,092,310.36 | 10,318,114.79 | - | 411,410,425.15 | - | - |
| Wuhan HikStorage Technology Co., Ltd. | 60,869,464.15 | - | - | 60,869,464.15 | - | - |
| Chengdu Hikvision Digital Technology Co., Ltd. | 300,000,000.00 | 240,086,104.32 | - | 540,086,104.32 | - | - |
| Hangzhou HikAuto Software Co., Ltd. | 5,483,004.52 | 9,053,170.08 | - | 14,536,174.60 | - | - |
| Hangzhou Haikang Intelligent Technology Co., Ltd. | 2,726,015.34 | 5,963,128.62 | - | 8,689,143.96 | - | - |
| Hangzhou EZVIZ Software Co., Ltd. | 12,535,758.31 | 22,548,397.51 | - | 35,084,155.82 | - | - |
| LLC Hikvision Tashkent | 833,014.00 | - | - | 833,014.00 | - | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 |
| Xi’An Hikvision Digital Technology Co., Ltd. | 75,000,000.00 | 10,000,000.00 | - | 85,000,000.00 | - | - |
| Wuhan Hikvision Technology Co., Ltd. | 12,600,000.00 | - | - | 12,600,000.00 | - | - |
| Wuhan Hikvision Science and Technology Co., Ltd. | 65,250,000.00 | 85,000,000.00 | - | 150,250,000.00 | - | - |
| Hangzhou Hikmed Technology Co., Ltd. | 48,769,806.64 | 2,178,627.18 | - | 50,948,433.82 | - | - |
| 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 | 45,000,000.00 | - | 80,000,000.00 | - | - |
| Hangzhou Kuangxin Technology Co., Ltd. | 112,000,000.00 | - | - | 112,000,000.00 | - | - |
| Zhengzhou Hikvision Digital Technology Co., Ltd. | 55,000,000.00 | 10,000,000.00 | - | 65,000,000.00 | - | - |
| 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 | 348,846.40 | - | 50,348,846.40 | - | - |
| 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 | 2,669,982.96 | - | 2,843,875.79 | - | - |
| Shijiazhuang Hikvision Technology Co., Ltd. | - | 45,000,000.00 | - | 45,000,000.00 | - | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
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 |
| Zhejiang Haikang Fire Protection and Control Co., Ltd. | - | 84,004.82 | - | 84,004.82 | - | - |
| Hikvision Argentina S.R.L | - | 1,793,559.15 | - | 1,793,559.15 | - | - |
| Fuzhou Hikvision Digital Technology Co., Ltd. | - | 50,814,676.49 | - | 50,814,676.49 | - | - |
| Hangzhou Hikfire Technology Co., Ltd. | - | 61,871,362.21 | - | 61,871,362.21 | - | - |
| Hangzhou Rayin Technology Co., Ltd. | - | 60,702,536.80 | - | 60,702,536.80 | - | - |
| Hangzhou Microimage Software Co., Ltd. | - | 2,090,633.38 | - | 2,090,633.38 | - | - |
| Kunming Hikvision Digital Technology Co., Ltd. | - | 126,666.06 | - | 126,666.06 | - | - |
| Total | 4,878,400,682.40 | 1,034,530,525.61 | 100,000.00 | 5,912,831,208.01 | - | - |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
3.2 Inestments in associated enterprises and joint ventures
Unit：RMB
| Name of investee | Opening balance | Increase/Decrease during the current reporting period | Closing Balance | Blance of impairment loss provision at the end of the current reporting period | ||||||
| Additional Investments | Reduce Investments | Investment income (losses) recognized under the equity method | Other comprehensive income adjustment | Declared cash dividends or profits | Provision for impairment | Others | ||||
| 1.Joint Ventures | ||||||||||
| Hangzhou Haikang Intelligent Fund | 50,000,000.00 | 550,000,000.00 | - | 12,479,371.62 | - | - | - | - | 612,479,371.62 | - |
| Daishan Hailai | 13,320,000.00 | - | - | 1,933,091.76 | - | - | - | - | 15,253,091.76 | - |
| Haishi Huayue | - | 10,200,000.00 | - | (214,422.68) | - | - | - | - | 9,985,577.32 | - |
| Xuzhou Kangbo | - | 4,900,000.00 | - | (268,713.42) | - | - | - | - | 4,631,286.58 | - |
| Shenzhen City Service | - | 8,000,000.00 | - | (1,970,430.31) | - | - | - | - | 6,029,569.69 | - |
| Yunnan Yinghai | - | 4,900,000.00 | - | (58,939.24) | - | - | - | - | 4,841,060.76 | - |
| Zhejiang City Digital Technology | - | 11,500,000.00 | - | 364,018.37 | - | - | - | - | 11,864,018.37 | - |
| Guangxi Haishi | - | 6,000,000.00 | - | (703,304.64) | - | - | - | - | 5,296,695.36 | - |
| Total | 63,320,000.00 | 595,500,000.00 | - | 11,560,671.46 | - | - | - | - | 670,380,671.46 | - |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
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 (losses) recognized under the equity method | Other comprehensive income adjustment | Declared cash dividends or profits | Provision for impairment | Others | ||||||||||||
| 2.Associated Enterprises | ||||||||||||||||||
| Wuhu Sensor Tech | 48,420,966.46 | - | - | 10,070,297.96 | - | - | - | - | 58,491,264.42 | - | ||||||||
| Maxio Technology | 65,397,927.02 | - | - | (10,776,124.48) | - | - | - | - | 54,621,802.54 | - | ||||||||
| Zhiguang Hailian | 8,684,859.27 | 10,000,000.00 | - | 2,568,199.60 | - | - | - | - | 21,253,058.87 | - | ||||||||
| Qingtang Big Data | 9,793,595.29 | - | - | 1,853.38 | - | - | - | - | 9,795,448.67 | - | ||||||||
| Subtotal | 132,297,348.04 | 10,000,000.00 | - | 1,864,226.46 | - | - | - | - | 144,161,574.50 | - | ||||||||
| Total | 195,617,348.04 | 605,500,000.00 | - | 13,424,897.92 | - | - | - | - | 814,542,245.96 | - | ||||||||
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
4. Operating income and operating cost
Unit：RMB
| Item | 2020 | 2019 | ||
| Income | Cost | Income | Cost | |
| Operating income | 24,051,359,607.67 | 7,010,347,837.77 | 22,818,988,903.46 | 7,351,332,707.12 |
| Other operating income | 2,260,627,739.73 | 167,059,377.68 | 2,893,477,698.34 | 377,154,148.55 |
| Total | 26,311,987,347.40 | 7,177,407,215.45 | 25,712,466,601.80 | 7,728,486,855.67 |
| Item | 2020 | 2019 |
| Long-term equity investment income (losses) calculated by cost method | 80,360,404.14 | 1,400,000.00 |
| Long-term equity investment losses measured by equity method | 13,424,897.92 | 5,089,008.14 |
| Investment income (loss) from disposal of asset group | (2,215.23) | 11,161.99 |
| 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 held-for-trading financial assets | 3,552,279.56 | 1,168,699.00 |
| Proceeds from the disposal of asset groups | 848,151,116.16 | - |
| Total | 1,095,486,482.55 | 25,026,089.44 |
| Related party | Transaction type | 2020 | 2019 |
| Subsidiaries of Hikvision (Note) | Purchase of materials and receiving of services | 7,995,299,074.64 | 5,671,591,849.30 |
| Subsidiaries of CETE | Purchase of materials and receiving of services | 11,773,724.55 | 39,607,756.46 |
| Maxio Technology and its subsidiaries | Purchase of materials and receiving of services | 7,875,600.00 | 4,192,107.01 |
| Wuhu Sensor Tech and its subsidiaries | Purchase of materials and receiving of services | 1,000.00 | - |
| Shanghai Fullhan Micro | Purchase of materials and receiving of services | - | 36,590,000.00 |
| Total | 8,014,949,399.19 | 5,751,981,712.77 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st
2020
Sales of goods/rendering of services:
Unit：RMB
| Related party | Transaction type | 2020 | 2019 |
| Subsidiaries of Hikvision | Sales of products and rendering of services | 18,507,772,746.27 | 17,597,924,722.59 |
| Subsidiaries of CETE | Sales of products and rendering of services | 71,968,472.76 | 251,053,117.23 |
| Xiaoyun Vision Technology | Sales of products and rendering of services | 2,629,911.49 | 7,709,012.16 |
| Zhiguang Hailian and its subsidiaries | Sales of products and rendering of services | 2,191,071.97 | 4,099,860.19 |
| Guangxi Haishi and its subsidiaries | Sales of products and rendering of services | 1,769,911.50 | - |
| Haishi Huayue | Sales of products and rendering of services | 263,634.07 | - |
| Shenzhen City Service and its subsidiaries | Sales of products and rendering of services | 13,868.14 | - |
| Qingtang Big Data | Sales of products and rendering of services | 7,092.92 | - |
| Wuhu Sensor Tech Service and its subsidiaries | Sales of products and rendering of services | 1,150.44 | 74,446.30 |
| Total | 18,586,617,859.56 | 17,860,861,158.47 |
| Related Party | Content of related party transaction | Amount occurred during the current reporting period | Closing balance at the end of the current reporting period | Amount occurred during the prior reporting period | Opening Balance at the beginning of the current reporting period |
| 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 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
6.2 Guarantees with related parties
In the current reporting period, the Company has provided guarantees for its 28 wholly-owned and majority-ownedsubsidiaries in an amount not exceeding an equivalent of RMB 32.80 billion (2019：RMB 25.55 billion), includingthe joint liability guarantee for the payment obligations on purchase from suppliers in an amount not exceeding anequivalent of RMB 3.125 billion (2019: RMB 3.125 billion), and the joint liability guarantee for the general creditlimit applied from commercial banks and other financial institutions or other financing methods through agreedmethods in an amount not exceeding an equivalent of RMB 29.67 billion (2019: RMB 22.42 billion).
For details of the Company's guarantees on Safety Chongqing project, please refer to Note X (5).
6.3 Funding from related parties
Amount of financial funds: The Company proposes to provide amounts of no more than RMB 300.00 million, RMB
50.00 million, RMB 100.00 million, RMB 500.00 million and RMB 1,000.00 million to five innovative businessholding subsidiaries, namely Hangzhou HikAuto Technology Co., Ltd., Hangzhou HikStorage, Hangzhou Hikfire,Hangzhou Hikmicro and Hangzhou HikRobotic Technology, respectively. The actual amount of funds will beprovided based on the actual business needs of each innovative business holding subsidiary. The period of financialfunds will take effect during 3 years after the date of approval by the general meeting of the Company, during whichthe limit (balance) can be utilized in circulation by batches.
6.4 Transfer of the asset groups of the related parties
The Company had integrated the thermal imaging business and intelligent fire protection and control business, andtransferred the asset groups of the thermal imaging business department and the asset groups of the intelligent fireprotection and control business to the Company’s holding subsidiaries, Hangzhou Hikmicro and Hangzhou Hikfire,at the consideration of RMB 801,140,000.00 and RMB 49,770,000.00, respectively. The Company transferred 100%equity of Wuhan Fire Protection and Control and Zhejiang Fire Protection and Control to Hangzhou Hikfire at theconsideration of RMB 0.00, upon the completion of which the shareholding ratios of those two companies werechanged from direct holding of 100% to indirect holding of 60%, respectively. For details, please refer to Note (VII)2.
7. Receivables from related parties and payables to related parties
7.1 Receivables from related parties
Unit：RMB
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Accounts receivable | Subsidiaries of Hikvision | 20,623,636,081.76 | - | 20,936,806,929.47 | - |
| Accounts receivable | Subsidiaries of CETE | 224,340,023.89 | 28,804,106.29 | 250,291,208.65 | 10,516,129.42 |
| Accounts receivable | Xiaoyun Vision Technology | 9,522,614.22 | 349,200.54 | 6,550,814.22 | 363,570.19 |
| Accounts | Zhiguang Hailian and its | 7,074.00 | 83.47 | 4,270,910.00 | 47,006.81 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st
2020
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| receivable | subsidiaries | ||||
| Accounts receivable | Wuhu Sensor-Tech and its subsidiaries | 1,300.00 | 58.76 | - | - |
| Total | 20,857,507,093.87 | 29,153,449.06 | 21,197,919,862.34 | 10,926,706.42 | |
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Notes receivable | Subsidiaries of CETE | 15,740,985.15 | - | - | - |
| Total | 15,740,985.15 | - | - | - | |
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Other receivables | Subsidiaries of Hikvision | 454,474,087.76 | - | 678,798,902.79 | - |
| Other receivables | Haishi Huayue | 279,452.11 | 3,297.53 | - | - |
| Other receivables | Subsidiaries of CETE | 145,000.00 | 1,711.00 | - | - |
| Total | 454,898,539.87 | 5,008.53 | 678,798,902.79 | - | |
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Prepayments | Subsidiaries of Hikvision | 3,646,828.69 | - | 64,380,038.22 | - |
| Prepayments | Subsidiaries of CETE | - | - | 144,569.90 | - |
| Total | 3,646,828.69 | - | 64,524,608.12 | - | |
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Long-term receivables (including those due | Subsidiaries of CETE | 53,512,305.64 | 1,446,519.44 | - | - |
Notes to Financial StatementsFor the reporting period from January 1
st 2020 to December 31
st2020
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| within one year) | |||||
| Total | 53,512,305.64 | 1,446,519.44 | - | - | |
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Dividends receivable | Subsidiaries of Hikvision | 22,910,404.14 | - | 2,550,000.00 | - |
| Total | 22,910,404.14 | - | 2,550,000.00 | - | |
| Item | Related party | Closing balance | Opening balance |
| Accounts payable | Subsidiaries of Hikvision | 329,639,516.11 | 877,307,780.01 |
| Accounts payable | Subsidiaries of CETE | 3,010,132.22 | 1,653.61 |
| Accounts payable | Maxio Technology and its subsidiaries | - | 8,560,000.00 |
| Total | 332,649,648.33 | 885,869,433.62 |
| Item | Related party | Closing balance | Opening balance |
| Contract liabilities | Subsidiaries of Hikvision | 5,755.28 | 7,682,167.48 |
| Contract liabilities | Subsidiaries of CETE | 382,332.53 | 109,309.12 |
| Contract liabilities | Daishan Hailai | 688.00 | - |
| Total | 388,775.81 | 7,791,476.60 |
| Item | Related party | Closing balance | Opening balance |
| Other payables | Subsidiaries of Hikvision | 289,914,770.68 | 219,301,627.42 |
| Other payables | Subsidiaries of CETE | 337,710.00 | 150,000.00 |
| Other payables | Shanghai Fullhan Micro | 100,000.00 | 100,000.00 |
| Other payables | Wuhu Sensor-Tech and its subsidiaries | 1,200.00 | 1,200.00 |
| Total | 290,353,680.68 | 219,552,827.42 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
Unit：RMB
| Supplementary information | 2020 | 2019 |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 12,671,388,440.50 | 11,682,416,010.01 |
| Add: Assets impairment provision | (2,397,952.77) | (51,593,292.77) |
| Credit loss provision | 35,765,705.73 | (656,135,180.29) |
| Depreciation of fixed assets | 256,698,165.42 | 245,879,493.31 |
| Amortization of intangible assets | 51,580,512.51 | 82,358,499.02 |
| Amortization of long-term deferred expenses | 21,910,527.64 | 9,252,020.83 |
| Gains on disposal of fixed assets, intangible assets and other long-term assets | (16,966.03) | (4,072,096.18) |
| Financial expenses | 270,249,113.29 | 183,074,224.09 |
| Gains from change in fair value | (69,478,784.83) | (17,547,234.44) |
| Investment income | (1,095,486,482.55) | (25,026,089.44) |
| Share-based payment through equity settlement | 523,901,019.53 | 193,304,834.81 |
| Increase in restricted funds | (16,350,637.05) | (2,035,173.70) |
| Decrease in deferred income tax assets | 16,291,195.35 | 95,421,754.68 |
| Decrease (increase) of inventories | (30,574,481.99) | 49,235,200.73 |
| Decrease (Increase) in operating receivables | 941,257,584.66 | (9,018,892,651.51) |
| Increase in operating payables | 974,737,516.48 | 5,315,195.54 |
| Decrease in deferred income | (39,562,793.01) | (24,728,979.56) |
| Net cash flow from operating activities | 14,509,911,682.88 | 2,746,226,535.13 |
| 2. Major investing and financing activities not involving cash receipt and payment: | ||
| 3. Net change in cash and cash equivalents: | ||
| Closing balance of cash | 23,264,693,578.70 | 16,656,028,410.72 |
| Less: Opening balance of cash | 16,656,028,410.72 | 18,998,934,287.59 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase (decrease) in cash and cash equivalents | 6,608,665,167.98 | (2,342,905,876.87) |
| Item | Closing balance | Opening balance |
| I. Cash | 23,264,693,578.70 | 16,656,028,410.72 |
| Including: Cash on hand | 264,936.39 | 181,655.02 |
Hikvision 2020 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st
2020
| Bank deposit for payment at any time | 23,264,326,122.65 | 16,654,913,925.73 |
| Other monetary funds for payment at any time | 102,519.66 | 932,829.97 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 23,264,693,578.70 | 16,656,028,410.72 |
| Item | Amount | Description |
| Profit or loss from disposal of non-current assets | (5,836,675.36) | / |
| 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) | 571,403,657.30 | / |
| 281,193.50 | / | |
| In addition to the Company's normal business related to the effective hedging business, gains and losses on changes in fair value arising from holding derivative financial assets, derivative financial liabilities, other non-current financial assets, and investment gains from the disposal of the above-mentioned financial assets/financial liabilities and receivables financing | 98,373,869.75 | / |
| Other non-operating income and expense except the items mentioned above | 74,007,631.14 | / |
| Impact of income tax | (109,931,807.07) | / |
| The impact of minority equity | (48,610,431.55) | / |
| Total | 579,687,437.71 | / |
Notes to Financial StatementsFor the reporting period from January 1
st
2020 to December 31
st2020
Unit：RMB
| 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 | 27.72% | 1.445 | 1.444 |
| Net profit excluding non-recurring items of profit or loss attributable to ordinary shareholders of the Company | 26.52% | 1.382 | 1.381 |
Section XIII Documents Available for Reference
1. 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 (Accounting Supervisor);
2. The original audit report containing the seal of the accounting firm and the signature and seal ofthe certified public accountant;
3. Original versions and copies of all the Company's documents and announcements that werepublicly disclosed on the website designated by CSRC during the reporting period.
The above documents are completely placed at the Company's board of directors’ office.
Hangzhou Hikvision Digital Technology Co., Ltd.
Chairman: Chen Zongnian
April 17
th
2021
Note:
This document is a translated version of the Chinese version 2020 Annual Report (“2020年年度报告”), and the published announcements in the Chinese version shall prevail. The complete publishedChinese 2020 Annual Report may be obtained at www.cninfo.com.cn.