Hangzhou Hikvision Digital Technology Co., Ltd.
2022 Annual Report
April 15, 2023
To Shareholders
The year 2022 was the twenty-first year since the establishment of the Company. It alsowitnessed the first negative profit growth since our creation. The Company is experiencing many newchallenges in a complex and changing environment. However, challenges are inevitable in the growthand development of businesses. Some challenges have made the Company more confident andcapable of addressing future challenges.
Technology is the first productive force. Recognizing the growing impact of technologicaladvancement on all aspects of our life, the Company embraces technological changes and followstechnological development trends. AIoT is a field the Company will continue to develop for a longtime as it covers many industry scenarios, technologies and a wide range of products from detectorsto system solutions. Today, customers focus on not only the type of objects, but also theircharacteristics, status or composition, and this change of consumer demand poses challenges andopportunities for us. The development of AI technology has provided us with greater capability andeasier access to more data of objects, enabling us to explore wider application of data with AIoT.Believing that success will come when conditions are ripe, the Company will continue to invest firmlyin perception, AI, big data and cloud computing technologies. We look forward to more breakthroughsin global technology, and will strive to grasp the business opportunities that each technological changepresents.Digital transformation is a long-term process that requires continuous improvement. We willcontinue to optimize our operational model or process by adopting digital technologies in variousbusiness scenarios of the Company and our partners. Digital transformation is crucial for our growthand the development of new market opportunities, but it cannot be done overnight. We will start withlittle practical work and steadily forges ahead toward our goal.The past five years has been challenging for many businesses due to the rise of internationalprotectionism and the trend of counter-globalization, and we are no exception. However, we havealso seen some growth. There is still a tremendous market out there and we will adapt to thecircumstances, further strengthen our marketing and service systems, and improve our supply chain
based on market trends and business development needs.The successful IPO of EZVIZ Network marks a milestone in the Company's internalentrepreneurial innovation and an achievement in our path to maintaining entrepreneurial andinnovative vitality. Being customer-centric and creating value for customers are always theCompany's original mission and core values, regardless of the business model. Whether in good orbad times, we remain open, transparent and honest.At last, I would like to express my sincere gratitude to all shareholders for your trust in themanagement team!
See far, go further!
Board of Directors of Hangzhou Hikvision Digital Technology Co., Ltd.
April, 2023
Section I Important Notes, Contents and DefinitionsThe Board of Directors, Board of Supervisors, directors, supervisors and senior managementguarantee that the information presented in this report is true, accurate and complete without falserecords, misleading statements or material omissions, and will undertake individual and joint legalliabilities.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 true,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: Board of Directors based on the Company’s current total share capital of9,363,932,789 shares, the Company proposed to distribute cash dividend of RMB7 (tax inclusive) pereach 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil.
Note:
This document is a translated version of the Chinese version 2022 Annual Report ("2022年年度报告"), and the published announcements in the Chinese version shall prevail. The complete publishedChinese 2022 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) Geopolitical environment risk: The current global geopolitical uncertainty has greatly increased, and
the operating environment in certain regions has deteriorated. The Company will adjust its marketingresources based on business opportunities, but if the geopolitical environment get worse, the Company'soperations in certain countries and regions may be adversely affected.
2) Global economic downside risk: The economic growth of some overseas countries slows down, the
potential risks such as economic fluctuation and debt default in various regions are difficult to eliminate.At the same time, the domestic economy is switching to a new development mode and its pace of recoveryneeds to be further observed. The Company disperses the operation risk of a single region with a widebusiness layout. But the Company's business will also be impacted if there is a global economic recession.
3) Supply chain risk: The global supply system is being undermined by politics. The Company has beenmaking efforts to build a diversified supply chain and optimize inventory adjustment and control.However, if systemic risks arise in the global supply chain, the Company’s operating capabilities may beaffected
4) Technology upgrading risk: AI, big data, cloud computing, edge computing and other technologiesdevelop rapidly, and the iteration speed of science and technology application is fast. If the update andchange of cutting-edge technology cannot be closely tracked and the innovative development of businesscannot be realized quickly, the uncertainty of the Company's future development will increase.
5) 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. The Company constantly strengthens the construction of legal compliance system sinceChina and overseas countries have stricter data supervision and business compliance requirements. If theCompany's legal compliance capabilities cannot keep up with the situation, it will bring adverse impactson the Company's operations.
6) Risk of exchange rate fluctuation: The Company carries out operations in various countries and regions,mainly settled in non-RMB currency. Exchange rate fluctuations could have impact on foreign exchangeexposures arising out of sales, procurement and financing, which could likely affect the profitability levelof the Company.
7) Financial risk caused by the decline of customers’ ability to pay: The enterprises’ financial liquidityis negatively impacted by the macroeconomic downturn. The Company has accumulated a certain amountof cash reserves due to its stable business operation, and the financing cost is low. If the overall liquidityrisk of the market increases, it will adversely affect the Company’s account receivables due to the paymentcollection speed of the Company may slow down.
8) Risk of internal management: The continual expansion of business scale, the continuous increase ofnew products and new businesses, and the continuous growth in total number of employees lead to asignificant rise of internal management complexity, which brings challenges to the Company’smanagement. The Company’s sustainable development will face certain risks if the management levelfails to proportionally address the Company’s business expansion.
9) Risk of cybersecurity: The Company has always attached great importance and taken active measuresto enhance cybersecurity performance of our products and systems. But there is still a possibility ofdeliberate attempts, including computer viruses, malicious software, hacker and others to intentionallyattack our systems or products, causing cybersecurity issues.10) Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale ofR&D investment, and produces considerable technical milestones. At the same time, the Companyimplements well-organized intellectual property right (IPR) protection measures. However, the risk ofintellectual property disputes and the risk of intellectual property rights violations still exist.
The above notices might not be all-inclusive of all other potential risks. Please pay attention to potential investmentrisks.
CONTENTS
To Shareholders ...... 1
Section I Important Notes, Contents and Definitions ...... 3
Section II Corporate Profile & Key Financial Data ...... 9
Section III Management Discussion and Analysis ...... 14
Section IV Corporate Governance ...... 125
Section V Environmental and Social Responsibility ...... 163
Section VI Significant Events ...... 164
Section VII Changes in Shares and Information about Shareholders ...... 191
Section VIII Information of Preferred Shares ...... 207
Section IX Bonds ...... 208
Section X Financial Report ...... 209
Section XI Documents Available for Reference ...... 368
Definitions
| Term | Definition |
| Reporting Period | From January 1, 2022 to December 31, 2022 |
| Articles of Associations | Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd |
| Hikvision, the Company, our 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 |
| EZVIZ, EZVIZ Network | Hangzhou EZVIZ Network Co., Ltd.(According to the context, also refers to the corresponding business) |
| HikRobot, Robotic business | Hangzhou Hikrobot Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
| HikAuto, Auto electronics business | Hangzhou Hikauto Technology Ltd. (According to the context, also refers to the corresponding business) |
| HikMicro, Micro Sensing, Thermal imaging business | Hangzhou Hikmicro Sensing Technology Ltd. (According to the context, also refers to the corresponding business) |
| HikSemi, HikStorage, Storage business | Wuhan Hikstorage Technology Ltd. (According to the context, also refers to the corresponding business) |
| HikImaging | Hangzhou Hikimaging Technology Ltd. (According to the context, also refers to the corresponding business) |
| HikFire | Hangzhou Hikfire Technology Ltd. (According to the context, also refers to the corresponding business) |
| HikRayin,Rayin, HikSecurityCheck | Hangzhou Rayin Technology Ltd. (According to the context, also refers to the corresponding business) |
| Hangzhou Innovation Industry Park | Located in Hangzhou, Binjiang District, 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. |
| Shijiazhuang Science and Technology Park | Located in Shijiazhuang City, Hebei Province, the planned use is R&D, office space and supporting facilities. |
| Security Industrial Base (Tonglu) | Located in Hangzhou, Zhejiang Province, the planned use is for production plants, logistics warehousing center and supporting facilities. |
| Wuhan Intelligence Industry | Located in Wuhan, Hubei Province, the planned use is for production plants, |
| Term | Definition |
| Park | 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 Industrial Park | EZVIZ Smart Home Products’ Industrial Base, located in Hangzhou, Zhejiang Province, is planned to be used for R&D, office space and supporting facilities of Hangzhou EZVIZ Network Co., Ltd. |
| Hefei Science and Technology Park | Located in Hefei, Anhui Province, the planned use is R&D, office space and supporting facilities, etc. |
| Nanjing Science and Technology Park | Located in Nanjing, Jiangsu Province, the planned use is R&D, office space and supporting facilities, etc. |
| Nanchang Science and Technology Park | Located in Nanchang, Jiangxi Province, the planned use is R&D, office space and supporting facilities, etc. |
| 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 (www.cninfo.com.cn). In this report, innovative business also refers to EZVIZ, HikRobot, HikAuto, HikMicro, HikSemi, HikImaging, HikFire, Rayin and their related business or products. |
Section II Corporate Profile & Key Financial Data
I. 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, Zhejiang Province | ||
| Postal code of Registered address | 310051 | ||
| Changes in the Company's registered address | The Company was listed on the Shenzhen Stock Exchange on May 28th 2010. The original registered address was No. 36 MachengRoad, Xihu District, Hangzhou, Zhejiang Province. In 2016, the Company's registered address was changed to No. 555 Qianmo Road, Binjiang District, Hangzhou, Zhejiang Province. | ||
| 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 | |||
II. Contacts and Contact Information
| Board Secretary | Securities Affairs Representative | |
| Name | Huang Fanghong | |
| Address | No. 518 WuLianWang Street, Binjiang District, Hangzhou | |
| Tel. | 0571-88075998 ; 0571-89710492 | |
| Fax | 0571-89986895 | |
| hikvision@hikvision.com |
III. Information Disclosure and Place of the Report
| The securities exchange website for the disclosure of the Annual Report | www.szse.cn |
| Media and website for the disclosure of the Annual Report | Securities Times, China Securities Journal, Shanghai securities Journal, 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
| Unified Social Credit Identifier | 91330000733796106P |
| Changes in principle business activities since the Company was listed (if any) | During the reporting period, the Company added the following to the business scope: production of commercial password products; development of network and information security software; Type II value-added telecommunications services; online data processing and transaction processing services (operating e-commerce); internet information services; general aviation services. The following phrases have been removed: manufacturing of consumer service robot, manufacturing of industrial robot, manufacturing of special operation robot, and sales of intelligent robot. At the same time, the Company adjusted some description of its business scope in accordance with the latest regulatory requirements of the industry and commerce authorities for business scope. After the change, the Company’s business scope covers: licensed items: production of Class II and Class III radiation devices; sales of Class II and Class III radiation devices; radioisotope production (except the radiopharmaceuticals for positron emission computed tomography ); sales of Class II, Class III, Class IV and Class V radioactive sources; engineering and construction activities; type II value-added telecommunications services; online data processing and transaction processing services (operating e-commerce); Internet information services; general aviation services. (as for the items which by law are subject to approval, business activities can be carried out only after having been approved by the relevant departments, and the specific operation items are subject to the terms of the approval). General items: manufacturing of digital video surveillance systems; sales of digital video surveillance systems; manufacturing of security equipment; sales of security equipment; manufacturing of IoT equipment; sales of IoT equipment; manufacturing of intelligent unmanned aerial drones; sales of intelligent unmanned aerial drones; manufacturing of computer software and hardware and peripherals; wholesale of computer software and hardware and auxiliary equipment; manufacturing of communication equipment; sales of communication equipment; manufacturing of network equipment; sales of network equipment; manufacturing of display devices; sales of display devices; manufacturing of intelligent mobile equipment; sales of intelligent mobile equipment; manufacturing of auto parts and accessories; wholesale of auto parts and accessories; manufacturing of electric signal appliances and devices; sales of electric signal appliances and devices; manufacturing of mechanical and electrical equipment; sales of mechanical and electrical equipment; manufacturing of special labor protective supplies; sales of special labor protective supplies; production of commercial password products; sales of electronic products; sales of digital cultural and creative technological equipment; technical services, technical development, technical consultation, technical knowledge exchange, technology transfer and technology promotion; software development; development of network and information security software; information system integration services; |
| computer system services; research and development of IoT technologies; IoT technology services; IoT application services; big data services; data processing and storage support services; security system monitoring services; security technology defense system’s design and construction services; electronic and mechanical equipment maintenance (excluding special equipment); parking lot services; digital cultural and creative content application services; environmental protection monitoring; business training (excluding education and vocational training that require licensing); import and export of goods; import and export of technology (Except for items which by law are subject to approval, the Company can determine and carry out operational activities in accordance with the law by virtue of its business license). | |
| Changes of controlling shareholders of the Company (if any) | No change during the reporting period |
V. Other Relevant Information
Accounting firm engaged by the Company
| 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, Cai Jin |
Sponsor institution engaged by the Company to continuously perform its supervisory function during the ReportingPeriod
□ Applicable √ Inapplicable
Financial advisor engaged by the Company to perform the duties of continuous supervision during the reportingperiod
√ Applicable □ Inapplicable
| Name of Financial Advisor | Office Address of Financial Advisor | Name of the lead financial advisor | Supervision Period |
| China International Capital Corporation Limited | 27th & 28th Floors, Tower 2, China World Tower, No.1 Jianguomen Outer Street, Chaoyang District, Beijing. | Wang Jian ; Liu Jia | The remaining period of the first year of listing of Hangzhou Ezviz Network Co., Ltd., a subsidiary under the control of the Company, and the following complete fiscal year.（From December 28, 2022 to December 31, 2023） |
VI. Key Accounting Data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
Unit: RMB
| 2022 | 2021 | YoY Change (%) | 2020 | |
| Revenue (RMB) | 83,166,321,681.14 | 81,420,053,539.27 | 2.14% | 63,503,450,891.78 |
| 2022 | 2021 | YoY Change (%) | 2020 | |
| Net profit attributable to shareholders of the Company (RMB) | 12,837,342,061.07 | 16,800,411,032.05 | -23.59% | 13,385,526,714.15 |
| Net profit attributable to shareholders of the Company excluding non-recurring gains and losses (RMB) | 12,330,695,878.62 | 16,444,723,630.97 | -25.02% | 12,805,839,276.44 |
| Net cash flows from operating activities (RMB) | 10,164,135,382.38 | 12,708,524,686.99 | -20.02% | 16,088,156,566.67 |
| Basic earnings per share (RMB/share) | 1.370 | 1.810 | -24.31% | 1.445 |
| Diluted earnings per share (RMB/share) | 1.370 | 1.806 | -24.14% | 1.444 |
| Weighted average ROE | 19.62% | 28.99% | -9.37% | 27.72% |
| At December 31, 2022 | At December 31, 2021 | YoY Change (%) | At December 31, 2020 | |
| Total assets (RMB) | 119,233,282,761.47 | 103,864,543,195.18 | 14.80% | 88,701,682,384.20 |
| Net assets attributable to shareholders of the Company (RMB) | 68,389,154,548.76 | 63,460,886,665.26 | 7.77% | 53,794,311,162.05 |
The total share capital of the Company as of the previous trading day of the annual report disclosure:
| The total share capital of the Company as of the previous trading day of the annual report disclosure (share) | 9,363,932,789 |
Fully diluted earnings per share calculated with the latest share capital
| Fully diluted earnings per share (RMB/share) calculated with the latest share capital | 1.371 |
VII. 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 ofInternational Financial 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
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
IX. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Inapplicable
Unit：RMB
| Item | 2022 | 2021 | 2020 |
| Profits or losses from disposal of non-current assets (including the write-off for the impairment provision of assets) | -18,617,582.10 | 26,069,469.18 | -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 application according to the state industrial policy) | 726,269,569.92 | 576,619,421.07 | 571,403,657.30 |
| 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 | - | 1,163,932.96 | 281,193.50 |
| Profits and losses attributed to change in fair value for derivative financial assets, derivative financial liabilities and other non-current financial assets; and investment gains and losses from disposal of derivative financial assets, derivative financial liabilities, and receivables financing, excluding the effective hedging business related to the regular business operation of the Company. | -99,112,871.09 | 75,408,081.63 | 98,373,869.75 |
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Revenue (RMB) | 16,521,549,351.36 | 20,735,967,239.26 | 22,464,020,301.15 | 23,444,784,789.37 |
| Net profit attributable to shareholders of the Company | 2,284,174,955.78 | 3,475,079,819.48 | 3,081,001,112.19 | 3,997,086,173.62 |
| Net profit attributable to shareholders of the Company excluding non-recurring gains and losses | 2,210,077,663.70 | 3,435,781,353.81 | 2,879,656,597.51 | 3,805,180,263.60 |
| Net cash flows from operating activities | -3,904,933,407.63 | 1,746,441,198.55 | 2,318,609,350.12 | 10,004,018,241.34 |
| Item | 2022 | 2021 | 2020 |
| Investment gains and losses on disposal of subsidiaries and other business units | 3,550,851.71 | -169,184,641.43 | - |
| Other non-operating income and expenditures except the items mentioned above | 72,446,008.81 | -1,471,007.77 | 74,007,631.14 |
| Less: Impact of income tax | 74,392,826.66 | 29,930,824.64 | 109,931,807.07 |
| Impact of the minority interests (after tax) | 103,496,968.14 | 122,987,029.92 | 48,610,431.55 |
| Total | 506,646,182.45 | 355,687,401.08 | 579,687,437.71 |
Details of other gain/loss items that meet the definition of non-recurring gains and losses:
□ Applicable √ Inapplicable
The Company did not have other gain/ loss items that meet the definition of non-recurring gains and losses.
Explain the reasons if the Company classifies any non-recurring gain/loss item mentioned in the <ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains and Losses> as a recurrent gain/loss item
□ Applicable √ Inapplicable
The Company did not classify an item as a non-recurring gain/loss according to the <Explanatory AnnouncementNo. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains andLosses> into a recurrent gain/loss item.
Section III Management Discussion and AnalysisI. The Industry Situation and Main Business of the Company during the Reporting Period
1. Business Overview
In 2022, Hikvision put its AIoT strategy into full swing. The Company is committed to serving a wide rangeof industries through IoT, perception, AI, and big data technologies, leading the future of AIoT. Throughcomprehensive perception technologies, we aim to help people better connect with the world around them, buildingthe foundation of an intelligent world. With a wealth of intelligent products, we strive to identify and satisfy diversedemands by delivering intelligence at your fingertips. Through innovative AIoT applications, we are dedicated toempowering every individual to enjoy a better future by building an intelligent world that is more convenient,efficient and secure.
AIoT is a fundamental capability that provides the possibility of connection and interaction between peopleand things as well as between things, but the support of perception technology is needed to realize this possibility.As things lack the ability of active or passive perception, the comprehensive development of perception technologyprovides everything with the possibility of "perceiving" and "being perceived". Currently, perception technology isshifting its focus from familiar perception models to unfamiliar areas where direct perception is impossible, isgrowing from single perception to multi-dimensional perception fusion, and is evolving from non-intelligent tointelligent perception, thus transforming things into intelligent things. Hikvision's perception technology coverslong waves from visible light to near-infrared, mid-infrared, far-infrared and millimeter waves, shortelectromagnetic waves such as ultraviolet light and X-ray, as well as short mechanical waves from sound toultrasonic waves. Furthermore, the Company is expanding physical sensing technologies such as temperature,humidity, pressure and magnetic force, building a technical foundation for comprehensive perception. We deliverperception, multi-dimensional perception and intelligent perception to multiple industries and fields throughproducts owing to continuous R&D and accumulation of perception technologies, so that perception and interactionbetween people and things and between things becomes possible, leading to the development of more applications.
The development of AIoT is supported by the development of perception technology and relies on thedevelopment of AI and big data. AI and IoT are a good match as they are closely connected and complementary.The rapid growth of intelligent perception technology thanks to AI, coupled with the generation of big data of things,
paves the way for the application of IoT. The most basic application of AIoT may be the use of data from IoTdevices to trigger simple alarms. For example, a thermal imaging camera sends an alarm for manual inspection aftersensing an excessive temperature of the device, while in a more complex IoT system, a large number of sensingdevices monitor multi-dimensional information in the production process. AI algorithms learn through massive IoTdata, distinguish between signals and noise based on user needs, and continue to optimize and iterate so that devicesand systems are able to make decisions, and take actions. This makes AI the soul of IoT. Hikvision has allocatedsubstantial investment and resources to the construction of basic arithmetic power and big models, and the relevantcapabilities have found applications in not only hardware and software products, but also user-oriented algorithmtraining including Hikvision AI Open Platform. Future breakthroughs in pre-trained large models and otherintelligent technologies will result in greater value of AI.The development of AIoT represents integrated development of a huge technology cluster, ranging from imagetechnology (AI-ISP, image enhancement, multi-camera stitching, multi-spectral fusion), optical technology (lens,fill-in light, focus and zoom, anti-shake, Fresnel optics, etc.), environmental adaptation technology (high- and low-temperature, rain, snow and dust-resistant, explosion-proof, heat dissipation, etc.), passive detection technology(passive infrared, vibration sensing, glass breakage detection, tilt/displacement detection, etc.) to networkconnection, data aggregation, storage and calculation technologies, and to display, control, interaction and otherapplication technologies. These technologies have collectively evolved from simple to engineered forms. With morethan 20 years of product R&D and manufacturing, Hikvision has initially built the R&D foundation of commontechnologies from hardware, process materials, embedded software to system-level software development, big dataand network security. The Company facilitates innovative R&D of products including detectors, modules, devicesand systems through the combination and integration of common technologies and scenario-based applicationtechnologies.The development of AIoT will remain driven by the individual needs of users for quite a long time. As AIoTapplications are scenario-driven ones, scenario-defined products and solutions will be the dominant business format.However, the specific use of AIoT applications varies with industries due to different characteristics and businessoperation models of each industry. Even different users in the same industry may have their unique needs. Hikvisionhas more than 30,000 hardware products, which are the result of expansion of previous business scenarios and thefoundation for future development of more applications. The Company will continue to promote the "baseline" +"customization" model, and enrich our product matrix, maintaining a balance between products and application
needs. Combining multi-dimensional perception with AI and big data, we have created tens of thousands of productsfrom detectors to system solutions that cover more than 300 scenarios across over 70 sub-sectors in 10 industries.These technologies, products and consumer needs promote one another through continuous changes, updates anditerations, becoming a competitive driver of Hikvision's technological innovation.
The future of AIoT is the integration of user needs with AIoT technologies, devices, and systems. Theirgrowing ease of use and declining cost will make everything perceivable and linkable. Just as the World Wide Webor Internet, IoT will not be mentioned anymore in the future because it will be the basic state of things, and peoplewill live in a new era created by AIoT.
2. Business Structure
Hikvision’s business can be summarized into three types of supporting technologies, five categories of softwareand hardware products, four system capabilities, two types of business organizations and two marketing systems.Among them, the three supporting technologies include IoT perception technologies, AI technologies and big datatechnologies; the five categories of software and hardware include IoT perception products, IT infrastructureproducts, platform service products, data service products and application service products; the four system
capabilities include system design and development, system engineering implementation, system operation andmaintenance management and system operation services; the two types of business organizations cover threebusiness groups (public business groups-PBG, enterprise business groups-EBG and SME business groups-SMBG)and eight innovative businesses (smart home, mobile robots and machine vision, infrared thermal imaging, autoelectronics, intelligent storage, intelligent fire protection and control, intelligent security check, and intelligentmedical services); the two major marketing systems refer to the domestic business marketing system and theinternational business marketing system.
3. Product Family
3.1 Hardware Product Family: Edge Node Comprehensive Perception + Edge Domain Scenario Intelligence+ Central Intelligent Storage and ComputingHikvision has been expanding its means of perception, enriching scenario-based product options, andimproving full system processing capability, with flourish development in its multiple-echelon products such asedge nodes, edge domains and cloud-center devices.
3.1.1 Edge Node Products: Comprehensive Intelligent Perception and Enriched Product Mix
Hikvision has many types and groups of edge nodes products, continues to complement the product family,integrates multi-dimensional perception means, and optimizes product design considering scenario-based needs,providing a solid ground for intelligent applications of cloud-edge fusion, IoT-information network fusion, and bigdata-AI fusion.
1) Front-end Cameras
Cameras have shifted from conventional video surveillance terminals to the most important AIoT terminals inthe Internet of Everything. Focusing on visual technology, Hikvision enhances multi-dimensional perceptioncapabilities, continuously expands application scenarios, and achieved the digitization of everything withcomprehensive perception means to build the infrastructure of intelligent applications.
Concentrating on vision to improve image application experience
Hikvision stays focus on the research of optical imaging area, with an aim to address such problems as thelimited view of traditional cameras, unclear imaging at night, and limited intelligent applications, continuouslystrengthening the product concept of ultra-HD, full-color and panoramic details, enriching product mix, andupgrading intelligent applications.In order to expand the all-weather field of view and reduce the safety hazards in the monitoring blind spot, theCompany created the technology of multispectral fusion panoramic stitching to achieve 190°low distortion and20:9 wide format, making the color bending more natural.
In order to improve the adaptability of the camera to the night-time environment, the Company strengthenedthe zoom full-color capability, to achieve constant large aperture zoom with a large focal length, stabilize lightamount, and ensure clear and bright picture colors. In order to solve the problems of uneven brightness and poorpermeability of traditional fill light, the Company has developed its own "squamous lens fill light" technology,where the light is reflected by the scaly reflector, and the light field is uniform and soft, which reduces diffusereflection caused by the dirt of the transparent dome, and greatly improves the effect of fill light.
In order to solve the problems of slow zoom speed, unclear focus and shaking during focusing process in wide-range and long-distance application scenarios, Hikvision launched the innovative focus technology, which adopts amethod that is driven by the magnetic levitation lens to complete zoom + focus in 0.1 seconds, greatly improvingzoom and focus speed of lens.
Enhancing perception and increasing multi-dimensional perception means
Based on visual perception, Hikvision integrates multi-dimensional perception methods to broaden perceptionboundaries and expand forms of intelligent application.
There are problems such as poor lighting conditions and complex environment in railways, ports, airports andother scenarios of open environment, which limit the range of video detection in intelligent applications such astarget intrusion and recognition, and are prone to the impact of rain and fog. More accurate kilometer-level intrusiondetection, ship identification and other intelligent applications may be achieved by integrating the radar perceptionmodule, the deep technology fusion of phased array radar and visual perception, and integrating environmentalvisualization and detecting multi-dimensional information such as target location, distance and speed.
In scenarios prone to geological disasters such as slopes, dams, pole towers and tailing reservoirs, in order tosolve problems such as hard to monitor, low monitoring accuracy, and monitoring is not visible when detectingdeformation such as subtle offset and settlements, Hikvision launched a displacement observation dome, whichintegrates satellite positioning technology with video technology and high-precision analytical algorithm to achievemillimeter-level 3D accurate perception of the monitoring subject, provides 24/7 long-term monitoring, improvesthe perception efficiency of geological disasters caused by deviation and settlement, and helps with disastermonitoring and early warning and emergency management.
Scenario adaptability and intensive exploration of segmented scenario demandsHikvision merges engineering thinking with technology, and develops cameras based on different scenarios,built for real-life usage, with optimized structure, imagine, intelligence, maintenance, and security.One example is explosion-proof products. Hikvision has expanded from traditional explosion-proof for factoryuse to explosion-proof for mining use, and application scenarios from petroleum and petrochemical to undergroundcoal mine, enriching the product portfolio to adapt to complex demands of multiple scenarios and creating scenario-based product solutions. For example, in terms of explosive, dim and harsh environment of underground coal mines,Hikvision launches an intrinsically safe camera with self-cleaning function for mining use, which is at anintrinsically safe explosion-proof level and can realize underground ultra-HD full-color imaging. Additionally, withthe air filtration technology and self-cleaning system equipped, it can effectively remove coal dust and ash and otherparticles, keep the lens clean and the picture clear, thus to ensure safety production and facilitate to build intelligentmines.
In the hydroelectric meter reading, production quality managing of coins, cracks monitoring of historical sitesand other scenarios that require close-up observation, there are issues such as unclear focus, interference ofcomplementary light reflection and others. Hikvision cameras under macro series adopt VCM voice coil motor torealize automatic focusing and polarization fill light, achieving 10-50cm close-range color imaging at all weather.To fulfill the need of real-time monitoring in cold storage and low-temperature scenarios such as agriculturalproduct storage, fresh food logistics, and pharmaceutical storage, Hikvision cryogenic cameras adopt lens self-heating, glass defogging and other technologies to solve the problem of lens fogging caused by the temperaturedifference when opening and closing doors, which ensures clear pictures and achieves the safety management of
cold storage materials.
2) Smart Traffic and Mobile Devices
Smart Traffic: Hikvision’s product portfolios with eco-friendly capture system keep iterating. The Companyparticipates in the formulation of relevant industry standards, and promotes the whole society to address the issueof light pollution. In multi-dimensional perception products such as radar video, Hikvision integrates the multi-dimensional perception capabilities of video, radar, RFID and ETC, and widely applies products in trafficmanagement, perimeter protection, industrial measurement and other fields.
In the field of traffic management, the Company facilitates digital pathway and improves comprehensive roadmanagement and control capabilities. The Road Pre-alarm Safety Series products, provide 24/7 roadwayssurveillance and proactive risk alarm, with an emphasis in traffic regulation enforcement and road surveillance inorder to provide security early warnings for traffic participants and reduce road safety hazards. The Radar-VideoAssisted Vehicle Detector offers 24/7 precise, remote monitoring of roadways, high-precision road informationcollection, together with proprietary smart signal systems and "weight balancing" adaptive algorithms, constitutinga holistic self-contained signal control system that spans diagnostics, simulation, operation, evaluation andadjustment. Meanwhile, more effective scenario-based signal control can be achieved by combining with moresignaling devices such as variable lanes device. In the field of perimeter protection, the 3D spatial fusion technologywith long-range, ultra-long-range radar and video is used to help the intelligent management of water traffic vesselsand the control of railway perimeter. In the field of industrial measurement, 3D modeling of data collected by laserand millimeter-wave radar are used to measure the volume of the stack.
Entrance and exit parking products: Hikvision is extensively involving in the application of refinedmanagement of parking lots and parking spaces, and its products cover entry/exit, parking lots, street parking andothers. The Company applies eco-friendly dual-sensor technology to cameras at entrance and exit to reduce lightpollution. The technology of super-resolution image intelligent restoration is applied to roadside high-positioncameras to effectively improve the detection and recognition rate. By improving the intensive level, intelligent anddigital capabilities of the system, the Company keeps iterating the product portfolio such as the Guardian Series(snapshot and display all-in-one machine) and the Roadside Parking Camera Series, enriching the product mix andimproving the scenario-based solutions. The Company further expands channels and enhances service capabilities,while digging deep into urban parking business management to help improve urban parking efficiency and theparking experience of the citizens.Mobile terminal products: Hikvision focuses on mobile law enforcement, mobile operations and other fields.The Company adopts video stabilization technology to launch forward recorders, applies intrinsically safeexplosion-proof technology to launch explosion-proof recorders, integrates low-power consumption technologywith ergonomic design to launch helmet-mounted cameras, operation assistants and other operate-wearable productsto facilitate mobile visual management scenarios such as mobile law enforcement, production safety management,construction site inspection, offering financial services. Based on barcode/character recognition technology andleveraging customized operating systems, the Company has launched a series of mobile intelligent data terminalproducts such as field-based full-screen model, button version, 5G model, industry-specific PDA, supplemented byapplication mall, device cloud management platform and other services, to provide data collection, scenario-basedintelligent identification and analysis capabilities for manufacturing, express logistics, retail e-commerce, medicaland health, public services and other industries.
3) Access Control, Intercom and Alarm Products
Hikvision’s access control, intercom, channel, alarm and other products focus on integrated management ofspatial scenarios, business development and innovation, and together with industry applications, have formedscenario-based solutions covering access control, attendance, visitors management, elevator control system,financial checkout, inventory management, building intercom system, medical intercom system, turnstile,emergency alarm, intrusion alarm, perimeter prevention, and so on.
Taking "MinMoe" as the core, Hikvision access control products focus on the research and integration of basictechnologies such as multi-modality, break through traditional infrared solutions, and integrate radar, laser and other
technologies to create global receptive field. The Company develops intensively small scenario-based solutions,polishes specialized products for segmented scenarios, and has launched novel products such as all-in-one intelligentturnstile series and distributed intelligent access control series, providing customers with one-card/one-code andmore diversified solutions for all scenarios.
Hikvision’s visual intercom products are committed to optimizing interaction, improving sound quality,reducing latency and upgrading intelligent applications on the product side, promoting the fusion of intercomsystems, smart homes, alarm systems and others, and constantly enriching their application in multiple verticalindustry scenarios such as residential building, hospital, prison, and finance building.
Hikvision has invested heavily in wireless radio frequency, detection optics, low-power design and othertechnical fields, integrating the application of displacement, microwave, infrared and other perception technologies,expanding the application of voice intelligent analysis, and continuously improving the comprehensivecompetitiveness of its product technology. In the field of intrusion alarm products, the Company developed a newgeneration of wireless and hybrid intrusion alarm systems, which further promotes cloud-based comprehensivealarm services, enriches scenario-based applications, and creates value for customers. In the field of perimeter alarm,the Company further iteratively expanded its product line, and launched a series of products such as stepless voltageregulation network-type intelligent fence and regional vibration detection product, to facilitate continuous expansionof application in energy and chemical industry, cultural protection and other industries. In the field of emergencyalarm, the Company went deep into business applications and taking video intercom as the core, launched a seriesof products based on voice intelligent recognition technology.
4) Audio products
Industrial audio – identifying by acoustic imaging, improving the efficiency of equipment operation andmaintenance managementHikvision has core technologies such as acoustic imaging, acoustic wave recognition and sound sourcelocalization. Focusing on industrial inspection, intelligent manufacturing and other fields, it deploys industrial audioproducts such as industrial auscultation microphones and online acoustic imagers, and provides new equipmentonline operation and maintenance and remote inspection methods to improve equipment operation and maintenancemanagement efficiency.
Industrial stethoscope could be deployed with zero-sample. By collecting vibration sound through boneconduction sensor, or discharge sound through ultrasonic sensor, it can extract the machine running voiceprint. Ittakes only 1 hour of normal audio data to generate the model autonomously and achieve real-time monitoring of therunning status of pump machines, electric machines, wind turbines, conveyor belts, power distribution cabinets andother machines and early warning of abnormal faults through AI model comparison, which improves the reliabilityof the system.
Through the integration of microphone arrays and camera components, the online acoustic imager locates thesound of the monitoring target in the frequency band by adopting the sound source localization algorithm. It canachieves sound visualization in the form of color cloud map, and displays the distribution of sound sources in thevisual field, which can be used for faults location and online real-time sound monitoring of partial discharge, gas
leakage, equipment abnormal noise and other faults in industrial scenarios such as transformer substations, windturbine cabins and chemical plants.Conference Audio - Clear and immersive sound to help provide a high-quality conference interactiveexperience
Hikvision has core technologies such as acoustic array, AI noise reduction, multi-source positioning, ultra-lowlatency algorithm and other core technologies including sound source acquisition, transmission, and demodulation.Hikvision has professional acoustic laboratories, various acoustic testing instruments and equipment, professionalacoustic simulation software, as well as the ability to develop, design, manufacture, simulate and test audio signalsof audio products including audio unit, audio cavity, audio circuit and audio system. The Company provides audioproducts for large, medium and small scenarios, such as plug-and-play microphone speaker series, easy-to-installHi-Fi conference speakers, medium and large professional conference products kit and other products, which adaptto the conference sound field, improve the user experience of remote interaction, and bridge the communicationdistance for off-site meetings.In particular, the Hi-Fi conference speaker is specially designed for the conference system, which can beflexibly installed and deployed. Equipped with a low-frequency passive radiation cavity, the tones generated by Hi-Fi speaker unit is clean at the middle and high frequencies, mellow at the low frequencies. Specially, the internalstructure uses a cushioning design to further reduce the internal resonance noise and provide high-quality audio forthe conference room.
5) Sensors
Hikvision’s distributed positioning optical fiber sensors "sense" and "transmit" external signals simultaneouslyby using light waves as the carrier and optical fiber as the medium. Compared with traditional sensors, distributedpositioning optical fiber sensors have the advantages of high positioning accuracy, high detection sensitivity, longdetection distance, good electrical insulation performance, strong anti-electromagnetic interference, curvable shape,small size, corrosion resistance, among others, and can detect temperature, pressure, vibration, displacement, speed,voltage, current and other physical quantities online in real time.Distributed positioning vibration optical fiber - interconnected vision and precise positioning improve theoverall utilization rate of the monitoring system
Hikvision’s positioning vibration optical fiber quantitatively restores the vibration signals and accuratelylocates disturbance positions by adopting the principle of Rayleigh scattering and patented demodulation technology.With AI acoustic wave recognition algorithm, it effectively filters out false alarms to achieve intelligentclassification and early warning. After the vibration optical fiber captures the disturbance signals, the cameras canbe linked for cross-check, which can not only improve the utilization rate of the cameras, but also help cover theblind spot of the cameras and improve the overall operation efficiency of the perimeter system. The products arewidely used for perimeter prevention of important places such as valve chambers, oil and gas pipelines, petroleumrefineries, cultural and museum buildings, railway perimeters, telecom optic fibers, as well as the application ofearly warning for external damage prevention of long-distance pipelines and optical cables.Distributed positioning auscultation fiber – Remote monitoring improves the inspection, operation andmaintenance efficiency of conveyor belts
Adopting the principle of Rayleigh Scattering and sensitized industrial diagnostic detection technology,Hikvision positioning auscultation fiber restores acoustic signals, accurately locates the faults locations, whiledetecting the equipment faults and early warns by relying on intelligent acoustic algorithms for single-classificationindustrial diagnosis. All sounds are generated by vibration, and are propagated by the form of sound waves. Sooptical fiber help remotely detect the faults of conveyor belts faults by restoring sound waves based on vibrationdetection. Thus, manpower could be saved since site inspection is not necessary and operation and maintenanceefficiency is improved. The products can be widely used to detect abnormities of heavy-duty belt conveyors in avariety of scenarios including coal mining, thermal power generation, building cement, iron and steel metallurgy,
ports and so on.Distributed positioning temperature measurement optical fiber – 3D temperature measurement, visualdisplay, ensuring the safety of industrial production and manufacturing
Hikvision’s temperature measurement optic fiber products obtain the temperature spatial distributioninformation leveraging the principles of Raman scattering and optical time-domain reflection. For key devices suchas lasers, optical switches and detectors, the Company has significant technical and cost advantages in terms ofhardware designing, manufacturing, material matching and intelligent algorithms. The front-end optical fiber doesnot need power supply, and can also resist high-voltage and strong electrical interference, which is intrinsically safewithout risk of explosions and suitable for flammable and explosive scenarios. The optical fiber material ischaracterized by high deflection, small wire diameter (<3mm), which is easy to install and can be easily laidaccording to the shape without network and electricity. The product is suitable for internal temperature measurementin scenarios with limited spaces such as battery cell racks, hazardous chemical racks, switch cabinets, powerdistribution cabinets, energy storage cabinets, and long-distance temperature measurement of linear objects such aspower transmission cables, oil and gas pipelines, thermal pipelines, which is widely used in new energy warehouses,thermal pipelines, power pipelines, oil and gas storage tanks and other scenarios.
3.1.2 Edge Domain Products: Further develop intelligent business scenarios and expand AIoT applicationsHikvision constantly deepens the application scenarios of domain-level products, and makes breakthroughsand innovations in industry applications. With the videos being upgraded from high-definition to ultra-clear image,the in-depth development of AI technology and the integration of intelligence and Internet of Things, Hikvisionachieved multi-dimensional data transmission, storage and fusion applications, making the products more in linewith the development of the IoT era. The company is increasing its openness and gradually building an openecosystem for AIoT to help customers upgrade their business.
1) Integrated Devices for Intelligent Applications
DeepinMind NVR, Core Product for Edge Domain: In 2022, Hikvision DeepinMind NVR kept improvinguser experience, developing innovated AI technology, strengthening traditional video services, deepening intelligentindustry businesses, and rapidly upgrade the product systems.Hikvision keeps promoting "inclusive AI" and enriched lightweight intelligent products. In 2022, Hikvisionadhered to the trends of high definition and intelligence, releasing the 8K NVR and leading the industry in thedevelopment of high-definition. It features HD recording, lightweight AI applications, multi-dimensional perception,and on-demand data aggregation, which is intelligent, cost-effective and easy to use. Hikvision DeepinMind achieve"algorithm self-learning", greatly improving the accuracy and automatic evolution of applications such as perimeterprevention, and facilitates intelligent prevention upgrades.
Hikvision delves into intelligent industry business, gains insight into customer needs, and enhances productcapabilities. Focusing on the intelligent application of the industry, the Company has launched a variety ofintelligent product packages for scenarios such as cleaner kitchens, intelligent construction sites, intelligentemergency management, intelligent power grid, and AI inspection DeepinMind fusion server to meet the intelligentupgrade needs of the industry. Hikvision continued to improve DeepinMind computing, and achieved continuouslyiterative in new technologies such as AI chip virtualization, algorithm orchestration, and algorithm self-learning.Hikvision adheres to the concept of open cooperation, and establishes extensive ecological cooperation system whileproviding the AI algorithm training capabilities and the HEOP protocol to the ecological partners.
AIoT gateway——Multi-Dimensional Data Fusion Products: AIoT technology is developing rapidly, andthe data is richer and diverse. Hikvision domain-end AIoT products support data aggregation, data forwarding, datafusion, intelligent analysis, and comprehensive application, which fit for small and medium-sized scenarios anddistributed scenarios. It supports application closed-loop of multi-dimensional perception data, and create value forcustomers with data.
2) Smart Display and Video Conference Products
Hikvision smart display and video conference products leverage screen display, touch interaction, videoconference and other technologies to create intelligent terminals and systems for the digital era. The productsintegrate various media in physical space to provide integrated solutions for smart conference rooms, smartclassrooms and other scenarios through display, viewing and interaction.
Smart Display Products: In 2022, the performance of smart display chips have been greatly upgraded, andaudio and video effects have been significantly improved. All series of conference flat panel chips have beenupgraded, and the comprehensive computing performance, the screen rendering capability have been significantlyimproved, which perfectly support the mainstream video conference software. The enhanced pickup ability of built-in microphone supports up to 15m sound pickup, intelligent sound screen adjustment and multi-angle directionalsound pickup. It also provides conference speaker mode and standard speaker mode in wall-mounted and mobilebracket installation scenarios. The conference mode focuses on the clarity and comfort of the sound, while thestandard mode focuses on sound fidelity and sound quality. In terms of smart blackboards and interactive all-in-onemachines, the chips have been upgraded, while the touch response speed and the interaction fluency has beensignificantly improved. The Company upgraded the visual angle and image quality of the built-in camera, so that
the classroom can be viewed completely and clearly. The speaker is all-roundly upgraded to ensure the coverage ofevery corners of the classroom, while the sound quality is optimized for specific scenarios such as listening tests toensure that the sound is highly restored. For other related devices such as microphones and high-speed scanners, theCompany improved the product compatibility to facilitate efficient teaching.
Video conference products: In 2022, the product of video conference system was completely upgraded. Thewhole system was upgraded to 4K ultra-high-definition resolution and integrated with microphone array andintelligent noise-canceling algorithm, supporting intelligent functions like intelligent voice, real-time captioning,electronic nameplate, speaker positioning and provides users with a good remote conference experience.
Conference Management Software: In 2022, the rapidly iterated software version and gradual expansion ofapplication scenarios accelerated the formation of the intelligent conference room solution. The conferencemanagement platform takes the conference flat panel as the core, and is equipped with the peripheral conferenceroom devices, combined with the business applications that control the entire meeting processes. The conferencemanagement platform supports flexible switching between multiple scenarios, which can automatically control theconference devices and the parameters. Moreover, it supports the connections between the online and offlineconference, and can connect with Tencent Meeting and EZVIEZ Conference (萤石易会). The conferencemanagement platform supports the management of multiple types of scenarios such as general meetings, videoconferences, reception meetings, and paperless meetings, leading to the initial formation of the intelligentconference room solution.
3) Intelligent Video Transmission Products
Network nodes are the nexuses and hubs of Internet of things, and Hikvision intelligent video transmissionproducts can handle up to 5,000 video channels, providing stable and reliable network support for various scenario-based applications. In 2022, the Company expanded the application of intelligent video transmission system inscenarios such as highways, ports, primary and secondary schools, energy, scenic spots, enterprise zones, andcommercial complexes. In the highway scenario, relying on the ring network architecture, the reliability of networkcan be effectively improved as the network topology manages the cameras of toll stations, road sections and serviceareas. In primary and secondary school scenario, the campus network and security network have achieved unifiedconstruction and centralized management, thereby shortening the construction period and saving costs. In the scenicscenario, industrial switches can operate stably in environments with high humidity and large temperaturedifferences, and the high speed data transmission of the wireless bridge can reduce the wire installation andmaximize the protection of the natural ecology. In the future, the Company will keep expand its applications to helpcustomer reach a smart way to operate and maintain the network.
3.1.3 Cloud Center Products: A Solid Ground with Steady Improvements in Product Capabilities
With the advent of the AIoT era, digitalization has become a trend. The amount of data computing has increasedsignificantly, resulting in an increasing demand for basic IT infrastructure. Hikvision continues to improve itscentral computing and storage capabilities, with a rich product portfolio such as general computing server,
intelligent computing server, big data server, converged storage, large-screen display and control, etc., providing acomplete AIoT-based IT solutions.
1) General Computing Products
Hikvision has a variety of generic server products, providing X86/ARM and other products of mainstreamtechnology routes. It has launched various forms of server products from edge to center, including edge servers,general-purpose workstations, tower servers and rack servers to meet the demands of the IoT and IT markets,providing high-performance, high-reliability, and high-security computing infrastructure for various industries.
2) Intelligent Computing Products
Intelligent servers provide intelligent computing capabilities required by AI, big data, and platform services.Hikvision's products are constantly upgraded and innovated. Taking central computing as the major scenario, itfocuses on improving the performance and stability of the product as a whole, continuously improves the softwareand hardware ecology, and has built a diversified technical route, which ensured good compatibility and costperformance, as well as product competitiveness. The Company adopts new technologies such as self-learning andlarge model to continuously improve the accuracy of algorithms, while improving the ability of algorithms to solvecomplex scenario problems, forming a complete algorithm system.
3) Universal Storage Products
Over 18 years of accumulation in R&D, Hikvision’s storage products cover various business scenarios, forminga complete product system of file storage and block storage. Based on its extensive understanding of differentscenarios, it has formed a dual system of server architecture and multi-controller architecture supported by thehybrid flash (HDD and SSD hybrid storage) and all-flash (full SSD storage) technologies, which better supportedthe application of fusion storage, distributed storage and cloud storage, and greatly improved the capacity toundertake private and public cloud solutions.
4) Fusion Storage Products
In order to meet the storage needs of IoT's multi-dimensional perception data, Hikvision has launched a multi-dimensional perception data storage solution based on powerful video stream storage capabilities. With a moreoptimized and more suitable storage model for business applications, it ensures the fast, safe and effective storageof various non-standard format data of AIoT. Products are widely used in various industries, and in the researchreport released by IDC
, Hikvision's stream storage products ranked in the forefront in terms of sales.
Based on its profound understanding of massive data storage such as videos and images, Hikvision released avideo cloud storage system based on stream storage technology, providing a storage resource pooling solution forlarge-scale image applications. At present, it has covered multiple series of products in different scenarios fromstand-alone to cloud-based solutions, from small disk locations to high-density solutions, and from non-standardscenarios to standardized computer room applications, which satisfies the growing data storage needs.
5) Large Screen Displays and Control Products
Hikvision’s display products, powered by video processing technology, image restoration technology, imageaugmentation technology, ultra-high-definition technology, and smart interaction technology, is widely used inscenarios such as monitoring centers, command centers, cloud center and big data center. The Company continuesto invest in Mini LED, COB and energy efficient products, improving heat dissipation with innovations such as flipinstallation and common cathode technology, and expanding its presence to conference room scene. Focusing onbetter color consistency and higher definition resolution, the Company further developed application scenarios inthe field of professional display and commercial display, and provided cost-effective display products and displaysolutions.
For scenarios such as command center, monitoring center, and conference display, Hikvision launched the third
Data from IDC China Quarterly External Disk Storage Market Tracker (Q2 2022).
generation of video integrated platform products and splicing controller to improve the efficiency of command,scheduling and business display. For the command center and monitoring center scenarios, the third generation ofvideo integrated platform adopts brand-new high-speed bus system architecture, which has the real-time video datacomputing processing capabilities for high frame rate, high bit depth, wide color gamut, and high dynamic, applyingHikvision's leading video technology to achieve complete image display effect. For the conference display scenario,the high-definition audio and video technology, intelligent interaction technology, IoT perception technology and3D display technology applied in the third generation of splicing controller provide users with an immersiveinteractive experience.
3.2 Software Product Family: Software Platforms + Intelligent Algorithms + Data Models + Business ServicesHikvision’s software product family is composed of software platforms, intelligent algorithms, data modelingand business services.
3.2.1 Software Platforms: Basic Platforms + General Platforms + Industry-specific Platforms
Basic software platforms: The ecosystem of "two pools, three libraries, seven platforms and oneenvironment" was continuously enriched and improved. "Two pools" refer to computing storage resource pool anddata resource pool, where the computing storage resource pool contains cloud computing platform and cloud storageplatform, and the data resource pool contains the products related to basic big data platform. "Three libraries" referto component library, algorithm library, and model library, respectively supporting the management and reuse ofcomponents, algorithms and models. "Seven platforms" refer to the resource management and scheduling platform,intelligent perception networking platform, AI open platform, fusion of perceptions platform, iDatafusion platform,intelligent application open platform, and integrated operation and maintenance service platform, providingintelligent applications with storage and computing resource scheduling, equipment access and networking,intelligent algorithm training, intelligent service publishing, data aggregation management, intelligent applicationdevelopment, and integrated operation and maintenance service capabilities. "One environment" refers to the four-dimensional space operation environment, that is, the virtual space-time operation environment corresponding tothe physical world. It supports the storage, correlation and analysis of information collected by perceptiontechnology and other data in the same environment, and supports the configuration of visual applications and theassociation with data in the case of low-coding.
General software platforms: Provides general software functions across multiple industries, includinggeneral security and protection, visual command, alarm management, inspection supervision, conference interaction,and content release. The general software platform of visual command, as an example, includes AR virtualizationplatform, VR panoramic application platform, integrated communication application platform, intelligent large-screen management platform and portable law enforcement integrated management platform.
Industry-specific software platforms: Hikvision, serving over 70 sub-industries, has gradually built 110industry-specific software platforms. Taking the traffic control industry as an example, we provide platforms suchas the comprehensive traffic management and control platform, the urban traffic situation analysis and judgmentplatform, the traffic accident investigation and judgment platform, the law enforcement management platform, thesmart traffic signal control platform, the highway traffic safety monitoring and management platform, the smartcheck station platform, and the intelligent inspection platform for driving control.
3.2.2 Intelligent Algorithms: General Algorithms + Industry-specific Algorithms
Hikvision has accumulated a large number of video artificial intelligence analysis algorithms in the process ofserving various industries 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, intelligent scenario inspection algorithm, image and text recognition algorithm, video andimage quality recognition algorithm, algorithms to detect and classify transportation equipment, motor vehicles andnon-motor vehicles, and algorithms to detect traffic flow of people and vehicles, etc.
Industry-specific Algorithms: Algorithms that developed for industry-specific application demands. Forexample, illegal occupation detection, illegal construction detection, and human/vehicle/material detection in theconstruction process for state-owned land resources; urban appearance detection and street order detection formunicipal management; safety helmet wearing detection, hot operation detection, labor suit detection, overrundetection for safety production and emergency management; vessel detection, floating debris detection, fishingdetection for water environment management; illegal passenger boarding detection and driving behavior detectionof drivers for key vehicle supervision; chef's hat, uniform and mask inspection for "Cleaner Kitchens"; fire escapeoccupancy detection for community fire safety; abnormal garbage sorting detection for community garbageclassification management.
3.2.3 Data Model: Industrial Business Data Model
Hikvision provides big data application services for various industries based on the big data collection,management, analysis and service capabilities provided by the iDatafusion platform. In this process, we haveaccumulated a batch of industrial business data models, which can be managed by the model library, and can bereplicated and optimized in other similar application scenarios.Taking transportation industry as an example, we provide an highway traffic situation analysis model, illegalparking remediation model, urban road traffic operation evaluation and diagnosis model, urban road traffic tracinganalysis model, urban road traffic short-term prediction model, high-precision real-time online traffic flowsimulation model, changeable lane feature research and judgment and control model, tidal lane feature research andjudgment and control model, public transportation priority signal control model, time-space analysis and judgmentmodel for fake-licensed vehicles, racketeering car analysis model, traffic accident address analysis model based onstandard semantic analysis, public transportation OD passenger flow analysis model, highway truck detour analysismodel, driving behavior habit label and comprehensive scoring model, driving behavior safety risk managementand control model, and risky section mining model based on active safety data.
3.2.4 Business Services: System Operation and Maintenance + Data Engineering + Business Operations
Hikvision, concerned with users’ application demands, explores the transformation from being a product andsystem supplier to being a service provider for certain businesses.
System Operation and Maintenance Services: Hikvision provides system operation and maintenanceservices to certain customers. For systems and equipment that have exceeded the warranty period, the team willoffer professional system operation and maintenance services.
Data Engineering Services: Hikvision delivers data engineering services including IoT resourcesmanagement, and integration of data collection, management and services.
Business Operations 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 300 cities, and its coverage scope is expanding continuously. The number of users of businessoperation platforms for fire protection operation, intelligent community operation, garbage classification intelligentmanagement, safety risk monitoring and pre-warning, intelligent elevator management are also increasing.
4. Industry Applications
Hikvision’s three domestic business groups aim to serve the public service sector, enterprises and institutions,and small and medium-sized businesses respectively, providing relevant solutions according to customers’differentiated needs and enabling digital transformation for customers. The Company’s international business iscountry-specific, providing overseas customers with local support for the entire process from R&D, manufacturing,logistics and services, and continuously improving its global marketing service network.
4.1 Public Business Group (PBG): Enhance Product and System Capabilities to Boost Digital GovernmentTransformation
4.1.1 Overview
The construction of digital governments has been accelerated during the 14
thFive-Year Plan period in China.As IoT perception, AI, big data and cloud computing and other technologies are increasingly used in this process,the importance of data and AI governance has attracted growing attention, and enhancing data and AI governancecapability has become an important part of the construction of digital governments. Digital governmenttransformation shows a trend towards intensive and scientific construction featuring "construction of perceptiontechnologies in a systematic way, unified management by one network, unified operation and maintenance,empowerment with data and AI, and promoting construction through application."
Combining AIoT technology with years of profound understanding of the needs of users in the public servicefield, Hikvision continues its efforts in five industrial businesses, security, traffic, ecosystem, governance andservice. Moreover, the Company integrates product and technology capabilities to support the data and AIgovernance of governments at municipal, county, town, village and community levels. With the philosophy of "AIuniversal empowerment and deepening of data value", Hikvision has constantly expanded its product portfolio interms of "hardware, platforms, algorithms, models and services" and deeply integrated product and systemcapabilities with a focus on the value fulfillment of solutions. Ultimately, the Company serves to empower digitalgovernment transformation through the comprehensive expansion of intelligent businesses in public security,transportation, urban governance, livelihood services, ecological and environmental protection, etc.
4.1.2 Core Technologies: Strengthen Basic Capabilities of AIoT, Expand Industry Applications, andConsolidate Industrial ServicesIn response to the urgent need for digital government transformation, Hikvision continues to strengthenurban-level basic capabilities of AIoT such as Perception Base, Intelligence Base, Data Base and EmpoweringPlatform. The Company intensifies its efforts in various sectors and expands applications across industrysegments, developing and consolidating its industrial service capabilities.
1）Basic capabilities of AIoTPerception Base: Hikvision creates a scientific deployment system for the evaluation and planning of urbanperception capabilities based on the perception needs of business scenarios in industry segments. The Companycontinues its efforts in full-stack spectrum and multi-dimensional perception, and expands its product portfolio tosupport universal intelligent connection between various existing and new perception resources in differentindustries or cities and provide rich and vivid urban perception data for industry applications.Intelligent Base: Utilizing core AI capabilities such as intelligent identification, intelligent scheduling andintelligent research and judgment, Hikvision enriches and optimizes the intelligent algorithms adapted to various
industrial scenarios, and provides unified management and scheduling of intelligent resources, scenario-basedarrangement of intelligent tasks, strategy research and judgment to achieve intensive, efficient and accurateextraction of valuable information about videos and images.
Data Base: Hikvision supports the entire process from multi-dimensional data aggregation, data processing,data governance, data mining and data service for different industries or cities. Furthermore, the Company improvesdata quality through data cleaning, conversion and governance, explores data value using cognitive model,knowledge graph and other technologies, and enables data publishing and sharing by means of data resourcedirectory, interface directory and push subscription.Empowering Platform: Owing to the basic capabilities provided by Perception Base, Intelligence Base andData Base, Hikvision builds an empowering platform highlighting common construction, sharing and use. TheCompany enables co-construction of locations, video sharing, algorithm co-management, capacity sharing,computing power integration, and event co-governance across industries and departments through integration andutilization of perception, intelligence and data resources of different industries or cities, empowering their quickconstruction of intelligent scenario-based applications. Over the past year, the Fusion of Perceptions EmpoweringPlatform has been successfully used in more than 130 projects across 79 cities of 26 provinces in China, covering anumber of industries including smart city, smart transportation, smart water conservancy, emergency management,urban management and ecological environment.2）Industrial applicationsHikvision continues its efforts in different industry segments. With scenario-based AIoT capabilities, theCompany continuously expands scenario-oriented intelligent applications in various industries and promotes theestablishment of an entire business chain. The Company has sorted out more than 2,000 business scenarios,developed more than 250 industrial solutions and improved more than 500 intelligent industrial applications with afocus on public security, traffic management, transportation, urban governance, ecological and environmentalprotection, livelihood services and other sectors. All these efforts are aimed at optimizing government's operationalmechanisms and construction modes, and providing strong support for modernized urban governance.3）Industrial servicesCombining a profound understanding of each industry with years of experience, Hikvision has continuouslyconsolidated its service capabilities in AI engineering, data engineering, business operation and system operation
and maintenance. The Company has also established a nationwide professional service team to enhance the loyaltyof users.AI engineering services: Hikvision provides users with scenario-based AI engineering services, includingpersonalized algorithm training, tuning of intelligent algorithms, tuning of correlation clustering, intelligent scenarioarrangement, event analysis, and event identification. The Company has provided AI engineering services for morethan 50 projects.Data engineering services: Hikvision provides users with data engineering services involving multi-dimensional perception data and business data, including IoT resource calibration, data probing, data governance,data organization, and BI visualization analysis. The Company has provided data engineering services for 220projects.Business operation services: Hikvision has increasingly expanded the scope of business operation serviceswhich provided based on Internet operation platforms, and it has covered a number of fields includingcomprehensive urban operations, urban parking operations, firefighting operations, community security operations,security inspection operations, and intelligent management of garbage classification.
4.1.3 Value Fulfillment
While deepening its understanding of business in public security, transportation, urban governance, livelihoodservices, ecological and environmental protection and other fields, Hikvision strives to build the capabilities of the"Perception Base, Intelligence Base and Data Base" for cities with a focus on perception, intelligence and data. Inaddition, the Company has continuously expanded smart industrial services through the Fusion of PerceptionsEmpowering Platform. It is committed to making cities smarter, society safer, transportation more convenient,governance more refined, services more targeted, and the ecological environment more livable.1）Smarter cities
In the field of smart cities, Hikvision focuses on governance with perception data and empowerment withdata and AI. The Company has optimized the urban perception networking system, promoted an organic integrationof multi-source data, and created an ecosystem of AIoT perception application with the goal of empowering multiplebusinesses with data and AI. Utilizing IoT, AI, big data and other technologies, the Company has established agovernance network that is responsive, comprehensive, intelligent, efficient and collaborative, assisting indeveloping an efficient, accurate, and smart urban digital governance system that makes the city smarter.
Hikvision continues to optimize the Fusion of Perceptions Empowering Platform. Guided by the corephilosophy of "co-construction of different equipment, video sharing, algorithm co-management, capacity sharing,computing power integration, and event co-governance," the Company cultivates unified video convergence,catalog governance, algorithm management, arrangement and scheduling, and open sharing capabilities for cities tomeet the needs of visualized and intelligent applications across industries and departments.In the area of primary-level governance, Hikvision provides a smart management platform which focuseson the daily management needs of primary-level governance and realizes intelligent identification of violationsthrough products such as urban management dome cameras, intelligent access control, and intelligent fire protection.Also, it provides primary-level workbenches, early warning, and comprehensive scheduling applications, gathers,assigns and addresses events, and supports the development of primary-level governance capabilities. This platformenables home safety warning for the elderly, school gate supervision, and fire safety control, helping to improveprimary-level service capabilities. Furthermore, the platform supports population management, rental housingmanagement, smart supervision of dump trucks, smart store management, and supervision of people throwingobjects from heights, helping to increase public management efficiency.In terms of rural revitalization, Hikvision provides a management platform for digital villages. With thesupport of rural revitalization policy, the platform enables digital planting, rural live streaming and otherapplications for multiple scenarios including rural industries, ecological protection, rural governance, and ruralservices, promoting the high-quality development of characteristic industries such as rural agriculture and tourism.Moreover, the platform achieves management of straw burning prohibition, intelligent farmland protection, andwater environment monitoring, facilitating disaster prevention and ecological environment protection. The platformis also used for rural appearance inspection, fire safety supervision, and comprehensive command and scheduling,intelligently identifying and addressing uncivilized acts such as littering, and helping to improve the comprehensivegovernance capacity of rural areas. In addition, the platform provides intelligent elderly care, digital radio, and otherapplications that monitor the safety of elderly people living alone and enable convenient access to rural information,driving the construction of rural service systems.2）Safer societiesIn public safety domain, Hikvision combines the deep understanding of businesses with AIoT technology.Drawing on its accumulation of visible light technologies, the Company has taken a leap from DarkFighter toDarkFighterX and from black & white to ColorVu, delivering a high-definition intelligent view in all weathers and
at every moment. Meanwhile, the Company has continuously improved the product mix in X-ray, thermal imaging,sound wave, radar and other sectors, achieving comprehensive perception of public safety elements.Based on the capabilities of its intelligent video image application system developed over the years, Hikvisionnot only provides security guarantee for cities, but also extends its business to the public security control and serviceof the countryside, railway lines, river basins and other scenarios.
Hikvision has enhanced all-round situational perception capabilities for public security by utilizing "perceptionintegration, computing integration, intelligence integration, data aggregation, application integration, and thecombination of operation and maintenance." Empowered by technology, the Company strives to escort a peacefulChina by reducing burden and increasing efficiency for users at all levels.In terms of traffic safety, Hikvision provides intelligent detection capability for road traffic violations suchas red-light running, driving on wrong road side, overrun, overspeed, improper hanging of the number plate,deliberate shielding and defacement of the number plate, inconsistent driving model, disqualified driving, non-motor vehicle violation, pedestrian violation, dangerous driving, truck compartments carrying passengers, vehicleoverload, truck turning right without stopping. Also, it provides data applications for real-time severe weatherwarning, traffic conflict warning, traffic accident portrait analysis, structural hazard analysis and dynamic conflictanalysis of the road network, road network safety optimization, research and judgment of suspicious vehicles andoverloaded vehicles bypassing, thus helping ensure a safe transportation environment. In 2022, the severe weatherwarning system was improved to enhance the safety of the highway network. The structural hazard analysis anddynamic conflict analysis of the road network were strengthened by providing professional suggestions fororganizational optimization based on the identification of road network hazards using static road network anddynamic radar data as well as knowledge graphs in traffic engineering. Furthermore, the traffic safety interventionsystem was enhanced by providing multi-tier deceleration capability for dynamic traffic flow based on perceptionof road network safety events in addition to the traditional violation snapshot and intelligence board warning.
Hikvision provides vehicle sensing technologies to ensure vehicle safety, delivering collision warning,panoramic view, blind spot detection and other applications for buses, passenger vehicles, freight vehicles andonline ride-hailing vehicles. The Company has served hundreds of transportation enterprises, contributing to vehiclesafety.
Hikvision delivers multi-dimensional perception capabilities to ensure road safety, providing perception, dataanalysis and warning for scenarios such as road event detection, sharp road turn warning, and slope falling rockwarning to help reduce road safety risks.
Hikvision provides intelligent application capabilities based on multi-dimensional perception, deliveringperception, intelligent analysis, and warning capabilities for security checks at airports, urban rail transit, andrailways. The Company has improved the efficiency of security check for many airports, urban rail transit, andrailway stations.In emergency management, Hikvision provides an integrated solution for emergency management. To dealwith the production safety risks of hazardous chemicals companies, fireworks and firecrackers businesses, non-coalmining enterprises, tailings ponds and other types of enterprises, the Company established an efficient system forproduction safety monitoring and warning that enables data access and analysis, intelligent warning, hierarchicalpush notifications, information backup and other applications to effectively address the supervision pain points ofusers. For forest fires, floods, geological disasters and other natural disasters, Hikvision provides solutions such ascomprehensive monitoring of all elements, disaster warning, comprehensive risk assessment, analysis, consultation,research and judgment of disaster progression, laying a solid foundation for disaster prevention and mitigation andestablishing a sound system for natural disaster monitoring and warning. For different kinds of sudden accidentsand disasters, the Company provides emergency command and dispatch capability, including key applications suchas on-duty management, emergency plans management, coordination and consultation, command and dispatch,summary and evaluation, helping users to enhance emergency response and rescue capabilities, reduce disasterlosses, and build a complete emergency command and rescue system.3）More convenient transportationAs for traffic management, Hikvision provides intelligent signal control capabilities such as single-locationadaptive control based on real-time traffic parameter perception, dynamic/static trunk green wave control andregional coordinated control, supporting tidal lanes, variable lanes, roundabouts, bus priority, turning left from theopposite lane, bottleneck control, pedestrian crossing and other intelligent control modes. The Company deliversprofessional smart travel service capabilities such as city-level unified signal control, traffic situation research andjudgment, intersection problem diagnosis, event monitoring, digital intersections, traffic flow tracing, trafficsimulation, intelligent guidance, vehicle traffic management, real-scene command, information analysis,information research and judgment, intelligent service research and judgment, key vehicle protection, and greenparking. Also, it provides the "Data and AI-Based Traffic Management Base" incorporating road networkcomputing, data computing and model computing. In 2022, signal machines continued to rank high in the industrywith annual sales of more than 10,000 units. A new "digital intersection" solution was launched to provide data
research and judgment and dynamic warning capabilities apart from basic dynamic three-dimensional presentationcapabilities. The intersection problem diagnosis capabilities were improved by providing professional suggestionsfor organizational optimization based on the identification of signal timing and traffic organization issues usingstatic road network and dynamic vehicle traffic data as well as knowledge graphs in traffic engineeringIn highway transportation, Hikvision fully combines the IoT perception technology with industry scenariosto deliver safe and efficient monitoring capabilities for highway maintenance, bridges, slopes, tunnels and otherscenarios. It also provides abnormality detection and data analysis capabilities for highway events and weather, aswell as visualized industry supervision capabilities for engineering construction and industry management. TheCompany has served thousands of users in this area.With regard to port management, utilizing multi-dimensional perception and AI algorithms, Hikvision hasdeveloped scenario-based solutions such as standard management of work wear, dangerous operation management,blind spot warning for port machines and failure warning for production equipment, which cover "people, vehicles,goods, machines and environment" and other elements. The Company has served nearly 100 port enterprises,ensuring port operation safety and improving management efficiency.In railway transportation and rail transit, Hikvision provides comprehensive monitoring and detection inscenarios such as railway stations and hubs, freight yards, power substations, train carriages and railway linesthrough multi-dimensional perception technology, serving 18 railway administration groups and hundreds of high-speed railway station hubs across China. Hikvision’s technologies have been applied to public safety precautions,smart operation, intelligent operation and maintenance, digital service and other scenarios in over 100 urban railtransit lines in the country, providing support and guarantee for the safe, efficient and smooth operation of urbanrail transit and creating a safer and more comfortable ride experience for citizens.As for airport travel, Hikvision offers passengers convenient and intelligent parking guidance, automaticparking, smart navigation display, paperless customs clearance, easy transfer guidance, ramp space managementand other applications in nearly 100 airports, helping to build a safe, green and intelligent airport.4）More refined governanceIn urban management, Hikvision offers a smart urban management platform that provides warning andalgorithmic scheduling capabilities for nearly 70 types of violations ranging from fixed locations to mobileinspection and from a single scenario to a complex area through urban management dome cameras, urbanmanagement panoramic PTZ cameras and intelligent analysis servers. The platform provides mobile intelligent data
collection, intelligent violation inspection, urban waterlogging monitoring, command and dispatch, operation andmonitoring centers and other applications, helping to create a tidy and orderly urban environment.
In terms of municipal administration, Hikvision provides a smart municipal supervision platform with afocus on municipal facilities such as manhole covers, garbage cans and street lights, as well as municipal eventssuch as waterlogging and road damage. The platform integrates problem collection, dispatching and handling, andfeedback and evaluation through the use of IoT devices including intelligent monitoring terminals for manholecovers, water level cameras, and radar level meters, facilitating targeted municipal management services.
In terms of city appearance and environmental sanitation, Hikvision provides a smart sanitation platformand a garbage classification and supervision platform for manual or vehicle-based sanitation operations, garbageclassification and other scenarios. The platforms enable supervision of manual or vehicle-based operations, garbageclassification management, yard operation supervision and other applications through the use of intelligenttransmission control units, garbage classification cameras, Intelligent Analysis DeepinMind and other equipment,improving refined sanitation management capabilities.
As for law enforcement, Hikvision provides a comprehensive management platform for mobile lawenforcement with a focus on law enforcement event collection, law enforcement process recording, law enforcementcase area and other scenarios. The platform allows off-site collection of law enforcement events, management ofobjects of law enforcement, command and dispatch, electronic evidence management, intelligent review and closureof cases and other applications through the use of law enforcement recorders, law enforcement case terminals,collection stations and other devices, helping to improve the effectiveness of comprehensive law enforcement.5）More targeted services
In the field of government services, Hikvision provides a comprehensive management platform for smartgovernment halls with a focus on various government service halls, convenience service centers, and other scenarios.The platform provides hall operation management, government information publishing, and electronic videomonitoring through the use of AR panoramic cameras, passenger flow monitoring cameras, and window servicemanagement servers, helping to make government services more efficient and standardized.
In terms of market supervision, Hikvision provides management platforms such as elevator networking,forklift supervision, and food safety networking. These platforms enable special equipment supervision, off-sitesupervision of kitchens and other applications through the use of elevator monitoring cameras, intelligent forkliftsupervision and analysis machines, and dedicated cameras for kitchens and other products, helping to improve
digital supervision capabilities.As for smart communities, Hikvision provides a comprehensive management platform that allowssupervision of people throwing objects from heights, electric vehicle safety management, street store management ,elderly care services, smart property management and other applications through the use of dedicated cameras fordetecting people throwing objects from heights, electric vehicle detection cameras, urban management domecameras, intelligent access control, smart smoke sensors and other products, helping community services becomemore effective.With regard to elderly care services by civil administration departments, Hikvision creates systematicsolutions for homes, communities and institutions, featuring applications such as elderly security, smart nursing,health monitoring and caring services through intelligent elderly care all-in-one machine, alarm box, fall detectionradar and other equipment, providing technology support for the safety of the elderly, intelligent and convenientmeans for the smooth operation of geriatric nursing institutions, and service data support for civil administrationdepartments.6）A more livable ecological environment
With the help of video, radar, thermal imaging, and hyperspectral and other multi-dimensional perception andintelligent analysis technologies, Hikvision strives to build an ecological monitoring, management and servicesystem for natural resources, ecological environment, meteorology and other businesses, creating a more livableecological environment.To help protect natural resources, Hikvision sets up an intelligent management platform for nature reserves.Bi-spectrum thermal imaging, wildlife protection cameras, insect detection lamps and road cameras are combinedwith animal identification, fireworks identification and other algorithms for applications such as wildlife monitoring,forest and grass fire prevention, pest monitoring, human activity management, ecological live streaming, promotingnatural ecological protection as well as science popularization and education. The forest fire monitoring and warningplatform is built to monitor forest fires and human activities through high-point bi-spectrum thermal imaging andlow-point intelligent cameras, realizing fire monitoring and warning, fire research and judgment, fire disposal, sandmodelling, rescue force recommendation, disaster damage assessment, and other functions, and enhancingcomprehensive forest fire prevention and control capabilities. A smart monitoring platform for natural resources iscreated to identify characteristic elements of suspected illegal activities through high-point intelligent cameras andbispectral thermal imaging, etc., implementing applications such as farmland protection and supervision of illegal
mining, thereby effectively enhancing natural resource monitoring and supervision capabilities. A cloud platformfor geological disaster monitoring is built to monitor rainfall, surface displacement, soil moisture content and otherfactors through video GNSS
, rainfall gauges, soil moisture meters and other devices, achieving three-dimensionaland visual monitoring of geological disasters such as landslides, collapses and debris flows, and facilitating earlydetection and elimination of geological hazards.For the purpose of smart water conservancy, Hikvision provides an intelligent management platform forriver and lake management and protection. Through AI analysis for videos, multi-spectrum visual perception,satellite remote sensing interpretation and other technologies, the platform can intelligently detect the disorder andchaos events of rivers and lakes, such as illegal sand excavation, shoreline destruction and garbage stacking, helpingto improve the long-term protection and dynamic control of rivers and lakes, revive the ecology of rivers and banks,and create a beautiful environment. A smart safety management platform for water conservancy is set up toachieve applications such as safety monitoring, equipment monitoring and intelligent inspection of dams,embankments, water gates, and pumping stations through video GNSS, seepage and seepage pressure meters,hydrological monitoring camera, thermal imaging, and inspection robots, etc., and integrate information on workconditions and rain conditions with real-time panoramic AR images, thus obtaining real-time updates on safe projectoperation and protecting water conservancy projects during floods. A command and scheduling platform for waterdisaster prevention is provided to integrate audio and video resources such as voice and video conference throughthe integrated communication gateway, offer GIS scheduling, conference scheduling, video scheduling and otherfunctions, and realize "full access for one system, full connectivity of one network, full display on one screen,"ensuring vertical linkage and horizontal coordination of flood control command and scheduling. Comprehensivemonitoring and management platform for small reservoirs is formulated to protect the safety of small reservoirsduring floods. An irrigation area management platform is provided to offer functional applications such as watermeasurement management and irrigation area safety inspection, improve water conservation capability of irrigationareas, and facilitate the renovation and modernization of irrigation areas. A water plant safety management platformis created to achieve safety management of water plants and secondary water supply pump houses through thermalimaging, and industrial auscultation, etc., ensuring safe production of water plants and pump houses.
As for ecological protection, Hikvision provides a smart monitoring platform for the atmosphericenvironment, using LiDAR, hyperspectral Fourier transform, thermal imaging, video AI and other technologies to
GNSS: Global Navigation Satellite System.
achieve intelligent applications such as prohibition of straw burning, VOCs
monitoring, particulate mattermonitoring, exhaust gas monitoring and dust control. Through innovative technologies, the Company strives toprotect the environment, support more real, accurate and comprehensive atmospheric environment monitoring, andenable efficient supervision, thus helping to defend the blue sky. A smart monitoring platform for the waterenvironment is created to monitor water quality factors such as chlorophyll, total nitrogen and total phosphorus inrivers and lakes through the self-developed hyperspectral water quality monitor, providing water quality monitoring,trend analysis, water quality evaluation, pollution traceability and other intelligent applications, helping users gainan understanding of the status and changing trend of water environment quality and providing support for rapidresolution of water pollution events. A water source monitoring platform is established to provide intelligentapplications such as water environment monitoring, entrance and exit control, and human activity monitoringthrough hyperspectral water quality monitors, AR panoramic camera, bi-spectrum PTZ cameras, road cameras, andintelligent sound columns and other equipment, supporting intelligent water source monitoring and ensuringdrinking water safety. A river or marine outfall supervision solution is developed to provide video surveillance,water quality monitoring, online inspection and other intelligent applications, facilitating the supervision andmanagement of all aspects from receiving water and outfalls. A pollution source management and control solutionis offered to provide station visualization, AI-based intelligent supervision, converged communication and otherintelligent applications, and intelligently identify illegal pollution discharges or falsification, promoting off-site lawenforcement concerning pollution sources. A smart whole-process supervision platform for solid waste is createdto achieve the closed-loop management of solid waste throughout the process from generation, collection, storage,transfer and disposal through such technologies as IoT, video AI and big data. Dynamic data collection andintelligent analysis and warning are used to deliver intelligent applications such as "refined supervision, whole-process supervision, risk supervision and law enforcement supervision" of solid waste, effectively curbing illegaldumping and preventing environmental risks.In meteorological operations, Hikvision works with the meteorological department to develop a nationalmeteorological live image capture, transmission and management system, realizing effective integration and on-demand sharing of live videos from national and provincial observation stations and field research groups. A safetymanagement system for weather modification (artificially modified weather) operations is established to enableintelligent control of key sites, and coordinated command between superior and subordinates, thus improving the
VOCs: Volatile Organic Compounds.
safety supervision capability of weather modification operations. An intelligent meteorological observation systemis built for the intelligent observation of cloud cover, cloud shape, visibility, snow cover and other meteorologicalelements by means of sky imagers and intelligent meteorological observation cameras and other dedicatedequipment, taking meteorological observation to the next level. An management platform for unattendedobservation stations is established to enable prevention and alarming and video tracking using radars, videos andother equipment, achieving 24-hour intelligent guarding of observation sites.
4.1.4 Outlook
As the construction of digital economy, society and governments gains speed, IoT perception, AI, big data andother technologies continue to find applications in cities and industries, gradually fulfilling their value. Theapplication of ubiquitous security has expanded from public security to security control needs in various fieldsincluding public areas, municipal administration, transportation, resources, and production in a broader sense. Itsapplication in a single industry has been gradually brought to a new level with growing demand for integration andempowerment based on all scenarios, all weathers and all-round perception. The picture of a smart city isincreasingly clearer, transforming from "all operations via one network" to "unified management via one network",from "Internet +" to "intelligent +", and from "scenario intelligence to "industry intelligence."With a user-centered approach, Hikvision seeks to work with partners in the AIoT sector such as researchinstitutes, product providers, algorithm vendors, independent software developers, system integrators and productdistributors to create a closed-loop ecosystem that covers the entire value chain from technology, products tosolutions and services by understanding the core needs of users. Moreover, the Company will continue to promotethe upgrading of products, systems and services, while providing high-quality technologies, products and servicesto industrial users in the public service field.
4.2 Enterprise Business Group (EBG): Promote Innovative Development of Businesses through AIoT
4.2.1 Overview
Based on AIoT technology, Hikvision offers better industry insight and actively explores digital applicationscenarios. In 2022, Hikvision built solution capabilities around two core business areas, "safeguarding enterprise-wide security " and "enhancing asset operation efficiency," while creating digital transformation solutions for keyapplication scenarios such as enterprise safety production, people and vehicle safety management, integration of
park security and fire protection, enterprise emergency command, operation efficiency improvement, equipmentand facility management, good and material management, and smart space management.
4.2.2 Core Technologies: Consolidate AIoT Base and Enhance Value Delivery
Hikvision builds an AIoT-based product and solution system powered by multi-dimensional perception, AI,low-code, cloud services and other technologies. Multi-dimensional intelligent perception products are used to pushthe boundaries of perception and generate a variety of perception data, while AI engineering services aim to reduceAI empowerment costs and enable fast delivery for partners. Moreover, Hikvision Huipin ApplicationEmpowerment Platform is utilized to support the rapid launch of digital applications enabled by low-codetechnology, whereas Hik-Cloud Platform is established to provide standardized industry applications and servemore industry users.
1）Continuously push the boundaries of perception with a multi-dimensional perception product mix
Hikvision continues to improve the multi-dimensional perception products mix using AIoT technology. TheCompany has launched perception products to enhance universal perception capability, while strengthening scenarioadaptation capability and creating diversified product forms to meet the needs of multivariate scenarios.
Hikvision integrates a variety of perception technologies to further improve its product mix. Existing productsinclude a millimeter wave imaging radar for volume measurement of stacked materials, which realizes accuratemeasurement of raw material reserves; an ultraviolet imaging PTZ camera that can accurately detect electric arcs,
monitoring abnormal discharge of electric power equipment; a gas cloud imaging PTZ camera based on spectralimaging technology, which detects gas leakage in production environments; auscultation optical fiber that supportsequipment sound monitoring for timely detection of abnormal operation of belt rollers; optical fiber for temperaturemeasurement in confined spaces, which monitors real-time temperature of new energy batteries during the agingprocess; an acoustic imager capable of locating sound sources and intensity, used for long-distance detection ofpipeline gas leaks or partial discharges in high-voltage systems; an intelligent X-ray counter, used for rapid countingof the number of production components, etc.Hikvision continues to expand application scenarios by exploring new industry applications. For example, thelow-temperature-resistant camera is designed for ultra-low environments and is used in the whole-processsupervision of cold chain logistics, while the self-cleaning camera is designed for high dust environments and isused in the regular cleaning of lenses to guarantee imaging quality. The anti-corrosion camera made of polymermaterials is designed for perishable environments and is used to guarantee the long-term reliable operation ofequipment, whereas the medical dedicated PDA is designed for medical high frequency sterilization and otherenvironments and is utilized in bedside data collection, medical order execution and other business managementactivities in hospitals. Furthermore, the explosion-proof level meter is designed for the internal environment ofhazardous chemical tanks and can accurately measure the height of stored solids/liquids, while the explosion-proofPTZ camera designed for Zone 1
explosion-proof scenarios finds application in safety supervision of restrictedspace operations in chemical enterprises. The intrinsically safe bi-spectrum thermal imaging camera designed forexplosion-proof environments in coal mines is used to monitor underground equipment for abnormal temperaturesin these locations.2）Expand the applications of AI with an AI engineering service systemHikvision is committed to transforming AI technology into effective productivity. The Company activelybuilds an AI engineering service system to reduce the technical requirements for the application of AI in industryscenarios and improve application effects.In 2022, Hikvision’s AI engineering services promoted successful implementation of increasing scenario-based AI applications. The Company has created a series of AI engineering models covering general businessscenarios such as standardized operation, auxiliary automation, warehouse management, material inventory and
Zone 1 explosion-proof: A classification of the explosive environment. Zone 1 refers to an area where flammable or explosivegases or vapors may be present in the normal environment.
store retail to effectively reduce the deployment cost of AI applications in these business scenarios and effectivelyachieve hazard detection, efficiency improvement and other business management objectives for users.As the application scenarios of AI continued to emerge, the number of enterprise users of the AI open platformrapidly increased from more than 8,000 to more than 15,000 in 2022. To better serve the scenario-based intelligentneeds of enterprises, Hikvision continues to improve its AI engineering service system and provide diverseempowerment solutions for partners of different scales and with different advantages, helping partners to developbusiness applications and enhance business implementation capabilities.3）Build a business engine system through the Huipin Application Empowerment PlatformThe Hikvision Huipin Application Empowerment Platform is built based on a unified software technologyarchitecture, which is suitable for use in many industries. The Company has also developed a software businessengine system powered by low-code technology, which quickly meets corporate business needs and help usersquickly deploy digital applications through visualized rule configuration, drag-and-drop process design, andcustomized data reports.
The Hikvision Huipin Application Empowerment Platform provides a line of systematic business engines.Low-code development of basic applications from information network and IoT are enabled by basic businessengines, such as event rule engines, to conveniently achieve event reception, rule arrangement, distribution, query,statistics and other functions. Business applications are effectively abstracted through general business engines,taking the inspection engine as an example, it has served more than 5,000 enterprises, reducing the softwaredevelopment workload by about 90%. Hikvision has launched various general business engines such as localizationengine and passenger flow engine based on breakthroughs in the inspection engine to serve more scenario-basedbusinesses. Multiple basic and general business engines are reused through the comprehensive business engine tocope with more complex business requirements of users, such as the integration of safety production engines intoinspection, localization, event rules, reporting and other types of engines. These engines will achieve closed-loopsecurity management from hazard detection to risk warning and accident handling, support the customization ofapplications related to safety production through low-code technology and rapidly respond to the needs of IoTapplication integration. With the Hikvision Huipin Application Empowerment Platform, Hikvision quickly meetsthe diversified needs of enterprise users through low-code technology, and reduces software development costs,facilitating faster development and iteration of applications for enterprises, and promoting the continuousdevelopment of AIoT applications.
4）Explore standardized IoT applications through the Hik-Cloud enterprise-level SaaS platformAs an enterprise-level SaaS platform, Hik-Cloud platform continues to accumulate achievements in perception,cloud platform, AI and other technologies, striving to provide digital services related to AIoT for various industries.The platform offers a variety of services in the key industries such as retail chain, education & teaching, and propertyservice, while enhancing service professionalism to develop core competitiveness for users. In 2022, the number ofusers and access devices on Hik-Cloud platform grew at a high rate. Hik-Cloud platform has served over 400,000chain stores, 6.18 million homeowners in different communities, and 4.5 million students and parents, providingaccess to 3.7 million terminal devices.Hik-Cloud platform provides standardized inspection services in the retail chain industry to standardizenighttime goods delivery through personnel authorization and process records. The platform is also applied inteaching scenarios in primary and secondary school campuses to provide special teaching products for lessonpreparation and teaching, and offer a cloud-based deployment solution to the Education Bureau for "ThreeClassrooms" scenario. Moreover, Hik-Cloud platform provides an integrated cloud-edge fusion solution forresidential communities, which enables cross-district remote management services, reducing management costs ofusers. Hik-Cloud platform will continue to explore industry digital applications and provide more digital cloud-edgefusion solutions.
4.2.3 Value Fulfillment
Hikvision continues to improve its value delivery methodology based on four value propositions of "shorteningmanagement distance, improving business efficiency, regulating operating behaviors and preventing safety risks."In 2022, Hikvision explored the application of a closed-loop end-to-end management concept in various scenariossuch as enterprise parks, industrial parks, chemical parks, commercial parks, campuses, hospitals and venues witha focus on two core business areas of "safeguarding enterprise-wide security" and "enhancing asset operationefficiency." Through continuous business innovation and experience accumulation, the Company has worked withpartners to set examples for excellent industry practices.
1）Safeguarding enterprise-wide securityHikvision focuses on enterprise safety production, people and vehicle safety management, integration of parksecurity and fire protection and enterprise emergency command, extending the scope of safety management fromtraditional park security to all aspects of enterprise operations. The Company has built closed-loop safetymanagement system covering the entire process including prevention, management to control and handling,promoting the transformation of enterprise safety management models.
1.1）Enterprise safety production
Hikvision supports the establishment of a digital safety production system for businesses through a low-codesafety production system, which covers all aspects of safety production including risk, hazard and accident handling,and enables business applications such as monitoring of major danger sources, special operations, intelligentinspection, closed management, and AR safety and environmental information dashboard. This system has beensuccessfully implemented in electric power, petroleum and petrochemical, metallurgy, manufacturing, constructionand other industries, serving users including Sinopec and Shengli Oilfield.For the metallurgical industry, a dashboard showing situational perception of production safety is created toallow precise localization and one-click access to danger source-related data such as production, equipment,personnel, safety, environmental protection, videos and warnings. AIoT products are used to support businessdepartments in quickly developing safe operation supervision applications, and implementing on-site safetysupervision and tips, remote equipment operation and maintenance and other management services, thus achieving
the purpose of ex-ante warning, event handling and ex-post archiving.In the electric power industry, security situational perception capabilities are developed through a multi-dimensional AIoT system to enable intelligent equipment inspection, online temperature measurement, acousticmonitoring, remote switch and video review, three-dimensional panoramic display, operation and maintenance datadashboard and other applications for managers. With the use of these applications in substation operation andmaintenance, on-site manual routine inspection is replaced by remote intelligent inspection and the conventionalknife-switch is replaced by the remote switch, improving the safety and efficiency of operation, maintenance andinspection activities.With regard to the construction industry, a video monitoring system is used to monitor the operating limitsof tower cranes, excavators and other large construction machinery, preventing risks from blind spots. A personnelidentification system confirms the identity of operators to ensure the assignment of a dedicated operator to aparticular job. Cab management allows the supervision of operating behavior to avoid violations. Furthermore, AI-based devices automatically identify the number of people in the lift cars to avoid accidents caused by overload.
1.2）People and vehicle safety management
Using HD video surveillance, non-video security, intelligent image analysis, people/vehicle identification,alarm management and other IoT technologies, Hikvision has built a comprehensive enterprise security system thatincorporates people, vehicles and events into management, achieving intelligent management of people, smartcontrol of vehicles and effective handling of events. This system has been successfully implemented inmanufacturing, chemical, logistics, steel, education and other industries, serving users such as Jiangsu Huai’anIndustrial Park.For the chemical industry, comprehensive and dynamic supervision of dangerous goods transport vehiclesentering and leaving chemical parks is enabled through a closed-loop management system that integrates reservation,localization, driving behavior monitoring and a list of vehicles of concern, thus achieving the management goal of"traceable source, traceable destination, accountable responsibility, and predictable patterns."In the logistics industry, an intelligent yard dispatching management system of logistics vehicles is createdto not only enable online management of these vehicles throughout the entire process from entry by reservation toauthorized exit, but also improve the efficiency and management of personnel access and vehicle dispatching inlogistics parks.With regard to the education industry, a three-dimensional campus traffic control system is established to
provide rapid vehicle passage by reservation, speeding and parking violation detection, campus parking guide,education for violations and other management services in areas such as entrances and exits, main roads and parkinglots. This system aims to provide integrated management services for vehicle passage, safeguarding traffic order inthe campus and creating a smart and safe campus.
1.3）Integration of park security and fire protection
Hikvision leverages AIoT technologies such as thermal imaging and temperature sensing fibers to deeplyintegrate security and fire protection systems, building a full-process management system that covers multi-dimensional perception, intelligent early warning, firefighting and rescue, command and dispatch, and ex-postassessment. The system allows prompt identification of safety hazard, quick response and efficient rescue, andimproving fire prevention and emergency handling capabilities of enterprises. It has been successfully implementedin new energy, finance, commercial real estate, universities, culture and museums and other industries, serving userssuch as Contemporary Amperex Technology.In the new energy industry, thermal imaging or optical fiber products for temperature measurement aredeployed in key facilities such as workshops, warehouses and energy storage stations to identify fire hazards, re-check with videos, issue warnings promptly and activate automatic fire extinguishing devices, thus improving fireaccident handling efficiency of enterprises and reducing accident losses.For the financial industry, environmental data such as water, electricity, smoke, combustible gas andtemperature are collected to evaluate the fire hazards in buildings such as bank outlets, branches and sub-branchesin real time. This will help provide early warning of fire risks and improve emergency response and handlingefficiency for banks, achieving the paradigm shift from passive response to active defense.With regard to the cultural and museum industry, the video monitoring, electrical and fire monitoring,thermal imaging fire warning, and smoke detection systems are created to monitor fire hazards in ancient buildings,as well as the cultural and museum venues. On-site videos enable rapid review of any violations, timely distributionof warning messages, rapid response and handling.
1.4）Enterprise emergency command
In response to the emergency management needs of enterprises, Hikvision establishes an enterprise-levelemergency command system based on integrated communications, emergency response, data dashboard and ARreality and other technologies to achieve closed-loop management from command centers to emergency handling.
The system has found applications in the pipeline corridor, chemical, manufacturing and other industries, servingusers such as Chizhou Chemical Park and Xiangyu Chemical Park.For the pipe corridor industry, an emergency command center consisting of a data platform, an intelligentmanagement cockpit, a knowledge library, emergency plan library and other subsystems is set up to provide real-time monitoring, event classification and warning reporting, the display of emergency resources, one-clickactivation of emergency plans and other applications, achieving rapid handling of emergency events in the pipecorridor.In the chemical industry, an emergency command system supported by AR reality application, integratedcommunication and an accident handling plan library is developed to enable visualized park command and dispatch,emergency plan exercise, one-click dispatch of emergency resources, one-click activation of emergency plans andone-click export of emergency reports and other applications, helping users to improve safety managementcapability of chemical parks.With regard to the energy industry, an intelligent gas safety production command center is created to fulfilldata integration and display on the GIS Map, allowing access to valve rooms, refueling stations, city networks andother sites. The center fully monitors site operations, and enables safety management of gas storage, transmission,and other operations while achieving efficient dispatching of emergency personnel and materials by using theintegrated communication system.2）Enhancing asset operation efficiencyHikvision focuses on operational efficiency improvement, equipment and facility management, enterprisematerial management, and smart space management. Through technological innovation, the Company has achievedeffective management of key production and operation elements, such as personnel, equipment, materials, and space,on the basis of traditional information management, thus facilitating efficient operation of enterprises at lower costsand increased efficiency, and achieving the management goal.
2.1）Operational efficiency improvement
Hikvision helps users achieve business management goals of regulated operation, automated operation processand lower training cost from three aspects: operation assistance, man-machine cooperative operation and personnelability improvement. This strategy has been successfully implemented in manufacturing, new energy, coal mining,agriculture, construction, logistics and other industries, serving users including EVE Battery.
For the energy industry, AI vision are utilized to enable real-time supervision of operating behavior,standardize the operation process, and ensure daily production order. Intelligent inspection services are providedfor managers and inspectors to improve inspection efficiency. Online classes, remote auxiliary diagnosis and othermethods of personnel training are offered to improve the ability of personnel.In the manufacturing industry, intelligent equipment and products assist people to improve operationalefficiency and reduce the risk of misuse. For example, an X-ray material counter counts the quantity of materialsautomatically, while a rail robot automatically executes inspection instructions. A high-frame-rate and low-latencycamera assists in determining the production status, whereas a thermal imaging device monitors the temperature ofthe production line.With regard to the breeding industry, a livestock and poultry breeding monitoring system is established tomeet the need for regular weighing of livestock and poultry in the breeding process. Unlike the traditional weighingmethod, the system enables remote inspection of livestock and poultry growth, dynamically monitors changes inweight and volume of livestock and poultry, and adjusts feeding strategy in a timely manner, helping users to achievelarge-scale breeding.
2.2）Equipment and facility management
Hikvision promotes the intelligent O&M transformation of equipment and facility management business.Combining AIoT sensing technology with low-code engine capabilities such as integrated work orders and reports,the Company develops equipment lifecycle management systems including intelligent inspection, repair,maintenance, scrapping, spare parts, ledgers and other services to ensure the safety of equipment assets, reduce thedowntime and maintenance costs, and effectively improve equipment management efficiency for enterprises. Thissystem has been implemented in manufacturing, brewing and other industries, serving users such as HangzhouQianjiang Refrigeration Group.
In the manufacturing industry, sensors are combined with AI technology to enable vibration fault diagnosisof equipment such as centrifugal casting machines, understand the working and health status of stamping equipment,and obtain real-time production data of winding equipment. A maintenance system is established based onproduction data to monitor the risks and hazards, provide failure warnings and reduce unplanned emergency repairs.
For the liquor industry, core equipment assets are inventoried to achieve overall equipment effectiveness(OEE) management, spare parts management and other operations. Equipment and facility maintenance data areused to assist enterprises in formulating proper spare parts management strategies and striking a balance between
spare parts cost control and guaranteed continuous production.
2.3）Enterprise material management
Hikvision has established a lifecycle management mechanism covering the entire process from materialprocurement to end-of-life. The mechanism reduces the workload of manual recording and message transmission,effectively decreases the management risk of data inconsistency, and informs the quantity and status of materialstimely for precise regulation and control to ensure orderly production. It has been successfully implemented incement, electric power, manufacturing and other industries, serving users including Inner Mongolia Ojing Science& Technology.
In the cement industry, an AI-based raw materials monitoring system is established to measure, in real-time,the area and volume of stored raw materials and other key data without interrupting production, evaluate thecontinuous production time based on the consumption of raw materials, and assist users in adjusting the feedingplan in a timely manner.
In the power industry, RFID products are used to meet the needs of identifying materials of different formsand volumes in a non-contact manner, saving the labor cost required for material inventory.
For the manufacturing industry, an automatic inbound and outbound warehousing inventory system thatintegrates vision, AI, localization technology and other technologies is provided to automatically count the numberof products in the inbound and outbound warehousing process. The system is used for data alignment with thewarehouse management and manufacturing management systems to identify asset management risks such asaccount discrepancies.
2.4）Smart space management
Hikvision optimizes the design of the movement lines of people, vehicles and goods through digitalapplications of spaces such as parks, workshops, dormitories, warehouses, storage and workstations to achieveintelligent monitoring of space and statistical analysis of space utilization, facilitating refined management of alltypes of spaces. These applications have been successfully implemented in medical, real estate, education and otherindustries, serving users such as Ningbo University.
In medical institutions, a variety of intelligent interactive displays are deployed in outpatient and inpatientareas to ease the contact between doctors and patients and relieve patients’ anxiety. Vital sign radars are used tosense personnel status and behavior to timely detect any unusual events such as patients leaving the bed and falling,
ensuring a safe treatment environment and improving the treatment experience for patients.
For industrial parks, the business process from lease to audit and finance is integrated to clearly display real-time information on real estate operations, helping to attract investment. Service records are established forenterprises in the park, and proper services are provided for them based on a thorough understanding of theirpersonalized needs. A reservation-based space resource usage mechanism is developed for functional areas such asconference rooms, cafeterias and office areas to improve the actual utilization rate of space and create an efficientand convenient management service model.With regard to colleges and universities, an auxiliary management system for teaching resources isestablished to monitor laboratory resources, and verify the identity of the personnel entering the laboratory to ensurecompliant use of these resources. A lifecycle management mechanism is created for dangerous chemicals to ensurethat their use is under control. The indoor environment, instruments and equipment are monitored to ensure the safeand efficient operation of equipment.
In 2022, Hikvision established successful practices of digital transformation with many partners. In the future,considering the multi-park development model of enterprises, Hikvision will provide multi-park managementsolution for industrial parks while further exploring park management business to optimize the multi-park businessdevelopment model for users, achieving business value of "unified standards, capability sharing, benchmarkedmanagement and service alignment".
4.2.4 Outlook
As an important driving force of industrial transformation, digital technology is being fully integrated into thesocial and economic industrial chain, exerting an increasingly great impact on the way of enterprise management,production and service, and giving birth to a variety of scenario-based digital applications in different industries.With AIoT technology, Hikvision will continue to expand industrial application scenarios, fulfill common needs ofdifferent industries and consolidate its AIoT product and solution system, helping users with industry transformationpractices.
At the same time, new trends in economic development, such as continuous industrial transfer, optimization ofenergy structure and the rise of younger generation, are driving the rapid development of related industries. Manyindustries, especially manufacturing, is shifting from the eastern to western region, where the construction of moreindustrial parks and bases will lead to many structural opportunities. As the energy structure is gradually changing
to non-fossil energy, and the production and consumption sides are transforming rapidly. A growing number ofinnovative businesses are emerging along with the rapid changes in industrial structure, creating many new marketopportunities. The growing diversified demands of younger generation for quality, culture and other elements givesrise to more new consumption areas, leading to more competitive and robust economic activities.A new develop pattern brings new opportunities and new changes give rise to new needs. As an importantbridge between the physical and the digital world, AIoT technology will play a crucial role in this process. Hikvisionpays close attention to many new industrial trends such as large manufacturing chains, retail store networkingmanagement, corporate digital twins, and new infrastructure in education and medical industries, helping enterprisesto consolidate infrastructure for digital transformation with an AIoT software and hardware system. Additionally,the Company improves operation and management capability for enterprises through AIOT solutions such asenterprise safety production and asset efficiency improvement.
Hikvision will continuously deepen business innovation, explore more digital application scenarios, and joinhands with partners to pave the path to digital transformation.
4.3 SME Business Group (SMBG): Enhance Industry-wide Service Capabilities, and Facilitate DigitalTransformation of SMEs
4.3.1 Overview
The business conditions of small and medium-sized enterprises (SMEs) are highly correlated with macroeconomy, and the industry has faced many challenges over the past year. As the economy recovers, SMEs willrebound and gradually increase their investment in security, digitalization, intelligence and other areas. Digitaltransformation is an inevitable trend, and plays a key role in helping SMEs break the development bottleneck,weaken their dependence on the external environment and build long-term competitiveness. According to theestimation of iResearch Consulting, the market size of digital services for SMEs exceeded 300 billion in 2022. Thismarket includes AIoT devices and marketing and re-purchase of multi-scenario digitization solutions and productpackages for stores, parks and factories, as well as engineering services and SaaS application services, which is vastin size and holds great potential for growth.
Based on industry understanding and user insight, Hikvision uses AIoT devices as digital infrastructure toimproves equipment management, explore business applications, and provides low-cost, lightweight, tailor-madeand precise solutions and services for various SMEs, reducing choice and usage costs for customers and users.
Hikvision continues to expand its presence in the lower-tier markets, and works with nationwide partners to shiftfrom the single-loop model of channel-customer-user based on product distribution to the double-loop ecosystemof solution marketing + service provision. Moreover, the Company develops online and offline digital store businessand builds a service mesh to better promote digital transformation of SMEs.
4.3.2 Core Technologies: Mutual Promotion between Online and Offline Channels Driven by HikvisionSMBG HikLink and Hikvision SMBG E-commerceHikvision has established two mainline platforms: Hikvision SMBG HikLink and Hikvision SMBG E-commerce, which provide an empowerment platform for security professionals, a project contractor workbench, anSME service platform and an open platform for ecological cooperation that serve channel customers, projectcontractors and SME users. Based on the infrastructure capacity and the partner network, an empowerment platformis built to adapt to the industrial structure.Hikvision SMBG HikLink: This is an AIoT platform that provides multi-scenario solutions and services forSME users. With Hikvision’s AIoT capabilities, this platform can access video, access control, intercom, attendance,fire protection, alarm, transmission and other categories of products to provide IoT-information network integrationapplications powered by the "video + access control card." Hikvision creates scenario-based solutions and servicesin collaboration with ecosystem partners for scenarios such as communities, office, retail stores, factory parks, andagricultural farming. Hikvision SMBG HikLink Pro provides a project management tool for project contractors,accumulates project data, and increases service performance efficiency, supporting project contractors in providingsolutions, subscription services and operation and maintenance services for users, and increasing business efficiencyand revenue for project contractors.
Hikvision SMBG E-commerce: It is an empowerment platform for security professionals, integratingengineering tools, marketing empowerment, solutions, product information, service and operation. Based on themarketing service system, the platform offers online showrooms, scenario-based product matching guides, onlinepre-sales, service squares and others, contributing to the upgrading of the industry chain. For now, it has servedmore than one million security professionals.The Hikvision SMBG HikLink and Hikvision SMBG E-commerce platforms are mutually supportive andspirally driven to help project contractors manage equipment and projects efficiently, enhance professionalcapabilities and serve users efficiently, thereby creating one-stop preferred products and services defined by omni-channel, whole-process and omni-scenario offering for SMEs.
4.3.3 Value Fulfillment
1）Facilitate digital transformation of SMEs through the provision of one-stop solutions and services
Hikvision develops online and offline digital store business based on solution marketing, connecting with usersand continuously providing services. Through the expansion of product lines, Hikvision builds an AIoT cloudplatform that provides simple and good solutions and standardized services for SMEs. The Company integratesmulti-terminal capabilities with a focus on the "video + access control card" business to support the access of morethan 100 kinds of access control, attendance, and visual intercom devices, as well as intelligent applications such asAll-Purpose Card, cloud attendance, cloud intercom and cloud visitors. Hikvision has provided scenario-basedsolutions for tens of thousands of SME users such as communities, factories and parks in collaboration with nationalpartners, with the number of access devices and users maintaining high growth throughout the year.2）Promote the digital transformation of security professionals and enhance their service capability
Hikvision SMBG E-commerce empowers and enhances the efficiency of security professionals by supportingintelligent order matching of multiple products through the upgrading of the order matching tool, which generatednearly 100,000 orders in 2022. The product material database covers the whole selling process including pre-sales,sales and after-sales, which has processed more than one million inquiries throughout the year. The platformpromotes solution marketing by providing more than 100 types of solutions and digital showrooms to increase brandinfluence. It has optimized social marketing tools, which have been shared more than 100,000 times by nearly10,000 customers. SMBG E-commerce Live Streaming helps connect channel customers with their downstreampartners. Nearly 1,000 live streaming activities have been conducted on the platform and more than 100,000 people
have participated in live interactions throughout the year.Hikvision SMBG HikLink Pro provides a project contractor workbench equipped with various professionalequipment configuration and debugging functions to assist the project contractors in project delivery and systemoperation and maintenance, which has provided services for tens of thousands of project contractors, with keyfunctions used more than 100,000 times.Looking ahead, Hikvision will work with channel customers, project contractors and ecosystem partners toprovide more competitive scenario-based solutions, while establishing connection with SME users to facilitate theirdigital transformation. An IoT system will be established to unlock more possibilities.
4.4 International Business: Continue to Promote the Localization Strategy of "One Policy for One Country"and Improve the Global Marketing and Service Network
4.4.1 Overview
In 2022, overseas markets gradually recovered and some regions maintained rapid economic growth, providinggood opportunities for Hikvision’s international business. Although geopolitical tensions, energy crisis and inflationbring uncertainties to the macro environment, the Company’s international business has maintained overall steadydevelopment due to its presence in many countries and regions, and optimization of operations.Hikvision continuously promotes the localization strategy of "one policy for one country" for its internationalbusiness, improves the global marketing and service network system, and promotes the localization of R&D,manufacturing, logistics and after-sales service, thus quickly responding to the needs of customers, users andpartners. By 2022, the Company has set up 72 branches, subsidiaries and offices in the international marketincluding Hong Kong, Macau and Taiwan regions of China. In 2022, the Company also set up a new R&D centerin Dubai to satisfy the customized needs of regional markets together with overseas R&D centers in Montreal andLondon. Furthermore, Hikvision built 5 new overseas logistics warehouses, bringing the total number of warehousesto 17 and improving local logistics coverage and distribution capabilities. The Company set up 2 new overseas callcenters, reaching a total of 13. These centers enable Hikvision to actively expand cooperation with channel partners,extend the technical service networks and provide customers with timely and high-quality after-sales services.
Hikvision’s long-term investment and accumulation in technological innovation, product R&D and productiondelivery allows the Company’s products to maintain a dominant position in overseas markets. With the steadygrowth of the video business, non-video businesses such as access control, alarm, intercom and commercial displayare growing rapidly, and have offered products for many market segments. Meanwhile, the Company activelyexpands the vertical industry market, providing a complete range of scenario-based solutions for transportation,retail, logistics, education, energy, manufacturing and other industries to improve the digitalization, intelligence andautomation of business operations for customer and users.
4.4.2 Core Technologies: Sound and Solid Product and Technology System for International Business
With its solid technical foundation and continuous technological innovation, Hikvision has always beencompetitive in overseas markets and has formed a complete product and technology system that meets the needs ofthese markets. In 2022, the Company launched and optimized several types of products and solutions powered byimage technology, AI, multi-dimensional perception and fusion applications，which adapted to different businessscenarios.1）All-weather, all-environment image technology
Video image technology has always been superior technology of Hikvision’s international business. Byleveraging dual-light fusion, ISP and mixed fill light technologies, the Company has developed ColorVu and
DarkFighter technologies that enable HD and color imaging at night or under low light conditions, which have beenused in 4K HD, high magnification zoom, panoramic imaging and other products to meet the needs of differentscenarios and applications. Additionally, Hikvision provides special product series such as anti-high and lowtemperature, explosion-proof, anti-corrosion and anti-vibration that ensure stable and clear video imaging undercomplex and harsh environmental conditions.2）More extensive and open AI applicationsHikvision delivers a greater variety of AI applications and diversified solutions according to the market demand,development stage and policies in different countries and regions. The ANPR and intelligent perimeter alarmproducts developed and manufactured by the Company have been widely used in the international market. AIapplications such as people counting, queue detection, vehicle feature detection, speed detection, traffic flowanalysis, intelligent parking management, and personal protective equipment (PPE) detection are gradually beingimplemented. At the same time, the Company is committed to build an open AI platform that shares its hardwareand software products with international technological partners while launching the latest HEOP 2.0 open platformto better meet the diversified needs of the market for AI applications.3）Continuously expanding perception technology capabilitiesBased on visible light perception, Hikvision continuously expands multi-dimensional perception technologiessuch as infrared light, millimeter wave radar, X-ray, and acoustic wave to enrich IoT perception capabilities. TheCompany has launched a diverse range of perception product series in the international market, covering radar,thermal imaging, access control, visual intercom, and alarm products. The Company combines visual perceptiontechnology with other perception technologies to provide innovative products and solutions, such as an integratedradar and video machine for perimeter protection and traffic blind spot detection, as well as an alarm system withdifferent detectors such as water level, smoke and vibration detection, and video re-check.4）Integrated multi-device and multi-system applicationsIn response to the increasing demand for integrated applications, Hikvision has developed a system integratedwith multi-device and multi-system applications to meet the differentiated needs of the market. The Companyprovides Hik-Partner Pro and Hik-Connect for small and medium-sized businesses, which allow customers to run,maintain and manage multiple devices in the same interface conveniently and link video with non-video devices.The Company offers HikCentral series platform management software to large and complex scenario-based
businesses. The software integrates video security, access control management, visitor management, alarm, fireprevention, emergency management and other systems and supports the integration of non-security informationsystems to form a comprehensive IoT solution, providing more comprehensive data for management decisions ofcustomers and users.
4.4.3 Value Fulfillment
Hikvision is committed to continuously creating value for international customers through technologicalinnovation and localized products and solutions, and working together with them to build a more secure, efficientand intelligent world.1）Create one-stop solutions for SMEs
SMEs are generally more concerned about the ease of use of security products and systems, and prefer lightintelligent applications. Hikvision creates one-stop security and intelligent application solutions for SME users,providing diversified products, unified and convenient management platforms and tools to enhance the ease of useof security systems and intelligent applications and reduce comprehensive costs for customers.2）Promote industry intelligence and digitalization
With AIoT technology, Hikvision provides systematic and scenario-based solutions for international industrycustomers that cover transportation, retail, logistics, education, energy, manufacturing and other market segments,promoting industry intelligence and digitalization. For example, in the logistics industry, the park managementsolution enables unified management of vehicles, people, space and goods to ensure park safety and improveoperational efficiency. For the energy industry, an intelligent inspection solution allows remote monitoring andwarning of key areas and equipment status to improve emergency handling capability and efficiency.3）Promote the open sharing of the AIoT ecosystem
As the IoT industry is characterized by diverse products, fragmented scenarios and individualized applicationdemands, Hikvision builds an open AIoT ecosystem to promote industry cooperation. In terms of device openness,in addition to the traditional ISAPI, Hikvision releases the OTAP architecture protocol that covers all Hikvisionproducts with a set of open protocols to improve the efficiency of product integration for technical partners. In termsof platform openness, cloud and OpenAPI platform are used to achieve unified management and integratedapplication, which help reduce the development cost of higher-level applications. In addition, Hikvision shares
technical and market resources with ecosystem partners through the Global Technology Partner Program.4）Contribute to sustainable social development
Hikvision has integrated corporate social responsibility into its business practice from R&D design to productmanufacturing, constantly exploring and practicing the concept of green and low-carbon development, andpromoting sustainable social development through technological innovation. In 2022, Hikvision delivered the STARPublic Welfare Partnership Program across the world. Through cooperation with non-profit and social welfareorganizations, the program aims to provide technical support in various fields such as biodiversity monitoring andprotection, environmental monitoring and protection, and cultural heritage protection, using technology to promotethe implementation of more public welfare projects and striving to create a better future for human beings.
In response to the differentiated needs of overseas markets, Hikvision will continue to strengthen theconstruction of regional R&D centers, enrich the international product and solution system, and promote thelocalization strategy of "one policy for one country." Moreover, the Company will expand the localized marketingand service network to continuously create value for international customers, users and partners and achieve win-win development.
5. Innovative Businesses
Hikvision’s continuous efforts in technical reserves and expanding business scope provide a good environmentfor innovative business development. Currently, its innovative businesses include EZVIZ Network, HikRobot,HikMicro, HikAuto, HikSemi, HikFire, Rayin and HikImaging. The solid growth of innovative businesses hascontinuously injected new impetus into the long-term stability and sustainable development of the Company.
5.1 Innovative Business - EZVIZ Network
In March 2015, EZVIZ Network was created as the first innovative business based on Hikvision’s co-investment scheme. Its vision is to become a trusted provider of smart home services and IoT Cloud Platform. Afterseven years of strong growth, the company has developed a "1+4+N" smart home ecosystem for individual andfamily consumers that provides intelligent life solutions primarily based on visual interaction to bring a technology-enabled casual, comfortable and enjoyable life for people. Moreover, by leveraging the self-developed EZVIZ OpenCloud Platform, the company shares its cloud platform service capabilities for intelligent videos with industry
partners to jointly establish an IoT cloud ecosystem. The company has been actively developing domestic andinternational markets, synergizing online and offline channels, and building diverse multi-level marketing channels,with continued steady growth in sales performance and online user base.
On December 28, 2022, EZVIZ Network was successfully listed on the STAR Market of the Shanghai StockExchange as the first spin-off subsidiary of Hikvision. For details of EZVIZ Network, please refer to EZVIZNetwork 2022 Annual Report.
5.2 Innovative Business - HikRobot
Combining visual perception, AI and navigation control technologies, HikRobot focuses on industrial IoT,smart logistics and intelligent manufacturing with solid algorithm accumulation, strong software and hardwaredevelopment capabilities, and a complete marketing system. HikRobot continuously invests in the fields of mobilerobots and machine vision to promote the digitization and intelligence of manufacturing and logistics.
5.2.1 Mobile Robots: Focus on Intralogistics and Promote Intelligent Logistics of Factories
As a dedicated provider of mobile robot products and solutions, HikRobot continuously concentrates on creategreater value for users through technological innovation. In 2022, the company focused on the standardization andserialization of product development, improved the efficiency of the entire process from design and development toimplementation and deployment, increased efforts in industry applications, and actively developed its overallsolution capability, thus securing an advantageous position in new energy, automotive manufacturing and otherindustries.1）Four hardware product series
LMR (Latent Mobile Robot) series: HikRobot’s fourth-generation Q3 and Q7 products released in 2021 havebeen widely used in new energy industries such as photovoltaics and lithium battery, as well as in the productionprocess of automotive OEMs such as final assembly and welding. These products formed a number of highlycompetitive solutions for internal automated logistics. In 2022, HikRobot released the Q2 series, also based on thefourth-generation architecture, to better meet the needs of smaller space application scenarios such as 3C electronicsmanufacturing.
CMR/HMR (Conveyor/Heavy-duty Mobile Robot) series: In 2022, the CMR/HMR product line focused onthe photovoltaics, lithium battery, automotive manufacturing and other industries, closely integrated with the
production line, and launched a number of industrial products. In the photovoltaic slicing segment, a fully automatedloading and unloading robot for use with a slicing machine has been launched. In the lithium industry, a specialmodel for double-lift integrated with the coating process has been introduced, which can achieve a docking accuracyof ±2mm. In the automotive manufacturing segment, a delivery robot specially designed for main production lineshas been used for the first time, while the Traction series has significantly improved its competitiveness and hasbeen used at large scales.FMR (Forklift Mobile Robot) series: In 2022, by upholding the concept of independent design anddevelopment, the company developed a number of core components and significantly enhanced its product strength.The rated load of the F4 Stacking series and F3 Handling series were increased to 2 tons and 3 tons respectively.Also, HikRobot released F5-1600, a self-developed product of the Forward-Moving series.CTU (Cargo To You) series: In 2022, HikRobot focused on the standardized and modular development ofkey components, significantly improved development efficiency and product quality. The company has expandedthe application of its products to photovoltaic and lithium battery production, and also across the pharmaceuticaldistribution, garments and footwear industries. Moreover, a product with an access height of more than 8 metershas been launched for storage applications.2）Software product seriesHikRobot has independently developed a low-code platform and a series of components that can quicklyperform core services such as third-party system interfacing, business process scheduling and user interactioninterface design to significantly reduce the development difficulty, improve the development efficiency and respondto user needs more quickly. The company has increased its investment in operation optimization algorithms foriWMS, an intelligent warehouse management system independently developed to meet warehousing needs. Theoperational efficiency of the system has been significantly improved through optimization of order batches, inboundwarehousing management and cluster scheduling.3）Solution developmentAutomotive industry: In 2022, HikRobot further expanded the application of its products from in-factorylogistics and distribution to process manufacturing in the automotive industry, and made breakthroughs in the finalassembly line and sub-assembly line, transforming the original process logistics model and making manufacturinglogistics more flexible and scalable. In addition, the application of solutions and industry penetration rate in the
commercial vehicle and upstream component segments has steadily increased. Through extensive and in-depthsolutions implementation, HikRobot has helped users to improve operational efficiency and management efficiency.3C industry: In 2022, HikRobot intensifies efforts in the display panel industry. In view of the characteristicsof this industry, including different forms of display panel products, high storage requirements, complex businessneeds and multiple dimensions of material quality management, the company has developed scenario-basedsolutions such as aisle warehousing, material stacking, inbound or outbound warehousing of designated materials,which effectively met the production and operation requirements. Furthermore, the company has developed andimproved solutions for typical and complex businesses such as incoming materials inspection, multi-levelmanagement by serial number, and SMT backflush management to suit flexible manufacturing needs and enhanceunmanned, automated and intelligent logistics throughout the factory.
New energy industry: In 2022, mobile robot systems found large-scale applications in photovoltaic andlithium battery fields. These systems have been applied in crystal pulling, slicing, cell wafers and PV modules inthe photovoltaic industry as well as in early electrode manufacturing, intermediate cell manufacturing and latebattery assembly in the lithium battery industry. Pre-scheduling, partition task management, large-scale clusterscheduling and other algorithms have been utilized to further guarantee on-site production efficiency, meet theoperational and management requirements of lithium battery enterprises such as production capacity, productionefficiency, quality control, and cost control.
As the global manufacturing industry is undergoing another round of transformation and upgrading, and has astrong demand for automated logistics, the mobile robot market will continue to grow at a high rate. In 2023, the
company will continue to expand the application of AI in AMR’s perception, planning, control, and collaboration,and leverage 3D vision and other perception technologies to enhance the autonomous capability of AMR, strivingto expand its applications and market presence. To empower partners, HikRobot will build an industrial softwareplatform in the field of AMR, so that partners will be able to more easily customize robots, more rapidly tailorsystems, and better serve end users.
5.2.2 Machine Vision: Focus on Industrial Perception and Drive Digital and Intelligent ProductionAs the core of industrial perception, machine vision is the eyes of robots and automation equipment. It is alsoan integral part of flexible and intelligent production. In 2022, HikRobot focused on the optimization of 2D vision,intelligent ID and 3D vision product lines. Moreover, the company has cultivated a vision application ecosystemcentered on the Vision Master (VM) Software Platform, and worked with partners to meet the needs of fragmentedindustrial applications.1）Three product lines
2D vision product line: HikRobot continues to develop competitive industrial cameras, lenses, light sourcesand capture cards powered by image capture technology, providing industry customers with standardized coredevices for image capture. In 2022, the company upgraded the platform for a full range of industrial cameras.HikRobot has expanded the CU Economical and CS Enhanced categories of industrial cameras and completed theswitchover of the original CE and CA series products. Moreover, the company upgraded the platform for the CHseries and released a camera with an optical fiber transmission interface, while expanded the CL series line arraycameras based on the next generation of domestic 4K and 8K image sensors. The company developed a variety oflarge format line-scan lenses with a diameter of 60 mm and 80 mm to satisfy the demand for high-end line-scanapplications. It has expanded the light source series including strip, ring and surface ones, and enriched andoptimized light source controllers. In addition, the company has launched Gigabit network capture cards based ondomestic PHY chips and 10 Gigabit network capture cards based on optical fiber interfaces, while continued tooptimize Cameralink and CoaXPress capture cards to improve their compatibility with third-party cameras.
Intelligent ID product line: HikRobot focuses on open algorithm platforms and general-purpose intelligenthardware products supported by vision algorithms, providing the industry with an efficient and high-performanceintelligent processing platform. In 2022, in terms of vision algorithms, the company continuously optimized theperformance and efficiency of template matching, Blob analysis, geometry finding, character recognition and image
segmentation and other algorithms, and developed surface defect detection, fast classification, instancesegmentation, defect comparison and other algorithms based on the characteristics of industry applications. Theseefforts have further consolidated the company’s technical competitiveness in underlying algorithms for machinevision. In terms of intelligent products, HikRobot has provided an open underlying module framework for algorithmplatforms VM4.2 and VM4.3 that enables flexible secondary development and support secondary encryption byapplication developers. The company has significantly optimized the performance and efficiency of the algorithmplatforms, making them more open, safer, and more efficient. IDH7000, IDH5000, and IDH3000 and other seriesof handheld code readers have been introduced to further complement the code reader family. In addition, thecompany has increased efforts in industry applications, and improved the competitiveness of industrial code readers,intelligent cameras, vision controllers and other products through optimization of their performance and ease of use.3D vision product line: HikRobot provides a one-stop 3D vision software and hardware solution for customerswith a focus on two major applications enabled by 3D sensing technology, high-precision measurement and robotgripping. In terms of high-precision measurement, the company introduced a lineup of laser profile sensors in 2022,including 4 models of DP2000 series with higher performance DP3000 series under development. Moreover, it hasswitched 3D vision analysis software to VM framework and launched VM 3D version, which has been promotedand applied in many industries such as lithium battery, 3C and automotive parts, and well received by the market.In terms of robot gripping, HikRobot released a multi-DOE binocular scattering camera for depalletizingapplications and a laser oscillator RGBD camera for workpiece gripping applications in 2022. Furthermore, thecompany continues to optimize the 3D robot application software platform to gradually gain competitiveness in 3Drobot gripping applications.
2）Ecosystem constructionWith excellent hardware and software capabilities, HikRobot endeavors to establish a new machine visionecosystem. In 2022, the company continued to put efforts into the development of a machine vision ecosystem bypromoting the Ecosystem Partner Program v2.0 in the industry, further expanding the scope of training andcertification for machine vision application engineers, and identifying and cultivating ecosystem partners in variousindustries. It has incorporated 3D products into the ecosystem program to enrich the content of visual empowering.In 2022, the company held dozens of offline and online technical exchange meetings, and carried out a range ofspecialized machine vision competitions through V-club, providing more dynamic and professional learningopportunities and display platforms for machine vision professionals.3）Solution development
Through technological empowerment, HikRobot assists ecosystem partners in promoting the implementationof vision solutions in different industries.In 2022, the new energy industry maintained a rapid development momentum. HikRobot has focused on keyproduction processes of the lithium battery industry. The combination of traditional algorithms with deep learningtechnology has been used to efficiently detect and classify electrode defects in the front-end electrode inspectionprocess. Vision solutions for high-speed lamination-related vision inspection, measurement, deviation correction,alignment and other applications have been developed and massively implemented in the intermediate cellproduction process. The company has also focused on the module production process of the photovoltaic industryand developed many standardized vision solutions for assembly inspection, EL inspection, bus bars, moduleinspection and junction boxes, etc. These products have been widely used in the production of photovoltaic modules,significantly improving production efficiency and product yield.
HikRobot provides a 3D automated robot gripping solution for stamping and die casting parts for theautomotive industry, and has launched a disposable glove AI inspection solution for the medical industry and anautomated crossbelt supply solution for the express logistics industry. The company has released a softwaredevelopment framework in the 3C industry for a large number of non-standard vision-guided localizationapplications, helping partners to quickly create vision solutions.
As conventional industries continue to transform and upgrade, and relevant industries such as new energy andmedical develop rapidly, the machine vision industry will maintain rapid growth driven by AI, 3D and othertechnologies. In 2023, the company will increase investment in AI quality inspection, 3D technology, VM software,
and standardized vision systems and other areas, provide customers with simpler and more open hardware andsoftware products, establish a machine vision ecosystem, and create greater value with partners at all levels of theindustry chain.Looking forward, HikRobot will continue its efforts in intelligent manufacturing while remaining committedto the two business areas – mobile robots and machine vision. The company will help users to improve productionquality, enhance efficiency and reduce costs through technological innovation of software and hardware productsand platforms and continuous improvement of delivery processes, thus facilitating the development of globalintelligent manufacturing.
5.3. Innovative Business – HikMicro
Combining infrared thermal imaging technology with MEMS technology, HikMicro provides core components,detectors, modules, infrared thermal imaging products and overall solutions to the world. The company’s productsare widely used in industrial temperature measurement, outdoor, generic-security and other fields.
5.3.1 Product Innovation
After years of accumulation, HikMicro has established five advantages, namely clear image, advancedintelligence, efficient temperature measurement, stable design and reliable manufacturing.
HikMicro provides multi-form products and one-stop integration services from detectors, modules to completemachine to better empower the infrared industry. In 2022, HikMicro further complemented its integrated productsto completely achieve coverage from 96*96 to 1280*1024 resolution.
The company’s 96*96 resolution detector, which is less than the size of a mineral water bottle cap, integrates
lens, detectors, stoppers, temperature sensors and other functional hardware, greatly reducing the cost and powerconsumption. A universal hardware interface and built-in calibration data facilitate products integration, enablingthe application of this detector in multiple sectors including instrumentation, intelligent hardware, IoT, smart home,pandemic prevention and healthcare. Moreover, the company has launched a miniature PTZ camera that is ultra-lightweight and small in size, and features multi-dimensional sensing and intelligent algorithms. This camerareduces the integration difficulty and expanding the application fields.
5.3.2 Industrial Application
By leveraging its technical advantages in sensors and product design, HikMicro has grown rapidly, providingspecialized segmented services for customers in industrial temperature measurement, outdoor and generic-security,among other areas.Industrial temperature measurement market: In the industrial infrared temperature measurement market,HikMicro further improves its product solutions for industrial applications including non-destructive testing,predictive maintenance of equipment and safety inspection of production processes which are widely used indifferent industries. In the power industry, these products facilitate safety testing in power generation, transmission,transformation and distribution. In the steel industry these products are used to test key production processes suchas coking, sintering and steel rolling. In the coal industry, these products serve to monitor the status of key equipmentincluding belt machines, coal mining machines and coal cutters. They are also used to manage production safety ofoil fields, refineries, chemical parks and other applications in the petroleum and petrochemical industry.
Industrial temperature measurement products are iterated and innovated continuously according to the needsof different applications. For the steel industry, the company has launched ultra-high temperature resistant productsthat assist in determining the adequacy of sintering to ensure production efficiency. To respond to the needs of coal,oil fields, and other flammable and explosive scenarios, the company has introduced a family of intrinsically safeexplosion-proof products to guarantee the safe production of enterprises.
Outdoor market: Thermal imaging is widely used to detect targets in lightless or low-light environments insearch and rescue, patrol and other outdoor scenarios. HikMicro takes advantage of its strengths in images topromote the AI-ISP super-resolution image enhancement algorithm. This algorithm enables AI quadruple superresolution by means of deep learning, capturing all image details and improving overall image quality.
The company has launched NETD
25 mk high-sensitivity series products. Compared to the mainstream35~45 mk devices, these products offer smaller temperature differences discernibility, lower noise and higher clarity,thus helping users identify targets more easily.
Generic-security market: In 2022, HikMicro expanded its product lines for generic-security applications byintroducing a full range of intelligent products from 96*96 to 1280*1024 resolution. These products achieve fullcoverage from fragmented security scenarios to high-end application scenarios, and are widely used in differentscenarios such as perimeter prevention, indoor fire prevention and commanding heights. In terms of perimeterprevention, HikMicro has introduced a dual-light detection algorithm that combines visible light with thermalimaging capabilities using dual-light fusion, target detection, background modeling and multi-target associationtechnologies. This algorithm effectively detects targets and reduces false alarms in both small temperaturedifference
and strong light environments. Fire point identification application is the key need of commandingheight scenarios. There are numerous targets with complex interference in practical scenarios such as forest fireprevention, straw burning prevention, municipal commanding height firefighting, where many sources of falsealarms exist, such as smoke cloud and high temperature rocks. To address this problem, HikMicro has upgraded theoriginal smoke and fire detection algorithm to a multi-algorithm engine, which filters interference and significantlyimproves alarm accuracy through the fusion of multi-dimensional scenes and the aggregation of multi-classalgorithms.
NETD: Noise Equivalent Temperature Difference, the minimum temperature difference an infrared detector can detect. It is one ofthe main indexes to measure the performance of infrared detectors.
Small temperature difference scenario refers to a scenario where the temperature difference between the background and target isso small that the target blends with the background and is difficult to identify.
In the future, HikMicro will continue its efforts in MEMS and sensor technology, while continuouslyconsolidating its technical advantages of the products to make thermal imaging available to the public.
5.4 Innovative Business - HikAuto
HikAuto focuses on the field of intelligent driving. Centered on video sensors, and in combination withtechnologies such as radar, AI, and perceptual data analysis and processing, HikAuto is committed to becoming theindustry’s leading supplier of vehicle safety and intelligent products powered by video technology. It provides awide range of services to domestic and international passenger and commercial vehicle users, consumers at all levels,and industry users.
5.4.1 Steady Development of the Passenger Vehicle Pre-installed Market
In 2022, the wholesale sales of the domestic passenger vehicle market continued to grow, and the penetrationrate of new energy vehicles increased rapidly, driving the market share of domestic brands to a record-high, and theintelligent development of the whole vehicle is rapid. HikAuto passenger vehicle pre-installed market sales and thenumber of new projects maintained a high growth rate.
In terms of vision sensors, HikAuto expanded its leading advantage in market share, made effectivebreakthroughs in new project and new customer development, and 5 megapixel and 8 megapixel high-end intelligentdriving cameras achieved mass production in many domestic leading car companies' platform-based vehicle models.
In terms of intelligent driving, the company focused on UV fusion
perception and cockpit visual perceptiontechnologies, increased investment in parking and VIMS (Video Intelligent Monitor System) products, and achievedmass production of more than 10 projects for several domestic leading car companies, with the leading share of newprojects in China. In terms of driving-parking integrated intelligent driving products, the company integrated vision,ultrasonic and millimeter wave radar and other perception capabilities to provide intelligent driving domaincontroller products that suit different customer needs. In 2022, the company made a breakthrough in massproduction, discovering new growth opportunities.
In 2022, the company continued to promote cooperation with joint ventures and international brands, whilesteadily implementing the development of multiple platform-based product projects with a number of joint ventureand international car companies.
In 2023, HikAuto will increase investment in R&D to lead the development of domestic vision sensortechnology. Moreover, the company will create an intelligent driving domain control system with a focus on L2+intelligent driving scenarios to satisfy all kinds of needs. It will also actively explore solutions for integratedintelligent driving and cockpit, providing more options of intelligent products for customers.
5.4.2 Consolidating Advantages in the Passenger Vehicle Aftermarket
In 2022, the penetration rate of dashcams and panoramic view monitors continued to increase in the automotiveaftermarket. Despite the impact of external factors such as weak consumption and shrinking demand, HikAuto’s
UV fusion stands for Ultrasonic Vision fusion, and refers to the combination of ultrasonic radar and vision.
aftermarket products maintained solid development with year-over-year growth in sales and shipments.HikAuto provides a full range from 2 megapixel to 4K dashcams and actively explores consumer needs. In2022, the company launched the industry’s first F5 series dashcam with a fragrance system, which was well receivedby the market. HikAuto’s panoramic view monitors have been installed in more than 60 models of 9 collectionsfrom multiple international major brands, with stable performance and leading technology.
After two years of development, the M1 electronic rearview mirror with ultra-low-latency high-definition nightvision complies with the automotive-grade quality requirements. It is generally recognized by consumers andachieves high sales growth. On December 29, 2022, the national standard, GB 15084-2022 Performance andInstallation Requirements for Indirect Vision Device of Motor Vehicles, was introduced to support the developmentof electronic rearview mirror. The standard is planned to be implemented as of July 1, 2023, bringing greateropportunities for development to the market. The company will continue to increase investment in this product line.
HikAuto online flagship store has ranked at the top of dashcam store sales list on JD.com in the past threeyears, winning consumers’ trust. The company will create greater value for customers through continuousinnovation and a deeper understanding of market demand.
5.4.3 Growth in Commercial Vehicles despite a Downside Market
In 2022, despite economic fluctuations and overall sluggish demand, HikAuto achieved growth in thecommercial vehicle business unit due to great efforts in product innovation and R&D investment.
In terms of key technologies, the company continues to optimize the combination of BeiDou and GuanDaopositioning algorithms to significantly improve positioning accuracy. It expands the applicability of ADAS/DMS
intelligent algorithms by making them adaptable to more commercial vehicles. FCW, LDW, PCW, BSD
and DMSare among the top in terms of practicality in domestic commercial vehicle models.
In terms of products and solutions, HikAuto has released a lineup of transport vehicle for passenger, touristbus, and dangerous goods logistics vehicle that comply with the new national standard GB/T 19056-2021. Thecompany has obtained several projects from bus and truck OEMs. It has upgraded solutions for buses, school busesand construction vehicles, and developed more practical AI segmented scenario algorithms to enhance vehicledigitization, provide safer driving assistance capabilities for drivers, and allow administrative agencies to analyzevehicle usage more scientifically. Additionally, the company has introduced a new matrix of vehicle monitoringproducts for the international market that cover up to 16-channel monitoring scenarios.HikAuto’s cloud platform has enabled access to more than 500,000 vehicle-mounted video channels, andprovides more reliable OTA functions. The platform features a new subsystem of big data analysis, helping userswith fusion analysis of multi-source heterogeneous data and scientific decision-making. In terms of informationsecurity, the company has designed a full-link security system solution including hardware encryption, picture andvideo desensitization, SSL link encryption, and level III information protection certification of the central platform.In 2023, with social and economic recovery, the commercial vehicle market will continue to develop toward
ADAS: Advanced Driving Assistance System; DMS: Driver Monitor System, a fatigue driving detection system for drivers.
FCW: Forward Collision Warning; LDW: Lane Departure Warning; PCW: Pedestrian Collision Warning; BSD: Blind SpotDetection.
greater application, integration and practicality. The truck market will see wider application of ADAS/DMS and theintegration of a pilot vehicle system with an overload and overspeed monitoring system in more provinces. For thebus market, a majority of provincial capitals have planned the construction of an intelligent bus 3.0 system topromote integrated application of bus monitoring, bus scheduling, passenger flow statistics, ADAS/DMS, blind spotcollision warning, pedestrian priority at crosswalk, electronic rearview mirror, 5G-V2X and other subsystems. Asreal estate and new urban infrastructure recover, the construction vehicle market will bounce back. Fatigue drivingmonitoring, aggressive driving monitoring and blind spot collision warning systems will gradually become standardfeatures in new vehicles and connected with police traffic check points and E-police for composite management tolower the traffic accident rate. There is a clear trend in the international markets towards building video networksfor buses, school buses and other fields, and accelerating intelligent application.HikAuto will continue to increase R&D investment and innovate products and solutions in the commercialvehicle market to reduce traffic accidents, lower accident losses, and improve transportation efficiency, providingbetter services for customers worldwide.
5.5 Innovative Business - HikSemi
HikSemi is committed to providing worldwide users with professional overall storage solutions, with a focuson industrial control, data center, video surveillance, end-consumer and other application scenarios. With completedesign, development and manufacturing capabilities, the company operates four product lines: solid-state hard disks,front-end storage, embedded storage and flash memory application.
5.5.1 Key Products
Guided by the mission to meet the diversified storage needs of users, HikSemi continues to iterate and expandits four product lines by attaching importance to R&D investment, unremittingly promoting technologicalinnovation, and enriching application scenarios.1）Solid-state disk (SSD)
For video surveillance scenarios, the company released the industry’s first QLC-based embedded ultra-compact SSD for video surveillance in 2022. The product looks like a chip with an area of only 3.2 cm? and acapacity of up to 480 GB, further improving storage density.
For data center applications, the company has launched the D300 series of enterprise-grade SSD. This series
significantly improves data reliability by integrating the next generation of error correction engines, and reached99% to 99.999% QoS with the support of new scheduling algorithms after laboratory testing.For the end consumer market, the company has released DRAMless PCIe4.0 for use in the next generationof high-performance and high-speed applications which expanded the product matrix. Featuring host control andhigher Flash operating frequency and host memory buffer technology, after laboratory testing, this series withoutindependent cache has a maximum read speed of more than 7 GB/S and is power efficient. The performance of thisproduct has reached the industry’s leading level, which can meet the needs of content creators and e-sportsenthusiasts.2）Front-end storage productsConsolidate advantages and expand applications of memory cards. HikSemi launched a memory card inthe video surveillance field in 2015. Over seven years of solid technology accumulation, the company has continuedto consolidate its competitive advantages. It has launched card series of different themes for each applicationscenario in the end consumer market, and introduced 512GB memory cards for the mass storage market, providingbetter options for storage expansion.Improve the presence of memory products. HikSemi actively expands its share in the DDR4 memory marketwhile developing the DDR5 memory market through technology iteration. The company continues to introduceconsumer memory products for personal computers as well as industry memory products for autonomous servers.In 2022, the company launched U100 WAVE, a new DDR4 RGB memory stick. The product is made from high-quality particles, and supports XMP3.0 one-click overclocking. It features a pure white PCB and a 2.5D temperedglass vest strip with exquisite RGB light strips, achieving a balance of performance and appearance. It is graduallygaining popularity in the personal computer assembly market.3）Embedded storage products
Combining strict quality control with technological innovation, the company continues to expand theapplication of embedded storage products in industry segments and provides more reliable products, more relevantsolutions and more professional localization services. As of 2022, the company’s embedded storage products havecovered SPI Nor Flash, SLC NAND Flash, eMMC, LPDDR, DDR4 and other product series that meet the needs ofcustomers in the electric power, network communication, cell phone, security, smart home and other industries.4）Flash memory application products
HikSemi keeps introducing new products and services, while continuing to optimize the in-depth applicationof production and R&D technologies to respond to new evolving scenarios and personalized needs.Continuous innovation in mobile storage products: HikSemi takes user data protection seriously. Thecompany combines Hikvision cloud backup software, Hi Backup with a U disk and a mobile SSD, breaking thebarriers between online and offline data for users. HikSemi released USB 4.0 mobile SSD, leading industryupgrading.
Greater presence of flash peripherals: The company has created a range of high-performance laptopperipherals, including a dual-protocol hard disk cartridge supporting NVME and SATA interfaces, and a dockingstation with storage function.
Home storage products focus on user needs and improve interactive experience: With core values ofsecurity, convenience and intelligence, the company’s home storage products emphasize home data privacy andsecurity, and have been certified to ISO27001 and ISO27701 international privacy information managementsystems. In 2022, the company released HikSemi Intelligent Storage UI 4.0 software. The product is perfect forhousehold applications and offers a convenient interaction experience. It utilizes recognition algorithm to make anintelligent family photo album. Furthermore, the company has launched HIKSEMI_OS, an open platform forintelligent AI devices, to provide an underlying operating system for the implementation of storage solutions indifferent industries.
5.5.2 Outlook
In 2022, China’s semiconductor storage industry experienced ups and downs, facing opportunities andchallenges. HikSemi maintained proper internal management, responded to market changes calmly, developedchannels steadily, and actively expanded the industry market, with sales revenue growing steadily for fiveconsecutive years. The company has a marketing network covering more than 150 countries and regions, and hasestablished cooperation with more than 3,000 enterprises worldwide.
HikSemi will stay true to its original intention of "storing every beautiful moment and using intelligence tochange lives" and adhere to its user service concept of "dedicated to customers’ continual success, adding value tocompanies and communities." The company will continue to explore user needs, and create differentiated productsfor different scenarios. With a vision to become a leading provider of integrated storage solutions in China, HikSemiwill continue to provide consumers with safe and reliable storage devices, systems and solutions through technologyinnovation, product innovation, marketing innovation and brand building.
5.6 Innovative Business - HikFire
HikFire is a provider of intelligent fire protection IOT and intelligent management solutions powered byvisualized IOT. By leveraging emerging technologies such as multi-dimensional perception, IOT, Internet ofVision, cloud computing, big data and AI, as well as professional image processing, innovative security-fireprotection integration and IoT-information network integration technologies, HikFire provides products andservices for the construction and operation of corporate and municipal fire protection IOT system, and creates anopen fire protection ecosystem and a collaborative service system. Moreover, the company provides one-stop firesafety system solutions and fire management service solutions for users in municipal public services, enterprisesand institutions, small and medium-sized users, aiming to create a four-dimensional intelligent fire managementsystem consisting of smart perception, smart prevention and control, smart management and smart rescue. Thecompany’s business scope covers traditional fire protection, intelligent fire protection, platform software, e-commerce retail and other segments.
5.6.1 Main Business
1）Traditional fire protection: Enrich wired IOT products and further explore industry segments
HikFire has expanded its traditional fire protection product portfolio to fully cover the pre-installed market of
general fire protection. The products are divided into nine major systems in four segments: early warning, fire alarm,emergency evacuation and automatic fire control. In 2022, the company continued to develop and improve theautomatic fire alarm system, emergency lighting and evacuation indicator system, fire broadcasting and phone callsystem, electrical fire monitoring system, fire equipment power monitoring system, residual pressure monitoringsystem, fire door monitoring system, combustible gas detection alarm and gas fire extinguishing control system.Breakthrough in two-bus communication and low-power technology: As a key part of an automatic firealarm system and a linkage subsystem, the two-bus communication technology is commonly used to achieve nodepower supply and communication. The company continuously upgrades and optimizes the basic technologies fortwo-bus communication such as underlying modulation and demodulation, filtering protection, chip engine, powermanagement, wireless communication, bus protocol to improve the carrying capacity, anti-interference capability,communication stability and communication distance of the two-bus automatic fire alarm system.Innovation of product and industrial applications: In 2022, HikFire launched new products and systemssuch as OS21 two-bus automatic fire alarm system, high-performance FS21 gas fire control system, and aneconomical emergency lighting and indicator system. The company has accelerated the application of traditionalfire protection products in civil and industrial fields including industrial and commercial enterprises, culture,education & health, intelligent buildings, financial services, and energy & metallurgy. By introducing the businessconcept of traditional fire protection powered by IoT and vision, the company is helping users reduce comprehensiveconstruction and operation costs and improve the efficiency of fire and risk control. In addition, the companyactively explores the application of integrated fire prevention and control systems in the new energy sector. It hasreleased integrated security and fire protection system, integrated fire prevention and control system for wind farms.Its three-level prevention and control system consisting of wind turbine prevention and control, wind farmprevention and control, corporate prevention and control has been put into use, achieving breakthroughs inapplication.
2）Intelligent fire protection: Promote the establishment of the IoT for fire protection and improvemanagement and service efficiency of fire protectionAs the traditional fire protection industry undergoes continued changes, the intelligent fire protection marketbecomes increasingly mature. HikFire offers a full range of intelligent fire protection products while creatingoperation and management IoT platform software for fire protection at the corporate, industrial and municipal levelsto meet the needs of different scenarios in different industries. Through fire protection IoT featuring multi-dimensional perception, security-fire protection integration, system coordination, data sharing and serviceintegration, HikFire aims to enable the early warning, early prevention and control, and early handling of fires,reduce fire safety risks, improve fire management efficiency, and reduce overall operating costs. The company offersfire protection IOT solutions for a number of industries according to their characteristics, including town and countyinfrastructure, financial services, cultural relics and ancient buildings, education, smart architecture, industrial andcommercial enterprises, energy & metallurgy, elderly services, commercial chains, and new energy.Breakthrough in dual-band fire and smoke detection technology: To address the pain points of many falsesmoke alarms and high operation and maintenance costs in firefighting scenarios, HikFire has applied dual-bandphotoelectric smoke detection technology and intelligent AI algorithms to the next generation of stand-alonephotoelectric smoke detectors. Experiments and field data have been used for algorithm training of these productsbased on the reflection and scattering characteristics of different wavelengths on particles with different size suchas smoke, water vapor, dust, oil smoke. This ensures the accuracy and timeliness of smoke and fire detection, while
significantly reducing false water vapor, dust and oil smoke alarms to improve reliability. This series of productsalso have the advantages of temperature and humidity detection, network signal diagnosis, infrared noise eliminationand low-power consumption operation that reduce on-site operation and maintenance costs.
Implementation of multi-spectral fire fusion detection technology: Focusing on the demand of firedetection and alarm at very early stage, HikFire continues to enrich and expand the multi-spectral sensingdimensions. In 2022, the company released a new multi-spectral fire detector. The product integrates video image,multi-band infrared flame detection and thermal imaging temperature sensing technologies to achieve recognitionof flame and smoke images, spectral analysis and non-contact temperature detection respectively. It is used toaccurately detect, warn and alarm fires in complex scenarios. The product has been technically qualified andcertified, suitable for fire prevention in large space, outdoor and key locations.
Four business platforms: HikFire creates a full-scenario application framework for corporate management,operation and hosting, and government regulation scenarios through the establishment of fire protection IOTstandards, operation specifications and regulatory standards. The company aims to serve fire regulatory agencies,
social service organizations, enterprises and institutions, and end-users in Nine Small Businesses.
3）E-commerce retail: Focus on fire safety for families and micro, small and medium-sized businesses andenhance brand awareness
The frequent occurrence of fire emergencies has led to a rapid increase of people’s safety awareness in China,stimulating the demand for fire safety products of individual consumers and small and medium-sized businesses.The household fire protection product series holds great potential to promote the development of the fire protectionindustry. HikFire has accelerated its e-commerce retail business by increasing the awareness, reputation and salesof gas detection, smoke detection and simple fire extinguishing products and fire emergency kits on major e-commerce platforms.In 2022, HikFire released the next generation of smoke detection alarms and home combustible gas detectorswith different networking solutions to meet the diverse needs of users. HikFire’s home fire safety kits andapplications cover many aspects of fire protection such as automatic fire alarm, gas alarm, active identification ofpotential safety hazards, emergency fire extinguishing, escape and self-rescue. The company is committed toimproving customer satisfaction through technological innovation and compliance with high quality standards.
5.6.2 Outlook
The next generation of digital technologies such as fire protection IOT, multi-dimensional perception, big dataand AI are accelerating the integration of traditional and intelligent fire protection. This increases the demand forremote monitoring, management and control of fire protection, and further enhances the synergy between fireprotection and security systems, leading the industry into an era of AIOT with physical world and digital worldinterconnected.As fire protection reform deepens, AI application increases and safety awareness improves, there will be agrowing scope of business and an increasing number of application scenarios for the fire protection business.HikFire will remain committed to technological innovation of the fire protection industry while striving to promotethe construction of the standard system. With a philosophy of openness and cooperation, the company will establish,operate and manage intelligent fire protection IoT to provide one-stop solutions for customers and users that meetmore scenario-based fire safety needs.
5.7 Innovative Business - Rayin
Rayin is focusing on X-ray imaging technologies, dedicated to becoming a leading technology R&D,manufacturing, sales and leasing services provider of invisible light detection equipment. With long-standingexpertise in X-ray technology, AI, IoT, etc., Rayin keep enabling technology and creating value for smart securityinspection and intelligent industrial manufacturing and other fields.
5.7.1 Smart Security Inspection: Capacity Enhancement and Business Integration
Combining AI, multi-dimensional perception, AR reality and other technologies, Rayin has released the JiXian 2.0 series of security inspection products to cover all aspects of intelligent security inspection includingintelligent identification, person-luggage association, AR reality command and dispatch, and data application. Theseproducts serve as a model of intelligent, three-dimensional security inspection that integrate efficient detection,information fusion, data analysis, real-time supervision and remote command, providing point-to-point and end-to-end security inspection solutions for different scenarios such as rail transit, logistics, hospitals, schools, checkpoints,and corporate loss prevention.
1）Smart security inspection in rail transit
Rayin’s smart security inspection solution for rail transit, represented by 6550/100100 series smart securityinspection products, provides centralized image interpretation, accurate person-luggage association, off-dutydetection and other functions to reduce security labor costs, regulate the behavior of security inspectors, and improvethe detection efficiency of prohibited goods. This smart solution allows comprehensive information integration,process traceability and resource deployment for the security inspection business while ensuring the efficiency ofpassenger traffic. These products facilitate a quick transformation of rail transit security inspection towards a digitalfuture.2）Smart security inspection in logistics
Rayin’s smart logistics security solution, represented by high-speed, intelligent 140100 series of X-ray securityinspection machines, provides image-code association, intelligent image interpretation, centralized image
interpretation, automatic rejection and other functions in logistic scenarios by utilizing industrial scanning cameras,AI, multi-dimensional perception and other technologies. This smart solution aims to better detect, address and tracehazards in the package delivery process, forming a comprehensive service chain and improving the efficiency ofpackage inspection.
5.7.2 Industrial Inspection: Anything Visible Can Be Inspected in the AI Era
Combining X-ray imaging with AI analysis algorithms, Rayin provides scenario-based industrial detectionproducts and solutions that intelligently detect foreign objects and defects in the industrial production process,empowering customers through intelligent industrial applications.
Rayin industrial detection products are supported by dedicated high-performance processor and the next-generation Raytina image enhancement engine for clearer, smarter and more efficient detection. Now it has beenwidely used in product defect defection and electronic left-over materials counting in the scope of electronicmaterials detection, in foreign object detection for packaging as well as flaw detection in the field of food and druginspection, and in internal flaw detection of castings in the area of industrial flaw detection, improving yield andreducing production as well as management costs for enterprises.
5.8 Innovative Business - HikImaging
HikImaging, rooted in the medical technology industry, is committed to the research and application of multi-dimensional perception, intelligent analysis, video/audio transmission and display control and other related
technologies in medical scenarios. The company provides products, solutions and related services for customers inthe medical device industry, working with customers to promote the digital and intelligent transformation of theoperating and the clinic scenarios.
5.8.1 Rigid Endoscopic Imaging Solution for MIS (Minimally Invasive Surgery)According to Ipsos Medtech’s report "Analysis of the Overall Development Trend of National Surgery Volumefrom 2015 to 2020", the compound growth rate of MIS penetration rate per million population in China increasedby 28.5% from 2015 to 2019. As the characteristics of fast recovery and small trauma, MIS is adopted by more andmore doctors and patients. In the future, the proportion of MIS will become one of the indicators for hospitalassessment, which will further promote the development of MIS and its technological upgrading.
In 2022, HikImaging launched the MIK5 endoscopic image processing hardware platform, as well as the 4Kfluorescence solution, the first-generation 3D solution, and the 4K white light solution.
HikImaging’s 4K fluorescence solution is the first solution in China that integrates 4K, fluorescence and auto-focus technologies. Its unique multi-color gradient fluorography can meet the needs of a variety of complexsurgical applications, and the auto-focus function enables the endoscope to automatically focus on objects insteadof manual focus, greatly improving focus accuracy and ease of use. The first-generation 3D solution is the firstparallax-adjustable 3D solution in China, providing users with personalized parallax settings and improving 3Dvisual comfort. The 4K white light series is equipped with the new MIK5 image processing module, offeringexcellent imaging quality. In 2022, HikImaging saw an increase in the number of bids won from hospitals for its4K white light and fluorescence solutions, improving the core technology of domestic high-end medicalequipment.
5.8.2 Electronic Endoscopic Imaging Solution for MIP (Minimally Invasive Procedure)HikImaging offers a wide range of electronic endoscopic imaging solutions and the core products include theall-in-one dual-lens image processor, the portable image processor and electronic endoscopes. Its electronicendoscopes include four-way biliary endoscopes for gastrointestinal endoscopy, ureteroscopes and cystoscopes forurology, bronchoscopes for respiratory medicine and hysteroscopes for gynecology.The market demand for disposable electronic microscopes is huge. As the domestic and international generalsafety regulations and standards continue to tighten, there are higher requirements for safety specifications andelectromagnetic compatibility, as well as for image processors and key components of electronic microscopes.HikImaging provides electronic microscope solutions that comply with safety (GB9706.1), electromagneticcompatibility (YY0505) and electronic microscope (YY/T1587) standards, helping customers to pass registrationand verification at one time.
5.8.3 ORMS (Operation Video Management System) Solution
HikImaging combines the ORMS product line with the MIS and MIP lines to provide customers with an overallsolution for operating room scenarios. The ORMS solution includes medical displays and operating room videomanagement products.In 2022, HikImaging launched 27-inch and 32-inch surgical displays, which conform to the medical standardIEC60601. The characteristics of strong anti-interference and low latency significantly improve the display stabilityof endoscopic camera systems. The company also launched endoscopy workstation software to further improve theoverall solution for operating room scenarios.
In the past few years, the demand for teleconsultation and remote learning has increased. HikImaging haslaunched the next-generation intelligent 5G full-link 4K video management system, including video recording hosts,surgical field cameras, panoramic cameras and platform software. The system applies the mainstream real-timeaudio and video transmission technology framework to the telemedicine field. Combining an optimized underlyingtransmission engine with the company’s advantages in coding and decoding technologies, the system supportssmooth multi-party interaction of 4K endoscopic ultra-clear images in a cross-network environment and improveuser experience. Additionally, the system supports private hybrid cloud deployments and local storage of businessdata to guarantee the safety of medical data.
The development of the medical device industry is an issue that concerns not only the industry, but people’swell-being. HikImaging continues to overcome technical difficulties, helping medical device manufacturers toimprove the competitiveness of their products, and driving partners to move towards the middle- and high-end ofthe value chain. The company also endeavors to promote the expansion and allocation of high-quality medicalresources in lower-tier markets, making high-level medical services accessible to the general public.
The demand for medical devices is expected to grow in China due to policy support, increasing agingpopulation and a gradual increase in the number of patients with chronic diseases. HikImaging will continue toinvest in R&D in multi-dimensional perception, intelligent analysis, video/audio transmission-display-control, andother technical fields while accelerating product innovation and actively expanding the practical application of newtechnologies and processes in different industries to provide industry users and customers with a variety of high-performance products and solutions. In addition, the company will continuously improve the quality system, servicesystem and supply chain system, increase customer satisfaction, and cooperate with industry ecosystem partners to
drive advances in medical technology and play a role in the construction of "Healthy China".
II. Analysis of Core Competitiveness
Demands in the AIoT industry has always been fragmented and scenario based. How to meet personalizeddemands and create scenario-based solutions while maximizing business economies of scale is a challenge thatfaced by all industry participants. Hikvision has established and consistently improving the operating mechanismand organizational systems to adapt to the fragmented demands, and has continuously promoted the refinement andoptimization of baseline products and standardized businesses while meeting personalized demands. Under thestrategic traction of AIoT, Hikvision explores market opportunities with technologies, products and solutions,helping people establish perception, connection, computing and applications between people and things as well asbetween things. We firmly believe that AIoT breeds broad market opportunities, and we expend great effort pursuingscience and technology for good, in a hope to enable everyone to enjoy a brighter future.
1. Continues to invest in R&D to build a comprehensive technology and product mix
Hikvision has gradually expanded perception technology from visible light to infrared, ultraviolet, X-ray,millimeter wave and other fields, explored sound wave, ultrasonic and other fields, continuously developedperception methods such as temperature, humidity, pressure, magnetism, and further expanded upon the fusion ofmulti-dimensional perception applications.
During the reporting period, Hikvision's investment in R&D accounted for over 11.80% of its total revenue,while the number of R&D and technical service personnel continued its stable growth, accounting for nearly 50%of Hikvision's total workforce. The Company will continue to maintain high intensity of technical investment,consolidate the foundation of AIoT technology, enrich the varieties of AIoT devices, concentrate on exploring theapplication opportunities of AIoT and consolidate the market position in the field of AIoT.
2. Continues to gain insight into customer needs and improve of domestic and foreign marketing network
In China, the Company facilitated by its provincial-level and city-level business centers, forming a hierarchicalcity-based marketing system prioritized by economic development. Overseas, the Company formed a marketingnetwork architecture of headquarters-regions-countries. The headquarters is tasked with building business supportcapabilities, while regions establish operations and service systems, and countries adapt to local conditions to deeplycultivate specific local markets. Hikvision has long-term and consistent investment in the construction of marketing
system, insisting on building localized talent teams, attaching great importance to the accumulation of partners, andforming a sound marketing network for business connection, information interaction and resource optimization.Hikvision has expanded industry applications through dividing business into three business groups: publicbusiness group (PBG), enterprise business group (EBG) and SME business group (SMBG). The overseasdistribution business and industry business are complementary to one another, so Hikvision has implemented thestrategy of "One policy for one country". Through the organic synergy of industry-driven region, region-drivenindustry, marketing-driven R&D, and R&D-driven marketing helps the Company gain insight into user demands,enabling both marketing and technical R&D work to be performed in a targeted manner, thereby steadily drivingthe Company's business forward..
3. Continues to build flexible manufacturing system and ensure supply chain stabilityHikvision sells nearly 30,000 different models of hardware equipment and often encounter scattered orders,frequent changes in demands, and high requirements for the completeness of supply chain. Therefore, the Companycontinues to build flexible and efficient manufacturing system, improving its capacity for lean production andintelligent manufacturing to meet the large scale demands of multiple small-lot production. Hikvision operatesdomestic manufacturing bases in Hangzhou Tonglu, Chongqing and other places, orderly promotes the constructionand expansion for new manufacturing bases, and supports the global product supply through local factories in India,Brazil, and United Kingdom.The Company has helped over a thousand supplier partners around the world to achieve rapid development,helping them quickly iterate and improve upon raw-materials, and components and parts over the long-term, whichin turn has strengthened the stability of the overall industrial supply chain. In response to the supply chainuncertainly caused by sanctions, the Company has continued to maintain large stockpiles of raw materials.4． Continues to promote the evolution of management system and improve the operating efficiencyAs for business direction and goal setting, the Company has annually updated and applied the strategic planningand annual business planning based on the BLM strategic planning methodology, facilitating effectivecommunication and alignment of each business and functional departments to ensure clear goals and division ofresponsibilities. In terms of internal management, focusing on revolution of management, Hikvision hasimplemented over 100 management reform initiatives each year to optimize resource layout and improve overallcapabilities. Relying on the construction of IT system, the Company continuously optimized business processes andimproved efficiency of business system. Furthermore, the Company continues to refine the digital management
capabilities in many aspects including promoting the identification and management of financial risks, building adigital quality management system, improving internal control mechanisms, pursing the construction of compliancesystems, protecting innovation achievements, and etc.
5. Continues to build people-oriented organizational climate and unite outstanding talents
Hikvision considers talents as the most important resource of enterprise competitiveness, recruiting talent fromall around the world, while adhering to the employment concept of "growing together with talents". By improvingthe talent discovery and performance appraisal mechanism and identifying and assigning people through scientificapproach, the Company has boosted the morale and creativity of employees to improve organizational capabilities.The comprehensive employee reward system has been formed, which consists of compensation and benefits, equityincentives, innovative business co-investment, and etc., further developing the distribution mechanism foremployees to participate in and benefit from the Company's growth. Employees participating in equity incentivesand co-investment can obtain long-term returns through their contributions to the Company's performance,coordinating the long-term development pf business with the continuous employee growth.
III. Core Business Analysis
1. Overview
In 2022, the world is facing increased macro-economy volatility, complicated geopolitical layout and escalatedsanctions from the US and Europe, and China is facing pressures such as decreased demands, supply shock andweak expectations, which has posed great challenges to business operations. Adhering to the business philosophyof "professionalism, honesty, and integrity", Hikvision responded to the uncertainties in a proactive and prudentmanner. During the reporting period, the Company achieved a total revenue of RMB83.17 billion, representingyear-over-year growth of 2.14%, and realized a net profit attributable to shareholders of the Company of RMB12.84billion, representing year-over-year decrease of 23.59%.
(1) Sustained investment in R&D and formed a solid technical foundation
In 2022, Hikvision invested RMB9.81 billion in R&D, accounting for 11.80% of the Company’s total revenue.The Company had about 28,000 R&D and technical service personnel, upholding its commitment to significantR&D investment. Guided by the strategy, the Company continues to focus on the main businesses and persistentlyoptimizes the resource allocation based on product innovation and market opportunities.
In order to form a comprehensive and leading technology mix, the Company continues to promote thedevelopment of perception, image and optical technologies. In terms of perception technology, a full-spectrumperception technology platform including visible light, infrared, X-ray, millimeter wave and other spectral bandshas been established. Through years of cultivation, the Company currently has over 30,000 product models for sale,enabling it to better meet the fragmented demands of users. Hikvision will continue to exploit the advantages oftransforming technology to product and commercializing the products, and continue to develop new technologiesand products to lead the development of the industry.
(2) Leveraged on resource allocation to seize business opportunities and cope with the changes in theexternal environment
In 2022, the changing market demand and customer expectation was due to the changes in the global patternand the downturn of the domestic economy, which result in the deviation of the Company's resource input andoutput. In terms of the domestic businesses, taking problem solving as the guide, the Company leveraged on resourceallocation to seize business opportunities. For overseas market, the Company implemented the "One policy for onecountry" strategy and continued to penetrate into the markets of different countries to enhance the operating
efficiency.
(3) Maintained safe inventory level and ensured stable supply chain
In 2022, in face of various uncertainties, the Company worked closely with partners to expand the supply ofimportant raw material and promoted the diversification of the supply chain. Meanwhile, the Company increasedthe inventory level of important raw material, in order to ensure supply continuity. Hikvision continued to promotelean production management, improved the level of intelligent manufacturing, optimized delivery efficiency andensured the steady development of business.
(4) Supported the Company’s stable development by diversified business layout
In 2022, the three domestic business groups were under pressure due to the fluctuation of macro-economy, butthe Company expects that there will still be great growth in the future because the digital transformation promotinghigh quality development is the doubtless long-term trend. Even though the overseas market was faced by inflation,geopolitical risk and other issues, the Company's overseas market share continued to increase based on the strongsupply capacity and solid business development. The innovative businesses maintained a fast growth.
The diversified business layout is the guarantee of the Company’s stable growth. Different businesses formgood synergy and interaction, which together help the Company to achieve stability and long-term sustainabledevelopment.
(5) Optimized the marketing system and improved the operational efficiency
In 2022, the Company continued to optimize the marketing network, bringing itself closer to customers andusers. Hikvision has 32 provincial business centers and more than 300 city branches and offices nationwide, as wellas 72 overseas branches to provide products and services to more than 150 countries and regions around the world.
The Company continues to advance process change management, enhance operational efficiency and improveorganizational management capabilities, ensuring that it evolves and keeps up with the times to support theCompany's long-term business development.
2. Revenue /cost of sales and services
1) Revenue structure
Unit：RMB
| 2022 | 2021 | YoY Change (%) | |||
| Amount | Proportion to revenue | Amount | Proportion to revenue | ||
| Revenue | 83,166,321,681.14 | 100.00% | 81,420,053,539.27 | 100.00% | 2.14% |
| Classified by industry | |||||
| AIoT products and services | 83,166,321,681.14 | 100.00% | 81,420,053,539.27 | 100.00% | 2.14% |
| Classified by product | |||||
| Products and services for main business 10 | 65,873,570,961.21 | 79.21% | 65,145,683,074.74 | 80.01% | 1.12% |
| Constructions for main business | 2,222,876,059.14 | 2.67% | 4,003,746,727.88 | 4.92% | -44.48% |
| Subtotal | 68,096,447,020.35 | 81.88% | 69,149,429,802.62 | 84.93% | -1.52% |
| Smart home business | 4,077,290,933.03 | 4.90% | 3,948,427,896.29 | 4.85% | 3.26% |
| Robotic business | 3,916,176,952.59 | 4.71% | 2,761,636,666.33 | 3.39% | 41.81% |
| Thermal imaging business | 2,790,033,744.03 | 3.35% | 2,214,127,005.65 | 2.72% | 26.01% |
| Auto electronics business | 1,905,289,927.53 | 2.29% | 1,431,895,295.48 | 1.76% | 33.06% |
| Storage business | 1,616,267,518.08 | 1.94% | 1,384,585,038.78 | 1.70% | 16.73% |
| Other innovative businesses11 | 764,815,585.53 | 0.92% | 529,951,834.12 | 0.65% | 44.32% |
| Subtotal | 15,069,874,660.79 | 18.12% | 12,270,623,736.65 | 15.07% | 22.81% |
| Classified by region | |||||
| Domestic | 56,890,890,769.45 | 68.41% | 59,434,989,705.17 | 73.00% | -4.28% |
| Overseas | 26,275,430,911.69 | 31.59% | 21,985,063,834.10 | 27.00% | 19.51% |
Note: The data listed in the subtotals may differ slightly from the aggregated results of the relevant individual datadue to rounding.
Revenue structure
Main business refers to the business parts other than the innovative businesses.
Other innovative businesses include the products and services of the innovative business subsidiaries, such asHikFire, Rayin and HikImaging. Same below.
The operating income from domestic main business (including three major business groups in domestic andother products and services for main business) and overseas main business only include Hikvision’s main
Unit: RMB 100mn
| 2022 | 2021 | YoY Change (%) | 2020 | ||
| Domestic main business | PBG | 161.35 | 191.61 | -15.79% | 159.87 |
| EBG | 165.05 | 166.29 | -0.75% | 147.24 | |
| SMBG | 124.97 | 134.90 | -7.36% | 92.09 | |
| Other products and services for main business | 9.27 | 9.43 | -1.70% | 9.71 | |
| Overseas main business | Products and services for main business | 220.32 | 189.26 | 16.41% | 164.44 |
| Innovative businesses13 | 150.70 | 122.71 | 22.81% | 61.68 | |
| Total | 831.66 | 814.20 | 2.14% | 635.03 | |
2）Industries, products or regions accounting for more than 10% of the Company's revenue or operatingprofit
√ Applicable □ Inapplicable
Unit: RMB
| Revenue | Cost of sales and services | Gross margin | YoY Change (%) of revenue | YoY Change (%) of operating cost | YoY Change (%) of gross margin | |
| Classified by industry | ||||||
| AIoT products and services | 83,166,321,681.14 | 47,996,254,466.32 | 42.29% | 2.14% | 5.88% | -2.04% |
| Classified by product | ||||||
| Products and services for main business | 65,873,570,961.21 | 37,063,587,434.45 | 43.74% | 1.12% | 6.07% | -2.62% |
| Constructions for main business | 2,222,876,059.14 | 1,672,876,250.28 | 24.74% | -44.48% | -45.76% | 1.78% |
| Innovative businesses | 15,069,874,660.79 | 9,259,790,781.59 | 38.55% | 22.81% | 26.83% | -1.95% |
| Subtotal | 83,166,321,681.14 | 47,996,254,466.32 | 42.29% | 2.14% | 5.88% | -2.04% |
| Classified by region | ||||||
| Domestic | 56,890,890,769.45 | 33,093,858,433.32 | 41.83% | -4.28% | 0.27% | -2.64% |
| Overseas | 26,275,430,911.69 | 14,902,396,033.00 | 43.28% | 19.51% | 20.93% | -0.67% |
When the statistical caliber of the Company's main business data is adjusted during the reporting period, theCompany's main business data would be adjusted according to the end of the reporting period in the most recent
business's products and services, excluding revenue from innovative businesses.
Innovative businesses' revenue includes its domestic and overseas revenue
period.
□ Applicable √ Inapplicable
3）If revenue from physical products sales greater than revenue from providing services
√ Yes □ No
| Industry | Item | Unit | 2022 | 2021 | YoY Change (%) |
| AIoT products and services | Sales volume | Per unit | 202,935,192 | 194,410,923 | 4.38% |
| Output volume | Per unit | 207,698,031 | 207,744,025 | -0.02% |
Explanation on why the related data varied by more than 30% on a YoY basis
□Applicable √Inapplicable
4) Fulfillment of signed significant sales contracts and procurement contracts by the reporting period
□ Applicable √Inapplicable
5) Cost of sales and services structure
Classified by industry
Unit: RMB
| Industry | Item | 2022 | 2021 | YoY Change (%) | ||
| Amount | Proportion to cost of sales and services | Amount | Proportion to cost of sales and services | |||
| AIoT products and services | Cost of sales and services | 47,996,254,466.32 | 100.00% | 45,329,400,332.65 | 100.00% | 5.88% |
Classified by product
Unit: RMB
| Product | Item | 2022 | 2021 | YoY Change (%) | ||
| Amount | Proportion to cost of sales and services | Amount | Proportion to cost of sales and services | |||
| Products and services for main business | Cost of sales and services | 37,063,587,434.45 | 77.22% | 34,944,137,550.04 | 77.09% | 6.07% |
| Constructions for main business | Cost of sales and services | 1,672,876,250.28 | 3.49% | 3,084,364,818.86 | 6.80% | -45.76% |
| Innovative businesses | Cost of sales and services | 9,259,790,781.59 | 19.29% | 7,300,897,963.75 | 16.11% | 26.83% |
| Subtotal | Cost of sales and services | 47,996,254,466.32 | 100.00% | 45,329,400,332.65 | 100.00% | 5.88% |
6) Any change in consolidation scope during the reporting period
√Yes □ No
During the reporting period, the Company established two domestic subsidiaries and four overseas subsidiaries,acquired one subsidiary, and liquidated and cancelled three subsidiaries. All of this result in changes in the scope ofits consolidation scope. For details, please refer to changes in the consolidation scope in Note (Ⅵ) to the financialstatements.
7) Significant change or adjustment of the Company’s business, products or services during the reportingperiod:
□ Applicable √ Inapplicable
8) Major customers and suppliers:
Sales to major customers of the Company
| Sales to top five customers (RMB) | 2,024,692,757.25 |
| Total sales to top five customers as a percentage of the total sales for the year (%) | 2.43% |
| Total sales to the related parties in top five customers as a percentage of the total sales for the year (%) | 0.00% |
Information on top five customers
| No. | Name of Customer | Sales Amount (RMB) | Percentage of total sales for the year |
| 1 | First | 814,903,094.87 | 0.98% |
| 2 | Second | 333,144,012.47 | 0.40% |
| 3 | Third | 310,497,692.61 | 0.37% |
| 4 | Fourth | 300,071,290.68 | 0.36% |
| 5 | Fifth | 266,076,666.62 | 0.32% |
| Total | -- | 2,024,692,757.25 | 2.43% |
Other information of major customers
□Applicable √Inapplicable
Major suppliers of the Company
| Total purchases from top five suppliers (RMB) | 8,294,123,264.58 |
| Total purchases from top five suppliers as a percentage of the total purchases for the year (%) | 17.58% |
| Total purchases from the related parties in the top five suppliers as a percentage of the total purchases for the year (%) | 6.54% |
Information on top five suppliers of the Company
| No. | Supplier Name | Purchase Amount (RMB) | Percentage of total purchase for the year |
| 1 | First | 2,769,664,258.70 | 5.87% |
| 2 | Second | 1,719,471,215.65 | 3.65% |
| No. | Supplier Name | Purchase Amount (RMB) | Percentage of total purchase for the year |
| 3 | Third | 1,364,276,241.23 | 2.89% |
| 4 | Fourth | 1,316,427,377.50 | 2.79% |
| 5 | Fifth | 1,124,284,171.50 | 2.38% |
| Total | -- | 8,294,123,264.58 | 17.58% |
Other information of major suppliers
□ Applicable √ Inapplicable
3. Expenses
Unit: RMB
| 2022 | 2021 | YoY Change (%) | Note of significant change | |
| Selling expenses | 9,773,457,336.23 | 8,586,443,668.02 | 13.82% | Continue to increase investment in domestic and overseas marketing networks |
| Administrative expenses | 2,642,113,372.00 | 2,132,250,463.96 | 23.91% | Due to the expansion of the Company's business scale and increased number of employees |
| R&D expenses | 9,814,444,260.55 | 8,251,645,101.39 | 18.94% | Continue to increase R&D investment |
| Financial expenses | -990,401,533.32 | -133,343,257.84 | -642.75% | Affected by foreign exchange rate fluctuations, foreign exchange income increased |
4. R&D Investment
√Applicable □Inapplicable
R&D personnel of the Company
| 2022 | 2021 | Change Percentage | |
| Number of R&D staff (ppl) | 27,951 | 25,352 | 10.25% |
| R&D staff as percentage of Total headcount | 47.96% | 48.06% | -0.10% |
| Education structure of R&D staff | - | - | - |
| Bachelor degree | 17,376 | 16,305 | 6.57% |
| Master’s degree | 8,528 | 7,159 | 19.12% |
| Master’s degree or above | 162 | 129 | 25.58% |
| others | 1,885 | 1,759 | 7.16% |
| Age composition of R&D staff | - | - | - |
| Under 30 years old | 16,442 | 15,388 | 6.85% |
| 2022 | 2021 | Change Percentage | |
| 30-40 years old | 10,844 | 9,425 | 15.06% |
| Over 40 years old | 665 | 539 | 23.38% |
R&D investment of the Company
| 2022 | 2021 | Change Percentage | |
| Amount of R&D expenses (RMB) | 9,814,444,260.55 | 8,251,645,101.39 | 18.94% |
| R&D expenses as a percentage of revenue | 11.80% | 10.13% | 1.67% |
| 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% |
Reason and effect of significant change in the composition of the Company's R&D personnel
□ Applicable √ Inapplicable
Reason of significant change of total R&D expenses as a percentage of revenue as compared to last year
□ Applicable √ Inapplicable
Reason and explanation of its reasonableness of significant change of the capitalized R&D expenses
□ Applicable √ Inapplicable
5. Cash Flow
Unit: RMB
| Item | 2022 | 2021 | YoY Change (%) |
| Subtotal of cash inflows from operating activities | 92,669,076,379.69 | 90,984,859,750.26 | 1.85% |
| Subtotal of cash outflows from operating activities | 82,504,940,997.31 | 78,276,335,063.27 | 5.40% |
| Net cash flows from operating activities | 10,164,135,382.38 | 12,708,524,686.99 | -20.02% |
| Subtotal of cash inflows from investing activities | 7,422,373,113.52 | 6,370,051,168.33 | 16.52% |
| Subtotal of cash outflows from investing activities | 11,147,754,175.76 | 9,526,380,351.62 | 17.02% |
| Net cash flows from investing activities | -3,725,381,062.24 | -3,156,329,183.29 | -18.03% |
| Subtotal of cash inflows from financing activities | 14,375,530,041.46 | 6,123,487,832.52 | 134.76% |
| Subtotal of cash outflows from financing activities | 15,831,448,254.21 | 15,914,985,474.12 | -0.52% |
| Net cash flows from financing activities | -1,455,918,212.75 | -9,791,497,641.60 | 85.13% |
| Net increase in cash and cash equivalents | 5,211,446,085.37 | -420,893,449.11 | 1338.19% |
Explanation of why the related data varied significantly on a YoY basis
√ Applicable □ Inapplicable
The main reason for the change in net cash flow from operating activities was the increased expenditure on payrollduring the reporting period; the main reason for the change in net cash flow from investing activities was thepurchase of long-term assets during the reporting period; the main reason for the change in net cash flow fromfinancing activities was mainly due to the issuance of restricted shares and increase in capital absorption from thelisting of the subsidiary during the reporting period.
Explanation of reasons leading to the material difference between cash flow from operating activities during thereporting period and net profit for the year
□ Applicable √ Inapplicable
IV. Non-core Business Analysis
□Applicable √Inapplicable
V. Analysis of Assets and Liabilities
1. Material changes of asset items
Unit：RMB
| December 31, 2022 | December 31, 2021 | YoY Change (%) | Note of significant change | |||
| Amount | Percentage of total assets | Amount | Percentage of total assets | |||
| Cash and bank balances | 40,011,863,999.94 | 33.56% | 34,721,870,931.36 | 33.43% | 0.13% | No significant change |
| Accounts receivable | 29,906,294,410.40 | 25.08% | 26,174,773,100.42 | 25.20% | -0.12% | No significant change |
| Contract assets | 2,118,223,370.98 | 1.78% | 1,411,372,624.91 | 1.36% | 0.42% | Operating income of constructions increased |
| Inventories | 18,998,222,978.81 | 15.93% | 17,974,112,407.60 | 17.31% | -1.38% | No significant change |
| Long-term equity investment | 1,252,033,513.41 | 1.05% | 982,165,546.45 | 0.95% | 0.10% | Gains from investment in joint ventures and associated enterprises increased, as well as other changes in equity increased |
| Fixed assets | 8,539,842,630.68 | 7.16% | 6,695,590,671.27 | 6.45% | 0.71% | Projects of Security Industrial Base (Tonglu) - Phase II Continued Construction and Innovation Industry Park |
| December 31, 2022 | December 31, 2021 | YoY Change (%) | Note of significant change | |||
| Amount | Percentage of total assets | Amount | Percentage of total assets | |||
| transferred to fixed assets | ||||||
| Construction in process | 3,770,803,300.80 | 3.16% | 2,323,336,098.68 | 2.24% | 0.92% | Increase in construction investments on Science and Technology Parks in various locations |
| Right-of-use assets | 574,478,326.31 | 0.48% | 566,393,672.75 | 0.55% | -0.07% | No significant change |
| Lease liabilities | 277,255,924.83 | 0.23% | 317,951,879.21 | 0.31% | -0.08% | No significant change |
| Short-term borrowings | 3,343,071,972.89 | 2.80% | 4,074,962,469.97 | 3.92% | -1.12% | No significant change |
| Contract liabilities | 2,644,496,508.36 | 2.22% | 2,580,894,226.59 | 2.48% | -0.26% | No significant change |
| Long-term borrowings | 7,522,315,341.60 | 6.31% | 3,284,371,642.52 | 3.16% | 3.15% | Increase in demands for long-term working capital |
| Non-current liabilities due within one year | 868,197,272.46 | 0.73% | 596,915,360.58 | 0.57% | 0.16% | |
High proportion of overseas assets
□ Applicable √ Inapplicable
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB
| Item | Opening balance | Profit or loss from change in fair value during the period | 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 | 34,320,010.83 | -21,549,304.93 | 36,732.46 | 12,807,438.36 | ||||
| 2. Other non-current financial assets | 438,724,172.22 | -69,793,177.28 | 83,962,245.00 | 29,000,000.00 | 423,893,239.94 | |||
| 3. Receivables for financing | 1,316,035,122.06 | 168,183,136.68 | 1,484,218,258.74 | |||||
| Subtotal of financial assets | 1,789,079,305.11 | -91,342,482.21 | 36,732.46 | 83,962,245.00 | 29,000,000.00 | 168,183,136.68 | 1,920,918,937.04 | |
| Financial liabilities | 4,062,317.57 | -64,225,038.68 | 12,329.32 | 68,299,685.57 | ||||
Whether there were any material changes on the measurement attributes of major assets of the Company during the reporting period:
□ Yes √ No
3. Assets right restrictions as of the end of the reporting period
Unit: RMB
VI. Investments
1. Overview
√Applicable □ Inapplicable
2. Significant equity investment during the current reporting period
□Applicable √Inapplicable
| Item | Closing book value (RMB) | Reasons for being restricted |
| Cash and bank balances | 196,473,485.37 | Various cash deposits and other restricted funds |
Notes receivable
| Notes receivable | 1,241,880,022.19 | Endorsed to suppliers and discounted to banks |
| Receivables for financing | 10,312.23 | Pledge for issuance of bank’s acceptance bills |
| Accounts receivable | 344,585,345.01 | Pledge for long-term debts |
Contract assets
| Contract assets | 120,072,855.46 | Pledge for long-term debts |
| Fixed assets | 81,627,645.88 | Fixed assets leased out under operating leases |
| Intangible assets | 39,314,886.51 | Pledge and mortgage for long-term debts |
Other non-current assets
| Other non-current assets | 1,607,546,382.61 | Pledge for long-term debts |
| Total | 3,631,510,935.26 |
Investment in 2022 (RMB)
| Investment in 2022 (RMB) | Investment in 2021 (RMB) | YoY (%) |
| 4,686,051,570.44 | 2,534,882,042.80 | 84.86% |
3. Significant non-equity investment during the current 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 the current 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 | AIoT products and services | 528,392,746.55 | 1,424,680,236.64 | Self-financing | 72.36% | None | September 23, 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 | AIoT products and services | 399,241,430.12 | 792,552,212.28 | Specific Loan | 100.00% | None | September 23, 2017 | Announcement on Investment and Construction of Hangzhou Innovation Industry Park Project in Hangzhou (No. 2017-034) |
| Security Industrial Base (Tonglu) - Phase II Continued Construction Project | Self-built | Yes | AIoT products and services | 195,023,827.62 | 585,726,069.36 | Self-financing | 100.00% | None | October 16, 2014 | Announcement on Investment and establishment of a wholly-owned subsidiary in Tonglu and new construction of Hikvision Security Industrial Base (Tonglu) Project (2014-044) |
| 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 the current 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 | AIoT products and services | 329,131,701.34 | 510,141,028.55 | Self-financing | 22.39% | None | September 23, 2017 | Announcement on Investment and Construction of Xi’an Science and Technology Park in Xi’an (2017-031) |
| Wuhan Intelligence Industry Park Project | Self-built | Yes | AIoT products and services | 340,890,130.67 | 362,495,271.16 | Self-financing | 15.19% | None | September 23, 2017 | Announcement on Investment and Construction of Wuhan Intelligence Industry Park in Wuhan (2017-036) |
| EZVIZ Smart Home Product Industrial Base Project (Infrastructure Part) | Self-built | Yes | AIoT products and services | 186,803,117.49 | 282,125,289.82 | Self-financing/ Specific Loan | 37.47% | None | - | - |
| Security Industrial Base (Tonglu) Phase III | Self-built | Yes | AIoT products and services | 207,632,208.04 | 256,401,113.99 | Self-financing | 33.30% | None | - | - |
| Shijiazhuang Science and Technology Park Project | Self-built | Yes | AIoT products and services | 140,802,995.70 | 240,987,635.91 | Self-financing | 26.87% | None | March 22, 2018 | Announcement on Investment and Construction of Shijiazhuang Science and Technology Park in Shijiazhuang (2018-016) |
| 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 the current reporting period | Source of funds | Project schedule | Reasons for not reaching planned progress and expected benefits | Disclosure Date (if applicable) | Disclosure Index (if applicable) |
| Hefei Science and Technology Park Project | Self-built | Yes | AIoT products and services | 77,569,482.71 | 96,324,257.68 | Self-financing | 17.80% | None | - | - |
| Zhengzhou Science and Technology Park Project | Self-built | Yes | AIoT products and services | 51,865,323.17 | 93,894,775.99 | Self-financing | 19.36% | None | - | - |
| Chongqing Science and Technology Park Project-Phase Ⅲ | Self-built | Yes | AIoT products and services | 88,299,070.73 | 88,837,517.21 | Self-financing | 18.51% | None | - | - |
| EZVIZ Intelligent Manufacturing Chongqing Base Project(Infrastructure Part) | Self-built | Yes | AIoT products and services | 72,173,018.20 | 72,173,018.20 | Self-financing | 6.17% | None | August 11, 2021 | Announcement on Investment and Construction of EZVIZ Intelligent Manufacturing Chongqing Base by the holding subsidiary (2021-052) |
| Nanjing Science and Technology Park Project | Self-built | Yes | AIoT products and | 58,233,792.70 | 59,330,672.30 | Self-financing | 10.21% | 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 the current reporting period | Source of funds | Project schedule | Reasons for not reaching planned progress and expected benefits | Disclosure Date (if applicable) | Disclosure Index (if applicable) |
| services | ||||||||||
| Nanchang Science and Technology Park Project | Self-built | Yes | AIoT products and services | 49,487,530.31 | 55,299,275.67 | Self-financing | 11.26% | None | - | - |
| Total | -- | -- | -- | 2,725,546,375.35 | 4,920,968,374.76 | -- | -- | -- | -- | -- |
Note: 1. In accordance with the Company's Authorization Management System, EZVIZ Smart Home Product Industrial Base Project, Security Industrial Base (Tonglu)Phase III project, Hefei Science and Technology Park Project, Zhengzhou Science and Technology Park Project, Nanjing Science and Technology Park Project, andNanchang Science and Technology Park Project were approved by the Chairman of the Board of Directors. Chongqing Science and Technology Park Project-PhaseⅢ was approved by the Strategy Committee of the Board of Directors.
2. In accordance with the Company's Authorization Management System, new investments on fixed assets of Chengdu Science and Technology Park Project, Xi’anScience and Technology Park Project, and Shijiazhuang Science and Technology Park Project were approved by the Strategy Committee of the Board of Directors.New investments on fixed assets of Security Industrial Base (Tonglu) Phase III was approved by the Chairman of the Board of Directors.
4. Financial asset investment
(1) Securities Investments
□ Applicable √ Inapplicable
There no such case in the reporting period.
(2) Derivatives Investments
√ Applicable □ Inapplicable
1) Derivative investments for hedging purposes during the reporting period
√ Applicable □ Inapplicable
Unit: 0,000 RMB
| Type of derivatives investment | Initial investment amount | Gain or loss on changes in fair value during the reporting period | Changes in cumulative fair value included in equity | Purchased amount during the reporting period | Sold amount during the reporting period | Closing amount | Proportion of closing investment amount to the Company’s net assets at the end of the reporting period |
| Foreign exchange contract | 205,031.34 | -8,577.43 | - | 977,421.97 | - | 235,153.63 | 3.44% |
| Total | 205,031.34 | -8,577.43 | - | 977,421.97 | - | 235,153.63 | 3.44% |
| Accounting policies and specific accounting principles for hedging business during the reporting period and explanations on whether there have been significant changes from the previous reporting period | In accordance with the provisions of Accounting Standards for Business Enterprises (hereinafter referred to as "ASBE") No. 22 - Recognition and Measurement of Financial Instruments, ASBE No. 24 - Hedge Accounting, ASBE No. 37 - Presentation of Financial Instruments and other relevant regulations and guides, the Company correspondingly conducted accounting and reporting for foreign exchange derivatives business carried out. The Company conducted initial and subsequent measurements on contracts of foreign exchange derivatives by held-for-trading financial assets/ held-for-trading financial liabilities, and the fair value for held-for-trading financial assets and held-for-trading financial liabilities is determined by financial institutions based on trading data of open market. There was no significant changes from the previous reporting period. | ||||||
| Explanations on actual gain or loss during the reporting period | There was a total of RMB55.19 million actual gains during the reporting period. | ||||||
| Explanations on the effect of hedging business | The Company's purpose was to avoid and prevent risks of exchange rate or interest rate fluctuations and prohibited any speculative actions, further improving the Company's ability to cope with risks of foreign exchange fluctuations, better avoiding and preventing risks of foreign exchange rate and interest rate fluctuations, and enhancing its financial stability. | ||||||
| Capital source of derivatives investment | The Company's own fund. | ||||||
| Risk analysis and control measures (including but not | For details of the risk analysis and control measures, please refer to the Announcement on Conducting Foreign Exchange Hedging | ||||||
| Type of derivatives investment | Initial investment amount | Gain or loss on changes in fair value during the reporting period | Changes in cumulative fair value included in equity | Purchased amount during the reporting period | Sold amount during the reporting period | Closing amount | Proportion of closing investment amount to the Company’s net assets at the end of the reporting period |
| limited to, market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) of holding derivatives during the reporting period | Transactions in 2022 (NO. 2022-023) disclosed by the Company on April 16, 2022. | ||||||
| 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 carried out recognition and measurement in accordance with the Accounting Standards for Business Enterprises Article 22 - Recognition and Measurement of Financial Instruments, Chapter VII "Determination of Fair Value". During the reporting period, a total of RMB85.77 million of losses from changes in fair value of derivatives were recognized, and the fair value is determined according to the exchange rate and interest rate provided by banks and other pricing service institutions, measured and recognized on a monthly basis. | ||||||
| Prosecution (if applicable) | None | ||||||
| Announcement date for approvals of derivatives investment from the Board of Directors (if any) | April 16, 2022 | ||||||
| Announcement date for approvals of derivatives investment from the general meeting of shareholders (if any) | Inapplicable | ||||||
| Specific opinions on the Company’s derivatives investments and risk control from independent directors | The relevant approval procedures for the Company’s foreign exchange hedging business complies with the relevant national laws and regulations and the relevant provisions of the Articles of Association. The Company has established a sound process for the organization, business operation and approval for conducting foreign exchange hedging business, as well as the Foreign Exchange Hedging Management System. Under the premise of ensuring normal production and operation, the Company conducts foreign exchange hedging business, which enables the Company to avoid and prevent sharp exchange rate fluctuations and its adverse effects on the Company’s operations, and contributes to controlling foreign exchange risks. There is no damage to the interests of the Company nor of its shareholders. | ||||||
2) Derivative investments for speculative purposes during the reporting period
□Applicable √ Inapplicable
There is no derivative investments for speculative purposes during the reporting period.
5. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund.The details of the use of funds raised by EZVIZ Network, the Company's holding subsidiary, was disclosed on April 15, 2023 in Annual Report of Hangzhou EZVIZNetwork Co., Ltd Section Ⅵ (14) - Progress of the Use of Funds Raised on the website of Shanghai Stock Exchange ( www.sse.com.cn).
VII. Disposal of Significant Assets and Equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable
There is no disposal of significant asset for the Company during the current reporting period.
2. Sale of significant equity:
□ Applicable √ Inapplicable
VIII. Analysis of Major Subsidiaries and Holding Companies
Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable
| Company name | Equity acquisition and disposal method during the reporting period | Impact on overall production results |
| Zhejiang Zhiyuan Fire Safety Engineering Ltd. | Transfer of equity in cash | Business development |
| Shijiazhuang Sensortech, Technology Ltd. | Cash contribution | Business development |
| Hikvision Adriatic doo Beograd | Cash contribution | Expand overseas sales channels |
| Hikvision Technology Pte. Ltd. | Cash contribution | Expand overseas sales channels |
| Hikrobot Korea Limited | Cash contribution | Expand overseas sales channels |
| Hangzhou Xingrong Information Technology Ltd. | Cash contribution | Business development |
| Microimage Europe B.V. | Cash contribution | Expand overseas sales channels |
| Hangzhou Haikang Zhicheng Investment Development Ltd. | Liquidation & cancellation | Reorganization |
| Hangzhou Haikang Ximu Intelligent Technology Ltd. | Liquidation & cancellation | Reorganization |
| Microwave Solutions Limited | Liquidation & cancellation | Reorganization |
IX. Structural Entities Controlled by the Company
□ Applicable √ Inapplicable
X. Outlook for the Future Development of the Company
1. Development Trends for the Industry
AIoT is a fundamental capability that provides the possibility of connection and interaction between peopleand things as well as between things. This is happening right now, with a huge impact on the way decisions aremade. Boasting a trillion RMB-level market potential, AIoT will sweep across thousands of industries withunprecedented changes and it is not limited to a certain field or a certain industry, but a fundamental technologyaffecting various industries.Proceeding from industrial businesses based on large-scale scenarios, the Company has made abundantpreparations in many aspects such as supporting technologies, software and hardware products, system capabilities,business organization and marketing systems that related to AIoT. We are confident that Hikvision will be able toseize the opportunities brought by the rapid development of AIoT.
2. Development strategy of the Company
In the future, Hikvision is committed to serving various industries through its cutting-edge technologies ofmachine perception, artificial intelligence, and big data, leading the future of AIoT：Through comprehensivemachine perception technologies, we aim to help people better connect with the world around them; With a wealthof intelligent products, we strive to identify and satisfy diverse demands by delivering intelligence at your fingertips;Through innovative AIoT applications, we are dedicated to empowering every individual to enjoy a better future bybuilding an intelligent world that is more convenient, efficient and secure.
3. Key priorities in 2023
(1) Balance and optimize the input of recourses to improve the efficiency, pursing high quality growth.
(2) Maintain high investment in R&D to improve the capability of product innovation, consolidating andenhancing advantages in technology innovation.
(3) Facilitate cooperation between different business departments, as well as between main business andinnovative business, boosting the overall operational efficiency.
(4) Promote the city-based domestic marketing strategy and "One Country, One Policy" overseas marketingstrategy, focusing on core business and strengthening the regional penetration.
(5) Continue to build diversified supply system, keeping safe inventory levels and ensuring supply chainstability.XI. Reception of Activities including Research, Communication and Interviews during theReport 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 |
| January 4, 2022 – January 26, 2022 | Headquarters meeting room of the Company | Site research and telephone communication | Institutional investors | 21 investors including China Southern Fund Management-Chen Zhuo, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From January 4, 2022 – January 26, 2022 |
| February 21, | Headquarters | Site Research | Institutional | 36 investors | The Company's | CNINF, Investor Relations |
| 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 |
| 2022 –March 11, 2022 | meeting room of the Company | and telephone communication | investors | including Anxin Securities-Cheng Yuting, etc. | operating conditions and future prospects | Activity Record: From February 21, 2022 –March 11, 2022 |
| April 16, 2022 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | 688 investors including Guojin Fund Management-Li Siyuan, etc. | The Company's operations in 2021 and the first quarter of 2022 | CNINF, Investor Relations Activity Record on April 16, 2022 |
| August13, 2022 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | 694 investors including Changxin Fund Management-Lu Xiaofeng, etc. | The Company's operations in the first half of 2022 | CNINF, Investor Relations Activity Record on August 13, 2022 |
| October29, 2022 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | 489 investors including China Universal Asset Management-Zhan Jie, etc. | The Company's operations in the third quarter of 2022 | CNINF, Investor Relations Activity Record on October 29, 2022 |
Section IV Corporate Governance
I. Basic Situation of Corporate Governance
Since the inception of the Company, we have been strictly following relevant laws and regulations such as theCompany Law, Securities Law, Code of Corporate Governance of Listed Companies, Rules Governing the Listingof Shares on Shenzhen Stock Exchange, and Shenzhen Stock Exchange Listed Companies Self-RegulatorySupervision Guidelines No. 1 - Standardized Operation of Main Board Listed Companies as well as the requirementsof the regulations and regulatory documents of the regulatory authorities and continuously improving the "3+1"corporate governance structure comprising shareholders’ meeting, the Board of Directors, the Board of Supervisors,and the management taking into consideration the actual situation of the Company, and strictly follow the principleof disclosing information in a true, accurate, complete, timely and impartial manner; we have also established andimproved internal management and control system, promoted the standardized operation of the Company andensured the legitimate rights and interests of the Company and investors. During the reporting period, the basicdetails of corporate governance is as follows:
1. Shareholders and shareholders’ meeting
All shareholders of the Company have the equal status and full rights, especially small and mediumshareholders. During the reporting period, the Company held a total of 4 general meetings of shareholders, all ofwhich were convened by the Company's Board of Directors, and witnessed by lawyers on-site with legal opinionsissued. Proposals of general meetings of shareholders were reviewed in compliance with legal procedures to ensurethat all shareholders have the right to know, participate, and vote on major issues of the Company and to fullyexercise 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 illegally occupy the Company's funds or the Company illegallyprovides guarantees for controlling shareholders. The Company, with its own complete business system andmanagement capabilities, has been independent of controlling shareholders in terms of business, personnel, assets,organizations, and finances. The Company's Board of Directors, Board of Supervisors and internal institutions hasbeen operating separately and 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 exercised its authority invested by theArticles 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 committees for strategy, audit, nomination, remuneration andappraisal under it. Each committee has a clear division of labor, clear powers and responsibilities, and effectiveoperation. 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 andshareholders with a view to the interests of the Company and shareholders. The independent directors of theCompany performed their duties independently and unaffected in accordance with the Rules for IndependentDirectors of Listed Companies and other relevant regulations, attended the Company's Board of Directors andshareholders' general meetings, and expressed independent opinions on matters involving the interests of small andmedium investors such as related transactions and external guarantees, which ensured the standardized operation ofthe Company.During the reporting period, the Company convened 8 board meetings, reviewed and approved 61 proposalsincluding the Annual Report 2021 and its Summary, Proposal on Granting Restricted Shares to Grantees of 2021Restricted Stock Plan, Proposal on the Plan of Repurchase Part of the Company's Public Shares, and Proposal onthe Initial Public Share Offering and Listing on the SZSE ChiNext Market of the Subsidiary of the Company,Hangzhou Hikrobot Co., Ltd., etc.
4. Supervisors and Board of Supervisors
The Company's Board of Supervisors, operating in a normalized way, has exercised its authority invested bythe Articles of Association and relevant laws and regulations The number and composition of the Company’s Boardof Supervisors meet the requirements of laws and regulations; the Company’s supervisors have diligently performedtheir duties and obligations, and carried out supervision and inspection functions being responsible to shareholders,and supervised the Company’s financial status, operating conditions and related transactions, and the performanceof duties by directors and senior managers to fully protect the legal rights and interests of the Company and allshareholders.
During the reporting period, the Company held 7 Board of Supervisors’ meetings, reviewed and approved 37proposals including the Annual Report 2021 and its Summary, Proposal on Granting Restricted Shares to Granteesof 2021 Restricted Stock Plan, Proposal on the Plan of Repurchase Part of the Company's Public Shares, and
Proposal on the Initial Public Share Offering and Listing on the SZSE ChiNext Market of the Subsidiary of theCompany, Hangzhou Hikrobot Co., Ltd., etc.
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 schemeand the 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 Information DisclosureManagement Measures to disclose relevant information truthfully, accurately, completely, timely and impartially,and thoroughly implemented the Information Insider Registration Management System to register insiders and fileto further standardize inside information management and to ensure that all shareholders and other stakeholders ofthe Company have equal access to company information. During the reporting period, the Company disclosed 4periodic reports and 73 temporary announcements. The Company's information disclosure has been recognized bythe regulatory authorities: the Company has been rated as Level A by the Shenzhen Stock Exchange for 12consecutive years in the main board listed company information disclosure assessment.
7. Continue to improve the internal management system
In accordance with relevant laws and regulations of regulatory authorities such as the Company Law and theSecurities Law, requirements of normative documents and other internal management systems such as the Articlesof Association, the Rules of Procedure for the General Meeting of Shareholders, the Rules of Procedure for theBoard of Directors, the Authorization Management System, The Company continuously strengthened the internalmanagement, improved the governance structure, promoted the normative operation, and protected the legitimaterights and interests of the Company and shareholders.
8. Investor relations activities
The Company has proactively organized result briefing conferences and investor research activities after thedisclosure of regular reports to actively listen 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 dailywork, the Company has kept in touch with investors through multiple channels such as telephone, e-mail, andirm.cninfo.com.cn to effectively interact and communicate with investors. The Company was awarded "Top 100Main Board Listed Companies", "Top 100 Main Board Listed Companies in ESG", "Outstanding ManagementTeam for the Year" and other awards in the 16th China’s Most Valuable Listed Company Selection hosted by theSecurities Times.
Any significant incompliance for the laws, administrative regulations and the relevant regulatory documentsissued by China Securities Regulatory Commission in respect of the Company’s corporate governance:
□ Yes √ No
There is no significant incompliance for the laws, administrative regulations and the relevant regulatorydocuments issued by China Securities Regulatory Commission in respect of the Company’s corporate governance.
II. Company’s Independence in Assets, Personnel, Finances, Organizations and Businessesfrom Controlling Shareholders and Actual ControllerThe Company is completely independent in business, personnel, assets, organizations, and finances from itsshareholders. The Company has established a sound internal control system, being capable of operatingindependently with its complete and independent business.
(1) Business independence: The Company has own production, purchases and sales systems, which are
completely independent from controlling shareholders. Therefore, there is no competition among theCompany, 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 is independent from controlling shareholders, e.g. thechairman is elected through the general meetings of the Board. In addition, the general manager, seniordeputy general managers, the secretary of the Board, CFO, and other senior management personnel
of the Company are only employed and remunerated by the Company, and do not hold any positionin controlling shareholders and is not remunerated by controlling shareholders. Directors, supervisorsand senior management personnel are appointed through legal procedures strictly in accordance withrelevant regulations stipulated in Company Law and Articles of Association. There is no controllingshareholder illegal intervention in the Company’s personnel decisions in general meetings of theBoard 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 of Directors, Board of Supervisor,
management and other internal organizations operate independently, and each functional departmentis independent from controlling shareholders in duty and personnel. There is no superior-subordinaterelation between functional departments of controlling shareholders and those of the Company, whichwould have 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 a standardized financial accounting system and a financial managementsystem for the Company’s branches and subsidiaries, and there is no controlling shareholderintervention in the Company’s financial and accounting activities. The Company has maintainedaccounts with banks independently of and do not share any bank account with our ControllingShareholders. The Company has undertaken independent tax registration in accordance withapplicable laws, and paid tax independently.III. Horizontal Competition
□ Applicable √ Inapplicable
IV. Annual General Meeting and Extraordinary General Meetings Convened during theReporting Period
1. General Meetings Convened during the Reporting Period
| Meeting | Nature | Proportion of participating investors | Convened Date | Disclosure Date | Resolution of the Meeting |
| The 1st Extraordinary General Meeting of Shareholders in 2022 | Extraordinary General Meeting of Shareholders | 65.6154% | January 17, 2022 | January 18, 2022 | 4 proposals including the 2021 Restricted Stock Plan (Revised Draft) and its Summary were reviewed and voted. For details, please refer to the Company's announcement: No. 2022-002. |
| 2021Annual General Meeting | Annual General Meeting | 67.3841% | May 13, 2022 | May 14, 2022 | 12 proposals including the 2021 Annual Report and Summary were reviewed and voted. For details, please refer to the Company's announcement: No. 2022-035. |
| The 2nd Extraordinary General Meeting of Shareholders in 2022 | Extraordinary General Meeting of Shareholders | 63.6392% | October 10, 2022 | October 11, 2022 | 5 proposals including the Proposal on the Second Repurchase and Cancellation of the Granted but Unvested Restricted Shares under the 2018 Restricted Share Incentive Scheme were reviewed and voted. For details, please refer to the Company's announcement: No. 2022-056. |
| The 3rd Extraordinary General Meeting of Shareholders in 2022 | Extraordinary General Meeting of Shareholders | 64.8159% | December 26, 2022 | December 27, 2022 | 10 proposals including the Proposal on the Initial Public Share Offering and Listing on the SZSE ChiNext Market of the Subsidiary of the Company, Hangzhou Hikrobot Co., |
Ltd. were reviewed andvoted. For details, pleaserefer to the Company'sannouncement: No. 2022-073.
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with ResumedVoting Rights:
□ Applicable √ Inapplicable
V. Information about Directors, Supervisors, Senior Management
1. Basic Situation
| 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) | Other increase or decrease of shares (Share) | Shares held at the end of the Period (Shares) | Reasons for increase or decrease of shares |
| Chen Zongnian | Chairman | Incumbent | Male | 58 | June 19, 2008 | March 4, 2024 | 0 | 0 | 0 | 0 | 0 | -- |
| Qu Liyang | Director | Incumbent | Male | 59 | March 7, 2018 | March 4, 2024 | 15,750 | 0 | 0 | 0 | 15,750 | -- |
| Wang Qiuchao | Director | Incumbent | Male | 72 | March 5, 2021 | March 4, 2024 | 35,000 | 0 | 0 | 0 | 35,000 | -- |
| Hu Yangzhong | Director, General Manager (CEO) | Incumbent | Male | 58 | December 28, 2001 | March 4, 2024 | 155,246,477 | 0 | 0 | 0 | 155,246,477 | -- |
| Wu Weiqi | Director, Standing Deputy General Manager | Incumbent | Male | 59 | March 1, 2003 | March 4, 2024 | 8,631,089 | 0 | 0 | 0 | 8,631,089 | -- |
| Wu Xiaobo | Independent Director | Incumbent | Male | 63 | March 5, 2021 | March 4, 2024 | 0 | 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) | Other increase or decrease of shares (Share) | Shares held at the end of the Period (Shares) | Reasons for increase or decrease of shares |
| Hu Ruimin | Independent Director | Incumbent | Male | 59 | March 5, 2021 | March 4, 2024 | 0 | 0 | 0 | 0 | 0 | -- |
| Li Shuhua | Independent Director | Incumbent | Male | 52 | March 5, 2021 | March 4, 2024 | 0 | 0 | 0 | 0 | 0 | -- |
| Guan Qingyou | Independent Director | Incumbent | Male | 46 | March 5, 2021 | March 4, 2024 | 0 | 0 | 0 | 0 | 0 | -- |
| Hong Tianfeng | Supervisor Chairman | Incumbent | Male | 57 | March 5, 2021 | March 4, 2024 | 0 | 0 | 0 | 0 | 0 | -- |
| Xu Lirong | Supervisor | Incumbent | Male | 60 | March 21, 2018 | March 4, 2024 | 303,000 | 0 | 0 | 0 | 303,000 | -- |
| Lu Jianzhong | Supervisor | Incumbent | Male | 69 | March 5, 2021 | March 4, 2024 | 0 | 0 | 0 | 0 | 0 | -- |
| He Hongli | Senior Deputy General Manager | Incumbent | Female | 50 | December 18, 2005 | March 11, 2024 | 331,500 | 0 | 0 | 0 | 331,500 | -- |
| Cai Changyang | Senior Deputy General Manager | Incumbent | Male | 52 | April 8, 2016 | March 11, 2024 | 109,500 | 0 | 0 | 0 | 109,500 | -- |
| 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) | Other increase or decrease of shares (Share) | Shares held at the end of the Period (Shares) | Reasons for increase or decrease of shares |
| Xu Ximing | Senior Deputy General Manager | Incumbent | Male | 50 | October 11, 2016 | March 11, 2024 | 197,000 | 0 | 0 | 90,000 | 287,000 | The grant of 2021 restricted shares |
| Bi Huijuan | Senior Deputy General Manager | Incumbent | Female | 52 | October 11, 2016 | March 11, 2024 | 273,000 | 0 | 0 | 0 | 273,000 | -- |
| Pu Shiliang | Senior Deputy General Manager | Incumbent | Male | 46 | March 21, 2018 | March 11, 2024 | 295,900 | 0 | 0 | 90,000 | 385,900 | The grant of 2021 restricted shares |
| Jin Duo | Senior Deputy General Manager | Incumbent | Male | 58 | March 10, 2015 | March 11, 2024 | 109,500 | 0 | 0 | 0 | 109,500 | -- |
| Jin Yan | Senior Deputy General Manager, Person in charge of finance | Incumbent | Female | 44 | July 22, 2015 | March 11, 2024 | 284,000 | 0 | 0 | 80,000 | 364,000 | The grant of 2021 restricted shares |
| Huang Fanghong | Senior Deputy General | Incumbent | Female | 41 | April 8, 2016 | March 11, 2024 | 402,500 | 0 | 0 | 80,000 | 482,500 | The grant of 2021 restricted shares |
| 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) | Other increase or decrease of shares (Share) | Shares held at the end of the Period (Shares) | Reasons for increase or decrease of shares |
| Manager, Board Secretary | ||||||||||||
| Chen Junke | Senior Deputy General Manager | Incumbent | Male | 52 | March 21, 2018 | March 11, 2024 | 0 | 0 | 0 | 0 | 0 | -- |
| Xu Peng | Senior Deputy General Manager | Incumbent | Male | 47 | March 12, 2021 | March 11, 2024 | 77,244 | 0 | 0 | 70,000 | 147,244 | The grant of 2021 restricted shares |
| Guo Xudong | Senior Deputy General Manager | Incumbent | Male | 51 | March 12, 2021 | March 11, 2024 | 44,280 | 0 | 0 | 0 | 44,280 | -- |
| Total | -- | -- | -- | -- | -- | -- | 166,355,740 | 0 | 0 | 410,000 | 166,765,740 | -- |
Note:
(1) Number of shares held at the beginning of the period, shares increased during the period, shares decreased during the period, other increase or decrease of shares,and shares held at the end of the period for directors, supervisors, and senior management personnel above are all shares directly held by them accordingly, includingrestricted shares.
Any resignation of directors or supervisors and dismissals of senior management personnel during their term of office during the reporting period.
□Yes √No
Change of directors, supervisors and senior management personnel
□Applicable √Inapplicable
2. 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 deputygeneral manager of Shenzhen Gao Ke Run Electronics, director and general manager of Zhejiang HaikangInformation 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
ndResearch Institute at China Electronics Technology Group Corporation(hereinafter referred to as "52
nd
Research Institute"). Chen currently serves as the Chairman of China ElectronicsTechnology HIK Group Co., Ltd. (CETHIK), the Chairman of Phoenix Optics Co., Ltd. and the Chairman of theCompany.Mr. Qu Liyang (屈力扬): Born in 1964, bachelor degree of engineering, researcher-level senior engineer. Heserved as the director, deputy director, party secretary and deputy director of the 52
ndResearch Institute, andChairman 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. Wang Qiuchao (王秋潮): Born in 1951, master degree in law. Wang served as director of Zhejiang T&C LawFirm (浙江天册律师事务所), Chairman of the Zhejiang Lawyers Association (浙江省律师协会) , vice-presidentof the Zhejiang Law Society (浙江省法学会), and a supervisor of the Company. Wang currently serves as honorarypartner of Zhejiang T&C Law Firm, arbitrator of the China International Economic and Trade ArbitrationCommission (中国国际经济贸易仲裁委员会, "CIETAC") , an arbitrator of Shanghai International ArbitrationCenter (上海国际仲裁中心) and Shenzhen International Economic and Trade Arbitration Commission (深圳国际仲裁中心), and a director of the Company.Mr. Hu Yangzhong (胡扬忠): Born in 1965, master degree of engineering, senior research engineer. He served asan engineer of the 52
ndResearch Institute from June 1989 to December 2001. He has been appointed as a directorof the Company and general manager of the Company since December 2001. Hu currently serves as a director andthe general manager of the Company.Mr. Wu Weiqi (邬伟琪): Born in 1964, bachelor degree of engineering, senior engineer. Wu held various positionsat the 52
ndResearch Institute, including technician, engineer associate, engineer and senior engineer, from July 1986to December 2001. Since November 2001, He has been appointed as a deputy general manager, a standing deputy
general manager, and a director of Hikvision. Wu currently serves as a director and standing deputy general managerof the Company.Mr. Wu Xiaobo (吴晓波): Born in 1960, a PhD of business administration, Professor, Ph.D. Tutor. In February1982, he joined the Energy Saving Office of the Ministry of Forestry, Zhejiang Energy Conservation TechnologyService Center, and joined the School of Management of Zhejiang University in July 1992, successively served asan executive vice dean and dean. He is currently the Director of the Department of Social Sciences of ZhejiangUniversity, the director of the National Philosophy and Social Science Innovation Base - Research on InnovationManagement and Sustainable Competitiveness of Zhejiang University, the Chinese director of the Joint ResearchCenter for Global Manufacturing and Innovation Management of Zhejiang University-Cambridge University, theco-director of the Ruihua Institute of Innovation Management, and an independent director of the Company.Mr. Hu Ruimin (胡瑞敏): Born in 1964, a PhD in engineering, Second-level Professor, doctoral tutor, Luojiadistinguished scholar, recipient of Special Government Grants from the State Council, Senior Member of IEEE(Institute of Electrical and Electronics Engineers), fellow of China Institute of Communications, distinguishedmember of China Computer Federation. He has successively served as vice chairman of the Academic Committeeof Wuhan University, director of the National Multimedia Software Engineering Technology Research Center,director of Hubei Provincial Key Laboratory of Multimedia Network Communication Engineering, First ExecutiveDean of National Cyber Security College and Dean of School of Computer Science of Wuhan University. FromJanuary 2010 to January 2016, he served as the first dean of Hikvision Research Institute. He is currently a professorof Wuhan University and an independent director of the Company.Mr. Li Shuhua (李树华)：Born in 1971, a PhD in accounting, non-practicing member of the China Institute ofCertified Public Accountants, National-level candidates for the New Century Hundreds and Thousands of TalentsProject, National Leading Talents in Accounting, and National Leading Talents in Shenzhen. He has successivelyserved as deputy director of the Audit Division of the Accounting Department of the China Securities RegulatoryCommission (presiding), deputy director of the General Office (presiding), director of the Financial and BudgetManagement Department and director of the General Office, a member of the Executive Committee and ChiefFinancial Officer, Chief Risk Officer and Chief Compliance Officer of China Galaxy Securities Co., Ltd. Heconcurrently served as a PE professor and master’s tutor at the National Accounting Institute (Xiamen), PekingUniversity, Shanghai Institute of Advanced Finance, Shanghai Jiaotong University, and Tsinghua University. He iscurrently the managing partner of Shenzhen Oriental Fortune Capital Investment Management Co., Ltd. (OFC),
Chairman of Changzhou NRB Corporation (常州光洋軸承股份有限公司), and an independent director of theCompany.Mr. Guan Qingyou (管清友): Born in 1977, a holder of Ph.D. in economics, Young Economist. He hassuccessively served as the former vice president of Minsheng Securities and the president of the research institute;He is currently the President and Chief Economist of the Institute of Finance, Vice President of the China PrivateEconomic Research Association, Professor of the School of Economics of Hainan University, Chief Economist ofZhongguancun Private Equity & Venture Capital Association (ZVCA) and Guangdong Province Venture CapitalAssociation, and an independent director of the Company.
2) Supervisors
Mr. Hong Tianfeng (洪天峰): Born in 1966, master degree in engineering. Hong was an engineer in NanjingUniversity of Posts and Telecommunication (南京邮电大学) from July 1990 to June 1993; He served as anexecutive deputy general manager, chief executive of Operation and Delivery, chairman of investment decisioncommittee, and vice chairman of Huawei Technologies Co., Ltd. (华为技术有限公司) from July 1993 to September2011. Hong has served as an independent director of the Company. Hong currently serves as a managing partner ofSuzhou 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 Investment Management Co., Ltd. (上海方广投资管理有限公司), and supervisor of the Company.Mr. Lu Jianzhong (陆建忠): Born in 1954, holds bachelor degree in economics and CPA certificate. Lu served asa lecturer and an associate professor of finance and accounting 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 auditing department ofPricewaterhouseCoopers, from October 1997 to June 2012; he was a chartered accountant of Shanghai De’anCertified Public Accountants LLP (上海德安会计师事务所) from July 2012 to July 2013; he was a charteredaccountant 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 ZhongxinghuaCertificated Public Accountants LLP (中兴华会计师事务所) from August 2014 to January 2016; he was achartered accountant of Dahua Certificated Public Accountants LLP (大华会计师事务所) from January 2016 toDecember 2021. Lu has served as an independent director of Hikvision. Lu currently serves as a chartered
accountant of Zhongxinghua Certificated Public Accountants LLP Shanghai Branch, and a supervisor of theCompany.Mr. Xu Lirong (徐礼荣): Born in 1963, master degree of engineering, senior engineer. In January 2002, he joinedHikvision and served as manager of development division 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 currently the employeerepresentative 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 inDecember 2001 and served as an assistant to the general manager and a deputy general manager. Ms. He currentlyserves as a senior deputy general manager of the Company.Mr. Cai Changyang (蔡昶阳): Born in 1971, bachelor degree in engineering. He joined Hikvision in 2004, andheld various positions of the Company, including general manager of Beijing branch, director for government andenterprise corporation department, director of investment department, director of strategy and marketing department,and a deputy general manager of the Company. Mr. Cai currently serves as senior deputy general manager of theCompany.Mr. Xu Ximing (徐习明): Born in 1973, bachelor degree in engineering. From July 1996 to September 2016, heheld 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, and served as adeputy general manager of the Company. Mr. Xu currently serves as a senior deputy general manager of theCompany.Ms. Bi Huijuan (毕会娟): Born in 1971, PhD in engineering, senior research engineer. From April 1999 to August2016, 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, vice chiefengineer, and deputy director. She joined Hikvision in August 2016, and served as a deputy general manager of theCompany. Ms. Bi currently serves as a senior deputy general manager of the Company.
Mr. Pu Shiliang (浦世亮): Born in 1977, doctor of engineering, a senior engineer. He joined Hikvision in April2006 and held various positions in the Company, including R&D engineer, R&D manager, R&D director, dean ofthe R&D institute, and chief expert. He currently serves as a senior deputy general manager of the Company.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 engineer of the 52
nd
Research Institute from July 1986 to June 2004.He joined Hikvision in July 2004 and served as general manager of Hangzhou Branch, and a deputy general managerof 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 andheld various positions at the Company, including financial manager, the general manager of the FinancialManagement Center, and a deputy general manager and the person in charge of finance and accounting. Ms. Jincurrently serves as a senior deputy general manager and the person in charge of finance and accounting of theCompany.Ms. Huang Fanghong (黄方红): Born in 1982, bachelor degree in law. She joined Hikvision in June 2009 andheld various positions at the Company including legal department manager, internal audit manager, internal controldirector, and a deputy general manager and the board secretary. Ms. Huang currently serves as a senior deputygeneral manager, and board secretary of the Company.Mr. Chen Junke (陈军科): Born in 1971, bachelor degree in engineering, senior engineer. Chen held variouspositions in the 52
ndResearch Institute from 1994 to 2001, 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) Divisionof the Technology Management Center, general manager of supply chain management center, employeerepresentative supervisor. Chen currently serves 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 successivelyserved as an assistant engineer and engineer of 52
nd
Research Institute, and in 2004, he joined Hikvision, where heserved as camera research and development manager, research and development director, product director, generalmanager of front-end product business, and deputy general manager of the Company. He is currently the seniordeputy general manager of the Company.Mr. Guo Xudong (郭旭东): Born in 1972, bachelor of engineering. In July 2002, he joined Hikvision, andsuccessively served as general manager of Shenzhen Branch, marketing director of domestic marketing center anddeputy general manager of domestic marketing center. He is currently the senior deputy general manager of theCompany.
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 | April 2022 | N |
| Xu Lirong | China Electronics Technology HIK Group Ltd. | Supervisor, Member of Commission for Discipline Inspection | December 2013 | -- | N |
Positions held in other entities
√Applicable □ Inapplicable
| 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 AIoT Technology Magazine | Legal Representative | May 2009 | N | |
| Cheng Zongnian | Phoenix Optics Ltd. | Chairman | December 2019 | N | |
| Wang Qiuchao | Zhejiang T&C Law Firm | Partner | June 1986 | Y | |
| Wang Qiuchao | Shanghai Kehui Value Investment Management Ltd. | Director | July 2009 | N | |
| Wang Qiuchao | Yalongxing Investment Development Ltd. | Director | February 2012 | N | |
| Wang Qiuchao | Botsy Technology Co., Ltd | Independent Director | June 2020 | Y | |
| Wu Weiqi | Hangzhou Pukang Equity Investment Partnership (Limited Partnership) | Executive Partner | April 2011 | N | |
| Wu Weiqi | Wuhu Sensortech Intelligent Technology Ltd. | Director | January 2017 | February 2023 | N |
| Wu Weiqi | Hangzhou Qianmo Tongzhou Equity Investment Partnership (Limited Partnership) | Executive Partner | July 2021 | December 2022 | N |
| Wu Xiaobo | Shanghai Yirui Management Consultants Ltd. | Director | April 2004 | 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 |
| Wu Xiaobo | Hangzhou Co-Rui Enterprise Management Consulting Ltd. | Director | April 2011 | N | |
| Wu Xiaobo | Ningbo Industrial Internet Research Institute Ltd. | Independent director | May 2018 | Y | |
| Wu Xiaobo | Eddy Co., Ltd. | Independent director | August 2018 | Y | |
| Wu Xiaobo | Zhongliang Holdings Group Ltd. | Independent director | June 2019 | Y | |
| Wu Xiaobo | Ruihua Innovation Management Research Institute (Hangzhou) Ltd. | Director | November 2019 | N | |
| Wu Xiaobo | UCloud Technology Co., Ltd. | Independent director | June 2020 | Y | |
| Wu Xiaobo | Zhongtian Holding Group Ltd. | Independent director | July 2021 | Y | |
| Li Shuhua | Xi'an ShaanGu Power Co., Ltd. | Independent director | May 2018 | Y | |
| Li Shuhua | Shenzhen Dongfang Fuhai Investment Management Co., Ltd. | Managing Partner | July 2018 | Y | |
| Li Shuhua | Luoyang Yuchuan Yuye Group Co., Ltd. | Independent director | August 2018 | Y | |
| Li Shuhua | Changzhou Guangyang Holdings Ltd. | Chairman & CEO | August 2019 | N | |
| Li Shuhua | Changzhou NRB Co., Ltd. | Chairman | October 2019 | Y | |
| Li Shuhua | Weihai Shiyi Electronics Ltd. | Chairman | December 2020 | N | |
| Li Shuhua | Juzhengyuan Co., Ltd. | Independent director | December 2020 | Y | |
| Li Shuhua | Guangdong Shengyi Technology Co., Ltd. | Independent director | October 2021 | Y | |
| Li Shuhua | Shenzhen Yuanzhi Fuhai Investment Management Ltd. | Chairman of the Board of Supervisors | July 2018 | November 2022 | N |
| Guan Qingyou | Beijing Rushi Chengjin Information Consulting Services Ltd. | CEO | October 2016 | 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 |
| Guan Qingyou | Beijing Rushiwo Research Information Consulting Service Ltd. | Executive Director & CEO | December 2017 | Y | |
| Guan Qingyou | Midea Group Co., Ltd. | Independent director | August 2018 | Y | |
| Guan Qingyou | Beijing Xincai Zhibei Information Technology Ltd. | Supervisor | October 2018 | N | |
| Guan Qingyou | South China Futures Co., Ltd. | Independent director | March 2019 | Y | |
| Guan Qingyou | Beijing Film Spectrum Technology Co., Ltd. | Independent director | March 2019 | Y | |
| Guan Qingyou | Shanxi International Trust Co., Ltd. | Independent director | July 2019 | Y | |
| Guan Qingyou | Beijing Rushiwo Research Institute of Science and Technology Ltd. | Executive Director & CEO | May 2020 | N | |
| Guan Qingyou | Beijing Rushi Wancheng Technology Development Ltd. | Executive Director & CEO | June 2020 | N | |
| Guan Qingyou | Hainan Wuyongtang Information Technology Ltd. | Executive Director & CEO | July 2020 | N | |
| Guan Qingyou | Beijing Yaocen Yuanmu Information Technology Ltd. | Executive Director & CEO | July 2020 | N | |
| Guan Qingyou | Beijing Ruoan Jiatai Technology Ltd. | Executive Director r& CEO | December 2020 | N | |
| Guan Qingyou | Zhongchancheng Investment (Shenzhen) Ltd. | Supervisor | March 2021 | N | |
| Guan Qingyou | Qingdao Rushiwo Research Investment Management Ltd. | Supervisor | November 2021 | N | |
| Guan Qingyou | Shenzhen Jiuzhoutongyu Technology Ltd. | Supervisor | January 2022 | N | |
| Guan Qingyou | Beijing Minjin Information Consulting Services Ltd. | Supervisor | September 2017 | September 2022 | N |
| Guan Qingyou | Shandong Expressway Road and Bridge Group Ltd. | Independent director | January 2021 | May 2022 | Y |
| Hong Tianfeng | Shanghai Fangguang | Executive Director | February 2012 | 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 |
| Investment Management Ltd. | |||||
| Hong Tianfeng | Shanghai Fangguang Venture Investment Management Partnership Enterprise (Limited Partnership) | Managing Partner | June 2012 | N | |
| Hong Tianfeng | Shanghai Fangguang Venture Investment Partnership Enterprise (Limited Partnership) | Managing Partner | August 2012 | 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 | Shenzhen Yunzhixun Network Technology Ltd. | Director | May 2014 | N | |
| Hong Tianfeng | Shenzhen Fangguang Enterprise Management Consulting Ltd. | Executive Director & CEO | May 2016 | N | |
| Hong Tianfeng | Suzhou Fangguang Venture Investment Phase II Partnership Enterprise (Limited Partnership) | Managing Partner | July 2016 | N | |
| Hong Tianfeng | Shanghai Fangguang Erqi Venture Investment Partnership Enterprise (Limited Partnership) | Managing Partner | September 2016 | N | |
| Hong Tianfeng | Zhongwei Dahe Cloud Connection Network Technology Ltd. | Director | November 2016 | N | |
| Hong Tianfeng | CETC Huayun Information Technology Ltd. | Director | March 2017 | N | |
| Hong Tianfeng | Shenzhen YingFeiYuan Technology Ltd. | Director | October 2017 | 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 |
| Hong Tianfeng | Beijing ZhiZhangYi Sicence and Technology Ltd. | Director | January 2018 | N | |
| Hong Tianfeng | Shenzhen Chip and Semi-conductor Technology Ltd. | Director | February 2018 | N | |
| Hong Tianfeng | Shanghai Daxian Intelligent Science and Technology Ltd. | Director | June 2018 | N | |
| Hong Tianfeng | Quanzhi Technology (Hangzhou) Ltd. | Director | June2020 | N | |
| Hong Tianfeng | Shanghai Fanglan Enterprise Management Center | Executive Director & CEO | March 2021 | N | |
| Hong Tianfeng | Shanghai Fangguang Enterprise Management Consulting Ltd. | Executive Director | November 2022 | N | |
| Hong Tianfeng | Sannuo Biology Sensor Co., Ltd. | Director | September 2013 | January 2023 | Y |
| Hong Tianfeng | Shenzhen DongFengMingTu Enterprise Management Ltd. | Supervisor | August 2016 | July 2022 | N |
| Hong Tianfeng | Guangzhou Smart Software Ltd. | Director | March 2018 | June 2022 | N |
| Hong Tianfeng | Shenzhen Zhongtu Instrument Co., Ltd. | Director | February 2021 | April 2022 | Y |
| Lu Jianzhong | Huatai Baoxing Fund Management Ltd. | Director | July 2016 | Y | |
| Lu Jianzhong | COSCO Maritime Transport Development Co., Ltd. | Independent Director | January 2018 | Y | |
| Lu Jianzhong | Shanghai Xinnanyang Angli Education Technology Co., Ltd. | Independent Director | January 2019 | Y | |
| Lu Jianzhong | INESA (Group) Co., Ltd. | Director | December 2019 | N | |
| Lu Jianzhong | Shanghai Vico Precision Mold &Plastics Co., Ltd. | Director | May 2021 | Y | |
| Lu Jianzhong | BOMESC Offshore Engineering Co., Ltd. | Independent Director | December 2021 | Y | |
| Lu Jianzhong | Zhongxinghua Certified Public Accountants LLP (Shanghai Branch) | Chartered Accountant | January 2022 | 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 |
| Lu Jianzhong | Bank of Tianjin Co., Ltd. | Independent Director | August 2022 | Y | |
| Lu Jianzhong | Antai College of Economics and Management, SJTU | Corporate mentor | December 2013 | June 2022 | N |
| Xu Ximing | Shenzhen Wangyu Security Service Science and Technology Ltd. | Director | November 2019 | N | |
| Xu Ximing | Chengdu Guoshengtianfeng Network Technology Ltd. | Director | August 2020 | N | |
| Xu Ximing | Hangzhou Confirmware Technology Co., Ltd. | Director | August 2021 | N | |
| Jin Duo | Zhejiang Haishi Huayue Digital Technology Ltd | Chairman | January 2020 | N | |
| Xu Peng | Maxio Technology (Hangzhou) Co., Ltd. | Director | December 2021 | N | |
| Guo Xudong | Zhejiang Fast Line data fusion Information Technology Co., Ltd. | Director | January 2021 | N |
Incumbent and off-office directors, supervisors and senior management personnel during the reporting period thathave been imposed administrative penalties by the CSRC during the last three years.
□ Applicable √ Inapplicable
3. Remuneration of Directors, Supervisors and Senior Management PersonnelThe decision-making program, determination basis and actual remuneration payment of directors, supervisors andsenior management personnel:
The remuneration of directors, supervisors and senior management personnel will be received preliminarily bythe Remuneration and Appraisal Committee of the Board, among them, remuneration of independent directorsand external supervisors would be further reviewed and approved by general meeting of shareholders. As for thosedirectors (exclude independent directors), supervisors (exclude external supervisors) and senior managementpersonnel who receive remuneration from the Company directly, they will receive remuneration according to theCompany’s current Salary System and Performance Appraisal Schemes.Remuneration of directors, supervisors and senior management personnel
Unit: RMB 0,000
| Name | Title | Gender | Age | Tenure status | Total remuneration from the Company (RMB'0,000) | Remuneration from related parties (Y/N) |
| Chen Zongnian | Chairman | M | 58 | Incumbent | 0 | Y |
| Name | Title | Gender | Age | Tenure status | Total remuneration from the Company (RMB'0,000) | Remuneration from related parties (Y/N) |
| Qu Liyang | Director | M | 59 | Incumbent | 0 | Y |
| Wang Qiuchao | Director | M | 72 | Incumbent | 30.00 | N |
| Hu Yangzhong | Director, CEO | M | 58 | Incumbent | 243.54 | N |
| Wu Weiqi | Director, Standing Deputy General Manager | M | 59 | Incumbent | 266.37 | N |
| Wu Xiaobo | Independent Director | M | 63 | Incumbent | 30.00 | N |
| Hu Ruimin | Independent Director | M | 59 | Incumbent | 30.00 | N |
| Li Shuhua | Independent Director | M | 52 | Incumbent | 30.00 | N |
| Guan Qingyou | Independent Director | M | 46 | Incumbent | 30.00 | N |
| Hong Tianfeng | Supervisor Chairman | M | 57 | Incumbent | 20.00 | N |
| Lu Jianzhong | Supervisor | M | 69 | Incumbent | 20.00 | N |
| Xu Lirong | Supervisor | M | 60 | Incumbent | 148.08 | N |
| He Hongli | Senior Deputy General Manager | F | 50 | Incumbent | 262.04 | N |
| Cai Changyang | Senior Deputy General Manager | M | 52 | Incumbent | 252.77 | N |
| Xu Ximing | Senior Deputy General Manager | M | 50 | Incumbent | 370.74 | N |
| Bi Huijuan | Senior Deputy General Manager | F | 52 | Incumbent | 357.56 | N |
| Pu Shiliang | Senior Deputy General Manager | M | 46 | Incumbent | 270.25 | N |
| Jin duo | Senior Deputy General Manager | M | 58 | Incumbent | 268.97 | N |
| Jin Yan | Senior Deputy General Manager, person in charge of finance and accounting | F | 44 | Incumbent | 245.82 | N |
| Huang Fanghong | Senior Deputy General Manager Board Secretary | F | 41 | Incumbent | 240.60 | N |
| Chen Junke | Senior Deputy General Manager | M | 52 | Incumbent | 248.75 | N |
| Xu Peng | Senior Deputy General Manager | M | 47 | Incumbent | 274.61 | N |
| Guo Xudong | Senior Deputy General Manager | M | 51 | Incumbent | 243.57 | N |
| Total | -- | -- | -- | -- | 3,883.67 | -- |
Note: During the reporting period, the remuneration of incumbent directors, supervisors and senior managementare the remuneration for the period in which they held their positions.
VI. Performance of Duties by Directors during the Reporting Period
1. The Board of Directors during the Reporting Period
| Meeting Session | Convening Date | Disclosure Date | Meeting Resolutions |
| The 8th meeting of the 5th session of the Board | January 18, 2022 | January 19, 2022 | 7 proposals were considered and approved at the meeting, including the Proposal on Adjusting Grantees and Number of Granted Shares of Restricted Share Plan. For details, please refer to the Company’s announcement: No. 2022-004. |
| The 9th meeting of the 5th session of the Board | April 14, 2022 | April 16, 2022 | 21 proposals were considered and approved at the meeting, including the 2021 Annual Report and Its Summary. For details, please refer to the Company’s announcement: No. 2022-018. |
| The 10th meeting of the 5th session of the Board | May 5, 2022 | May 6, 2022 | 3 proposals were considered and approved at the meeting, including the Proposal on Vesting Conditional Achievements for the Second Vesting Period of the 2018 Restricted Share Incentive Scheme. For details, please refer to the Company’s announcement: No. 2022-031. |
| The 11th meeting of the 5th session of the Board | June 10, 2022 | June 11, 2022 | 10 proposals were considered and approved at the meeting, including the Proposal on the Initial Public Share Offering and Listing on the SZSE ChiNext Market of the Subsidiary of the Company, Hangzhou Hikrobot Technology Ltd. For details, please refer to the Company’s announcement: No. 2022-039. |
| The 12th meeting of the 5th session of the Board | August 12, 2022 | August 13, 2022 | 4 proposals were considered and approved at the meeting, including the 2022 Half Year Report and Its Summary. For details, please refer to the Company’s announcement: No. 2022-045. |
| The 13th meeting of the 5th session of the Board | September 15, 2022 | September 16, 2022 | 4 proposals were considered and approved at the meeting, including the Proposal on the Plan of Repurchase Part of the Company's Public Shares. For details, please refer to the Company’s announcement: No. 2022-049. |
| The 14th meeting of the 5th session | October 28, 2022 | October 29, 2022 | 1 proposal was considered and approved at the |
| Meeting Session | Convening Date | Disclosure Date | Meeting Resolutions |
| of the Board | meeting, the 2022Q3 Report and Its Summary. For details, please refer to the Company’s announcement: No. 2022-060. | ||
| The 15th meeting of the 5th session of the Board | December 9, 2022 | December 10, 2022 | 11 proposals were considered and approved at the meeting, including the Proposal on the Initial Public Share Offering and Listing on the SZSE ChiNext Market of the Subsidiary of the Company, Hangzhou Hikrobot Co., Ltd. For details, please refer to the Company’s announcement: No. 2022-067. |
2. Attendance of Directors in Board Meetings and General Meetings
| Attendance of directors in board meetings and general meetings | |||||||
| Name of 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) |
| Chen Zongnian | 8 | 1 | 7 | 0 | 0 | N | 3 |
| Qu Liyang | 8 | 1 | 7 | 0 | 0 | N | 1 |
| Wang Qiuchao | 8 | 1 | 7 | 0 | 0 | N | 2 |
| Hu Yangzhong | 8 | 1 | 7 | 0 | 0 | N | 4 |
| Wu Weiqi | 8 | 1 | 7 | 0 | 0 | N | 4 |
| Wu Xiaobo | 8 | 1 | 7 | 0 | 0 | N | 2 |
| Hu Ruimin | 8 | 1 | 7 | 0 | 0 | N | 2 |
| Li Shuhua | 8 | 1 | 7 | 0 | 0 | N | 2 |
| Guan Qingyou | 8 | 1 | 7 | 0 | 0 | N | 1 |
3. Objections from Directors on Related Issues of the Company
Were there any objections on related issues of the Company from directors?
□ Yes √ No
During the reporting period, there is no objections on related issues of the Company from directors.
4. Other Details about the Performance of Duties by Directors
Were there any suggestions from directors accepted by the Company?
√ Yes □ No
Details: During the Reporting Period, directors strictly followed related rules, regulations, including CompanyLaw, Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Shenzhen Stock Exchange ListedCompanies Self-Regulatory Supervision Guidelines No. 1 - Standardized Operation of Main Board ListedCompanies and Articles of Association. They focused on the Company operation, carefully review the Company'srelevant meeting materials, reviewed and approved a number of board resolutions, and have no objection to all theproposals; At the same time, the directors of the Company put forward relevant constructive suggestions based ontheir professional abilities and the actual situation of the Company, which had a positive impact on the standardizedoperation of the Company and fulfilled their duties as directors.The Company’s independent directors strictly followed related rules, regulations, including Rules forIndependent Directors of Listed Companies and Regulations on Independent Directors of the Company. Theycarried out their duties independently and imparted considerable professional advice on improving the Company’ssystems, daily operations and decision making. They provided objective and fair advices during the reporting periodand played an effective role in improving the Company supervisory systems and protecting the legal rights of theCompany, the shareholders, especially public shareholders as a whole. For details, please refer to IndependentDirectors’ 2022 Debriefings disclosed on www.cninfo.com.cn.
VII. The Special Committees under the Board during the Reporting Period
| Committee Name | Members | Number of meetings held | Convening Date | Meeting Content | Important comments and suggestions |
| Strategy Committee of the 5th session of the Board of Directors | Chen Zongnian (convener), Wu Xiaobo, Hu Ruimin | 6 | January 12, 2022 to December 2, 2022 | Reviewed and approved 12 proposals including the 2021 Annual Work Report of the Strategy Committee of the Board of Directors | All expressed concurring opinions |
| Audit Committee of the 5th session of the Board of Directors | Li Shuhua (convener), Wang Qiuchao, Guan Qingyou | 3 | February 10, 2022 to April 14, 2022 | Reviewed and approved 9 proposals including Proposal on 2022 Reappointment of Certificated Public Accountants LLP | All expressed concurring opinions |
| Remuneration and Appraisal Committee of the 5th | Guan Qingyou (convener), Wu Xiaobo, Wu Weiqi | 4 | January 18, 2022 to May 5, 2022 | Reviewed and approved 10 proposals including the 2021 Annual Report and Its | All expressed concurring opinions |
| Committee Name | Members | Number of meetings held | Convening Date | Meeting Content | Important comments and suggestions |
| session of the Board of Directors | Summary |
VIII. Performance of Duties by the Supervisory CommitteeWere there any risks to the Company identified by Board of Supervisors when performing its duties during thereporting period?
□ Yes √ No
The Board of Supervisors has no objection to the supervision matters during the reporting period.
IX. Staff in the Company
1. Statistics of Employees, Professional Structure of the Staff, and Educational Background
| Number of incumbent employees in the parent Company at the end of the reporting period | 21,343 | |
| Number of incumbent employees in major subsidiaries at the end of the reporting period | 36,941 | |
| Number of incumbent employees at the end of the reporting period | 58,284 | |
| Number of employees receiving salaries in current period | 58,284 | |
| Number of retired employees requiring the parent Company and its subsidiaries to bear costs | 0 | |
| Professional structure | ||
| Tier | Number of employees | |
| Managerial personnel | 928 | |
| Production staff | 17,400 | |
| Sales staff | 10,085 | |
| Technical staff | 27,951 | |
| Financial staff | 417 | |
| Administrative Staff | 1,503 | |
| Total | 58,284 | |
| Educational background | ||
| Education background | Number of employees | |
| Master and/or doctor/or above | 10,964 | |
| Bachelor | 28,689 | |
| Junior College (professional training) | 5,368 | |
| Other | 13,263 |
| Total | 58,284 |
2. Staff Remuneration Policy
Hikvision applies scientific talent cultivation methods, effective talent incentive mechanisms and faircompetition platforms to recruit talents, and continuously optimizes the talent structure. The Company providesemployees with remuneration packages which are competitive in the industry. In addition to endowment insurance,medical insurance, unemployment insurance, employment injury insurance, maternity insurance and housingprovident funds, the Company also provides employees with the supplementary commercial insurance, specialallowances, and other benefits, and creates a fairer and more humanized working environment for each employee;so that each employee is able to demonstrate his/her value, and create value to satisfy increasing demands for a goodlife.
3. Staff Training Plans
The Company is focused on long-term development strategies and works for the goal of supporting businessdevelopment and people development. The Company has planned and implemented a set of training programs andcourses.
During 2020-2022, in the context of the macro environment and businesses becoming more complex, theCompany had to adapt itself to the higher requirements on learning management and operations. The Companycommitted to the twin strategies of "system construction" and "resource construction". In order to adapt to thediversity of internal learning needs, the Company gradually strengthened the traction and design of talent trainingprojects through deep online and offline integration, combing with the digital training platform to make trainingsmore flexible, and promoted organizational experience accumulation and replication in a more orderly manner, andresources can be shared and reused more efficiently within the Company through the comprehensive onlinemanagement of teachers and courses, accelerating replication and propagation from 1 to N of key businessexperiences.
To adapt to the background that the external business environment changes rapidly, the human resourcesdepartment goes deep into the front line of the business, quickly empowering key positions by working with business
experts to timely summarize experiences, identifying typical scenarios of business development, learning practicalmethodologies and skills, and implementing the large learning project that is a combination of theoretical trainingand practical training.In 2023, the Company continues to strengthen the construction of talent development systems, facilitating talentsupply for key positions for business development through designing the development project of talent developmentand the training project of core business talent.
4. Labor Outsourcing
□ Applicable √ Inapplicable
X. Profit Distribution and Capitalization of Capital Reserves
Profit distribution policy in the reporting period, especially the formulation, implementation and adjustment ofcash dividend policy
√Applicable □Inapplicable
| Special explanation of cash dividend policy | |
| Whether it complies with the provisions of the Company's articles of association or the requirements of the resolution of the shareholders' meeting: | Yes |
| Whether the dividend standard and dividend ratio are clear: | Yes |
| Whether the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether independent directors performed their duties and played their due roles: | Yes |
| Whether minority shareholders have the opportunity to fully express their opinions and demands, and whether their legitimate rights and interests are fully protected: | Yes |
| If the cash dividend policy is adjusted or changed, whether the conditions and procedures are compliant and transparent: | Inapplicable |
The 9th
meeting of the 5
th
session of the Board of Directors of the Company reviewed and approved the 2021Annual Profit Distribution Proposal, and was reviewed and approved by the Company's 2021 annual generalmeeting: based on the Company’s current total share capital of 9,433,208,719 shares, the Company proposed todistribute cash dividend of RMB 9 (tax inclusive) per each 10 shares to all shareholders, bonus share and sharedistribution from capital reserve is nil. The date of record for this profit distribution is May 25, 2022, the ex-rights/ex-dividend date is May 26, 2022, and the total cash dividends (tax inclusive) is RMB8,489,887,847.10.The above-mentioned profit distribution policy conforms to the provisions of the Company's articles ofassociation and the review procedures, and fully protects the legitimate rights and interests of small and medium
investors, and the independent directors have expressed their agreement.In 2022, the Company implemented the repurchase of its shares by means of centralized bidding. Accordingto the Company Law, Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Shenzhen Stock ExchangeListed Companies Self-Regulatory Supervision Guidelines No. 9 – Repurchase of Shares, the amount of sharesrepurchased that the Company has implemented during the year is deemed to be equal to the amount of cashdividends, which is included in the measurement of the relevant portion of cash dividends for the year.
During the reporting period, the Company was profitable and the distributable profits to shareholders of the parentcompany was positive, but the Company did not propose a cash dividend distribution plan.
□ Applicable √ Inapplicable
Profit distribution and capitalizing of capital reserves for the current reporting period
√ Applicable □ Inapplicable
| Bonus issue per 10 shares (share) | 0 |
| Cash dividend per 10 shares (RMB) (tax inclusive) | 7.00 |
| Additional shares converted from capital reserves for 10 shares (share) | 0 |
| Total capital shares as the basis for the distribution proposal (share) | 9,363,932,789 |
| Total cash dividend (RMB) (tax inclusive) | 6,554,752,952.30 |
| Amount of cash dividends in other methods (such as share repurchase) (RMB) | 2,043,476,488.53 |
| Total cash dividends (including other methods) (RMB) | 8,598,229,440.83 |
| Distributable profits (RMB) | 39,030,437,901.96 |
| Percentage of cash dividends in the total distributed profit (%) | 100.00% |
| 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 2022, the parent company of the Company realized net profit of RMB9,597,855,108.17, the withdraowal of statutory surplus reserve is RMB42,954,964.00, adding the undistributed profit of the parent company at the beginning of the year of RMB 37,958,561,319.89 deducting the cash dividends of RMB8,489,887,847.10 in 2021, adding back RMB6,864,285.00 of the unpaid dividends for the repurchased restricted shares, as of December 31, 2022, the profits distributable to shareholders of the parent company amounted to RMB39,030,437,901.96. As of December 31, 2022, the profits distributable to shareholders in the consolidated statement were RMB49,460,240,986.49 (consolidated). To sum up, according to the principle of "whichever is lower", the profits distributable to shareholders this year was | |
RMB39,030,437,901.96.
Based agree on the Company’s current total share capital of 9,363,932,789 shares, the Company proposed to distribute cash dividendof RMB7 (tax inclusive) per each 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil. Theabove scheme will distribute a total cash dividend of RMB6,554,752,952.30, and the remaining undistributed profits will betransferred to the next year.
XI. The Implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or otherIncentive Plans
√Applicable □Inapplicable
1. Share Incentive
(1) During the reporting period, the Company completed the grant of the 2021 Restricted Share IncentiveScheme.On December 30, 2021, proposals were reviewed and approved by the 7
th Meeting of the 5
thsession of theBoard of Directors of the Company, including the 2021 Restricted Stock Plan (Revised Draft) and its Summary andProposal to the General Meeting of Shareholders to Authorize the Board of Directors to Manage Relevant Mattersof the 2021 Restricted Share Incentive Scheme, proposing the General Meeting of Shareholders to authorize theBoard of Directors to implement relevant matters of the 2021 Restricted Share Incentive Scheme.
On January18, 2022, the Proposal on Granting Restricted Shares to Grantees under the 2021 Restricted ShareIncentive Scheme was reviewed and approved by the 8
th
Meeting of the 5
thsession of the Board of Directors and the
th Meeting of the 5
th
session of the Board of Supervisors of the Company. Based on the relevant laws, regulations,department rules, and normative documents such as the Measures for the Management of Equity Incentives of ListedCompanies, as well as 2021 Restricted Stock Plan (Revised Draft) and related authorization approved by the 1
st
Extraordinary General Meeting of Shareholders in 2022, the Company has completed the share grant andregistration of the 2021 Restricted Share Incentive Scheme. The grantees are 9,738 people, and the total amount ofrestricted shares granted is 97,402,605 shares, accounting for 1.04% of the total share capital of the Company beforethe grant. The granted shares were listed on February 11, 2022.For details, please refer to the Announcement on the Completion of the Grant of Shares under the 2021Restricted Share Incentive Scheme published by the Company on www.cninfo.com.cn on February 10, 2022 (No.2022-011).
(2) During the reporting period, the Company has completed the second vesting, repurchase and cancellationof the 2018 restricted share incentive scheme.On May 5, 2022, the 10
th meeting of the 5
th session of the Board of Directors and the 10
th meeting of the 5
th
session of the Board of Supervisors reviewed and approved the Proposal on the achievement of unlocking conditionsfor the second unlocking period of the 2018 restricted Share Incentive Scheme and Proposal on the SecondRepurchase and Cancellation of the Granted but Unvested Restricted Shares under the 2018 Restricted ShareIncentive Scheme, the Company has implemented the vesting of the total amount of 33,142,730 restricted shares for5,533 grantees, and the vested shares were listed on May 18, 2022. Meanwhile, 2,288,095 restricted shares that didnot meet the incentive conditions were repurchased and cancelled, and the repurchase and cancellation procedureswere completed as of December 19, 2022. For details, please refer the Indicative Announcement on Vesting, Listingand Circulation of Shares in the Second Vesting Period of the 2018 Restricted Share Incentive Scheme (No. 2022-036) and the Announcement on the Second Repurchase and Cancellation of the Granted but Unvested RestrictedShares under the 2018 Restricted Share Incentive Scheme (No. 2022-071) published by the Company onwww.cninfo.com.cn on May 17, 2022 and December 19, 2022, respectively.
As of the end of the reporting period, the Company has a total amount of 130,734,463 granted but unvestedshares, accounting for 1.39% of the Company's total share capital at the end of the reporting period.
The Company performs accounting treatments related to restricted share incentive plans in accordance withthe requirements of Accounting Standards for Business Enterprises No. 11-Share Payments and other relatedaccounting standards. The cost of the shares granted by the 2018 Restricted Share Incentive Scheme and the 2021Restricted Share Incentive Scheme is amortized during the vesting period.
During the reporting period, the amortization cost of the Company's 2018 Restricted Share Incentive Schemeand the 2021 Restricted Share Incentive Scheme had no significant impact on the Company's financial status andoperating results. For details, please refer to Financial Statement Note (XI)-Share-based Payment.
Equity incentives obtained by the directors and senior management of the Company
√Applicable □Inapplicable
Unit: Share
| 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, CEO | 0 | 0 | - | - | 0 |
| Wu Weiqi | Director, Standing Deputy General Manager | 0 | 0 | - | - | 0 |
| He Hongli | Senior Deputy General Manager | 0 | 0 | - | - | 0 |
| Cai Changyang | Senior Deputy General Manager | 0 | 0 | - | - | 0 |
| Bi Huijuan | Senior Deputy General Manager | 73,800 | 36,900 | - | - | 36,900 |
| Xu Ximing | Senior Deputy General Manager, | 118,200 | 59,100 | 90,000 | 29.71 | 149,100 |
| Pu Shiliang | Senior Deputy General Manager | 60,000 | 30,000 | 90,000 | 29.71 | 120,000 |
| Jin Duo | Senior Deputy General Manager | 0 | 0 | - | - | 0 |
| Jin Yan | Senior Deputy General Manager, Person in Charge of Finance | 66,000 | 33,000 | 80,000 | 29.71 | 113,000 |
| Huang Fanghong | Senior Deputy General Manager, Secretary of the Board | 66,000 | 33,000 | 80,000 | 29.71 | 113,000 |
| Xu Peng | Senior Deputy General Manager | 77,244 | 38,622 | 70,000 | 29.71 | 108,622 |
| Guo Xudong | Senior Deputy General Manager | 44,280 | 22,140 | - | - | 22,140 |
| Total | -- | 505,524 | 252,762 | 410,000 | -- | 662,762 |
Note:
(1) Persons listed above are grantees who are senior executives that are the Company’s incumbent senior
executives.
(2) During the reporting period, the Company has completed the grant of shares under the 2021 Restricted ShareIncentive Scheme with the total amount of 97,402,605 shares, of which 410,000 of shares were granted tosenior executives.
(3) During the reporting period, the second restricted shares of the Company were vested under the 2018Restricted Share Incentive Scheme with the total amount of 33,142,730 shares, of which 252,762 were vestedby senior executives.
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 2022, senior management personnelcarried out their duties diligently with good performance. In the face of multiple uncertainties in the businessenvironment, they led the Company to firm confidence, focus on its own capabilities, and continue to promote thesteady development of the Company.
2. The Implementation of Employee Stock Incentive Plan
□Applicable √Inapplicable
3. Other Incentive Plans
□Applicable √Inapplicable
XII. Construction and Implementation of Internal Control System during the Reporting Period
1. Construction and Implementation of Internal Control
The Company shall establish, improve and effectively implement internal control, further improve theconstruction of internal control system and strengthen internal audit supervision in accordance with the BasicStandard for Enterprise Internal Control, its associated Guidelines and other internal control supervisionrequirements. The Board of Directors of the Company truthfully discloses the internal control evaluation report.The Board of Supervisors supervises the establishment by the Board of Directors and its implementation of internalcontrol. The management is responsible for organizing and leading the daily internal controls of the Company.The Audit Committee of the Company under the Board of Directors inspects and supervises the scientificity,rationality, effectiveness and implementation of the Company's internal control system. At the same time, the AuditCommittee has organized special work meetings to follow up on the implementation of major matters by the
financial center and internal audit department, and puts forward relevant requirements on the normativeness ofinternal control of the Company. The Company has set up an internal audit department under the Audit Committeeof the Board of Directors, which is equipped with full-time personnel to independently carry out internal audits,supervise and inspect the effectiveness and rationality of internal control. The internal audit department isaccountable and reports to the Audit Committee and reports on their work regularly. The internal audit departmentaudits the risk profiles of the Company’s business areas according to an annual audit plan. It highlights internalcontrol defects and gives rational suggestions, and standardizes and supervises the operation and management ofthe Company.During the reporting period, the Company continuously strengthened its self-evaluation and self-improvementon internal control. It continued to improve and thoroughly implement internal control in its departments andstrengthened the awareness of compliance management, to ensure the effective implementation of the internalcontrol system, improve the standard of the Company’s operations, and promote the healthy and sustainabledevelopment of the Company. For more details, please refer to the 2022 Internal Control Self-Evaluation Reportdisclosed by the Company on CNINFO website (www.cninfo.com.cn).
2. Any Significant Internal Control Deficiencies during the Reporting Period
□ Yes √ No
XIII. The Company's Management and Control of Subsidiaries during the Reporting Period
In strict adherence to the relevant laws and regulations such as the Authorization Management System and theregulations and normative documents of regulatory authorities, the Company considers and approves proposals onthe acquisition and cancellation the registration of new subsidiaries, and exercises management powers over majormatters of the subsidiaries in accordance with the requirements regarding assets control over the subsidiaries andthe standard operations of the Company. At the same time, subsidiaries shall provide timely, complete and accurateinformation to the Company such as operating results, financial position and operating prospects, so that theCompany can conduct scientific decision-making, supervision and coordination.
During the reporting period, the Company established two domestic subsidiaries and four overseas subsidiaries,acquired one subsidiary, and liquidated and cancelled three subsidiaries. All of this result in changes in the scope ofits consolidation scope. For details, please refer to changes in the consolidation scope in Note (6) to the financial
statements.XIV. Self-evaluation Report on Internal Control or Internal Control Audit Report
1. Self-evaluation Report on Internal Control
| Disclosure date of full text of self-evaluation report on internal control | April 15, 2023 | |
| 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 |
2. Internal Control Audit Report
√Applicable □Inapplicable
| Deliberation Opinion Paragraph in Internal Control Audit Report | |
| We believe that Hangzhou Hikvision Digital Technology Co., Ltd. maintained effective internal control over financial reporting in all material aspects as of December 31st 2022 in accordance with the Basic Standard for Enterprise Internal Control and other related regulations. | |
| Disclosure of internal control audit report | Disclose |
| Disclosure date of the full text of the internal control audit report | April 15, 2023 |
| Disclosure index of full text of internal control audit report | www.cninfo.com.cn 2022 Internal Control Audit Report |
| Internal control audit opinion | Standard unqualified audit opinion |
| Whether there are material weakness of non-financial report | No |
Whether the accounting firm issued an internal control audit report with a non-standard opinion
□ Yes √ No
Whether the internal control audit report issued by the accounting firm is consistent with the opinion of the self-evaluation report fromthe Board of Directors
√ Yes □No
XV. Special Rectification Actions for Self-inspected Problems of Listed Companies
□Applicable √Inapplicable
Section V Environmental and Social ResponsibilityI. Significant Environmental IssuesWhether the Company or any of its subsidiaries should be categorized as a critical pollutant enterprises publishedby environmental protection department
□Yes √No.
II. Social ResponsibilitiesFor details, please refer to the Company’s 2022 Social Responsibility Report disclosed on CNINFO(www.cninfo.com.cn).III. The Achievements of Poverty Alleviation and Rural Revitalization
During the reporting period, the Company did not conduct any targeted poverty alleviation and rural revitalizationwork.
Section VI Significant EventsI. 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 committed as below for the transactions with Hikvision: (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 Hikvision 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 determine prices according to the market on the basis of equality, voluntarily. The Company will obey the Articles of Association and other regulatory documents related to the avoiding of issues | October 29, 2013 | Long-term | Strict performance |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| 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 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 |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| 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 Hikvision according to the Securities Acts and relevant laws and rules, 4.1 Currently the Company has no plan to change or make significant adjustments for principal business in the next 12 months; 4.2 Currently the Company has no plan to sell, merge or operate with another Company for the assets and business of the listed Company or its subsidiaries in the next 12 months. 4.3 Currently the Company has no plan to alter the Board of the Directors and senior management and no agreement with other shareholders about the appointment and removal of the directors or senior management. The team of Board of Directors and senior management will remain unchanged for the foreseeable future. 4.4 Currently the Company has no plan to make significant changes to the Articles of Association for the listed Company. 4.5 Currently the Company has no plan to make significant changes to the existing employee recruitment for the listed Company. 4.6 Currently the Company has no plan to make significant changes for the dividend distribution plan for the listed Company. 4.7 Currently the Company has no plan to make significant changes for business and organizational structure for the listed Company. | ||||||
| Commitments in Initial Public | Hangzhou Weixun Investment Management | Share restriction commitment | During Hu Yangzhong, Wu Weiqi, Jiang Haiqing, Zhou Zhiping, Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang, | May 17, 2010 | Long term | Strict performance |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| Offering or re-financing | Limited Partnership (later renamed as Hangzhou Weixun Equity Investment Partnership (Limited Partnership)) | 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 demission, should not transfer Hikvision’s shares held under Weixun. | ||||
| Hangzhou Kangpu Investment Limited Partnership (later renamed as Hangzhou Pukang Equity Investment Partnership (Limited Partnership)) | Share restriction commitment | During Hu Yangzhong, Wu Weiqi, Gong Hongjia’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 Pukang; within 6 months after abovementioned personnel’s demission, should not transfer Hikvision’s shares held under Pukang. | May 17, 2010 | Long term | Strict performance | |
| The Company's directors, supervisors and executive: HuYangzhong, Wu Weiqi, Jiang Haiqing, Zhou Zhiping，Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen Junke | 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; within 6 months after their demission, they should not transfer their shares held under Weixun. | May 17, 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 Kangpu; within 6 months after their demission, they should not transfer their shares held under Kangpu. | May 17, 2010 | Long term | Strict performance | |
| The Company’s director Gong Hongjia’s spouse, | 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 | May 17, | Long-term | Strict performance |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| Chen Chunmei | should not exceed 25% of total number of shares held under Kangpu; within 6 months after the demission of Gong Hongjia, Chen should not transfer her shares held under Kangpu. | 2010 | ||||
| China Electronics Technology Group Corporation (later renamed as China Electronics Technology Group Co., Ltd.) | Commitment to avoid horizontal competition | To avoid any loss of the Company and other shareholders arising from any competing business, China Electronics Technology Group Corporation, the actual controller of the Company, issued Letters of non-competition on 18 September, 2008. | September 18, 2008 | Long term | Strict performance | |
| Gong Hongjia; Hangzhou Weixun Investment Management Limited Partnership (later renamed as Hangzhou Weixun Equity Investment Partnership (Limited Partnership)); Hangzhou Kangpu Investment Limited Partnership (later renamed as Hangzhou Pukang Equity Investment Partnership (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 10, 2008 | Long term | Strict performance | |
| Other commitments (commitments | Hangzhou Hikvision Digital Technology Co., Ltd. | Commitment relating to the spin-off of EZVIZ | Arrangement on trading restriction and commitement to voluntarily restrict shares relating to the spin-off of EZVIZ Network to be listed on the Science and Technology Innovation Board, for details, please refer to the appendix Ⅵ | December 28, 2022 | Within 36 months from | Strict performance |
| Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
| relating to the spin-off of EZVIZ Network to be listed on the Science and Technology Innovation Board) | Network to be listed on the Science and Technology Innovation Board | of the Prospectus on the Initial Public Share Offering and Listing on the STAR Market of the Shanghai Stock Exchange of Hangzhou EZVIZ Network Co., Ltd. published by EZVIZ Network on the website of Shanghai Stock Exchange (www.sse.com.cn): commitments relating to investor protection. | the date of issuing and listing of EZVIZ Network | |||
| Commitment relating to the intention to hold shares and the intention to reduce holdings of shares of EZVIZ Network of the spin-off of EZVIZ Network to be listed on the Science and Technology Innovation Board, for details, please refer to the appendix Ⅵ of the Prospectus on the Initial Public Share Offering and Listing on the STAR Market of the Shanghai Stock Exchange of Hangzhou EZVIZ Network Co., Ltd. published by EZVIZ Network on the website of Shanghai Stock Exchange (www.sse.com.cn): commitments relating to investor protection. | December 28, 2022 | Within 2 years from the end date of shares restriction period of EZVIZ Network | Strict performance | |||
| Commitments and initiatives to stabilize the stock price of EZVIZ Network, to repurchase shares of EZVIZ Network, to guarantee no fraud in listing of EZVIZ Network, to make compensation for diluted spot return, to undertake compensation or liability in accordance with the law, to have constraints for failing to fulfill commitments, to avoid intra-industry competition, to regulate and reduce related party transactions, to avoid capital occupation, and to keep system independent after the spin-of of EZVIZ Network to be listed on the Science and Technology Innovation Board. For details, please refer the Prospectus on the Initial Public Share Offering and Listing on the STAR Market of the Shanghai Stock Exchange of Hangzhou EZVIZ Network Co., Ltd. published by EZVIZ Network on the website of Shanghai Stock Exchange (www.sse.com.cn): commitments relating to investor protection. | December 28, 2022 | Long term | Strict performance | |||
| 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 currentreporting period is still within the forecast period, the Company shall explain whether theperformance of the asset or project reaches the profit forecast and why:
□ Applicable √ Inapplicable
Commitments made by the Company's shareholders and counterparties in the operating performance of thereporting year
□ Applicable √ Inapplicable
II. The Company’s Funds Used by the Controlling Shareholder or Other Related Parties forNon-operating Purposes
□ Applicable √ Inapplicable
No such case during the current reporting period.
III. Illegal Provision of Guarantees for External Parties
□ Applicable √ Inapplicable
No such case in the current reporting period.
IV. Explanation Given by the Board of Directors regarding the Latest "Non-standard Auditor’sReport"
□ Applicable √ Inapplicable
V. Explanation Given by the Board of Directors, Supervisory Committee and IndependentDirectors (if applicable) regarding the "Non-standard Auditor’s Report" Issued by the CPAFirm for the Current Reporting Period
□ Applicable √ Inapplicable
VI. For Changes in Accounting Policies, Accounting Estimates or Correction of SignificantAccounting Errors Compared with the Financial Report for the Prior Year
√ Applicable □Inapplicable
For details, please refer to the Note (III) 32.
VII. Explanation for Changes in Scope of the Consolidated Financial Statements as Comparedto the Financial Report for the Prior Year
√ Applicable □ Inapplicable
During the reporting period, the Company established two domestic subsidiaries and four overseas subsidiaries,acquired one subsidiary, and liquidated and cancelled three subsidiaries. All of this result in changes in the scope ofits consolidation scope. For details, please refer to changes in the consolidation scope in Note (6) to the financialstatements.
VIII. 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) | 400 |
| Consecutive years of the audit service provided by the domestic CPA firm | 7 |
| Name of the certified public accountants from the domestic CPA firm | Tang Lianjiong, Cai Jin |
| Consecutive years of the audit service provided by the certified public accountants from the domestic CPA firm | Tang Lianjiong has provided audit service for 4 consecutive years; Cai Jin has provided audit service for 1 consecutive year. |
Whether the CPA firm was changed in the current period
□ Yes √ No
Whether to reappoint a CPA firm during the audit
□ Yes √ No
Engagement of internal control audit CPA firm, financial advisor or sponsor
√Applicable □ Inapplicable
During the reporting period, the Company hired Deloitte Touche Tohmatsu Certified Public Accountants LLPas the internal control audit accounting firm, and paid a total of RMB 600,000 of internal control audit fees duringthe period.
IX. Delisting after Disclosure of this Annual Report
□ Applicable √ Inapplicable
X. Bankruptcy and Restructuring
□ Applicable √ Inapplicable
No such case during the reporting period.XI. Material Litigations and Arbitration
□ Applicable √ Inapplicable
The Company had no material litigation or arbitration during the current reporting period.XII. Punishments and Rectifications
□ Applicable √ Inapplicable
No such case during the reporting period.XIII. Integrity of the Company and its Controlling Shareholders and Actual Controllers
□ Applicable √ Inapplicable
XIV. Significant Related-party Transaction
1. Related-party Transactions Arising from Routine Daily Operations
√ 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 by both parties | 223,452.42 | 4.74% | 500,000 | No | Payment on delivery | April 16, 2022 | Announcement on the forecast of daily related-party transactions in 2022 (No. 2022-022) |
| Joint ventures | Joint ventures held by the Company | Procurement | 507.17 | 0.01% | 700 | No | Payment on delivery | ||||
| Associated companies | Associated companies held by the Company | Procurement | 41,798.96 | 0.89% | 120,100 | No | Payment on delivery | ||||
| Enterprises with directors, supervisors, senior executives and related natural persons of the Company serving as directors | Enterprises with directors, supervisors, senior executives and related natural persons of the Company serving as directors | Procurement | 159,840.63 | 3.39% | 225,150 | No | Payment on delivery | ||||
| Subsidiaries or research institutes of CETC | Under the common control of the Company’s actual controller. | Sales | Providing services, selling | Reference market price | 44,718.66 | 0.54% | 70,000 | No | Payment on delivery | April 16, 2022 | Announcement on the forecast of daily |
| 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 |
| Joint ventures | Joint ventures held by the Company | Sales | products, commercial goods | agreed by both parties | 7,775.12 | 0.09% | 32,500 | No | Payment on delivery | related-party transactions in 2022 (No. 2022-022) | |
| Associated companies | Associated companies held by the Company | Sales | 8,714.97 | 0.10% | 28,000 | No | Payment on delivery | ||||
| Enterprises with directors, supervisors, senior executives and related natural persons of the Company serving as directors | Enterprises with directors, supervisors, senior executives and related natural persons of the Company serving as directors | Sales | 1,123.36 | 0.01% | 3,910 | No | Payment on delivery | ||||
| Subsidiaries or research institutes of CETC | Under the common control of the Company’s actual controller. | Lease | Renting house from related parties | Reference market price agreed by both parties | - | 0.00% | 50 | No | Based on contract | - | - |
| Joint ventures | Joint ventures held by the Company | Lease | 54.26 | 0.17% | 200 | No | Based on contract | - | - | ||
| Total | 487,985.56 | - | 980,610 | - | - | - | - | ||||
| Details on significant sales return | None | ||||||||||
| Total amount of related transactions projected based on different categories, and the actual performance during the current reporting period (if any) | The above trading quotas include newly increased forecast quota amount of RMB4,000,000 for procurement and receiving services from joint ventures, amount of RMB2,100,000 for selling products, commercial goods, and providing services from enterprises with directors, supervisors, senior executives and related natural persons of the Company serving as directors, and amount of RMB2,500,000 for renting houses from subsidiaries or research institutes of CETC and joint ventures. Those forecast quota amount | ||||||||||
| 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 |
| has been approved by the Chairman the Company according to related regulations and the Company's Management System of Related Transaction. | |||||||||||
| 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. Transactions with Related Financial Companies
√Applicable □Inapplicable
Deposit business
| Related Party | Relationship | Maximum daily deposit limit (0,000 RMB) | Deposit interest rate range | Opening Balance (0,000 RMB) | Amount incurred (0,000 RMB) | Closing Balance(0,000 RMB) | |
| Total deposit amount for the current period (0,000 RMB) | Total withdrawal amount for the current period (0,000 RMB) | ||||||
| CETC Finance Co., Ltd. | Under the common control of the Company's ultimate controller | 1,307,892.85 | 0.3%-2% | 450,000.67 | 414,089.37 | 464,086.69 | 400,003.35 |
Credit or other financial services
| Related Party | Relationship | Business Type | Total Amount (0,000 RMB) | Actual amount incurred (0,000 RMB) |
| CETC Finance Co., Ltd. | Under the common control of the Company's ultimate controller | Credit | 300,000.00 | 3,332.25 |
Note: The above occurred amount is the amount of bill discount occurred by the Group in CETC Finance Co., Ltd. in the reporting
period.
6. Transactions between the Financial Company Controlled by the Company and Related Parties
□ Applicable √Inapplicable
There is no deposit, loan, credit or other financial business between the financial company controlled by theCompany and its related parties.
7. Other Significant Related Party Transactions
√Applicable □Inapplicable
On October 22, 2021, the 6
th meeting of the 5
th
session of the Board of Directors of the Company reviewed andapproved the Proposal on Investing in the Establishment of Venture Investment Partnerships and RelatedTransactions, agreeing that the Company, CETHIK Group Co., Ltd., Hangzhou High-tech Venture CapitalManagement Ltd., and CETHIK (Hangzhou) Equity Investment Management Ltd. jointly invested and establishedHangzhou Haina Yuzhi Venture Investment Partnership Enterprise (Limited Partnership)(hereinafter referred to as"Haina Yuzhi Fund"). The scale of Haina Yuzhi Fund is RMB 600 million, of which Hikvision, as a limited partner,invested RMB 400 million yuan in currency, holding 66.6666% of the total shares. On January 29, 2022, inaccordance with the requirements of the Securities Investment Fund Law and Interim Measures for the Supervisionand Administration of Private Equity Fund, the Hangzhou Fund co-established by the Company, completed theprivate equity investment fund filing procedures in the Asset Management Association of China (AMAC), andobtained the Filing Certificate of Private Investment Fund.Disclosure website for provisional reports on significant related-party transactions:
| Title of provisional reports | Disclosure date | Disclosure website |
| Announcement on Investing in the Establishment of Venture Investment Partnerships and Related Transactions (Announcement No. 2021-064) | October 23, 2021 | www.cninfo.com.cn |
| Announcement on the Completion of the Filing Procedures of the Entrepreneurship Investment Partnership Enterprise Co-established by the Company (Announcement No. 2022-013) | February 10, 2022 | www.cninfo.com.cn |
XV. Significant Contracts and Their Execution
1. Trusteeship, Contracting and Leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such case in the reporting period.
(2) Contracting
□ Applicable √ Inapplicable
No such case in the reporting period.
(3) Leasing
□Applicable √Inapplicable
2. Significant Guarantees
√Applicable □ Inapplicable
Unit: RMB’0000
| Guarantees provided by the Company to its 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 | Fulfilled or not | Guarantee for a related party or not |
| Hangzhou Hikvision Technology Ltd. | April 16, 2022 | 1,136,000 | December 1, 2019 | 698,266.86 | Joint guarantee | 2019.12.01-2025.09.25 | No | No |
| Urumqi HaiShi Xin’An Electronic Technology Ltd. | April 16, 2022 | 37,000 | March 26, 2019 | 21,037.00 | Joint guarantee | 2019.03.26-2028.06.20 | No | No |
| LuoPu HaiShi DingXin Electronic Technology Ltd. | April 16, 2022 | 29,000 | March 26, 2019 | 21,440.00 | Joint guarantee | 2019.03.26-2035.03.26 | No | No |
| PiShan HaiShi YongAn Electronic Technology Ltd. | April 16, 2022 | 28,000 | March 26, 2019 | 20,678.00 | Joint guarantee | 2019.03.26-2040.03.26 | No | No |
| Moyu HaiShi Meitian Electronic Technology Ltd. | April 16, 2022 | 24,000 | March 26, 2019 | 17,000.00 | Joint guarantee | 2019.03.26-2035.03.26 | No | No |
| Hangzhou Hikvision System Technology Ltd. | April 16, 2022 | 70,000 | March 23, 2021 | 12,252.16 | Joint guarantee | 2021.03.23-2024.03.30 | No | No |
| Yutian HaiShi Meitian Electronic Technology Ltd. | April 16, 2022 | 30,000 | March 26, 2019 | 9,480.00 | Joint guarantee | 2019.03.26-2034.03.26 | No | No |
| Hangzhou Hikvision Electronic Ltd. | April 16, 2022 | 45,000 | November 20, 2021 | 810.84 | Joint guarantee | 2021.11.20-2024.03.30 | No | No |
| Chongqing Hikvision Technology Ltd. | April 16, 2022 | 30,000 | March 23, 2021 | 4,131.14 | Joint guarantee | 2021.03.23-2024.03.30 | No | No |
| Shijiazhuang Hikvision Technology Ltd. | April 16, 2022 | 20,000 | December 28, 2022 | 1.00 | Joint guarantee | 2022.08.01-2025.07.31 | No | No |
| Guarantees provided by the Company to its 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 | Fulfilled or not | Guarantee for a related party or not |
| Nanjing Hikvision Digital Technology Ltd. | April 16, 2022 | 15,000 | June 30, 2022 | 3,853.70 | Joint guarantee | 2022.06.28-2023.06.27 | No | No |
| Xi'an Hikvision Digital Technology Ltd. | April 16, 2022 | 28,000 | September 29, 2022 | 4,421.14 | Joint guarantee | 2022.09.29-2024.02.23 | No | No |
| Hikvision Singapore Pte. Ltd. | April 16, 2022 | 107,200 | July 15, 2021 | - | Joint guarantee | 2021.07.15-2022.08.24 | Yes | No |
| Hikvision International Co., Ltd. | April 16, 2022 | 37,800 | Not happened during the reporting period | |||||
| Hikvision Europe B.V. | April 16, 2022 | 5,100 | Not happened during the reporting period | |||||
| Wuhan Hikvision Technology Ltd. | April 16, 2022 | 33,000 | Not happened during the reporting period | |||||
| Shanghezhicheng Technology Ltd. | April 16, 2022 | 20,000 | Not happened during the reporting period | |||||
| Zhenping county Haikang Juxin Digital Technology Ltd. | April 16, 2022 | 19,000 | Not happened during the reporting period | |||||
| Hikvision Technology Pte. Ltd. | April 16, 2022 | 12,600 | Not happened during the reporting period | |||||
| Zhengzhou Hikvision Digital Technology Ltd. | April 17th 2021 | 10,000 | Not happened during the reporting period | |||||
| Hefei Hikvision Digital Technology Ltd. | April 16, 2022 | 10,000 | Not happened during the reporting period | |||||
| Hikvision Digital Technology (Shanghai) Ltd. | April 16, 2022 | 10,000 | Not happened during the reporting period | |||||
| Chengdu Hikvision Digital Technology Ltd. | April 16, 2022 | 10,000 | Not happened during the reporting period | |||||
| Nanchang Hikvision Digital Technology Ltd. | April 16, 2022 | 8,000 | Not happened during the reporting period | |||||
| Chongqing Hikvision System Technology Ltd. | April 16, 2022 | 5,000 | Not happened during the reporting period | |||||
| Fuzhou Hikvision Digital Technology Ltd | April 16, 2022 | 5,000 | Not happened during the reporting period | |||||
| Guarantees provided by the Company to its 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 | Fulfilled or not | Guarantee for a related party or not | |
| .Hikvision UK Limited | April 16, 2022 | 1,900 | Not happened during the reporting period | ||||||
| PT. Hikvision Technology Indonesia | April 16, 2022 | 1,400 | Not happened during the reporting period | ||||||
| Wuhan Haikang Technology Ltd. | April 16, 2022 | 1,000 | Not happened during the reporting period | ||||||
| Hikvision FZE | April 16, 2022 | 650 | Not happened during the reporting period | ||||||
| Hikvision Turkey Technology And Security Systems Commerce JSC | April 16, 2022 | 350 | Not happened during the reporting period | ||||||
| Total guarantee cap for subsidiaries approved during the reporting period(B1) | 1,790,000.00 | Total actual guarantee amount for subsidiaries during the reporting period(B2) | 1,405,623.60 | ||||||
| Total approved guarantee cap for subsidiaries at the end of the reporting period(B3) | 1,790,000.00 | Total actual guarantee balance for subsidiaries at the end of the reporting period(B4) | 813,371.84 | ||||||
| Guarantees provided by the Company’s subsidiary to another subsidiary | |||||||||
| Guaranteed party | Disclosure date of announcement of the guarantee cap | Guarantee cap | Actual occurrence date | Actual guaranteed amount | Type of guarantee | Term of guarantee | Fulfilled or not | Guarantee for a related | |
| Hangzhou Haikang Intelligent Technology Ltd. | April 16, 2022 | 80,000 | March 14, 2022 | 14,388.69 | Joint guarantee | 2022.03.14-2023.11.30 | No | No | |
| Hangzhou Hikmicro Intelligent Technology Ltd. | April 16, 2022 | 32,000 | March 14, 2022 | 2,350.70 | Joint guarantee | 2022.03.14-2023.03.13 | No | No | |
| Chongqing EZVIZ Electronic Ltd. | April 16, 2022 | 32,000 | August 18, 2022 | 800.00 | Joint guarantee | 2022.08.18-2023.08.18 | No | No | |
| Guarantees provided by the Company to its 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 | Fulfilled or not | Guarantee for a related party or not |
| Hangzhou Hikrobot Automation Ltd. | April 16, 2022 | 145,000 | Not happened during the reporting period | |||||
| Hangzhou Hikmicro Software Ltd. | April 16, 2022 | 105,000 | Not happened during the reporting period | |||||
| Hangzhou Hikstorage Technology Ltd. | April 16, 2022 | 10,000 | Not happened during the reporting period | |||||
| Zhejiang Hikfire Technology Ltd | April 16, 2022 | 3,000 | Not happened during the reporting period | |||||
| Zhejiang Zhiyuan Fire Safety Engineering Ltd. | April 16, 2022 | 3,000 | Not happened during the reporting period | |||||
| Total guarantee cap for subsidiaries approved during the reporting period (C1) | 410,000.00 | Total actual guarantee amount for subsidiaries during the reporting period (C2) | 20,525.33 | |||||
| Total approved guarantee cap for subsidiaries at the end of the reporting period（C3） | 410,000.00 | Total actual guarantee balance for subsidiaries at the end of the reporting period(C4) | 17,539.39 | |||||
| The total amount of Company’s guarantees (that is, the total of the first three items) | ||||||||
| Total guarantee cap approved during the reporting period（A1+B1+C1） | 2,200,000.00 | Total actual guarantee amount during the reporting period（A2+B2+C2） | 1,426,148.93 | |||||
| Total approved guarantee cap at the end of the reporting period（A3+B3+C3） | 2,200,000.00 | Total actual guarantee balance at the end of the reporting period（A4+B4+C4） | 830,911.23 | |||||
| Portion of the total actual guarantee (A4+B4+C4) amount in net assets of the Company | 12.15% | |||||||
| Of which: | ||||||||
| Guarantees provided by the Company to its 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 | Fulfilled or not | Guarantee for a related party or not |
| The balance of guarantee for shareholders, actual controllers and their affiliates. (D) | 0 | |||||||
| Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset ratio over 70% (E) | 808,368.24 | |||||||
| 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) | 808,368.24 | |||||||
3. Entrusted Others to Manage Cash Assets
(1) Entrusted financial management
□ Applicable √ Inapplicable
No such case during the reporting period
(2) Entrusted loan management
□ Applicable √ Inapplicable
No such case during the reporting period
4. Other Significant Contracts
□ Applicable √ Inapplicable
No such case during the reporting period
XVI. Other Significant Events
√ Applicable □ Inapplicable
1. Investment in Fixed Assets
On January 18, 2022, the 8
th meeting of the 5
thsession of the Board of Directors of the Company deliberated and approved the Proposal on the Investment andConstruction of HikRobot Products’ Industrial Base Project by the Company’s Holding Subsidiary, and approved the Company's innovative business, a holdingsubsidiary of the Company, Hangzhou Hikrobot Technology Co., Ltd. (hereinafter referred to as "HikRobot") to invest self-raised funds of RMB 1.1661 billion tobuild the above project. The project undertaker is HikRobot. For details, please refer to the Announcement on the Investment and Construction of HikRobot Products’Industrial Base Project by the Company’s Holding Subsidiary published by the Company on chino website (www.cninfo.com.cn) on January 19, 2022(Announcement No. 2022-007). On October 8, 2022, HikRobot won the use right of the state-owned construction land for the project with a total of RMB28.34million. On October 19, 2022, HikRobot and Hangzhou Planning and Natural Resources Bureau signed the Contract for Assigning the Right to Use State-ownedConstruction Land and obtained Building Construction Permit. On November 9, 2022, the project obtained Filing Certificate for Piling Construction in Advance, andis currently in the stage of pile foundation construction. On January 18, 2022, the 8
th meeting of the 5
thsession of the Board of Directors of the Company deliberated and approved the Proposal on the Investment andConstruction of Infrared Thermal Imaging Products’ Industrial Base Project by the Company’s Holding Subsidiary, and approved the Company's innovativebusiness, a holding subsidiary of the Company, Hangzhou Hikmicro Sensing Technology Co., Ltd. (hereinafter referred to as "HikMicro") to invest self-raised fundsof RMB 1.28018 billion to build the above project. The project undertaker is HikMicro’s wholly-owned subsidiary, Hangzhou Micro image Software Ltd (hereinafterreferred to as "HikMicro Software"). For details, please refer to the Announcement on the Investment and Construction of Infrared Thermal Imaging Products’Industrial Base Project by the Company’s Holding Subsidiary published by the Company on cninfo website (www.cninfo.com.cn) on January 19, 2022
(Announcement No. 2022-008). On October 8, 2022, HikMicro Software won the use right of the state-owned construction land for the project with a total ofRMB29.60 million. On October 19, 2022, HikMicro Software t and Hangzhou Planning and Natural Resources Bureau signed the Contract for Assigning the Right toUse State-owned Construction Land and obtained Building Construction Permit. On November 29, 2022, the project obtained Filing Certificate for PilingConstruction in Advance, and is currently in the stage of pile foundation construction.On January 18, 2022, the 8
th
meeting of the 5
thsession of the Board of Directors of the Company deliberated and approved the Proposal on the Investment andConstruction of Hikrobot Intelligent Manufacturing (Tonglu) Base Project by the Company’s Holding Subsidiary, and approved the Company's innovative business, aholding subsidiary of the Company, HikRobot to invest self-raised funds of RMB 1.53422 billion to build the above project. The project undertaker is HikRobot’swholly-owned subsidiary, Hangzhou Hikrobot Intelligence Ltd. (hereinafter referred to as "HikRobot Intelligence", which was renamed on July 25, 2022, and theformer name is Hangzhou Hikrobot Automation Ltd.) For details, please refer to the Announcement on the Investment and Construction of Hikrobot IntelligentManufacturing (Tonglu) Base Project by the Company’s Holding Subsidiary published by the Company on cninfo website (www.cninfo.com.cn) on January 19, 2022(Announcement No. 2022-009). On August 25, 2022, HikRobot Intelligence won the use right of the state-owned construction land for the project with a total ofRMB52.52 million. On September 9, 2022, HikRobot Intelligence and Tonglu Planning and Natural Resources Bureau signed the Contract for Assigning the Right toUse State-owned Construction Land. On January 18, 2022, the 8
th meeting of the 5
thsession of the Board of Directors of the Company deliberated and approved the Proposal on the Investment andConstruction of Hikvision Global Warehousing and Logistics Center Project, and approved the Company to invest self-raised funds of RMB 1.28605 billion to buildthe above project. The project undertaker is Hangzhou Hikvision Electronics Co., Ltd. (hereinafter referred to as "Electronics Company"), which is a holdingsubsidiary of Hikvision. For details, please refer to the Announcement on the Investment and Construction of Hikvision Global Warehousing and Logistics CenterProject (Announcement No. 2022- 010). On January 24, 2022, the Electronics Company won the use right of the state-owned construction land for the project (PhaseI) with a total of RMB 53.77 million. On February 10, 2022, the Electronics Company and Tonglu Planning and Natural Resources Bureau signed the Contract forAssigning the Right to Use State-owned Construction Land. On June 10, 2022, the project (Phase I) completed the process of obtaining the Building Construction
Permit for the warehousing construction and started to construct.
2. Repurchase of the Company's Public Shares
On September 15, 2022 and October 10,
2022, the Company held the 13
h meeting of the 5
thsession of the Board of Directors and the second extraordinary generalmeeting of shareholders in 2022 respectively, deliberated and approved the Proposal on the Plan of Repurchase Part of the Company's Public Shares, approved theCompany using its own fund to repurchase part of its RMB common shares (A shares) that have been issued domestically by means of centralized bidding through thetrading system of the SZSE, the aggregate amount of repurchase funds shall not exceed RMB2.5 billion (inclusive) and not less than RMB 2 billion (inclusive), therepurchase price shall not exceed RMB40 per share (inclusive), the implementation period of the repurchase shall not exceed 12 months from the date of the generalmeeting of shareholders of the Company at which the proposal on the plan of repurchase part of the Company's public shares is reviewed and approved, and theCompany will make repurchase decisions and implement them based on market conditions during the repurchase period. The shares repurchased by the Company willbe cancelled for reducing the registered capital according to law. For details, please refer to the Announcement on Resolutions of 13
th Meeting of the 5
th
Session of theBoard of Directors (Announcement No.: 2022-049), the Announcement on the Plan of Repurchase Part of the Company's Public Shares (Announcement No.: 2022-050), the Announcement on Resolutions of the Second Extraordinary General Meeting of Shareholders in 2022 (Announcement No.: 2022-056), the Report on the Planof Repurchase Part of the Company's Public Shares (Announcement No.: 2022-057) published by the Company on cninfo website (www.cninfo.com.cn) on September16, 2022 and October 11,
2022. On October 11,
2022, the Company first repurchased 6,820,968 shares of the Company by means of centralized bidding through adedicated securities account for the repurchase, accounting for 0.0723% of the Company's total share capital at that time. The highest transaction price was RMB29.65per share, the lowest transaction price was RMB28.71 per share, and the total transaction amount was RMB199,981,024.67 (excluding transaction fees). For details,please refer to the Announcement on the Initial Repurchase of the Company's Shares (Announcement No.: 2022-059) published by the Company on cninfo website(www.cninfo.com.cn) on October 12,
2022. During the repurchase period, the Company disclosed the progress of repurchase as of the end of last month within the firstthree trading days each month based on the regulation. For details, please refer to the Announcement on the Progress of Repurchase (Announcement No.: 2022-063)(Announcement No.: 2022-066) published by the Company on cninfo website (www.cninfo.com.cn) on November 2, 2022, December 3, 2022, respectively. As of
December 30, 2022, the repurchase of shares had been completed, and the actual repurchase date was between October 11, 2022 and December 30, 2022, meet therequirement on implementation period of repurchase in repurchase plan. As of December 30, 2022, the Company used the dedicated securities account for sharerepurchase to cumulatively repurchase shares with the total amount of 66,987,835 shares by means of centralized bidding, accounting for 0.7103% of the Company'stotal share capital at that time (9,430,920,624 shares). The highest transaction price was RMB35.13 per share, the lowest transaction price was RMB26.83 per share,and the total transaction amount was RMB2,043,476,488.53 (excluding transaction fees). The source of share-repurchase funding was from the Company's own fund,and the price of repurchase did not exceed the upper limit of the price (RMB40 per share) specified in the repurchase plan. The repurchase complies with relevant laws,regulations and rules from the disclosed repurchase plan. For details, please refer to the Announcement on the Progress and Result of Repurchase of the Company'sShares and Changes in Shares (Announcement No.: 2023-001) published by the Company on cninfo website (www.cninfo.com.cn) on January 4,
2023. On January 13,2023, the Company had completed the cancellation procedures for the above shares at the Shenzhen branch of China Securities Depository and Clearing CorporationLtd., with the total amount of 66,987,835 shares, accounting for 0.7103% of the Company's total share capital before the cancellation (9,430,920,624 shares), and thenumber of cancelled shares is equal to the number of actual repurchased shares. After the completion of the repurchase and cancellation of shares, the Company's totalshare capital changes from 9,430,920,624 shares to 9,363,932,789 shares. For details, please refer to the Announcement on the Completion of the Cancellation of theCompany's Repurchased Shares and Changes in Shares (Announcement No.: 2023-002) published by the Company on cninfo website (www.cninfo.com.cn) on January17, 2023.
XVII. Significant Events of the Company’s Subsidiaries
√ Applicable □Inapplicable
1. Matters Relating to the Completion of the Spin-off of EZVIZ Network to be Listed on the Science and Technology Innovation Board of Shanghai StockExchange
On January 8, 2021, the Proposal on the Spin-off of the Company’s Subsidiary Hangzhou EZVIZ Network Ltd. to be Listed on the Science and TechnologyInnovation Board was deliberated and adopted by the 21
st Meeting of the fourth session of the Board of Directors and the 18
th
Meeting of the fourth session of theBoard of Supervisors of the Company. On June 23, 2021, the Proposal on Overall Restructure the Company’s Holding Subsidiary, Hangzhou EZVIZ Network Ltd., toA Company Limited by Shares was deliberated and adopted by the 3
rd
Meeting of the Strategy Committee in 2021 of the 5
th session of the
Board of Directors of theCompany. On June 24, 2021, Hangzhou EZVIZ Network Ltd. as a whole was restructured and changed to a company limited by shares. On July 2, 2021, ZhejiangSecurities Regulatory Bureau of China Securities Regulatory Commission accepted the application filed by Hangzhou EZVIZ Network Co., Ltd. (hereinafter referredto as EZVIZ Network) for initial public offering of A shares and pre-listing counseling for listing on the Science and Technology Innovation Board. On August 10,2021, the 4
th meeting of the 5
th session of the Board of Directors and the 4
th
meeting of the 5
thsession of the Board of Supervisors reviewed and approved the Proposalon the Initial Public Share Offering and Listing on the STAR Market of the Shanghai Stock Exchange of the Subsidiary, Hangzhou EZVIZ Network Co., Ltd. (reviseddraft). On September 27, 2021, the Company's Second Extraordinary General Meeting in 2021 reviewed and approved the proposal to spin-off EZVIZ Network to belisted on the Science and Technology Innovation Board. On December 13, 2021, EZVIZ Network submitted the application materials for the initial public sharesoffering and listing on the STAR Market of the Shanghai Stock Exchange. On January 11, 2022, the Shanghai Stock Exchange (hereinafter referred to as "SSE") issuedthe Inquiry Letter on Review of Application Documents for Initial Public Share Offering and Listing on the Science and Technology Innovation Board (Shang ZhengKe Shen (Review) [2022] No. 11). EZVIZ Network has submitted the Reply to the Inquiry Letter on the Review of Hangzhou EZVIZ Network Co., Ltd.'s ApplicationDocuments for Initial Public Share Offering and Listing on the Science and Technology Innovation Board on March 15, 2022, and is currently updating the 2021financial statements. The above spin-off matters are subject to (including but not limited to) the approval of the SSE and the implementation of the issuance registrationprocedures of the China Securities Regulatory Commission. On June 6
,2022, according to the Announcement on the Results of the 46
thReview Meeting of the ListingCommittee of the SSE STAR Market in 2022 issued by the Shanghai Stock Exchange, the review result is: Hangzhou EZVIZ Network Co., Ltd. (initial offering) meetsthe conditions for issuing and listing, as well as requirements for information disclosure. EZVIZ Network’s initial public offering of shares and its application for listingon the SSE STAR Market was reviewed and approved by the SSE STAR Market's Listing Committee. For details, please refer to Announcement on the Initial Public
Offering of Shares by Hangzhou EZVIZ Network Co., Ltd., a Subsidiary of the Company, and its Application for Listing on the SSE STAR Market was Reviewed andApproved by the SSE STAR Market's Listing Committee published by the Company on the cninfo website (www.cninfo.com.cn) on June 7, 2022 (Announcement No.:
2022-038). On October 22, 2022, Approval of the registration of the initial public offering of Hangzhou EZVIZ Network Co., Ltd. was published by the China SecuritiesRegulatory Commission (hereinafter referred to as "CSRC"), approving the application for registration of EZVIZ Network’s initial public offering of shares on the SSESTAR Market. For details, please refer the Announcement on the Initial Public Offering of Shares by Hangzhou EZVIZ Network Co., Ltd., a Subsidiary of the Company,and its Application for Listing on the SSE STAR Market was Registered and Approved by the China Securities Regulatory Commission (Announcement No.: 2022-065)published by the Company on the cninfo website (www.cninfo.com.cn) on November 23, 2022. On December 28, 2022, EZVIZ Network was listed on the SSE STARMarket.
2. Matters Relating to Steady Promotion of the Spin-off of HikRobot to be Listed on the SZSE ChiNext MarketOn December 30, 2021, the 7
th meeting of the 5
thsession of the Board of Directors of the Company deliberated on and approved the Proposal on AuthorizingCompany Management to Begin Preparatory Work for the Split-off and Domestic Listing of Subsidiary, Hangzhou Hikrobot Technology Ltd., which authorized themanagement of the Company to begin preparatory work for the Split-off and domestic listing of subsidiary Hangzhou Hikrobot Technology Ltd.. For details, pleaserefer to the Announcement on Authorizing Company Management to Begin Preparatory Work for the Split-off and Domestic Listing of Subsidiary Hangzhou HikrobotTechnology Ltd. published by the Company on cninfo website (www.cninfo.com.cn) on December 31, 2021 (Announcement No. 2021-074). On June 10, 2022, the 11
th
meeting of the 5
th session of the Board of Directors and the 11
th meeting of the 5
thsession of the Board of Supervisors reviewed and approved the relevant proposalsincluding Proposal on the Initial Public Offering of Shares by Hangzhou Hikrobot Technology, Ltd., a Subsidiary of the Company, and Listing on the SZSE ChiNextMarket, and Plan on Spin-off of Hangzhou Hikrobot Technology Co., Ltd., a subsidiary of the Company, and Listing on the SZSE ChiNext Market. Approved the initialpublic offering of RMB common shares (A shares) and listing on the SZSE ChiNext Market of the subsidiary, Hangzhou Hikrobot Technology Ltd., after completingthe joint-stock system reform. For details, please refer to the Plan on Spin-off of Hangzhou Hikrobot Technology Ltd., a Subsidiary of the Company, and Listing on theSZSE ChiNext Market published by the Company on June 11, 2022 on cninfo website (www.cninfo.com.cn). On July 20, 2022, the 5
th
meeting of the 5
th
session of the
Board of Directors' Strategy Committee in 2022 reviewed and approved the Proposal on the Change the Hangzhou Hikrobot Technology Ltd., a Holding Subsidiary ofthe Company, to A Company Limited by Shares On July 21, 2022, Hangzhou Hikrobot Technology Ltd was restructured to a company limited by shares as a whole. OnDecember 9, the Proposal on Hangzhou Hikvision Digital Technology Co., Ltd.'s Plan on the Spin-off of Hangzhou Hikrobot Technology Co., Ltd., a subsidiary of theCompany, and Listing on the SZSE ChiNext Market (revised draft) was reviewed and approved by the 15
th
meeting of the 5
th
session of the Board of Directors and the
th
meeting of the 5
th session of the Board of Supervisors. On December 26, 2012, the Company's 3
rd
Extraordinary General Meeting in 2022 reviewed and approvedthe relevant proposals on the spin-off of Hangzhou Hikrobot Technology Co., Ltd. to be listed on the SZSE ChiNext Market. On March 7
th
2023, Hangzhou HikrobotCo., Ltd. (hereinafter referred to as "HikRobot") received Notice on Accepting the Application Documents for the Initial Public Offering of Shares and Listing on theSZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd. (SZSE Listing Review [2023] No. 252) issued by Shenzhen Stock Exchange, and SZSE considered thatapplication documents were completed and decided to accept. For details, please refer to the Announcement on the Application for the Initial Public Offering of Sharesand Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd., a Subsidiary of the Company, is Accepted by the SZSE (Announcement No.: 2023-008)published by the Company on cninfo website (www.cninfo.com.cn) on March 8,
2023.
Section VII Changes in Shares and Information about ShareholdersI. Changes in Share Capital
1. Table of Changes in Share Capital
Unit: Share
| Before the change | Changes in the period (+, -) | After the change | |||||||
| Shares | Ratio | New Shares Issued | Bonus share | Share transferred from capital reserve | Others | Sub-total | Shares | Ratio | |
| 1. Shares subject to conditional restriction(s) | 215,314,570 | 2.31% | 97,402,605 | -57,468,669 | 39,933,936 | 255,248,506 | 2.71% | ||
| 1) State holdings | |||||||||
| 2) Shares held by state-owned corporates | |||||||||
| 3) Shares held by other domestic investors | 215,200,030 | 2.31% | 97,266,605 | -57,411,399 | 39,855,206 | 255,055,236 | 2.70% | ||
| Including: held by domestic corporations | |||||||||
| held by domestic individuals | 215,200,030 | 2.31% | 97,266,605 | -57,411,399 | 39,855,206 | 255,055,236 | 2.70% | ||
| 4) Shares held by overseas investors | 114,540 | 0.00% | 136,000 | -57,270 | 78,730 | 193,270 | 0.00% | ||
| Including: held by overseas corporations | |||||||||
| held by overseas individuals | 114,540 | 0.00% | 136,000 | -57,270 | 78,730 | 193,270 | 0.00% | ||
| 2. Shares without restriction | 9,120,491,544 | 97.69% | 55,180,574 | 55,180,574 | 9,175,672,118 | 97.29% | |||
| 1) RMB ordinary shares | 9,120,491,544 | 97.69% | 55,180,574 | 55,180,574 | 9,175,672,118 | 97.29% | |||
| 2) Domestically listed foreign shares | |||||||||
| 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 | |
| 3) Foreign shares listed overseas | |||||||||
| 4) Others | |||||||||
| 3. Total | 9,335,806,114 | 100.00% | 97,402,605 | -2,288,095 | 95,114,510 | 9,430,920,624 | 100.00% | ||
Note: the tailing difference of the data in the table above is due to rounding to two decimal.
Reason for the changes in share capital
√Applicable □Inapplicable
(1) During the Reporting Period, the Company Completed the Grant of the 2021 Restricted Share Incentive SchemeOn December 30, 2021, proposals were reviewed and approved by the 7
th Meeting of the 5
th
session of the Board of Directors of the Company, including the 2021Restricted Stock Plan (Revised Draft) and its Summary and Proposal to the General Meeting of Shareholders to Authorize the Board of Directors to Manage RelevantMatters of the 2021 Restricted Share Incentive Scheme, proposing the General Meeting of Shareholders to authorize the Board of Directors to implement relevantmatters of the 2021 Restricted Share Incentive Scheme.
On January 18, 2022, the Proposal on Granting Restricted Shares to Grantees under the 2021 Restricted Share Incentive Scheme was reviewed and approved bythe 8
th
Meeting of the 5
th
session of the Board of Directors and the 8
th
Meeting of the 5
th
session of the Board of Supervisors of the Company. Based on the relevantlaws, regulations, department rules, and normative documents such as the Measures for the Management of Equity Incentives of Listed Companies, as well as 2021Restricted Stock Plan (Revised Draft) and related authorization approved by the 1
st
Extraordinary General Meeting of Shareholders in 2022, the Company has completedthe share grant and registration of the 2021 Restricted Share Incentive Scheme. The grantees are 9,738 people, and the total amount of restricted shares granted is97,402,605 shares, accounting for 1.04% of the total share capital of the Company before the grant. The granted shares were listed on February 11, 2022, and the total
share capital of the Company increased by 97,402,605 shares from 9,335,806,114 shares to 9,433,208,719 shares.
For details, please refer to the Announcement on the Completion of the Grant of Shares under the 2021 Restricted Share Incentive Scheme published by theCompany on www.cninfo.com.cn on February 10th 2022 (No. 2022-011).
(2) During the reporting period, the Company has completed the second vesting, repurchase and cancellation of the 2018 restricted share incentive scheme.
On May 5, 2022, the 10
th
meeting of the 5
th
session of the Board of Directors and the 10
th meeting of the 5
thsession of the Board of Supervisors reviewed andapproved the Proposal on the achievement of unlocking conditions for the second unlocking period of the 2018 restricted Share Incentive Scheme and Proposal on theSecond Repurchase and Cancellation of the Granted but Unvested Restricted Shares under the 2018 Restricted Share Incentive Scheme, the Company has implementedthe vesting of the total amount of 33,142,730 restricted shares for 5,533 grantees, and the vested shares were listed on May 18, 2022. Meanwhile, 2,288,095 restrictedshares that did not meet the incentive conditions were repurchased and cancelled, and the repurchase and cancellation procedures were completed on December 19,2022, and the total share capital of the Company decreased by 2,288,095 shares from 9,433,208,719 shares to 9,430,920,624 shares.
For details, please refer the Indicative Announcement on Vesting, Listing and Circulation of Shares in the Second Vesting Period of the 2018 Restricted ShareIncentive Scheme (No. 2022-036) and the Announcement on the Second Repurchase and Cancellation of the Granted but Unvested Restricted Shares under the 2018Restricted Share Incentive Scheme (No. 2022-071) published by the Company on www.cninfo.com.cn on May 17, 2022 and December 19, 2022, respectively.
Approval for changes in share capital
√Applicable □Inapplicable
(1) The Grant of the 2021 Restricted Share Incentive Scheme
On December 30, 2021, proposals were reviewed and approved by the 7
th Meeting of the 5
th
session of the Board of Directors of the Company, including the 2021Restricted Stock Plan (Revised Draft) and its Summary and Proposal to the General Meeting of Shareholders to Authorize the Board of Directors to Manage Relevant
Matters of the 2021 Restricted Share Incentive Scheme, proposing the General Meeting of Shareholders to authorize the Board of Directors to implement relevantmatters of the 2021 Restricted Share Incentive Scheme. On January 18, 2022, the Proposal on Granting Restricted Shares to Grantees under the 2021 Restricted ShareIncentive Scheme was reviewed and approved by the 8
th
Meeting of the 5
th session of the Board of Directors and the 8
th Meeting of the 5
thsession of the Board ofSupervisors of the Company. Based on the relevant laws, regulations, department rules, and normative documents such as the Measures for the Management of EquityIncentives of Listed Companies, as well as 2021 Restricted Stock Plan (Revised Draft) and related authorization approved by the 1
stExtraordinary General Meeting ofShareholders in 2022, the Company has completed the share grant and registration of the 2021 Restricted Share Incentive Scheme. The grantees are 9,738 people, andthe total amount of restricted shares granted is 97,402,605 shares, accounting for 1.04% of the total share capital of the Company before the grant. The granted shareswere listed on February 11, 2022.
(2) The Second Vesting, Repurchase and Cancellation of the 2018 Restricted Share Incentive SchemeOn May 5, 2022, the 10
th
meeting of the 5
th session of the Board of Directors and the 10
th meeting of the 5
thsession of the Board of Supervisors reviewed andapproved the Proposal on the achievement of unlocking conditions for the second unlocking period of the 2018 restricted Share Incentive Scheme and Proposal on theSecond Repurchase and Cancellation of the Granted but Unvested Restricted Shares under the 2018 Restricted Share Incentive Scheme, the Company has implementedthe vesting of the total amount of 33,142,730 restricted shares for 5,533 grantees, and the vested shares were listed on May 18, 2022. Meanwhile, 2,288,095 restrictedshares that did not meet the incentive conditions were repurchased and cancelled, and the repurchase and cancellation procedures were completed on December 19,2022.
Transfer for changes in share capital
√Applicable □Inapplicable
(1) The Grant of the 2021 Restricted Share Incentive Scheme
On February 11, 2022, the restricted shares of the 2021 Restricted Share Incentive Scheme were listed, and the total amount of restricted shares granted is97,402,605 shares. The total share capital of the Company increased by 97,402,605 shares from 9,335,806,114 shares to 9,433,208,719 shares.
(2) The Second Repurchase and Cancellation of the 2018 Restricted Share Incentive Scheme
On December 19, 2022, the second repurchase and cancellation procedures of the granted but unvested restricted shares under the 2018 Restricted Share IncentiveScheme were completed, and the total amount of repurchased and cancelled restricted shares is 2,288,095. The total share capital of the Company decreased by2,288,095 shares from 9,433,208,719 shares to 9,430,920,624 shares.
Effects of changes in share capital on the basic earnings per share ("EPS"), diluted EPS, net assets per share attributable to common shareholders of theCompany, 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 | Vesting date |
| Grantees of restricted share incentive plan (consolidated) | 68,762,683 | 97,402,605 | 35,430,825 | 130,734,463 | Restricted shares of share incentive scheme. The granted 97,402,605 restricted shares under the 2021 Restricted Share Incentive Scheme were listed. | May 18, 2022 |
| Qu Liyang | 11,812 | 0 | 0 | 11,812 | Restricted shares for senior executives | According to the relevant |
| Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Vesting date |
| Wang Qiuchao | 26,250 | 0 | 0 | 26,250 | Restricted shares for senior executives | regulations on the management of executive shares |
| Xu Lirong | 227,250 | 0 | 0 | 227,250 | Restricted shares for senior executives | |
| Hu Yangzhong | 116,434,858 | 0 | 0 | 116,434,858 | Restricted shares for senior executives | |
| Wu Weiqi | 6,473,317 | 0 | 0 | 6,473,317 | Restricted shares for senior executives | |
| He Hongli | 248,625 | 0 | 0 | 248,625 | Restricted shares for senior executives | |
| Cai Changyang | 82,125 | 0 | 0 | 82,125 | Restricted shares for senior executives + partial of the vested restricted shares turning into restricted shares for senior executives | |
| Xu Ximing | 29,550 | 59,100 | 0 | 88,650 | Restricted shares for senior executives + partial of the vested restricted shares turning into restricted shares for senior executives | |
| Bi Huijuan | 130,950 | 36,900 | 0 | 167,850 | Restricted shares for senior executives + partial of the vested restricted shares turning into restricted shares for senior executives | |
| Pu Shiliang | 161,925 | 30,000 | 0 | 191,925 | Restricted shares for senior executives + partial of the vested restricted shares turning into restricted shares for senior executives | |
| Jin Duo | 82,125 | 0 | 0 | 82,125 | Restricted shares for senior executives | |
| Jin Yan | 147,000 | 33,000 | 0 | 180,000 | Restricted shares for senior executives + partial of the vested restricted shares turning into restricted shares for senior executives | |
| Huang Fanghong | 235,875 | 33,000 | 0 | 268,875 | Restricted shares for senior executives + partial of the vested restricted shares turning into restricted shares for senior executives | |
| Xu Peng | 0 | 19311 | 0 | 19,311 | Restricted shares for senior executives + partial of the vested 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 | Vesting date |
| Guo Xudong | 0 | 11070 | 0 | 11,070 | Restricted shares for senior executives + partial of the vested restricted shares turning into restricted shares for senior executives | |
| Total | 193,054,345 | 97,624,986 | 35,430,825 | 255,248,506 | -- | -- |
Note:
1. Executives who are grantees under incentive restricted shares scheme, his/her holding incentive restricted shares are counted within the "Grantees of restrictedshare incentive plan (consolidated)" on the first row.
2. On February 11, 2022, the restricted shares of the 2021 Restricted Share Incentive Scheme were listed, and the actual total amount of restricted shares granted is97,402,605 shares.
3. The total amount of vested shares of the "Grantees of restricted share incentive plan (consolidated)" in current period is 35,430,825 shares, including 33,142,730vested shares and 2,288,095 repurchased and cancelled shares of the 2018 Restricted Share Incentive Scheme.
II. Issuance and Listing of Securities
1. Securities (exclude Preferred Share) Issued during the Reporting Period
√Applicable □Inapplicable
| Type of stocks and derivative securities | Issue date | Issue Price （or rate） | Issue amount (share) | Listing date | Listing approved amount (share) | Terminal date of transaction | Disclosure index | Disclosure date |
| Shares | ||||||||
| Restricted shares | February 11, 2022 | RMB29.71/share | 97,402,605 | February 11, 2022 | 97,402,605 | www.cninfo.com.cn | February 10, 2022 | |
2. Explanation on Changes in Total Share Capital, the Structure of Shareholders, and the Structure of Assets and Liabilities of the Company
√ Applicable □ Inapplicable
(1) The Grant of the 2021 Restricted Share Incentive Scheme
On February 11, 2022, the restricted shares of the 2021 Restricted Share Incentive Scheme were listed, and the total amount of restricted shares granted is97,402,605 shares. The total share capital of the Company increased by 97,402,605 shares from 9,335,806,114 shares to 9,433,208,719 shares.
(2) The Second Repurchase and Cancellation of the 2018 Restricted Share Incentive Scheme
On December 19, 2022, the second repurchase and cancellation procedures of the granted but unvested restricted shares under the 2018 Restricted Share IncentiveScheme were completed, and the total amount of repurchased and cancelled restricted shares is 2,288,095. The total share capital of the Company decreased by2,288,095 shares from 9,433,208,719 shares to 9,430,920,624 shares.
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 | 408,327 | The total number of ordinary shareholders at the end of the previous month before the disclosure date of the annual report | 329,519 | ||||||
| Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them | |||||||||
| Name of shareholder | Nature of shareholder | Share-holding percentage (%) | Total ordinary shares held at the end of the reporting period | Increase/decrease during the reporting period | The number of shares held with trading restrictions | The number of shares held without trading restrictions | Pledged or marked or frozen | ||
| Status | Amount | ||||||||
| China Electronics Technology HIK Group Co., Ltd. | Domestic state-owned corporation | 36.09% | 3,403,879,509 | - | - | 3,403,879,509 | Pledged | 50,000,000 | |
| Gong Hongjia | Overseas individual | 10.21% | 962,504,814 | - | - | 962,504,814 | Pledged | 71,270,000 |
| Hangzhou Weixun Equity Investment Partnership (Limited Partnership) | Domestic non-state-owned corporation | 4.78% | 450,795,176 | - | - | 450,795,176 | Pledged | 28,900,000 |
| Shanghai Perseverance Asset Management Partnership (Limited Partnership) - Perseverance Adjacent Mountain 1 Yuanwang Fund | Other | 4.58% | 432,000,000 | 228,200,000 | - | 432,000,000 | - | - |
| CETC Investment Holdings Co., Ltd. | Domestic state-owned corporation | 2.46% | 232,307,903 | - | - | 232,307,903 | - | - |
| Hangzhou Pukang Equity Investment Partnership (Limited Partnership) | Domestic non-state-owned corporation | 1.94% | 182,510,174 | - | - | 182,510,174 | Pledged | 132,033,000 |
| The 52nd Research Institute at China Electronics Technology Group Corporation | Domestic state-owned corporation | 1.92% | 180,775,044 | - | - | 180,775,044 | - | - |
| Hu Yangzhong | Domestic individual | 1.65% | 155,246,477 | - | 116,434,858 | 38,811,619 | - | - |
| Central Huijin Investment Co., Ltd. | Domestic state-owned corporation | 0.69% | 64,700,691 | - | - | 64,700,691 | - | - |
| Hong Kong Securities Clearing Company Ltd.(HKSCC) | Overseas corporation | 0.55% | 51,463,834 | -34,667,773 | - | 51,463,834 | - |
| Explanation on associated relationship or concerted actions among the above-mentioned shareholders: | China Electronics Technology HIK Group Co., Ltd., CETC Investment Holdings Co., Ltd., and the 52nd Research Institute at China Electronics Technology Group Co., Ltd.are all subject to control of China Electronics Technology Group Corporation. Ms. Chen Chunmei, limited partner of Hangzhou Pukang Equity Investment Partnership (Limited Partnership), is the spouse of Mr. Gong Hongjia, overseas individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding shares in both Hangzhou Weixun Equity Investment Partnership (Limited Partnership) and Hangzhou Pukang Equity Investment Partnership (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 Administrative Measures for Acquisitions of Listed Companies. | |||
| Special explanation on the existence of dedicated securities account among the Top 10 shareholders | As of the end of the reporting period, there is a dedicated securities account for repurchase among the Top 10 shareholders, "A dedicated securities account for repurchase of Hangzhou Hikvision Digital Technology Co., Ltd.", which held 66,987,835 shares of the Company, accounting for 0.71% of the Company's total share capital at the end of the reporting period. | |||
| 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. | 3,403,879,509 | RMB ordinary shares | 3,403,879,509 | |
| Gong Hongjia | 962,504,814 | RMB ordinary shares | 962,504,814 | |
| Hangzhou Weixun Equity Investment Partnership (Limited Partnership) | 450,795,176 | RMB ordinary shares | 450,795,176 | |
| Shanghai Perseverance Asset Management Partnership (Limited Partnership) - Perseverance Adjacent Mountain 1 Yuanwang Fund | 432,000,000 | RMB ordinary shares | 432,000,000 | |
| CETC Investment Holdings Co., Ltd. | 232,307,903 | RMB ordinary shares | 232,307,903 | |
| Hangzhou Pukang Equity Investment Partnership (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 | |
| Central Huijin Investment Co., Ltd. | 64,700,691 | RMB ordinary shares | 64,700,691 | |
| Hong Kong Securities Clearing Company Ltd.(HKSCC) | 51,463,834 | RMB ordinary shares | 51,463,834 | |
| Shanghai Chongyang Strategic Investment Ltd. – Chongyang Strategic Intelligence Fund | 47,775,769 | RMB ordinary shares | 47,775,769 | |
| Explanation on associated relationship and concerted actions among Top 10 shareholders holding shares without trading restrictions, and among Top 10 shareholders and Top 10 shareholders holding shares without trading restrictions | China Electronics Technology HIK Group Co., Ltd., China Electronics Technology Investment Holdings 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. |
| Special explanation on the existence of dedicated securities account among the Top 10 shareholders holding shares without trading restrictions | As of the end of the reporting period, there is a dedicated securities account for repurchase among the Top 10 shareholder holding shares without trading restrictions, "A dedicated securities account for repurchase of Hangzhou Hikvision Digital Technology Co., Ltd.", which held 66,987,835 shares of the Company, accounting for 0.71% of the Company's total share capital at the end of the reporting period. |
| Information on Top 10 shareholders of ordinary shares participating in margin trading and short selling business | Shanghai Chongyang Strategic Investment Ltd. – Chongyang Strategic Intelligence Fund, a shareholder, held 43,418,969 shares of the Company in a margin account. |
Any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conducted any agreed buy-back in the reporting period?
□ Yes √ No
No such case during the current reporting period.
2. Particulars about Controlling Shareholder of the Company
Nature of the controlling shareholder: Central State-ownedType of the actual controller: Corporation
| 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 29, 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. |
| Name of controlling shareholder | Legal Representative /People in charge | Date of establishment | Organization code | Business scope |
| Shares held by the controlling shareholder in other listed companies through controlling or holding during the reporting period | Directly holds 47.16% shares of domestic listed company Phoenix Optical Co. Ltd., and indirectly holds 17.32% shares of domestic listed company Hangzhou EZVIZ Network Co., Ltd. (China Electronics Technology HIK Group Co., Ltd.holds 36.09% shares of the Company and the Company holds 48.00% shares of Hangzhou EZVIZ Network Co., Ltd). | |||
Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
The Company's controlling shareholder has not changed during the reporting period.
3. Particulars about the Company’s Actual Controller & Concerted PartiesNature of the actual controller: Central state-owned assets management agencyType of the actual controller: Corporation
| 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 25, 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. (Market entities independently choose business projects and carry out business activities in accordance with the law; for projects subject to approval according to law, business activities are carried out according to the approved content after approval by relevant departments; the Company cannot engage in business activities of projects prohibited or restricted by national and municipal industrial policies.) |
| 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 16 domestic listed companies including Sun Create Electronic Co., Ltd, CETC Digital Technology Co., Ltd, CETC Cyberspace Security Technology Co., Ltd., CETC Putian Technology Co., Ltd., Tai’ji Computer Corporation Limited, GLARUN Technology Co., Ltd. , Phoenix Optics Co., Ltd., Chengdu Tianao Electronic Co., Ltd., CETC Acoustic-Optic-Electronic Technology Inc., Hebei Sinopack Electronic Technology Co., Ltd., Eastern Communications Co.,Ltd., Eastcompeace Technology Co.,Ltd., Nanjing Putian Telecommunications Co., Ltd., Chengdu Siwei Science and Technology Co., Ltd., Nanjingand Guobo Electronics Co., Ltd., and Hangzhou EZVIZ Network Co., Ltd. and etc. | |||
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
No such change during the reporting period.
The ownership and controlling relationship between the actual controller of the Company and the Company is detailedas follows:
The actual controller controls the Company through trust or other asset management methods
□ Applicable √Inapplicable
4. The Company's Controlling Shareholder or the Largest Shareholder and its Concerted Action Person'sCumulative Pledged Shares Account for 80% of the Company's Shares Held by Them
□ Applicable √ Inapplicable
5. Particulars about Other Corporate Shareholders with Shareholding Proportion over 10%
□ Applicable √ Inapplicable
6. Particulars on Shareholding Decrease Restrictions for the Controlling Shareholders, Actual Controller,Restructurer or Other Committing Parties
□ Applicable √ Inapplicable
IV. The Specific Implementation of Share Repurchase during the Reporting PeriodImplementation progress of share repurchase
√ Applicable □Inapplicable
| Disclosure Date | Planned repurchase amount of shares | Proportion to total share capital | Planned amount of repurchase fund | Repurchase period | Use of repurchase | Amount of repurchased shares (share) | The number of repurchased shares as a proportion of the underlying stock covered by the share incentive scheme |
| September 16, 2022 | Calculated based on that the repurchase price shall not exceed RMB40 per share. The amount shall not exceed 62,500,000 shares and not less than 50,000,000 share, and the final result is subject to the actual repurchase. | Calculated based on that the repurchase price shall not exceed RMB40 per share. The repurchased portion of shares shall not exceed 0.66% and not less than 0.53%, and final result is subject to the actual repurchase. | Shall not exceed RMB2.5 billion (inclusive) and not less than RMB 2 billion (inclusive) | October 11, 2022 – December 30, 202 | Cancel and reduce registered capital in accordance with law | 66,987,835 | Inapplicable |
On September 15, 2022 and October 10,
2022, the Company held the 13
h
meeting of the 5
th
session of the Board ofDirectors and the second extraordinary general meeting of shareholders in 2022 respectively, deliberated and approved theProposal on the Plan of Repurchase Part of the Company's Public Shares, approved the Company using its own fund torepurchase part of its RMB common shares (A shares) that have been issued domestically by means of centralized biddingthrough the trading system of the SZSE, the aggregate amount of repurchase funds shall not exceed RMB2.5 billion(inclusive) and not less than RMB 2 billion (inclusive), the repurchase price shall not exceed RMB40 per share (inclusive),the implementation period of the repurchase shall not exceed 12 months from the date of the general meeting ofshareholders of the Company at which the proposal on the plan of repurchase part of the Company's public shares isreviewed and approved, and the Company will make repurchase decisions and implement them based on market conditionsduring the repurchase period. The shares repurchased by the Company will be cancelled for reducing the registered capitalaccording to law. For details, please refer to the Announcement on Resolutions of 13
th
Meeting of the 5
thSession of theBoard of Directors (Announcement No.: 2022-049), the Announcement on the Plan of Repurchase Part of the Company'sPublic Shares (Announcement No.: 2022-050), the Announcement on Resolutions of the Second Extraordinary GeneralMeeting of Shareholders in 2022 (Announcement No.: 2022-056), the Report on the Plan of Repurchase Part of theCompany's Public Shares (Announcement No.: 2022-057) published by the Company on cninfo website(www.cninfo.com.cn) on September 16, 2022 and October 11,
2022. On October 11,
2022, the Company first repurchased6,820,968 shares of the Company by means of centralized bidding through a dedicated securities account for the repurchase,accounting for 0.0723% of the Company's total share capital at that time. The highest transaction price was RMB29.65per share, the lowest transaction price was RMB28.71 per share, and the total transaction amount was RMB199,981,024.67(excluding transaction fees). For details, please refer to the Announcement on the Initial Repurchase of the Company'sShares (Announcement No.: 2022-059) published by the Company on cninfo website (www.cninfo.com.cn) on October12,
2022. During the repurchase period, the Company disclosed the progress of repurchase as of the end of last monthwithin the first three trading days each month based on the regulation. For details, please refer to the Announcement onthe Progress of Repurchase (Announcement No.: 2022-063) (Announcement No.: 2022-066) published by the Company
on cninfo website (www.cninfo.com.cn) on November 2, 2022, December 3, 2022, respectively. As of December 30, 2022,the repurchase of shares had been completed, and the actual repurchase date was between October 11, 2022 and December30, 2022, meet the requirement on implementation period of repurchase in repurchase plan. As of December 30, 2022, theCompany used the dedicated securities account for share repurchase to cumulatively repurchase shares with the totalamount of 66,987,835 shares by means of centralized bidding, accounting for 0.7103% of the Company's total share capitalat that time (9,430,920,624 shares). The highest transaction price was RMB35.13 per share, the lowest transaction pricewas RMB26.83 per share, and the total transaction amount was RMB2,043,476,488.53 (excluding transaction fees). Thesource of share-repurchase funding was from the Company's own fund, and the price of repurchase did not exceed theupper limit of the price (RMB40 per share) specified in the repurchase plan. The repurchase complies with relevant laws,regulations and rules from the disclosed repurchase plan. For details, please refer to the Announcement on the Progressand Result of Repurchase of the Company's Shares and Changes in Shares (Announcement No.: 2023-001) published bythe Company on cninfo website (www.cninfo.com.cn) on January 4,
2023. On January 13, 2023, the Company hadcompleted the cancellation procedures for the above shares at the Shenzhen branch of China Securities Depository andClearing Ltd., with the total amount of 66,987,835 shares, accounting for 0.7103% of the Company's total share capitalbefore the cancellation (9,430,920,624 shares), and the number of cancelled shares is equal to the number of actualrepurchased shares. After the completion of the repurchase and cancellation of shares, the Company's total share capitalchanges from 9,430,920,624 shares to 9,363,932,789 shares. For details, please refer to the Announcement on theCompletion of the Cancellation of the Company's Repurchased Shares and Changes in Shares (Announcement No.: 2023-002) published by the Company on cninfo website (www.cninfo.com.cn) on January 17, 2023.Implementation progress of reduce holdings of repurchased shares by means of centralized bidding
□Applicable√ Inapplicable
Section VIII Information of Preferred Shares
□ Applicable √ Inapplicable
There is no preferred share existed for the Company during the current reporting period.
Section IX Bonds
□ Applicable √ Inapplicable
Section X Financial Report
Audit Report
| Audit Opinion | Standard unqualified audit opinion |
| Audit Report sign-off Date | April 13, 2023 |
| Audit Institution Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
| Audit Report Number | Deloitte Auditors’ Report (Audit) No. 23- P04048 |
| Certified Public Accounts Name | Tang Lianjiong, Cai Jin |
To all shareholders of Hangzhou Hikvision Digital Technology Co., Ltd.:
1. Audit Opinion
We have audited the accompanying financial statements of Hangzhou Hikvision Digital Technology Co., Ltd.(hereinafter referred to as "Hikvision" or "The Group"), including consolidated and parent company's balance sheet as ofDecember 31, 2022, consolidated and parent company's income statement, cash flow statement and statement of changesin owners’ equity of 2022 as well as relevant financial notes to financial statements.
In our opinion, the financial statements annexed have been prepared in accordance with Accounting Standards forBusiness Enterprises in all material respects and they present fairly the consolidated and parent company’s financialposition of Hikvision as of December 31, 2022 and consolidated and parent company’s financial performance and cashflows of 2022.
2. Basis of Opinion
We have conducted our audit in accordance with the Auditing Standards for Chinese Certified Public Accountants."Responsibilities of Certified Public Accountants for Financial Statements Audit" in the audit report further states ourresponsibilities under the standards. As per the code of ethics of Chinese certified public accountants, we are independentfrom Hikvision and have implemented other responsibilities as required by the code of ethics. We believe that the auditevidence we have acquired is sufficient and appropriate to provide a basis for our audit opinion.
3. Key Matters
Key matters are matters we deem the most significant to the financial statements audit for the current period basedon our professional judgment. These matters are handled based on the financial statements audit as a whole and the auditopinion formed accordingly. We don’t present opinions separately on these matters. We confirm that the following mattersare key matters to be communicated through in the audit report.
1) Recognition of Sales Revenues
Description:
As shown in Note (V) 45, the operating revenue in 2022 in the consolidated financial statements of the Group forthe year ended December 31, 2022 is RMB83,166,321,681.14. The product sales revenue, a key performance indicator,reaches RMB78,971,234,689.44, accounting for 94.96% of the operating revenue, which is a significant indicator and hasa significant 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 mayresult in a material misstatement of revenue recognition. Therefore, we regard the occurrence of sales revenue as a keyaudit 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 the sales contract, reviewing its main
transaction terms, evaluating whether revenue recognition complies with requirements of accounting policies of the
Group and the Accounting Standards for Business Enterprises;
(3) Analyzing revenues and gross profits based on product types, to understand whether there are abnormal fluctuations
in 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 model
of the selected domestic companies, additional inspections will be made to the customs declaration record and
shipment record.
2) 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, 2022, the balanceof accounts receivable amounted to RMB32,404,999,921.01, and the balance of provision for credit losses of accountsreceivable amounted to RMB 2,498,705,510.61. The book value of the Group’s accounts receivable is relatively high, andthe provision for credit loss of accounts receivable has a significant impact on the financial statements. As shown in Note(III) 10.2 and Note (III) 31 of the financial statements, the Group makes provisions for credit losses for accounts receivableat an amount equivalent to expected credit losses during the entire duration. For accounts receivable with significantindividual amount and when the debtor has major financial difficulties, etc., the Group recognizes its credit losses based
on individual assets, and classifies other accounts receivable into different combinations based on common credit riskcharacteristics and calculates expected credit losses on a portfolio basis.
For accounts receivable classified into portfolios, the Group uses impairment matrix to determine the expected creditloss provision for accounts receivable. The expected credit loss provision ratio for each portfolio is determined based onthe Group’s historical overdue ratio and default and with reference to the forward-looking information of the industry. Theaccounting estimates above are subject to a high level of uncertainties. Therefore, we identify the recognition of credit lossprovision for accounts receivable on a portfolio basis 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 expected credit loss
provision for accounts receivable by the Group, and testing the effectiveness of its operation;
(2) Understanding the Group’s accounting policies for expected credit loss on accounts receivable; for the model where
the Group’s management estimates expected credit loss provision for accounts receivable on a portfolio basis, we
mainly performed the following procedures;
-Assessing the rationality of measurement method by using impairment matrix model, and the rationality of the key
parameters and assumptions used in the impairment matrix model, including classification of different portfolios,
classification of stage, forward-looking adjustment, etc.;
- Obtaining the historical default data used by the Group’s management in determining the historical loss rate of
accounts receivable, and evaluating the accuracy thereof;
- Selecting samples to test the accuracy of the classification of portfolio and stage by the Group’s management;
- Recalculating the expected credit loss provision based on default loss percentage.
4. 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.
5. 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.
6. 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 canalways 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 and
implement audit procedures to cope with these risks, and obtain adequate and appropriate audit evidence as the basis
for expressing audit opinions. As fraud may involve collusion, forgery, willful omission, misrepresentation or
override of internal control, the risk of not discovering a material misstatement due to fraud is higher than the 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.
(3) Evaluate the properness of accounting policy selected by the management and the rationality of accounting estimate
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 uncertainties in 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 attention of the users of
the report to the relevant disclosures in the financial statements in the audit report. If the disclosure is insufficient, we
should issue modified audit opinions. Our conclusion is based on the information available up to the date of the audit
report. However, future events or conditions may result in the failure of Hikvision to continue as a going concern.
(5) Evaluate the overall presentation (including the disclosure), structure and content of the financial statements and
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 of
Hikvision 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 audit
of 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.
On December 31, 2022
Consolidated Balance Sheet
Unit: RMB
| Item | Notes | On December 31, 2022 | On December 31, 2021 |
| Current Assets: | |||
| Cash and bank balances | (V)1 | 40,011,863,999.94 | 34,721,870,931.36 |
| Held-for-trading financial assets | (V)2 | 12,807,438.36 | 34,320,010.83 |
| Notes receivable | (V)3 | 2,519,988,159.23 | 1,522,760,905.30 |
| Accounts receivable | (V)4 | 29,906,294,410.40 | 26,174,773,100.42 |
| Receivables for financing | (V)5 | 1,484,218,258.74 | 1,316,035,122.06 |
| Prepayments | (V)6 | 534,780,120.52 | 505,798,253.35 |
| Other receivables | (V)7 | 516,503,485.58 | 359,620,445.88 |
| Inventories | (V)8 | 18,998,222,978.81 | 17,974,112,407.60 |
| Contract assets | (V)9 | 2,118,223,370.98 | 1,411,372,624.91 |
| Non-current assets due within one year | (V)10 | 996,902,343.27 | 975,960,437.14 |
| Other current assets | (V)11 | 806,832,941.58 | 1,022,600,377.78 |
| Total Current Assets | 97,906,637,507.41 | 86,019,224,616.63 | |
| Non-current Assets: | |||
| Long-term receivables | (V)12 | 540,647,965.30 | 613,067,944.97 |
| Long-term equity investment | (V)13 | 1,252,033,513.41 | 982,165,546.45 |
| Other non-current financial assets | (V)14 | 423,893,239.94 | 438,724,172.22 |
| Fixed assets | (V)15 | 8,539,842,630.68 | 6,695,590,671.27 |
| Construction in progress | (V)16 | 3,770,803,300.80 | 2,323,336,098.68 |
| Right-of-use assets | (V)17 | 574,478,326.31 | 566,393,672.75 |
| Intangible assets | (V)18 | 1,544,933,502.19 | 1,304,247,415.07 |
| Goodwill | (V)19 | 217,386,531.28 | 202,381,895.37 |
| Long-term deferred expenses | (V)20 | 177,277,742.41 | 158,007,174.90 |
| Deferred tax assets | (V)21 | 1,469,646,489.04 | 1,210,877,575.24 |
| Other non-current assets | (V)22 | 2,815,702,012.70 | 3,350,526,411.63 |
| Total Non-current Assets | 21,326,645,254.06 | 17,845,318,578.55 | |
| Total Assets | 119,233,282,761.47 | 103,864,543,195.18 |
On December 31, 2022
Consolidated Balance Sheet-continued
Unit: RMB
| Item | Notes | On December 31, 2022 | On December 31, 2021 |
| Current Liabilities: | |||
| Short-term borrowings | (V)23 | 3,343,071,972.89 | 4,074,962,469.97 |
| Held-for-trading financial liabilities | (V)24 | 68,299,685.57 | 4,062,317.57 |
| Notes payable | (V)25 | 1,207,756,963.94 | 1,339,998,383.34 |
| Accounts payable | (V)26 | 16,025,563,802.99 | 15,889,694,981.12 |
| Contract liabilities | (V)27 | 2,644,496,508.36 | 2,580,894,226.59 |
| Payroll payable | (V)28 | 4,837,302,455.95 | 4,595,552,073.12 |
| Taxes payable | (V)29 | 1,234,032,138.37 | 1,461,470,029.69 |
| Other payables | (V)30 | 3,203,308,686.31 | 1,830,626,583.03 |
| Non-current liabilities due within one year | (V)31 | 868,197,272.46 | 596,915,360.58 |
| Other current liabilities | (V)32 | 923,721,593.78 | 917,479,922.61 |
| Total Current Liabilities | 34,355,751,080.62 | 33,291,656,347.62 | |
| Non-current Liabilities: | |||
| Long-term borrowings | (V)33 | 7,522,315,341.60 | 3,284,371,642.52 |
| Lease liabilities | (V)34 | 277,255,924.83 | 317,951,879.21 |
| Long-term payables | (V)35 | 7,569,934.67 | 9,009,331.50 |
| Provisions | (V)36 | 219,365,227.62 | 200,675,950.96 |
| Deferred income | (V)37 | 933,260,426.12 | 738,586,458.05 |
| Deferred tax liabilities | (V)21 | 116,502,770.84 | 93,315,151.17 |
| Other non-current liabilities | (V)38 | 2,831,108,087.59 | 534,334,158.27 |
| Total Non-current Liabilities | 11,907,377,713.27 | 5,178,244,571.68 | |
| Total Liabilities | 46,263,128,793.89 | 38,469,900,919.30 | |
| Owners’ Equity | |||
| Share capital | (V)39 | 9,430,920,624.00 | 9,335,806,114.00 |
| Capital reserves | (V)40 | 10,141,153,435.32 | 5,404,070,600.07 |
| Less: Treasury shares | (V)41 | 5,316,033,650.24 | 1,023,188,723.04 |
| Other comprehensive income | (V)42 | (42,587,158.81) | (77,184,125.29) |
| Surplus reserves | (V)43 | 4,715,460,312.00 | 4,672,505,348.00 |
| Retained earnings | (V)44 | 49,460,240,986.49 | 45,148,877,451.52 |
| Total Owners' Equity Attributable to Owner of the Company | 68,389,154,548.76 | 63,460,886,665.26 | |
| Minority equity | 4,580,999,418.82 | 1,933,755,610.62 | |
| Total Owners' Equity | 72,970,153,967.58 | 65,394,642,275.88 | |
| Total Liabilities and Owners' Equity | 119,233,282,761.47 | 103,864,543,195.18 |
The accompanying notes form part of the financial statements.The financial statements were signed by the following:
Legal Representative: Chen Zongnian; Person in charge of the accounting work: Jin Yan;Person in Charge of the Accounting Department: Zhan Junhua
On December 31, 2022
Balance Sheet of the Parent Company
Unit: RMB
| Item | Notes | On December 31, 2022 | On December 31, 2021 |
| Current Assets: | |||
| Cash and bank balances | 27,826,883,144.97 | 26,656,489,813.38 | |
| Held-for-trading financial assets | - | 4,489,098.88 | |
| Notes receivable | 291,894,821.88 | 254,830,140.51 | |
| Accounts receivable | (XV)1 | 24,375,815,151.52 | 23,878,118,071.42 |
| Receivables for financing | 1,380,237.21 | 3,116,794.78 | |
| Prepayments | 78,220,424.69 | 116,908,227.97 | |
| Other receivables | (XV)2 | 2,409,877,936.73 | 1,514,142,364.05 |
| Inventories | 287,356,998.22 | 346,835,446.94 | |
| Contract assets | 2,070,526.66 | 2,627,800.33 | |
| Non-current assets due within one year | 145,198,110.49 | 123,112,934.70 | |
| Other current assets | 10,325,583.58 | 46,183,195.94 | |
| Total Current Assets | 55,429,022,935.95 | 52,946,853,888.90 | |
| Non-current Assets: | |||
| Long-term accounts receivable | 544,335,046.78 | 237,682,275.59 | |
| Long-term equity investment | (XV)3 | 7,735,758,795.50 | 7,785,916,631.88 |
| Other non-current financial assets | 336,896,766.52 | 435,839,952.22 | |
| Fixed assets | 3,632,220,781.28 | 2,834,983,102.39 | |
| Construction in progress | 31,536,529.55 | 450,957,191.99 | |
| Right-of-use assets | 106,886,641.18 | 67,592,195.40 | |
| Intangible assets | 108,027,048.91 | 134,626,963.77 | |
| Long-term deferred expenses | 44,756,196.08 | 61,162,816.25 | |
| Deferred tax assets | 171,524,646.19 | 281,893,463.93 | |
| Other non-current assets | 20,271,638.61 | 21,042,856.65 | |
| Total Non-current Assets | 12,732,214,090.60 | 12,311,697,450.07 | |
| Total Assets | 68,161,237,026.55 | 65,258,551,338.97 |
On December 31, 2022
Balance Sheet of the Parent Company - continued
Unit: RMB
| Item | Notes | On December 31, 2022 | On December 31, 2021 |
| Current Liabilities: | |||
| Short-term borrowings | 371,761,513.12 | 361,117,361.14 | |
| Accounts payable | 871,899,603.98 | 713,263,324.12 | |
| Contract liabilities | 252,386,307.55 | 368,945,242.08 | |
| Payroll payable | 2,751,925,304.64 | 2,838,109,439.40 | |
| Taxes payable | 371,935,883.41 | 861,102,872.06 | |
| Other payables | 1,523,785,190.90 | 1,334,246,256.62 | |
| Non-current liabilities due within one year | 280,431,699.90 | 66,524,298.83 | |
| Other current liabilities | 504,448,226.96 | 561,225,504.26 | |
| Total Current Liabilities | 6,928,573,730.46 | 7,104,534,298.51 | |
| Non-current Liabilities: | |||
| Long-term borrowings | 1,674,051,800.00 | 1,254,076,200.00 | |
| Lease liabilities | 51,034,219.65 | 27,440,248.49 | |
| Provisions | 112,936,131.57 | 113,998,912.05 | |
| Deferred Income | 463,302,126.80 | 365,699,705.71 | |
| Other non-current liabilities | 2,806,169,050.05 | 511,594,361.52 | |
| Total Non-current Liabilities | 5,107,493,328.07 | 2,272,809,427.77 | |
| Total Liabilities | 12,036,067,058.53 | 9,377,343,726.28 | |
| Owners’ Equity | |||
| Share capital | 9,430,920,624.00 | 9,335,806,114.00 | |
| Capital reserves | 8,264,384,780.30 | 4,937,523,553.84 | |
| Less: Treasury shares | 5,316,033,650.24 | 1,023,188,723.04 | |
| Surplus reserves | 4,715,460,312.00 | 4,672,505,348.00 | |
| Retained earnings | 39,030,437,901.96 | 37,958,561,319.89 | |
| Total Owners' Equity | 56,125,169,968.02 | 55,881,207,612.69 | |
| Total Liabilities and Owners' Equity | 68,161,237,026.55 | 65,258,551,338.97 |
For the reporting period from January 1, 2022 to December 31, 2022
Consolidated Income Statement
Unit: RMB
| Item | Notes | Amount for the current period | Amount for the prior period |
| I. Total Revenue | (V)45 | 83,166,321,681.14 | 81,420,053,539.27 |
| Less：Total operating costs | (V)45 | 47,996,254,466.32 | 45,329,400,332.65 |
| Business taxes and surcharges | (V)46 | 581,896,696.51 | 560,980,007.52 |
| Selling expenses | (V)47 | 9,773,457,336.23 | 8,586,443,668.02 |
| Administrative expenses | (V)48 | 2,642,113,372.00 | 2,132,250,463.96 |
| Research and Development (R&D) expenses | (V)49 | 9,814,444,260.55 | 8,251,645,101.39 |
| Financial expenses | (V)50 | (990,401,533.32) | (133,343,257.84) |
| Including：Interest expenses | 311,251,154.55 | 229,950,217.93 | |
| Interest income | 921,912,411.61 | 885,545,988.62 | |
| Add: Other Income | (V)51 | 2,482,467,855.97 | 2,628,560,820.46 |
| Investment income | (V)52 | 218,396,306.44 | 174,205,547.82 |
| Including: Investment gains in associated enterprise and joint-venture enterprise | 106,498,595.01 | 114,137,281.18 | |
| Gains (losses) from changes in fair values | (V)53 | (155,567,520.89) | (38,200,024.47) |
| Credit impairment gains (losses) | (V)54 | (585,161,235.45) | (569,758,165.50) |
| Impairment gains (losses) of assets | (V)55 | (508,453,828.82) | (447,689,406.60) |
| Asset disposal income (losses) | (17,578,905.00) | 34,225,603.81 | |
| II. Operating Profit | 14,782,659,755.10 | 18,474,021,599.09 | |
| Add: Non-operating income | (V)56 | 87,365,985.48 | 75,744,369.29 |
| Less: Non-operating expenses | (V)57 | 15,074,113.11 | 81,554,105.75 |
| III. Total Profit | 14,854,951,627.47 | 18,468,211,862.63 | |
| Less: Income tax expenses | (V)58 | 1,297,981,905.54 | 957,490,652.16 |
| IV. Net Profit | 13,556,969,721.93 | 17,510,721,210.47 | |
| 4.1 Classification by continuous operation | |||
| (a) Net profit on continuous operation | 13,556,969,721.93 | 17,510,721,210.47 | |
| (b) Net loss on terminated operation | - | - | |
| 4.2 Classification by attribution of ownership | |||
| (a) Profit or loss attributable to minority shareholders | 719,627,660.86 | 710,310,178.42 | |
| (b) Net profit attributable to owners of parent company | 12,837,342,061.07 | 16,800,411,032.05 | |
| V. Other Comprehensive Income, Net of Income Tax | (V)42 | 88,691,088.90 | 4,631,122.68 |
| Other comprehensive income attributable to owners of the Company, net of tax | 34,596,966.48 | 7,809,801.65 | |
| (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 | 34,596,966.48 | 7,809,801.65 | |
| 1. Exchange differences arising on conversion of financial statements denominated in foreign currencies | 34,596,966.48 | 7,809,801.65 | |
| Other comprehensive income attributable to minority interests, net of tax | 54,094,122.42 | (3,178,678.97) | |
| VI. Total Comprehensive Income | 13,645,660,810.83 | 17,515,352,333.15 |
| Item | Notes | Amount for the current period | Amount for the prior period |
| Total comprehensive income attributable to owners of the parent company | 12,871,939,027.55 | 16,808,220,833.70 | |
| Total comprehensive income attributable to minority shareholders | 773,721,783.28 | 707,131,499.45 | |
| VII. Earnings per Share | |||
| (I) Basic earnings per share | (XVI)2 | 1.370 | 1.810 |
| (II) Diluted earnings per share | (XVI)2 | 1.370 | 1.806 |
For the reporting period from January 1, 2022 to December 31, 2022
Income Statement of the Parent Company
Unit: RMB
| Item | Notes | Amount for the current period | Amount for the prior period |
| I. Total Revenue | (XV)4 | 24,284,505,338.35 | 28,072,593,261.87 |
| Less: Total operating Cost | (XV)4 | 5,097,739,346.67 | 5,240,788,874.32 |
| Business taxes and surcharges | 282,765,774.49 | 327,853,515.36 | |
| Selling expenses | 3,580,457,766.03 | 3,578,887,952.72 | |
| Administrative expenses | 883,004,663.75 | 767,812,041.04 | |
| Research and Development (R&D) expenses | 6,920,548,083.50 | 6,049,343,480.30 | |
| Financial expenses | (654,027,587.29) | (740,196,978.65) | |
| Including : Interest expenses | 103,549,530.55 | 104,266,342.46 | |
| Interest income | 765,252,513.50 | 701,176,190.67 | |
| Add: Other income | 1,747,068,413.89 | 1,889,775,429.25 | |
| Investment income | (XV)5 | 387,283,344.13 | 237,198,739.71 |
| Including: Investment gains in associated enterprise and joint-venture enterprise | 118,900,466.08 | 109,087,538.20 | |
| Gains (losses) from changes in fair values | (74,432,284.58) | (48,725,796.17) | |
| Credit impairment gains (losses) | (122,761,912.01) | (119,440,900.17) | |
| Impairment gains (losses) of assets | (1,195,518.35) | (2,669,913.88) | |
| Asset disposal income (losses) | (2,215,205.61) | 30,917,301.16 | |
| II. Operating profit | 10,107,764,128.67 | 14,835,159,236.68 | |
| Add: Non-operating income | 18,830,134.69 | 9,542,292.17 | |
| Less: Non-operating expenses | 1,205,910.50 | 61,845,120.19 | |
| III. Total profit | 10,125,388,352.86 | 14,782,856,408.66 | |
| Less: Income tax expenses | 527,533,244.69 | 694,128,740.64 | |
| IV. Net profit | 9,597,855,108.17 | 14,088,727,668.02 | |
| V. Other comprehensive income, net of income tax | - | - | |
| VI. Total comprehensive income | 9,597,855,108.17 | 14,088,727,668.02 |
For the reporting period from January 1, 2022 to December 31, 2022
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 receipts from sale of goods or rendering of services | 86,798,776,609.53 | 83,503,340,788.69 | |
| Receipts of tax refunds | 3,767,899,232.43 | 4,683,092,023.52 | |
| Other cash receipts relating to operating activities | (V)59(1) | 2,102,400,537.73 | 2,798,426,938.05 |
| Sub-total of ash inflows from operating activities | 92,669,076,379.69 | 90,984,859,750.26 | |
| Cash payments for goods purchased and services received | 54,179,038,046.40 | 53,662,747,197.88 | |
| Cash paid to and on behalf of employees | 16,397,768,429.86 | 12,868,949,235.34 | |
| Payments of various types of taxes | 5,947,034,037.02 | 6,447,300,353.27 | |
| Other cash payments relating to operating activities | (V)59(2) | 5,981,100,484.03 | 5,297,338,276.78 |
| Sub-total of cash outflows from operating activities | 82,504,940,997.31 | 78,276,335,063.27 | |
| Net Cash Flows from Operating Activities | (V)60(1) | 10,164,135,382.38 | 12,708,524,686.99 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from recovery of investments | 7,309,732,287.10 | 6,189,975,412.80 | |
| Cash receipts from investment income | 51,892,209.92 | 115,644,801.97 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 12,978,200.27 | 64,430,953.56 | |
| Other cash receipts relating to investing activities | (V)59(3) | 47,770,416.23 | - |
| Sub-total of cash inflows from investing activities | 7,422,373,113.52 | 6,370,051,168.33 | |
| Net cash paid for obtaining subsidiaries and other business units | (V)60(2) | - | 323,604,530.74 |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 3,755,680,900.22 | 3,098,310,855.39 | |
| Cash payments to acquire investments | 7,392,073,275.54 | 6,094,268,306.70 | |
| Other cash payments relating to investment activities | (V)59(4) | - | 10,196,658.79 |
| Sub-total of cash outflows from investing activities | 11,147,754,175.76 | 9,526,380,351.62 | |
| Net Cash Flows from Investing Activities | (3,725,381,062.24) | (3,156,329,183.29) | |
| III. Cash Flows from Financing Activities: | |||
| Cash receipts from capital contributions | 6,015,196,647.38 | 207,702,900.00 | |
| Including: cash receipts from capital contributions from minority owners of subsidiaries | 3,121,365,252.83 | 207,702,900.00 | |
| Cash receipts from borrowings | 8,360,333,394.08 | 5,915,784,932.52 | |
| Sub-total of cash inflows from financing activities | 14,375,530,041.46 | 6,123,487,832.52 | |
| Cash repayments of borrowings | 4,786,252,322.38 | 7,758,027,348.85 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 8,734,449,665.28 | 7,844,017,257.76 | |
| Including : Dividends and profits paid by subsidiaries to minority shareholders | 3,050,502.27 | 4,704,000.00 | |
| Other cash payments relating to financing activities | (V)59(5) | 2,310,746,266.55 | 312,940,867.51 |
| Sub-total of cash outflows from financing activities | 15,831,448,254.21 | 15,914,985,474.12 | |
| Net Cash Flows from Financing Activities | (1,455,918,212.75) | (9,791,497,641.60) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | 228,609,977.98 | (181,591,311.21) | |
| V. Net Increase (Decrease) in Cash and Cash Equivalents | (V)60(1) | 5,211,446,085.37 | (420,893,449.11) |
| Add: Opening balance of Cash and Cash Equivalents | (V)60(1) | 34,603,944,429.20 | 35,024,837,878.31 |
| VI. Closing Balance of Cash and Cash Equivalents | (V)60(3) | 39,815,390,514.57 | 34,603,944,429.20 |
For the reporting period from January 1, 2022 to December 31, 2022
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 | 26,487,868,077.06 | 34,148,655,237.57 | |
| Receipts of tax refunds | 1,436,480,287.99 | 1,726,725,329.46 | |
| Other cash receipts relating to operating activities | 1,532,865,664.26 | 976,326,567.89 | |
| Sub-total of cash inflows from operating activities | 29,457,214,029.31 | 36,851,707,134.92 | |
| Cash payments for goods acquired and services received | 5,493,671,074.35 | 8,696,110,952.82 | |
| Cash paid to and on behalf of employees | 7,512,557,371.10 | 6,188,349,496.37 | |
| Payments of various types of taxes | 3,460,034,171.26 | 4,406,691,364.91 | |
| Other cash payments relating to operating activities | 3,467,533,481.78 | 1,765,753,448.19 | |
| Sub-total of cash outflows from operating activities | 19,933,796,098.49 | 21,056,905,262.29 | |
| Net Cash Flows from Operating Activities | (XV)8(1) | 9,523,417,930.82 | 15,794,801,872.63 |
| II. Cash Flows from Investing Activities: | |||
| Cash receipts from recovery of investments | 433,936,760.50 | 33,398,189.82 | |
| Cash receipts from investment income | 199,427,999.55 | 131,960,801.97 | |
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 70,976,304.99 | 84,321,638.76 | |
| Other cash receipts relating to investing activities | 73,174,669,493.77 | 82,668,322,959.43 | |
| Sub-total of cash inflows from investing activities | 73,879,010,558.81 | 82,918,003,589.98 | |
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 830,581,107.94 | 650,844,109.04 | |
| Cash payments to acquire investments | 53,320,000.00 | 942,402,941.96 | |
| Other cash payments relating to investing activities | 74,151,979,147.50 | 83,113,418,266.33 | |
| Sub-total of cash outflows from investing activities | 75,035,880,255.44 | 84,706,665,317.33 | |
| Net Cash Flows from Investing Activities | (1,156,869,696.63) | (1,788,661,727.35) | |
| III. Cash Flows from Financing Activities | |||
| Cash receipts from capital contributions | 2,893,831,394.55 | - | |
| Cash receipts from borrowings | 991,175,000.00 | 1,644,388,055.69 | |
| Other cash receipts relating to financing activities | 10,877,860,127.00 | 15,606,213,712.04 | |
| Sub-total of cash inflows from financing activities | 14,762,866,521.55 | 17,250,601,767.73 | |
| Cash repayments of borrowings | 389,788,200.00 | 4,572,909,918.72 | |
| Cash payments for distribution of dividends or profits or settlement of interest expenses | 8,466,387,329.97 | 7,516,599,420.29 | |
| Other cash payments relating to financing activities | 13,134,864,230.77 | 15,775,258,476.27 | |
| Sub-total of cash outflows from financing activities | 21,991,039,760.74 | 27,864,767,815.28 | |
| Net Cash Flows from Financing Activities | (7,228,173,239.19) | (10,614,166,047.55) | |
| IV. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents | (6,756,445.09) | (17,084,979.94) | |
| V. Net Increase in Cash and Cash Equivalents | (XV)8(1) | 1,131,618,549.91 | 3,374,889,117.79 |
| Add: Opening balance of cash and cash equivalents | (XV)8(1) | 26,639,582,696.49 | 23,264,693,578.70 |
| VI. Closing Balance of Cash and Cash Equivalents | (XV)8(2) | 27,771,201,246.40 | 26,639,582,696.49 |
For the reporting period from January 1, 2022 to December 31, 2022
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
| Items | 2022 | |||||||
| 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 | 9,335,806,114.00 | 5,404,070,600.07 | 1,023,188,723.04 | (77,184,125.29) | 4,672,505,348.00 | 45,148,877,451.52 | 1,933,755,610.62 | 65,394,642,275.88 |
| II. Increase or decrease in the current period | 95,114,510.00 | 4,737,082,835.25 | 4,292,844,927.20 | 34,596,966.48 | 42,954,964.00 | 4,311,363,534.97 | 2,647,243,808.20 | 7,575,511,691.70 |
| (I) Total comprehensive income | - | - | - | 34,596,966.48 | - | 12,837,342,061.07 | 773,721,783.28 | 13,645,660,810.83 |
| (II) Owners’ contributions and reduction in capital | 95,114,510.00 | 4,737,082,835.25 | 4,412,565,229.40 | - | - | - | 1,876,759,941.16 | 2,296,392,057.01 |
| 1. Capital contribution from shareholders | 97,402,605.00 | 2,796,428,789.55 | 2,893,831,394.55 | - | - | - | 58,500,000.00 | 58,500,000.00 |
| 2. Share-based payment recognized in owners’ equity | - | 601,605,075.24 | - | - | - | - | 49,386,376.03 | 650,991,451.27 |
| 3. Business combination of enterprises not under the same control | - | - | - | - | - | - | - | - |
| 4. Others | (2,288,095.00) | 1,339,048,970.46 | 1,518,733,834.85 | - | - | - | 1,768,873,565.13 | 1,586,900,605.74 |
| (III) Profit distribution | - | - | (119,720,302.20) | - | 42,954,964.00 | (8,525,978,526.10) | (3,237,916.24) | (8,366,541,176.14) |
| 1. Transfer to surplus reserves | - | - | - | - | 42,954,964.00 | (42,954,964.00) | - | - |
| 2. Distributions to shareholders | - | - | (119,720,302.20) | - | - | (8,483,023,562.10) | (3,237,916.24) | (8,366,541,176.14) |
| III. Closing balance of the current period | 9,430,920,624.00 | 10,141,153,435.32 | 5,316,033,650.24 | (42,587,158.81) | 4,715,460,312.00 | 49,460,240,986.49 | 4,580,999,418.82 | 72,970,153,967.58 |
For the reporting period from January 1, 2022 to December 31, 2022
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
| Items | 2021 | |||||||
| 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 | 9,343,417,190.00 | 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 |
| II. Increase or decrease in the current period | (7,611,076.00) | 225,293,137.98 | (98,730,014.43) | 7,809,801.65 | - | 9,342,353,625.15 | 1,248,323,372.13 | 10,914,898,875.34 |
| (I) Total comprehensive income | - | - | - | 7,809,801.65 | - | 16,800,411,032.05 | 707,131,499.45 | 17,515,352,333.15 |
| (II) Owners’ contributions and reduction in capital | (7,611,076.00) | 225,293,137.98 | (37,631,007.23) | - | - | - | 545,895,872.68 | 801,208,941.89 |
| 1. Capital contribution from shareholders | - | - | - | - | - | - | 207,702,900.00 | 207,702,900.00 |
| 2. Share-based payment recognized in owners’ equity | - | 340,326,119.26 | - | - | - | - | 29,003,130.85 | 369,329,250.11 |
| 3. Business combination of enterprises not under the same control | - | - | - | - | - | - | 317,436,910.79 | 317,436,910.79 |
| 4. Others | (7,611,076.00) | (115,032,981.28) | (37,631,007.23) | - | - | - | (8,247,068.96) | (93,260,119.01) |
| (III) Profit distribution | - | - | (61,099,007.20) | - | - | (7,458,057,406.90) | (4,704,000.00) | (7,401,662,399.70) |
| 1. Transfer to surplus reserves | - | - | - | - | - | - | - | - |
| 2. Distributions to shareholders | - | - | (61,099,007.20) | - | - | (7,458,057,406.90) | (4,704,000.00) | (7,401,662,399.70) |
| III. Closing balance of the current period | 9,335,806,114.00 | 5,404,070,600.07 | 1,023,188,723.04 | (77,184,125.29) | 4,672,505,348.00 | 45,148,877,451.52 | 1,933,755,610.62 | 65,394,642,275.88 |
For the reporting period from January 1, 2022 to December 31, 2022
Statement of Changes in Owners' Equity of the Parent Company
Unit: RMB
| Item | 2022 | |||||
| Share capital | Capital reserves | Less: Treasury share | Surplus reserve | Retained profits | Total owners' equity | |
| I. Closing balance of the prior year | 9,335,806,114.00 | 4,937,523,553.84 | 1,023,188,723.04 | 4,672,505,348.00 | 37,958,561,319.89 | 55,881,207,612.69 |
| II. Increase or decrease in the current period | 95,114,510.00 | 3,326,861,226.46 | 4,292,844,927.20 | 42,954,964.00 | 1,071,876,582.07 | 243,962,355.33 |
| (I) Total comprehensive income | - | - | - | - | 9,597,855,108.17 | 9,597,855,108.17 |
| (II) Owners’ contributions and reduction in capital | 95,114,510.00 | 3,326,861,226.46 | 4,412,565,229.40 | - | - | (990,589,492.94) |
| 1. Capital contribution from owners | 97,402,605.00 | 2,796,428,789.55 | 2,893,831,394.55 | - | - | - |
| 2. Share-based payment recognized in owners’ equity | - | 507,562,719.42 | - | - | - | 507,562,719.42 |
| 3. Others | (2,288,095.00) | 22,869,717.49 | 1,518,733,834.85 | - | - | (1,498,152,212.36) |
| (III) Profit distribution | - | - | (119,720,302.20) | 42,954,964.00 | (8,525,978,526.10) | (8,363,303,259.90) |
| 1. Transfer to surplus reserves | - | - | - | 42,954,964.00 | (42,954,964.00) | - |
| 2. Distributions to shareholders | - | - | (119,720,302.20) | - | (8,483,023,562.10) | (8,363,303,259.90) |
| III. Closing balance of the current period | 9,430,920,624.00 | 8,264,384,780.30 | 5,316,033,650.24 | 4,715,460,312.00 | 39,030,437,901.96 | 56,125,169,968.02 |
| Item | 2021 | |||||
| Share capital | Capital reserves | Less: Treasury share | Surplus reserve | Retained profits | Total owners' equity | |
| I. Closing balance of the prior year | 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 |
| II. Increase or decrease in the current period | (7,611,076.00) | 167,313,219.68 | (98,730,014.43) | - | 6,630,670,261.12 | 6,889,102,419.23 |
| (I) Total comprehensive income | - | - | - | - | 14,088,727,668.02 | 14,088,727,668.02 |
| (II) Owners’ contributions and reduction in capital | (7,611,076.00) | 167,313,219.68 | (37,631,007.23) | - | - | 197,333,150.91 |
| 1. Share-based payment recognized in owners’ equity | - | 282,346,200.96 | - | - | - | 282,346,200.96 |
| 2. Others | (7,611,076.00) | (115,032,981.28) | (37,631,007.23) | - | - | (85,013,050.05) |
| (III) Profit distribution | - | - | (61,099,007.20) | - | (7,458,057,406.90) | (7,396,958,399.70) |
| 1.Distributions to shareholders | - | - | (61,099,007.20) | - | (7,458,057,406.90) | (7,396,958,399.70) |
| III. Closing balance of the current period | 9,335,806,114.00 | 4,937,523,553.84 | 1,023,188,723.04 | 4,672,505,348.00 | 37,958,561,319.89 | 55,881,207,612.69 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 Digital TechnologyLtd", established on November 30, 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, 2008, with approvalof document No. 598 [2008] issued by the MOFCOM (The Ministry of Commerce of the People's Republic of China),the Company was renamed as "Hangzhou Hikvision Digital Technology Co., Ltd.", headquartered in Hangzhou, andobtained the business license of enterprise No.91330000733796106P. On May 28, 2010, the Company was listed on theShenzhen Stock Exchange.In accordance with the authorization by the Company’s second Extraordinary General Meeting in 2016 ,theauthorization by the second Extraordinary General Meeting in 2018, the resolution by the 20
th
meeting of the 4
thsessionof the Board of Directors on December 25, 2020, the resolution of the first Extraordinary General Meeting in 2021 onMarch 5, 2021 and the revised Articles of Association, the Company repurchased and cancelled the granted 7,611,076restricted RMB treasury shares that have not been unlocked by cash. The Company completed the deregistration on July2, 2021 and the share capital was accordingly changed to 9,335,806,114 shares.
On January 18, 2022, in accordance with the authorization by the Company's first Extraordinary General Meeting in2022, the resolution by the 8
th meeting of the 5
thsession of the Board of Directors and the revised Articles of Association,the Company was approved to issue 99,417,229 additional RMB ordinary shares (97,402,605 shares after adjustment) to9,933 (9,738 after adjustment) scheme participants. The Company completed the share registration procedures on February10, 2022. The share capital of the Company was accordingly changed to 9,433,208,719 shares.
In accordance with the authorization by the Company’s second Extraordinary General Meeting in 2018, the resolutionby the 10
th meeting of the 5
thsession of the Board of Directors on May 5, 2022, the resolution of the second ExtraordinaryGeneral Meeting in 2022 on October 10, 2021 and the revised Articles of Association, the Company repurchased andcancelled the granted 2,288,095 restricted RMB treasury shares that have not been unlocked by cash. The Companycompleted the deregistration on December 21, 2022 and the share capital was accordingly changed to 9,430,920,624 shares.For details of the share capital, please refer to Note (V) 39.
As of December 31, 2022, the Company’s total registered capital is RMB 9,430,920,624.00, with total capital sharesof 9,430,920,624 shares (face value RMB 1 per share), of which restricted A-shares were 255,248,506 shares, A-shareswithout restriction are 9,175,672,118 shares.
The Company is involved in the sector of other electronic equipment manufacturing of the electronic industry.Business scope of the Company includes development and production of electronic products (including explosion-proofelectrical products, tele-communication equipment and its ancillary equipment, multimedia equipment, transmission anddisplay equipment), fire protection and control products, big data and IoT software and hardware products, aerial vehicles,robots, intelligent equipment and intelligent systems, real-time communication systems, auto parts and accessories,electrical signal equipment for vehicle, servers and supporting hardware and software products; sales of self-manufacturedproducts; technical service, electronic technology consulting service, training service (excluding class training), electronicequipment installation, design, construction and maintenance of electronic engineering and intelligent system engineering.
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
For details about business scope of the Company and its subsidiaries, please refer to Note (VII) 1.The Company’s consolidated financial reports were approved for issuance by the 17
th
meeting of the 5
thsession ofthe Board of Directors of the Company on April 13, 2023.For consolidation scope of the financial statements of the current reporting period, please refer to Note (VII) "Interestin other entities". For changes in consolidation scope of the financial statements during the current reporting period, pleaserefer to "changes in the consolidation scope" in Note (VI).
II. Basis of Preparation of Financial StatementsBasis of preparation of financial statementsThe Company and its subsidiaries (hereinafter referred to as "the Group") have adopted the Accounting Standards forBusiness Enterprises ("ASBE") and relevant provisions issued by the Ministry of Finance ("MoF"). In addition, the Grouphas disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules forCompanies Offering Securities to the Public No. 15－General Provisions on Financial Reporting (revised in 2014).
Going concernThe Group has evaluated its going concern for 12 months going forward starting from December 31
st2022, 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.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
The fair value is a price received by the market participants from selling asset or transferring liability during orderlytransaction at the measurement date. No matter the fair value is observable or estimated by using valuation technique, themeasured and disclosed fair value in the financial statement shall be determined on this basis.
When measuring non-financial assets at fair value, the assets shall be measured considering the ability of marketparticipants to use the assets for optimal use to generate economic benefits, or to sell the assets to other market participantsto use the assets for optimal use to generate economic benefits.
For the financial assets measured with transaction price at the initial recognition, and the use of valuation techniquesinvolving unobservable inputs in the subsequent fair value measurement, the valuation technique is corrected in thevaluation process in order to make the initial recognition results confirmed by valuation techniques equal to the transactionprice.
Based on the observable extent of the input value of the fair value, and the importance of such input value to the fair valuemeasurement, the fair value measurement is divided into three levels:
? Level 1: The input value is the unadjusted offer of the same assets or liabilities on active market acquired on measurementdate;? Level 2: The input value is the input value of relevant assets or liabilities observable directly or indirectly in addition tolevel 1 input value;? Level 3: The input value is the non-observable input value of relevant assets or liabilities.III. Significant Accounting Policies and Accounting Estimates
1. Statement for Compliance with Accounting Standards for Business Enterprises (ASBE)The financial statements of the Company have been prepared in accordance with ASBE, and present truly and completely,the Company's and consolidated financial position as of December 31
st
2022; and the Company's consolidated results ofoperations, and the Company’s and consolidated cash flows for 2022.
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.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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) 62. The Group adoptsRMB to prepare its financial statements.
5. The Accounting Treatment of Business Combinations Involving Enterprises under Common Control andBusiness Combinations Not Involving Enterprises under Common ControlBusiness combinations are classified into business combinations involving enterprises under common control and businesscombinations not involving enterprises under common control.
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or parties both before and after the combination, andthat control is not transitory.
Assets and liabilities obtained shall be measured at their respective carrying amounts as recorded by the combining entitiesat the date of the combination. The difference between the carrying amount of the net assets obtained and the carryingamount of the consideration paid for the combination is adjusted to the share premium in capital reserve. If the sharepremium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period in which they are incurred.
5.2 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in which all of thecombining enterprises are not ultimately controlled by the same party or parties before and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurredor assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. If a business combinationnot under the common control is realized step by step through multiple transactions, the cost of the combination is the sum
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
of the consideration paid on the purchase date and the fair value of the equity of the purchase 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 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
7. Joint Arrangement Classification and Joint Operation AccountingJoint 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 for
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
the 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.
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 on
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
conversion 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.
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.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 and long-termreceivables.
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 aninvestment in an equity instrument held for non-trading purpose recognized or without consideration in a businesscombination of enterprises not under the same control as a financial asset at fair value through other comprehensive income.This type of financial assets is presented as investment in other equity instruments.
Financial assets which have satisfied one of the following conditions indicate that such financial assets are held for tradingpurpose by the Group:
? The purpose of acquiring the relevant financial asset is mainly for sale in recent period.
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
? At the time of initial recognition, the relevant financial asset is a part of an identifiable portfolio of financialinstruments under collective management, and there is objective evidence showing a recent and actual existence of short-term profitable mode.? The relevant financial assets are derivatives, excluding derivatives which satisfy the definition under financialguarantee contracts and derivatives which are designated as effective hedging instruments.
Financial assets at fair value through profit and loss include financial assets which are classified as financial assets at fairvalue through profit and loss and financial assets designated at fair value through profit and loss:
? Financial assets which do not satisfy the conditions of being classified as financial assets measured at amortized costor as financial assets at fair value through other comprehensive income, they will be classified as financial assets at fairvalue through profit and loss.? At the time of initial recognition, in order to eliminate or substantially reduce mismatch in accounting, the Groupmay irrevocably designate a financial asset as a financial asset measured at fair value with changes through profit and loss.
Financial assets at fair value through profit and loss will be presented as held-for-trading financial assets. If such financialassets have a maturity of more than one year from the balance sheet date (or without a fixed maturity) and which areexpected to be held for more than one year, they will be presented under other non-current financial assets.
10.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost adopt the effective interest rate method for subsequent measurement accordingto amortized cost, the profit or loss when impairment occurs or upon derecognition will be accounted in profit and loss ofthe current period.
The Group recognizes interest income by using effective interest rate method for financial assets measured at amortizedcost. The Group determines interest income by multiplying the balance of book value of financial assets with the effectiveinterest rate except under the following circumstances:
? For acquired or generated financial assets which incurred credit impairment already, their interest income will bedetermined by using the amortized cost of such financial asset calculated with the credit adjusted effective interest rate.? For acquired or generated financial assets which have not incurred credit impairment but incur credit impairment inthe subsequent period, the Group will determine their interest income by using the amortized cost of such financial assetsmultiplied with the effective interest rate in the subsequent period. If such financial asset ceases to have credit impairmentdue to improvement in credit risk in the subsequent period, then the Group should change to multiply the effective interestrate with the balance of book value of such financial asset instead to determine the interest income.
10.1.2 Financial asset at fair value through other comprehensive income
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 instruments
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
since initial recognition. If the credit risk of such financial asset has significantly increased after initial recognition, theGroup will calculate its loss provision based on the amount equivalent to the expected credit loss for the entire subsistingperiod. If the credit risk of such financial asset since initial recognition has not increased significantly, the Group willcalculate its loss provision according to the expected credit loss amount of such financial asset for the next 12 months.The amount of increase or reversal in the provision for credit loss, apart from financial assets classified as financial assetat fair value through other comprehensive income, is accounted in the profit and loss of the current period. For financialasset classified as measured at fair value through other comprehensive income, the Group will recognize its credit lossprovision in other comprehensive income and charged the impairment loss or gain to the profit and loss of the currentperiod, and will not decrease the book value of such financial asset presented in the balance sheet.
The Group has calculated the loss provision equivalent to the expected credit loss amount for the entire subsisting periodof the financial instrument in the preceding accounting period, but at the balance sheet date of the current period, suchfinancial instrument is no longer under the condition of significant increase in credit risk since initial recognition, theGroup calculates the loss provision for such financial instrument on the balance sheet date of the current period accordingto an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provision reversal amountwill be counted as impairment gain and booked into the profit and loss of the current period.
10.2.1 Significant increase in credit risk
The Group uses available and reasonable forward-looking information with justification, by comparing the default risk ofthe financial instrument at the balance sheet date with the default risk on the initial recognition date, to confirm whetherthe credit risk of the financial instrument has significantly increased after initial recognition. When using the financialinstrument impairment rules for loan commitment and financial guarantee contracts, the date when the Group becomes aparty of an irrevocable commitment is deemed as the initial recognition date.
The Group considers the following factors when assessing whether the credit risk has significantly increased:
(1) Whether a significant change has been caused to the internal price indicator due to changes in credit risk.
(2) Whether the external credit rating of financial instrument has actual or expected significant changes.
(3) Whether the actual or expected internal credit rating of the debtor has been downgraded.
(4) Whether adverse changes have occurred in the business, finance or economic conditions which are expected to causesignificant changes in the capability of the debtor to perform debt repayment obligations.
(5) Whether actual or expected significant changes have occurred in the operating results of the debtor.
(6) Whether significant adverse changes have occurred in the supervision, economic or technical environment in 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
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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.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 and other receivables, that are individually significant and the debtor has serious financialdifficulties, are determined on the basis of individual for its credit loss. The remaining accounts receivable and contractassets are divided into different portfolios according to the area and target of the business as a common risk characteristicand an impairment matrix is used to determine the credit losses of relevant financial instruments on a portfolio basis. Forthe remaining other receivables and long-term receivables, the credit loss of the relevant financial instrument is determinedon a portfolio basis. Notes receivable and receivables are evaluated on a portfolio basis to determine credit losses by
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
assessing the probability of breach and loss given default based on the credit rating of the acceptor as a common riskcharacteristic.
The Group confirms the expected credit loss of the relevant financial instrument according to the following method:
? In respect of financial asset and lease receivables, the credit loss is the present value of the difference between thecontractual cash flow that the group should receive and the cash flow that it expects to receive.? In respect of a financial guarantee contract (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 the compensationmade to the contract holder due to the occurrence of credit loss and the amount expected to be received by the Groupfrom 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 valueof such financial asset and the present value of the estimated future cash flows discounted by the original effectiveinterest 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-off constitutes a derecognition 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 continuous
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
involvement 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 torecognize the entire financial assets transferred and the consideration received as a result of the asset transfer is recognizedas a liability when received.
10.4 Classification, confirmation and measurement of financial liabilities and equity instruments
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
For financial liabilities designated at fair value through profit and loss of the current period, changes in fair value of suchfinancial liabilities caused by changes in the Group’s own credit risks shall be included in other comprehensive income,and other changes in fair value shall be included in the profit and loss of the current period. On derecognition of suchfinancial liabilities, the accumulated amount of changes in fair value as a result of changes in our own credit risk includedpreviously in other comprehensive income shall be transferred to retained earnings. Dividends or interest expenses relatingto such financial liabilities shall be included in the profit and loss of the current period. If handling the effect of changesin credit risk of such financial liabilities according to the aforesaid method would cause or magnify the accountingmismatches in profit and loss, the Group will include all gains or losses of those financial liabilities (including the amountaffected by changes in their own credit risk) in the profit and losses of the current period.
10.4.1.2 Other financial liabilities
Excluding transfer of financial assets not complying with derecognition conditions, or financial liabilities as a result 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 relevant
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
provisions of the Revenue Standard, whichever the higher.
10.4.2 Derecognition of financial liabilities
When the existing obligations of a financial liability have been wholly or partially discharged, such financial liability orsuch part of it will be derecognized. When the Group (as borrower) and the lender enter into an agreement to undertakenew financial liabilities for replacing the original financial liabilities, if substantive difference exists in the contractualterms between the new financial liabilities and the original financial liabilities, the Group should derecognize the originalfinancial liabilities while at the same time recognizes the new financial liabilities.
When a financial liability is wholly or partially derecognized, the difference between the book value of the derecognizedportion and the consideration paid (including non-cash asset transferred out or new financial liabilities undertaken) willbe accounted in the profit and loss of the current period.
10.4.3 Equity instrument
Equity instrument refers to a contract which can prove the ownership of remainder interest in assets after deducting allliabilities of the Group. The Group issues (including refinances), repurchases, sells or cancels equity instruments fortreatment of changes in equity. The Group will not recognize changes in the fair value of equity instruments. Tradingexpenses relating to equity transactions will be deducted from equity.
The Group’s distribution to holder of equity instrument is treated as profit distribution, the share dividends paid out willnot affect the total equity of shareholders.
10.5 Derivatives and embedded derivatives
Derivatives include foreign exchange forward contract, foreign exchange option contract and interest rate swap contract,etc. Derivatives are measured at fair value initially on the date of signing the relevant contract and will be measured at fairvalue for subsequent measurement.
For a hybrid contract constituted by an embedded derivative and a master contract, if the master contract is in respect of afinancial asset, the Group will not split the embedded derivative from the hybrid contract, but will consider such hybridcontract as a whole unit to which the accounting standards and rules for classification of financial assets are applicable.If the master contract included in the hybrid contract is not in respect of a financial asset, and fulfills the followingconditions at the same time, the Group will split the embedded derivative from the hybrid contract to be treated as aseparate subsisting derivative.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
(1) The economic characteristics and risks of the embedded derivative are not closely connected to the economiccharacteristics and risks of the master contract.
(2) A separate instrument containing the same terms as the embedded derivative fits the definition of a derivative.
(3) The hybrid contract is not measured at fair value and changes in fair value are accounted through profit and loss ofthe current period.
If an embedded derivative is split from the hybrid contract, the accounting treatment adopted by the Group for the mastercontract within the hybrid contract will be in accordance with the applicable accounting standards and rules. If the Groupis unable to measure the fair value of the embedded derivative reliably according to the terms and conditions of theembedded derivative, the fair value of such embedded derivative will be determined by the difference between the fairvalue of the hybrid contract and the fair value of the master contract. After adoption of the above method, if the fair valueof such embedded derivative is still unable to be measured separately on the acquisition date or subsequent balance sheetdate, the Group will designate the entire hybrid contract as a financial instrument measured at fair value through profit andloss of the current period.
10.6 Offsetting between financial assets and financial liabilities
When the Group has legal right to offset the recognized financial assets and financial liabilities, and such legal right isenforceable currently, while at the same time the Group plans to perform netting settlement, or to liquidate the financialasset and repay the financial liability at the same time, the amount after offsetting between the financial asset and financialliability will be presented in the balance sheet. Save as said above, the financial asset and financial liability are presentedseparately in the balance sheet without offsetting each other.
11. Receivables for Financing
Among the notes receivable measured at fair value through other comprehensive income, the ones with a term of less than(including) one year since they are acquired will be listed as receivables for financing; the ones with a term of more than(including) one year since they are acquired will be listed as other debt investment. The relevant accounting policy isexplained in Note (III), 10.1, 10.2 and 10.3.
12. Inventories
12.1 Categories of inventories
The Group's inventory mainly includes finished products, products in process, raw materials and contract performancecosts that held in daily activities. Inventories are initially measured at cost. Cost of inventories comprises all costs ofpurchase, costs of conversion and other expenditures incurred in bringing the inventories to their present location andcondition.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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
Packaging materials and low cost and short-lived consumable items are amortized using the immediate write-off method.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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
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.
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 issuedby 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 the
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
invested 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.
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.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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:
| Item | Depreciation period | Residual value rate (%) | Annual depreciation rate (%) |
| Buildings and Constructions | 20 years | 10 | 4.5 |
| General-purpose equipment | 3-5 years | 10 | 18.0-30.0 |
| Special-purpose equipment | 3-5 years | 10 | 18.0-30.0 |
| Transportation vehicles | 5 years | 10 | 18.0 |
Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from disposalof the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the conditionexpected at the end of its useful life.
16.3 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.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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, Service Life and Impairment Test
Intangible assets include land use right, intellectual property (IP), application software, and franchise, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is available for use, itsoriginal cost is amortized over its estimated useful life using the straight-line method. The useful life and predicted netresidual value of various intangible assets are shown as follows:
| Class | Service life (year) | Salvage value rate (%) |
| Land use right | 40 or 50 years | - |
| IP Right | 10 Years | - |
| Application Software | 5-10 years | - |
| Franchise | Franchised operating period | - |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
The fees charged by the Group to those who acquire public products and services during the project operation period donot constitute an unconditional right to receive cash. When the PPP project assets are ready for their intended use, thedifference between the consideration amount of the relevant PPP project assets or the amount of confirmed constructionincome and the amount of cash (or other financial assets) that is entitled to receive a determinable amount will berecognized as intangible assets.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of theperiod, and makes adjustments when necessary.
For the impairment test of intangible assets, please refer to Note (III), 20. Long-term asset impairment.
19.2 Accounting Policy for Internal Research and Development Expenditure
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is recognized asintangible asset. Expenditure during development phase that does not meet the following conditions is recognized in profitor loss for the period.
(1) It is technically feasible to complete the intangible asset so that it will be available for use or sale;
(2) The Group has the intention to complete the intangible asset and use or sell it;
(3) The Group can demonstrate the ways in which the intangible asset will generate economic benefits, including theevidence of the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be usedinternally, the usefulness of the intangible asset;
(4) The availability of adequate technical, financial and other resources to complete the development and the ability to useor sell the intangible asset; and
(5) The expenditure attributable to the intangible asset during its development phase can be reliably measured.
If the expenditures cannot be distinguished between the research phase and development phase, the Group recognizes allof them in profit or loss for the period. The costs of the intangible assets generated by internal development activities onlyinclude the total expenditure incurred from the time point when the capitalization conditions are available to the pointwhen the intangible assets are used for their intended purposes; for the expenditure that already becomes an expenditure
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 indicationthat such assets may be impaired, recoverable amounts are estimated for such assets. Intangible assets with indefiniteuseful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether thereis any indication that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of anindividual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverableamount is determined by the higher of 1) net amount of fair value of the asset or asset group deducted by the disposalexpenses; or 2) the present value of the expected future cash flows of the asset or asset group.
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted 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 cannot 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 and employee housing loan deferred interest. Long-term deferred expenses are evenly amortized in installments inthree to five years during the expected benefit period.
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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
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 or
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
employee 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
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.
25.1 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
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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
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 and PPPProjects provided by 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 consideration
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
to 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.
The Group evaluates the contract on the commencement date of the contract, identifies the individual performanceobligations contained in the contract and determines whether each individual performance obligation is to be performedover a certain period of time or at a certain point in time. Revenue is recognized over time by reference to the progresstowards complete satisfaction of the relevant performance obligation if one of the following criteria is met: (1) the customersimultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs; (2) theGroup’s performance creates or enhances an asset that the customer controls as the Group performs; or (3) the Group’sperformance does not create an asset with an alternative use to the Group and the Group has an enforceable right topayment for performance completed to date. Otherwise, revenue is recognized at a point in time when the customer obtainscontrol 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 uncertaintyis 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 in
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
accordance 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,
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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.
The Group, as a private capital, entered into a PPP project contract with the government and provided construction,operation, maintenance and other services. The Group identifies each individual performance obligation in the contract,and allocates the transaction price to each performance obligation based on the relative proportion of the stand-aloneselling price of each performance obligation. When providing construction services or outsourcing projects to other parties,whether the identity of the Group is the principle or agent is determined, and then accounting for construction revenue toconfirm the contract assets is made. After the PPP project is ready for use, the Group recognizes revenue related tooperation and maintenance services.
27. Cost of Contract
27.1 Cost of obtaining a contract
Incremental costs incurred by the Group to obtain a contract (that is, costs that would not have occurred without a contract)and expected to be recovered are recognized as an asset, and amortized using the same basis as revenue recognition forthe goods or services to which the asset relates, and included in current profit or loss. If the amortization period of theasset does not exceed one year, it is included in current profit or loss when it occurs. Other expenses incurred by the Groupin order to obtain the contract shall be included in current profit or loss when incurred, unless it is clearly borne by thecustomer.
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 losses on assets related to 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 expected
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
to be obtained by the Group for the transfer of goods or services related to the asset; (2) the estimated costs to be incurredin connection with the transfer of such relevant goods or services.
After provision for impairment is made for the asset related to contract costs, if the difference between the above two itemsis higher than the carrying value of the asset due to changes in the factors of impairment in previous periods, the originalprovision for impairment of the asset is reversed and included in the current profit or loss, but the carrying value of theasset after the reversal shall not exceed the carrying value of the asset on the reversal date assuming no provision forimpairment 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.
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 special projects and Value-Added-Tax refund, etc. whichare used to compensate the group-related costs or losses, and therefore are categorized as government subsidy related toincome.
For a government grant related to income, 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 the
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
related costs or losses are recognized; If the subsidy, such as VAT refund, 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.
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 theinitial 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 the
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
temporary 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
Lease refers to a contract that conveys the right to use an asset for a period of time in exchange for consideration.
The Group assesses whether a contract is, or contains, a lease at the inception date. The Group does not re-assess whether
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
a contract contains a lease unless the terms and conditions of the contract are changed.
30.1 The Group as the lessee
30.1.1 Separating components of lease
In case the contract contains one or more lease and non-lease components, the Group separates each lease component andnon-lease component, and allocates the consideration to the lease and non-lease components based on the proportion ofrelative stand-alone prices of the components.
30.1.2 Right-of-use assets
The Group recognizes the right-of-use assets for leases on the commencement date of the lease term, except for short-termlease and lease of low-value assets. The commencement date of the lease term refers to the date from which the lessormakes the leased assets available for use by the Group. Right-of-use assets are initially measured at cost. The cost includes:
? Initial measurement amount of lease liabilities;? Amount of lease payment made at or before the commencement date of the lease, less any lease incentives received;? Initial direct costs incurred by the Group;? An estimate of any costs to be incurred by the Group in dismantling and removing the underlying asset, or restoringthe site on which it is located, or restoring the leased assets to the conditions as agreed under the terms of the lease,excluding costs incurred to produce inventories.
The Group calculates depreciation of the right-of-use assets in accordance with the relevant depreciation provisions ofAccounting Standards for Business Enterprises No. 4 - Fixed Assets. The right-of-use asset is depreciated over the shorterof the lease term and the useful life of the right-of-use asset, unless there is a transfer of ownership or purchase optionwhich is reasonably certain to be exercised at the end of the lease term.
The Group determines whether the right-of-use assets are impaired and accounts for the identified impairment loss inaccordance with the provisions of Accounting Standards for Business Enterprises No. 8 - Impairment of Assets.
30.1.3 Lease liabilities
The Group initially measures the lease liability on the commencement date at an amount equal to the present value of thelease payments during the lease term that are not paid at that date, except short-term lease and lease of low-value assets.In calculating the present value of the lease payments, the Group adopts the interest rate implicit in the lease as the discountrate. The Group uses its incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined.
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Lease payments refer to the payments made by the Group to the lessor in connection with the right to use the leased assetduring the lease term, including:
? Fixed payments, including in-substance fixed payments, less any lease incentives receivable;? The exercise price of a purchase option, if the Group is reasonably certain to exercise that option;? Payments for terminating the lease, if the lease term reflects the lessee exercising the option to terminate the lease;? Amounts expected to be payable by the Group under residual value guarantees.
After the commencement date of the lease term, the Group calculates interest expense of lease liabilities in each period oflease term at fixed periodic rate and recognizes in the current loss and profit or relevant asset costs.
After the commencement date of the lease term, the Group remeasures the lease liability and adjusts the correspondingright-of-use assets under the following circumstances. If the carrying value of the right-of-use assets has been reduced tozero while the lease liability needs to be further reduced, the Group will recognize the difference into the current loss andprofit:
? In case of any change of the lease term or any change in the valuation of the purchase option, the Group remeasuresthe lease liability at the present value calculated based on the modified lease payments and the revised discount rate;? In the event of any change in the amount expected to be payable based on the residual value guarantees, the Group
remeasures the lease liability at the present value calculated based on the changed lease payments and the originaldiscount rate.
30.1.4 Short-term lease and lease of low-value assets
The Group has elected not to recognize the right-of-use assets and lease liabilities for short-term leases and leases of low-value assets. Short-term lease refers to lease with a term no more than 12 months from the commencement date of leaseterm and without purchase option. Lease of low-value assets refers to lease for single lease asset with low value when itis new. The Group recognizes lease payments under short-term leases and leases of low-value assets as the current lossand profit or the relevant asset costs on a straight-line basis over each period during the lease term.
30.1.5 Lease modification
In case of lease modification, the Group makes accounting treatment of such lease change as a separate lease if all of thefollowing conditions are met:
? Such lease modification increases the scope of the lease by adding the right to use one or more lease assets;? The increased consideration is commensurate with the stand-alone price for the increase in scope and any appropriateadjustments to reflect the circumstances of the particular contract.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Where accounting treatment is not made for lease modification as a separate lease, at the effective date of leasemodification, the Group reallocates the contract consideration after the modification, redetermines the lease term, andremeasures the lease liability based on the present value calculated according to the modified lease payments and therevised discount rate.
In the event that the lease scope is decreased or the lease term is shortened as a result of the lease modification, the Groupreduces the carrying amount of the right-of-use assets, and recognizes the relevant gains or losses relating to the partial orfull termination of the lease in the income statement; for the lease liabilities remeasured due to other lease modifications,the Group adjusts the carrying amount of the right-of-use assets accordingly.
30.1.6 Sale-leaseback transactions
The Group as the seller-lessee
The Group assesses and determines whether the transfer of the asset in sale and leaseback transaction qualifies as a sale inaccordance with the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue. If the transfer doesnot qualify as a sale, the Group continues to recognize the transferred asset and at the same time recognize a financialliability equal to the transfer proceeds and account for the financial liability in accordance with the provisions ofAccounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments. If thetransfer of the asset qualifies as a sale, the Group measures the right-of-use asset arising from the leaseback as theproportion of the previous carrying amount of the asset that relates to the right of use retained. The gain or loss recognizedis limited to the proportion of the total gain or loss that relates to the rights transferred to the lessor.
30.2 The Group as the lessor
30.2.1 Separating components of lease
In case the contract contains both lease and non-lease components, the Group allocates the contract consideration inaccordance with the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue on portion oftransaction prices, based on the respective stand-alone prices of the lease component and the non-lease component.
30.2.2 Classification of lease
Finance lease is a lease that substantially transfers all the risks and rewards of incidental to ownership of an underlyingasset. Operating lease refers to the leases other than finance lease.
30.2.2.1 The Group records the operating lease business as the lessor
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
The Group recognizes the lease payments from operating leases as rental income on a straight-line basis for all periodsover the lease term. The Group's initial direct costs incurred in connection with operating leases is capitalized as incurred,recognized in the income statement over the lease term on the same basis as the lease income.
30.2.2.2 The Group records the finance lease business as the lessor
On the commencement date of the lease term, the Group uses the net lease investment as the carrying value of the financelease receivables and derecognizes the finance lease assets. Net lease investment is the sum of present value ofunguaranteed residual value and lease payments receivable discounted at the interest rate implicit in lease on thecommencement date of the lease term.
Lease payments receivable, which refer to amounts receivable by the Group from the lessee for conveying the right to usethe leased assets during the lease term, include:
? Fixed payment including in-substance fixed payments by the lessee, less any lease incentives payable;? The exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;? Payments for terminating the lease (if the lease term reflects the lessee exercising the option to terminate the lease;? Residual value guarantees provided to the Group by the lessee, a party related to the lessee, or a third party unrelatedto the lessor that is capable of discharging the obligations under the guarantee.The Group calculates and recognizes the interest income in each period of the lease term according to the fixed periodicinterest rate.
30.2.3 Lease modification
In case of modification of the operating lease, the Group accounts for it as a new lease as of the effective date of themodification, any prepaid or accrued lease payments relating to the original lease are considered as payments for the newlease .
In case of modification of the finance lease, the Group accounts for the modification of a finance lease as a separate leaseif all of the following conditions are met:
? The modification increases the scope of the lease by adding the right to use one or more lease assets;? The consideration for the lease increases by an amount that is commensurate with the stand-alone price for theincrease in scope, and any appropriate adjustments to that price to reflect the circumstances of the particular contract.
If a modification of finance lease is not accounted for as a separate lease, the Group accounts for the changed lease underthe following circumstances:
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
? If the modification becomes effective on the commencement date of the lease and the lease is classified as anoperating lease, the Group accounts for it as a new lease from the effective date of the lease modification and measuresas the net lease investment prior to the effective date of the lease modification as the carrying value of the leasedasset.? If the modification becomes effective on the commencement date of the lease and the lease is classified as a finance
lease, the Group accounts for it in accordance with the provisions of Accounting Standards for Business EnterprisesNo. 22 - Recognition and Measurement of Financial Instruments regarding the modification or renegotiation ofcontracts.
30.2.4 Sale and leaseback transaction
The Group as the buyer-lessor
If the transfer of the asset in a sale and leaseback transaction does not qualify as a sale, the Group does not recognize thetransferred asset, but recognizes a financial asset equal to the transfer proceeds and account for the financial asset inaccordance with the provisions of Accounting Standards for Business Enterprises No. 22 - Recognition and Measurementof Financial Instruments. If the transfer of the asset qualifies as a sale, the Group accounts for the purchase of the asset inaccordance with other applicable Accounting Standards for Business Enterprises and account for the lease of the asset.
31. Important Judgments while Applying Accounting Policy, and Key Assumptions and Uncertainty FactorsApplied for Accounting EstimateDuring the process of using accounting policy described in note (III), due to the uncertainty in operation activities, thegroup should judge, estimate and assume the book value of the report items which may not be metered reliably. Thesejudgments, estimates and assumptions are based on the historical experience of the Group's management and 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
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 aging.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. For details,please refer to Note (V) 8.
Impairment of accounts receivable
Except for accounts receivable whose credit losses are determined on the basis of individual basis, the Group adopts animpairment matrix on a portfolio basis to determine its expected credit loss of the relevant accounts receivable. The Groupdivides the risk characteristics according to the region and object of its business, and divides the relevant accountsreceivable into different portfolios. Based on the historical loss rate and consider reasonable and well-founded forward-looking information in the industry, the Group determines the proportion of corresponding loss reserves for differentportfolios of various types of accounts receivable. As of December 31, 2022, based on the historically loss rate and considerreasonable and well-founded forward-looking information in the industry, the Group determines the correspondingproportion of loss provision for accounts receivable. The amount of the provision for expected credit losses will changeas the estimation of the Group. The details on the provision for expected credit losses of the accounts receivable of theGroup are given in Note (V) 4.
Useful life and predicted net residual value of fixed asset
The Group's estimation of fixed assets useful life is based on the historical experience of actual usable term of fixed assetswith similar properties and functions, the estimation of predicted net residual value is the amount obtained currently bythe Group from the assets after deducting the anticipated disposal expense based on the anticipated status assuming theconditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. The Group shallconduct the review on the predicted service life and predicted net residual value of fixed assets at least annually. For thecurrent reporting period, the Group's management did not see signs either indicating a shortened or extended useful life of
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
the 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 taxable income, taxable temporarydifferences, and the effective tax rate of temporary difference in the future applicable years. If the actual taxable incomeand taxable temporary differences in the future is less than the estimation, or actual tax rate is lower than the estimation,then the confirmed deferred income tax assets will be reversed and confirmed in the income statement during thecorresponding period. If the actual taxable income and taxable temporary differences in the future is more than theestimation, or actual tax rate is higher than the estimation, then the deferred tax assets that are partially unrecognizeddeductible losses and deductible temporary differences will be recognized and confirmed in the income statement duringthe 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 money
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
and specific asset risk need to be determined. When the future actual result is different from the original estimation, thegoodwill impairment loss will alter.
Fair value measurement and valuation process
Held-for-trading financial assets, receivables for financing, and other non-current financial assets of the Group aremeasured at fair value in the financial statement. When evaluating 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 valuators to conduct valuation. The Finance Department and evaluation panel of theGroup will work closely with the hired valuators to determine appropriate valuation techniques and the input values of thevaluation model. The valuation techniques and input values used for evaluating the fair value of various assets are disclosedin Note (IX).
32. Significant Alternation in Accounting Policy and Accounting EstimationsInterpretation No. 15 of Accounting Standards for Business Enterprises
The Ministry of Finance issued the Interpretation No. 15 of Accounting Standards for Business Enterprises (the"Interpretation No. 15") on December 30, 2021. It specifies the accounting treatment and determination of loss contractsfor the sales of products or by-products that are produced before the fixed assets reach the expected conditions for use orduring the R&D process.
Accounting treatment for the sales of products or by-products that are produced before the fixed assets reach the expectedconditions for use or during the R&D process
The Interpretation No. 15 states that if an enterprise sells the products or by-products that are produced before the fixedassets reach the expected conditions for use or during the R&D process, the revenue and costs related to trial sales shouldbe accounted for separately in accordance with ASBE No. 14 - Revenue and ASBE No. 1 - Inventory and other regulations,and included in the current profit or loss, and the net amount after offsetting the costs of trial sales shall not be offsetagainst the costs of fixed assets or R&D expenditure. Moreover, the enterprise shall separately disclose in the notes theamount of the revenue and costs related to trial sales, the specific items presented and the significant accounting estimatesused to determine the costs related to trial sales and other relevant information. As this regulation is effective as of January1, 2022, a retroactive adjustment shall be made to trial sales that occurred between the beginning of the earliest periodpresented in the financial statements and January 1, 2022.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
The products produced by the Group in the course of research and development during the reporting period have beenaccounted for in accordance with the above principles and the adoption of this provision has not had a material impacton the Group's financial statements.
Determination of loss contracts
The Interpretation No. 15 defines that the "costs of contract performance" an enterprise considers in determining whetherthe contract is a loss contract shall include the incremental costs of contract performance and the apportioned amount ofother costs directly related to contract performance. This regulation is effective as of January 1, 2022. Enterprises shallapply this regulation to contracts with outstanding obligations as of January 1, 2022, and make a cumulative-effectadjustment to retained earnings and other related financial statement items as of the beginning of the year of the effectivedate of such regulation, but not to prior-period comparative financial statement data.
The Group has assessed that the adoption of this regulation does not have a material impact on the Group's financialstatements.
Interpretation No. 16 of Accounting Standards for Business Enterprises
The Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for Business Enterprises (the"Interpretation No. 16") on November 30, 2022. It specifies the accounting treatment of the income tax effects on dividendsrelated to financial instruments classified as equity instruments by an issuer and the accounting treatment of themodification of cash-settled share-based payments to equity-settled share-based payments by an enterprise.
Accounting treatment of the income tax effects on dividends related to financial instruments classified as equity instrumentsby an issuer
The Interpretation No. 16 defines that if dividend expenses related to financial instruments classified as equity instrumentsby an enterprise in accordance with ASBE No. 37 - Presentation of Financial Instruments and other regulations arededucted before corporate income tax in accordance with the relevant provisions of the tax policy, the enterprise shallrecognize the dividend payable, and include the income tax effects on the dividend in the current profit or loss or owner'sequity items by applying the same accounting treatment as that applied to the previous transaction or item generatingdistributable profit. This regulation is effective as of November 30, 2022. If the recognition of dividends payable forfinancial instruments classified as equity instruments occurs between January 1, 2022 and the effective date of theregulation and involves income tax effects not treated in accordance with the aforesaid provisions, adjustments shall bemade in accordance with these provisions. If the recognition of dividends payable for financial instruments classified asequity instruments occurs before January 1, 2022 and involves income tax effects not treated in accordance with the
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
aforesaid provisions and the related financial instruments have not been derecognized as of January 1, 2022, retroactiveadjustments should be made.
The Group has assessed that the adoption of this regulation does not have any impact on the Group's financial statements.
Accounting treatment of the modification of cash-settled share-based payments to equity-settled share-based payments byan enterprise
The Interpretation No. 16 stipulates that if an enterprise modifies a cash-settled share-based payment to an equity-settledshare-based payment by changing terms and conditions of the cash-settled share-based payment agreement, the enterpriseshall, on the date of modification, measure the equity-settled share-based payment at the fair value of the equity instrumentgranted on that date, record the acquired services in capital surplus, derecognize the liability recognized for the cash-settledshare-based payment on the date of modification, and include the difference between the two in the current profit or loss.This regulation is effective as of November 30, 2022. For new transactions made between January 1, 2022 and the effectivedate of the regulation, enterprises shall make adjustments in accordance with the regulation. For transactions made beforeJanuary 1, 2022 and not handled in accordance with this regulation, enterprises shall make a cumulative-effect adjustmentto retained earnings and other related financial statement items as of January 1, 2022, but not to the information during thecomparable period.
The Group has assessed that the adoption of this regulation does not have any impact on the Group's financial statements.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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%, 5% |
| Education surcharges | Actual payable turnover tax | 3% |
| Local education surcharges | Actual payable turnover tax | 2% |
Note 1: Except that this Company and subsidiaries in China are applicable to the following tax preference, this Company'sother subsidiaries in China are applicable to 25% of enterprise income tax rate, the overseas subsidiaries are applicable tocorresponding local tax rate.
(1) 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, 2020, the Company was identified as the high-tech enterprise with avalid term of 3 years and the preferential tax period is from 2020 to 2022.
According to the Announcement on the Enterprise Income Tax Policies for Promoting the High-quality Developmentof Integrated Circuit Industry and Software Industry (Ministry of Finance, State Administration of Taxation, NationalDevelopment and Reform Commission, Ministry of Industry and Information Technology Announcement [2020] No.
45), the Company was approved by the tax authorities in May 2022 to pay the 2021 annual corporate income tax atthe rate of 10%. As of the approval date of this report, the Company’s preferential income tax in 2022 has not beenverified and approved. Therefore, the Company’s enterprise income tax in 2022 is still calculated and paid at the rateof 15% (2021: 10%).
(2) In accordance with Finance and Taxation [2011] No. 58 Document of Ministry of Finance, State Administration ofTaxation and General Administration of Customs, the subsidiaries, Chongqing Hikvision Technology Co., Ltd.(hereinafter referred to as "Chongqing Technology") and Chongqing Hikvision System Technology Co., Ltd.(hereinafter referred to as "Chongqing System"), are qualified to enjoy the west development preferential tax policyfrom 2011 to 2020. According to the Announcement on Continuation of the Corporate Income Tax Policy for theWestern Development (Ministry of Finance, State Administration of Taxation, National Development and ReformCommission Announcement [2020] No.23), the subsidiaries of the Company, Chongqing Technology and ChongqingSystem will enjoy the preferential policies for the Western Development from 2021 to 2030. Therefore, the currententerprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period(2021:15%).
(3) According to the Recording List of the First Batch of identified High-tech Enterprises of Zhejiang Province in 2021
issued by the Leading Group Office of National High-tech Enterprise Identification Management Work on January 24,2022, Fuyang Baotai, a subsidiary of the Company, is identified as a high-tech enterprise, and the validity period ofthe identification is 3 years and the preferential tax period is from 2021 to 2023. Therefore, the enterprise income taxis calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2021:15%).
(4) In accordance with the List of High-tech Enterprises Recognized by Zhejiang Provincial Identification Institution in2022 issued by the leading group office of Zhejiang high-tech enterprise identification management work onDecember 24, 2022, the Company’s subsidiary, Hangzhou Hikvision System Technology Ltd. (hereinafter referred to
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
as "Hangzhou System") and Hangzhou Kuangxin Technology Co., Ltd. (hereinafter referred to as "HangzhouKuangxin") , was recognized as a high-tech enterprise and was valid for 3 years and the preferential tax period is from2022 to 2024. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% inthe current reporting period (2021:15%).
(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, 2020, theCompany’s subsidiary, Shanghai Goldway Intelligent Transportation System Co., Ltd. was identified as the high-techenterprise with a valid term of 3 years and the preferential tax period is from 2020 to 2022. Therefore, the enterpriseincome tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2021:15%).
(6) 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. 251) issued by the Leading Group Office of National High-tech EnterpriseIdentification Management on December 29, 2020, the Company’s subsidiaries, Hangzhou Hikrobot Technology Co.,Ltd. ( formerly known as Hangzhou Hikrobot Technology Ltd. and hereinafter referred to as "HikRobot"), HangzhouHikauto Software Co., Ltd. (hereinafter referred to as "HikAuto Software") and Hangzhou Hikimaging TechnologyCo., Ltd. (hereinafter referred to as "HikImaging Technology") were identified as the high-tech enterprises with avalid term of 3 years and the preferential tax period is from 2020 to 2022. Therefore, the enterprise income tax iscalculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2021:15%).
(7) In accordance with the Announcement on the Filing of High-tech Enterprises Recognized by Zhejiang Provincial
Identification Institution in 2022 issued by the Leading Group Office of National High-tech Enterprise IdentificationManagement on January 17, 2023, the Company’s subsidiary, Hangzhou Hikmicro Sensing Technology Co., Ltd.(hereinafter referred to as " Hikmicro Sensing") were identified as the high-tech enterprises with a valid term of 3years and the preferential tax period is from 2022 to 2024.
According to the Ministry of Industry and Information Technology of the People's Republic of China, the NationalDevelopment and Reform Commission, the Ministry of Finance and the National State Administration of Taxation,No. 9 of 2021 Announcement on the Enterprise Income Tax Policy for Promoting the High-quality Development ofthe Integrated Circuit Industry and Software Industry (Ministry of Finance, State Administration of Taxation, NationalDevelopment and Reform Commission, Ministry of Industry and Information Technology Announcement [2020] No.
45), Notice on Requirements for Formulating Lists of Integrated Circuit Enterprises, Projects and SoftwareEnterprises enjoying Preferential Tax Policies (Fa Gai Gao Ji [2021] No. 413), Hikmicro Sensing was identified as akeyintegrated circuit design enterprise in May 2022. The qualified enterprise will be exempted from corporate incometax for the first year to the fifth year from the profitable year, and levied at a reduced rate of 10% in the subsequentyears. The year of 2022 is the second year of Hikmicro Sensing making profits and is exempt from enterprise incometax (2021: tax-exempted).
(8) In accordance with the Announcement on the Enterprise Income Tax Policies for Promoting the High-qualityDevelopment of Integrated Circuit Industry and Software Industry (Ministry of Finance, State Administration ofTaxation, National Development and Reform Commission, Ministry of Industry and Information TechnologyAnnouncement [2020] No. 45), , enterprises engaging in integrated circuit design, equipment, materials, packaging,testing and software encouraged by the state are entitled to exemption from enterprise income tax in the first andsecond years after start of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the third tofifth years. The Company’s subsidiaries, Hangzhou EZVIZ Software Ltd. (hereinafter referred to as "HangzhouEZVIZ Software") and Hangzhou Microimage Software Co., Ltd. (hereinafter referred to as "Hangzhou MicroimageSoftware"), are qualified software companies and enjoy the preferential collection of corporate income tax at half thestatutory tax rate of 25% in 2022 (2021: tax-exempted).
(9) According to the Recording List of the First Batch of identified High-tech Enterprises of Zhejiang Province in 2021
issued by the Leading Group Office of National High-tech Enterprise Identification Management Work on January 24,2022, the Company’s subsidiaries Hangzhou Hikstorage Technology Co., Ltd. ("Hikstorage Technology") is identifiedas a high-tech enterprise with a validity period of 3 years and the preferential tax period is from 2021 to 2023.Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the currentreporting period (2021: 15%).
Note 2: In accordance with the requirements of the Notice on Software Product Value-added Tax Policy (Cai Shui [2011]
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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, HikRobot, HikAuto Software, Hangzhou EZVIZ Software, HikstorageTechnology, Hikimaging Technology, Hangzhou Hikfire Technology Co., Ltd. (hereinafter referred to as "HikFireTechnology"), Hangzhou Rayin Technology Co., Ltd. (hereinafter referred to as "Hangzhou Rayin Technology"),Hangzhou Microimage Software, Henan Haikang Hua’An BaoQuan Electronics Co., Ltd. (hereinafter referred to as"Hua’An BaoQuan Electronics") , Hangzhou Kuangxin, Fuyang Baotai and Zhejiang Hailai Yunzhi Technology Co., Ltd.,the VAT shall be calculated and paid with tax rate of 13% at first, then the portion with actual tax bearing excess 3% shallbe 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, 2019 to December 31, 2021, 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"). According to the Several Policies on Promoting the Recovery and Development ofDifficult Industries in the Service Industry Fa Gai Cai Jin [2022] No. 271, the VAT deduction policy for the service industrywill be continued, and the input tax deductible for the current period of taxpayers in the production and life serviceindustries will continue to be deducted by 10% and 15% respectively in 2022. The Company’s subsidiaries, a part ofHangzhou Hikvision Technology Ltd.’s branches , Chongqing System, Hangzhou Hikvision Security Equipment LeasingService Co., Ltd., Anhui Hikvision Urban Operation Service Co., Ltd., a part of Hangzhou EZVIZ Network Co.,Ltd.(hereinafter referred to as "EZVIZ Network")'s branches, Zhejiang Haikang City Service Co., Ltd. Luliang Branch,Henan Hua’An Bao Quan Intelligent Development Co., Ltd. Luoyang Branch, Henan Hua’an Security Services Co., Ltd.,and Guizhou Haikang Transportation Big Data Co., Ltd. are complying with the provisions of the Additional DeductionPolicy and were entitled to additional deduction preferential tax policy of input tax since 2022.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
V. Notes to Items in the Consolidated Financial Statements
1. Cash and Bank Balances
Unit: RMB
| 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 | - | - | 1,710.03 | - | - | 16,909.86 |
| EUR | 43,514.50 | 7.4229 | 323,003.75 | 41,743.98 | 7.2197 | 301,379.03 |
| INR | 1,759,047.96 | 0.0834 | 146,704.60 | 2,288,210.50 | 0.0857 | 196,099.64 |
| USD | 32,583.86 | 6.9646 | 226,933.53 | 33,133.82 | 6.3757 | 211,251.31 |
| Other currencies | - | - | 511,713.25 | - | - | 1,125,633.69 |
| Bank balance： | ||||||
| RMB | - | - | 35,604,295,321.02 | - | - | 31,577,521,085.40 |
| USD | 369,237,191.93 | 6.9646 | 2,571,589,346.94 | 272,857,839.86 | 6.3757 | 1,739,659,729.57 |
| EUR | 116,323,339.53 | 7.4229 | 863,456,516.97 | 96,011,075.74 | 7.2197 | 693,171,163.55 |
| GBP | 14,606,954.81 | 8.3941 | 122,612,239.34 | 17,199,784.69 | 8.6064 | 148,028,226.97 |
| INR | 1,359,355,345.44 | 0.0834 | 113,370,235.81 | 1,092,845,025.79 | 0.0857 | 93,656,818.71 |
| MXN | 83,049,427.31 | 0.3577 | 29,706,780.15 | 75,249,325.96 | 0.3116 | 23,447,689.97 |
| AED | 12,105,289.40 | 1.8966 | 22,958,891.87 | 5,055,058.19 | 1.7361 | 8,776,086.53 |
| PLN | 13,600,844.40 | 1.5878 | 21,595,420.74 | 10,745,706.25 | 1.5717 | 16,889,026.51 |
| BRL | 16,530,324.26 | 1.3050 | 21,572,073.16 | 36,644,426.85 | 1.1436 | 41,906,566.54 |
| HKD | 22,764,985.95 | 0.8933 | 20,335,961.95 | 31,824,133.26 | 0.8176 | 26,019,411.35 |
| THB | 98,104,375.12 | 0.2014 | 19,758,221.15 | 121,837,799.11 | 0.1912 | 23,295,387.19 |
| AUD | 2,198,029.38 | 4.7138 | 10,361,070.89 | 1,886,989.36 | 4.6220 | 8,721,664.84 |
| Other currencies | - | - | 186,155,014.22 | - | - | 172,693,920.13 |
| Other currency funds: | ||||||
| RMB | - | - | 361,751,169.54 | - | - | 112,293,072.17 |
| USD | 1,623,544.38 | 6.9646 | 11,307,337.16 | 3,595,184.37 | 6.3757 | 22,921,816.99 |
| EUR | 713,664.81 | 7.4229 | 5,297,462.51 | 580,030.78 | 7.2197 | 4,187,648.22 |
| Other currencies | - | - | 24,530,871.36 | - | - | 6,830,343.19 |
| Total | 40,011,863,999.94 | 34,721,870,931.36 | ||||
| Including: deposited in overseas banks | 589,363,613.39 | 737,750,220.06 | ||||
Details of other currency funds:
Unit: RMB
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
2. Held-for-trading Financial Assets
Unit: RMB
| Item | Closing Balance | Opening Balance |
| Financial assets measured at fair value through current gain and loss | 12,807,438.36 | 34,320,010.83 |
| Including: derivative financial assets | 12,807,438.36 | 34,320,010.83 |
| Total | 12,807,438.36 | 34,320,010.83 |
On December 31, 2022, derivative financial assets are forward foreign exchange contracts, and they are not designated ashedging instruments, and the gains or losses arising from changes in their fair values are directly included in the currentprofit and loss.
3. Notes Receivable
1) Categories of notes receivable
Unit：RMB
| Category | Closing Balance | Opening Balance |
| Bank acceptance bill | 2,184,776,591.31 | 1,228,046,849.95 |
| Commercial acceptance bill | 335,211,567.92 | 294,714,055.35 |
| Total | 2,519,988,159.23 | 1,522,760,905.30 |
| 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 | - | - | 9,477,411.92 | - | - | 35,387,135.77 |
| Deposits for letter of guarantee | - | - | 126,434,505.79 | - | - | 51,980,170.28 |
| Other security deposits | - | - | 13,666,564.66 | - | - | 4,679,097.53 |
| Other capitals with limitations | - | - | 46,895,003.00 | - | - | 25,880,098.58 |
| Subtotal | 196,473,485.37 | 117,926,502.16 | ||||
| Capitals without limitations: | ||||||
| Deposit in payment instrument provided by third-party and in securities account | - | - | 205,579,877.47 | - | - | 27,469,681.96 |
| Other currency funds in USD | 93,664.25 | 6.9646 | 652,334.03 | 119,611.52 | 6.3757 | 762,607.17 |
| Other currency funds in EUR | 24,403.36 | 7.4229 | 181,143.70 | 10,262.10 | 7.2197 | 74,089.28 |
| Subtotal | 206,413,355.20 | 28,306,378.41 | ||||
| Total | 402,886,840.57 | 146,232,880.57 | ||||
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
2) As of December 31, 2022, the pledged notes receivable by the Group is nil.
3) At the end of the current reporting period, notes receivable endorsed or discounted by the Group but not yet dueat the balance sheet day
Unit：RMB
| Category | Amount not derecognized as of December 31, 2022 |
| Bank acceptance bill Note | 1,241,880,022.19 |
| Total | 1,241,880,022.19 |
As of December 31, 2022, the Group gave RMB1,182,413,217.20 (2021: RMB711,238,103.83) undue bank acceptancebills to suppliers for endorsement and discounted RMB59,466,804.99 (2021: nil) undue bank acceptance to banks. Sincethe Group has not transferred almost all the risks and rewards of ownership of financial assets, the Group has not terminatedits confirmation. For details, please refer to Note (V) 23 and Note (V) 30.3.
4) As of December 31, 2022, the Group transferred the defaulted notes receivable into accounts receivable.
Unit：RMB
| Category | Amounts transferred into accounts receivable as of December 31, 2022 |
| Commercial Acceptance Bill | 29,536,416.13 |
| Total | 29,536,416.13 |
5) The Group believes except for bills that are transferred to accounts receivable due to the failure of the drawer to
perform the contract, the bank acceptance bills and commercial acceptance bills held by the Group do not havesignificant credit risks. Therefore, no loss provision is made.
4. Accounts Receivable
1) Disclosure by aging
Unit: RMB
| Item | Closing Balance | ||
| Accounts receivable | Credit loss provision | Proportion (%) | |
| Within credit period | 17,802,665,327.45 | 81,686,804.21 | 0.46 |
| Within 1 year after exceeding credit period | 10,468,264,283.90 | 535,593,193.42 | 5.12 |
| 1-2 years after exceeding credit period | 1,906,850,057.03 | 374,959,383.05 | 19.66 |
| 2-3 years after exceeding credit period | 907,553,767.72 | 379,943,208.42 | 41.86 |
| 3-4 years after exceeding credit period | 762,308,314.38 | 569,164,750.98 | 74.66 |
| Over 4 years after exceeding credit period | 557,358,170.53 | 557,358,170.53 | 100.00 |
| Subtotal | 32,404,999,921.01 | 2,498,705,510.61 | 7.71 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
2) Classified disclosure of credit loss provision by methods
Unit: RMB
| 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 | 32,404,999,921.01 | 100.00 | 2,498,705,510.61 | 7.71 | 29,906,294,410.40 |
| Total | 32,404,999,921.01 | 100.00 | 2,498,705,510.61 | 7.71 | 29,906,294,410.40 |
| 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 | 28,201,432,058.17 | 100.00 | 2,026,658,957.75 | 7.19 | 26,174,773,100.42 |
| Total | 28,201,432,058.17 | 100.00 | 2,026,658,957.75 | 7.19 | 26,174,773,100.42 |
Provision for credit loss by portfolios for accounts receivable
Unit: RMB
| Customer | Closing balance | ||
| Carrying amount | Credit loss provision | Proportion (%) | |
| Portfolio A | 3,704,238,967.38 | 68,040,950.20 | 1.84 |
| Portfolio B | 21,545,877,335.97 | 2,222,360,508.89 | 10.31 |
| Portfolio C | 7,154,883,617.66 | 208,304,051.52 | 2.91 |
| Total | 32,404,999,921.01 | 2,498,705,510.61 | 7.71 |
Description of credit loss provision by portfolios for accounts receivable
As part of the Group's credit risk management, the Group uses the aging exceeding credit period of accounts receivable toassess the expected credit losses of accounts receivable formed by domestic and overseas sales business, and divides therisk characteristics into portfolio A, portfolio B and portfolio C, according to the business area and object. These threeportfolios involve a large number of customers with the same risk characteristics. Aging information is able to reflect thesolvency of these three types of customers when the accounts receivable are due.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
As of December 31, 2022 and January 1, 2022, 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 | 0.03 | 2,958,550,090.46 | 952,575.87 | 2,957,597,514.59 | 0.04 | 3,095,392,524.62 | 1,291,742.49 | 3,094,100,782.13 |
| Within 1 year after exceeding credit period | 2.02 | 672,866,835.07 | 13,604,729.18 | 659,262,105.89 | 1.70 | 594,470,571.01 | 10,117,916.29 | 584,352,654.72 |
| 1-2 years after exceeding credit period | 48.47 | 27,091,133.84 | 13,129,835.35 | 13,961,298.49 | 44.11 | 50,793,800.93 | 22,404,389.00 | 28,389,411.93 |
| 2-3 years after exceeding credit period | 77.48 | 23,880,801.35 | 18,503,703.14 | 5,377,098.21 | 83.73 | 43,832,222.47 | 36,701,948.79 | 7,130,273.68 |
| 3-4 years after exceeding credit period | 100.00 | 13,340,404.86 | 13,340,404.86 | - | 100.00 | 19,359,244.96 | 19,359,244.96 | - |
| Over 4 years after exceeding credit period | 100.00 | 8,509,701.80 | 8,509,701.80 | - | 100.00 | 2,653,390.61 | 2,653,390.61 | - |
| Total | 1.84 | 3,704,238,967.38 | 68,040,950.20 | 3,636,198,017.18 | 2.43 | 3,806,501,754.60 | 92,528,632.14 | 3,713,973,122.46 |
As of December 31, 2022 and January 1, 2022, the credit risk and expected credit losses of accounts receivable from portfolio B 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 | 0.76 | 8,531,459,822.34 | 65,085,907.08 | 8,466,373,915.26 | 1.99 | 8,575,278,759.81 | 170,679,301.15 | 8,404,599,458.66 |
| Within 1 year after exceeding credit period | 5.30 | 9,133,051,848.20 | 484,083,420.12 | 8,648,968,428.08 | 4.63 | 7,167,632,732.53 | 331,869,605.70 | 6,835,763,126.83 |
| 1-2 years after exceeding credit period | 18.66 | 1,841,980,392.51 | 343,623,789.72 | 1,498,356,602.79 | 19.80 | 1,387,932,595.51 | 274,788,108.40 | 1,113,144,487.11 |
| 2-3 years after exceeding credit period | 38.19 | 835,970,994.09 | 319,296,676.54 | 516,674,317.55 | 44.75 | 914,771,713.21 | 409,398,421.89 | 505,373,291.32 |
| 3-4 years after exceeding credit period | 72.52 | 702,886,673.06 | 509,743,109.66 | 193,143,563.40 | 83.68 | 347,000,938.34 | 290,357,481.17 | 56,643,457.17 |
| Over 4 years after exceeding credit period | 100.00 | 500,527,605.77 | 500,527,605.77 | - | 100.00 | 288,831,015.89 | 288,831,015.89 | - |
| Total | 10.31 | 21,545,877,335.97 | 2,222,360,508.89 | 19,323,516,827.08 | 9.45 | 18,681,447,755.29 | 1,765,923,934.20 | 16,915,523,821.09 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
As of December 31, 2022 and January 1, 2022, 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 | 0.25 | 6,312,655,414.65 | 15,648,321.26 | 6,297,007,093.39 | 0.12 | 4,954,201,263.39 | 5,863,712.80 | 4,948,337,550.59 |
| Within 1 year after exceeding credit period | 5.72 | 662,345,600.63 | 37,905,044.12 | 624,440,556.51 | 5.08 | 594,136,961.30 | 30,172,981.24 | 563,963,980.06 |
| 1-2 years after exceeding credit period | 48.19 | 37,778,530.68 | 18,205,757.98 | 19,572,772.70 | 52.38 | 69,240,541.50 | 36,265,915.28 | 32,974,626.22 |
| 2-3 years after exceeding credit period | 88.35 | 47,701,972.28 | 42,142,828.74 | 5,559,143.54 | 100.00 | 46,561,027.57 | 46,561,027.57 | - |
| 3-4 years after exceeding credit period | 100.00 | 46,081,236.46 | 46,081,236.46 | - | 100.00 | 25,802,744.58 | 25,802,744.58 | - |
| Over 4 years after exceeding credit period | 100.00 | 48,320,862.96 | 48,320,862.96 | - | 100.00 | 23,540,009.94 | 23,540,009.94 | - |
| Total | 2.91 | 7,154,883,617.66 | 208,304,051.52 | 6,946,579,566.14 | 2.94 | 5,713,482,548.28 | 168,206,391.41 | 5,545,276,156.87 |
3) Credit loss provision
Provision, re-collection, or reverse of the credit loss provision in the current reporting period
Unit: RMB
| Credit loss provision | Total |
| Balance on January 1, 2022 | 2,026,658,957.75 |
| Provision/(reverse) during the current reporting period | 532,337,205.31 |
| Derecognition of financial assets (including direct write-downs) and transfer out | (61,413,372.39) |
| Difference arised from foreign currency statement translation | 1,122,719.94 |
| Balance on December 31, 2022 | 2,498,705,510.61 |
In the current reporting period, the amount of actual accounts receivable write-off is RMB 61,413,372.39.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
4) Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
| Name of the Party | Closing balance | Proportion (%) of the total balance of accounts receivable at the end of the current reporting period | Closing balance for credit loss provision |
| CETC’s subsidiary company A (Note) | 289,926,400.73 | 0.89 | 147,074,800.81 |
| Third Party A | 223,037,956.64 | 0.69 | 557,594.89 |
| Third Party B | 215,186,541.42 | 0.66 | 38,545,214.14 |
| Third Party C | 154,227,240.01 | 0.48 | 6,554,657.70 |
| Third Party D | 142,785,139.22 | 0.44 | 356,963.07 |
| Total | 1,025,163,278.02 | 3.16 | 193,089,230.61 |
Note: A subsidiary of CETC is a subsidiary of China Electronics Technology Group Co., Ltd., the Company's ultimatecontroller.
5) As of December 31, 2022, there is no termination of accounts receivable booking due to transfer of a financialasset.
6) As of December 31, 2022, the Group has no assets/liabilities booked due to transferred accounts receivable thatthe Group still continue to be involved in.
5. Receivables for Financing
1) Receivables for financing by categories
Unit: RMB
| Item | Closing Balance | Opening Balance |
| Bank acceptance bill | 1,484,218,258.74 | 1,316,035,122.06 |
| Total | 1,484,218,258.74 | 1,316,035,122.06 |
2) At the end of the reporting period, the Group’s pledged receivables for financing
Unit: RMB
| Item | Amount pledged as of December 31, 2022 |
| Bank acceptance bill | 10,312.23 |
| Total | 10,312.23 |
3) At the end of the reporting period, receivables for financing endorsed or discounted by the Group that have notyet expired on the balance sheet date.
Unit: RMB
| Item | Derecognized amount as of December 31, 2022 |
| Bank acceptance bill | 1,908,510,492.86 |
| Total | 1,908,510,492.86 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
4) The Group believes that the acceptance bank's credit rating of the bank acceptance bill held is high, and there isno significant credit risk, so no loss provision is made.
6. Prepayment
1) Prepayments by aging analysis
Unit: RMB
| Aging | Closing Balance | Opening Balance | ||
| Carrying amount | Proportion (%) | Carrying amount | Proportion (%) | |
| Within 1 year | 467,175,741.37 | 87.36 | 472,051,582.19 | 93.33 |
| 1-2 years | 60,041,088.41 | 11.23 | 16,837,633.29 | 3.33 |
| 2-3 years | 4,732,310.18 | 0.88 | 12,180,525.79 | 2.41 |
| Over 3 years | 2,830,980.56 | 0.53 | 4,728,512.08 | 0.93 |
| Total | 534,780,120.52 | 100.00 | 505,798,253.35 | 100.00 |
2) Closing balances of top five prepayments parties
As of December 31, 2022, the Group’s top five balances of prepayments amounted to RMB163,448,162.33,accounting for 30.56% of total closing balance of prepayments.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
7. Other Receivables
1) Other receivables by aging
Unit: RMB
| Item | Closing Balance | ||
| Other receivables | Bad debt provision | Proportion (%) | |
| Within contract period | 435,726,390.34 | 2,647,306.22 | 0.61 |
| Within 1 year | 74,536,873.66 | 3,098,605.26 | 4.16 |
| 1-2 years | 6,501,889.62 | 1,149,718.96 | 17.68 |
| 2-3 years | 5,758,160.62 | 2,190,980.22 | 38.05 |
| 3-4 years | 8,938,449.42 | 5,871,667.42 | 65.69 |
| Over 4 years | 15,094,368.40 | 15,094,368.40 | 100.00 |
| Subtotal | 546,556,132.06 | 30,052,646.48 | 5.50 |
2) Other receivables by nature of the payment
Unit: RMB
| Item | Closing Balance | Opening Balance |
| Guarantee deposits | 262,305,393.59 | 216,176,255.21 |
| Temporary payments for receivables | 153,962,968.02 | 113,230,687.20 |
| Tax rebates | 2,166,013.19 | 762,862.50 |
| Investment intention fund | - | 4,000,000.00 |
| Others | 128,121,757.26 | 51,019,823.13 |
| Total | 546,556,132.06 | 385,189,628.04 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 | Recollect or reverse | Resell or write off | ||||
| Other receivables | 25,569,182.16 | 7,029,184.17 | (2,476,821.46) | (393,162.35) | 324,263.96 | 30,052,646.48 |
| Total | 25,569,182.16 | 7,029,184.17 | (2,476,821.46) | (393,162.35) | 324,263.96 | 30,052,646.48 |
Changes in credit loss provisions for other receivables
Unit: RMB
| Bad 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 1, 2022 | 2,587,782.99 | 3,087,217.99 | 19,894,181.18 | 25,569,182.16 |
| The book balance of other receivables on J January 1, 2022 in the current reporting period | - | - | - | - |
| --Transfer into stage 2 | (648,213.90) | 648,213.90 | - | - |
| -- Transfer into stage 3 | - | (1,066,987.16) | 1,066,987.16 | - |
| --provision/(reverse) in the current reporting period | 383,473.17 | 1,579,879.49 | 2,589,010.05 | 4,552,362.71 |
| Derecognition of financial assets (including direct write-downs) and transfer out | - | - | (393,162.35) | (393,162.35) |
| Other changes | 324,263.96 | - | - | 324,263.96 |
| Balance on December 31, 2022 | 2,647,306.22 | 4,248,324.22 | 23,157,016.04 | 30,052,646.48 |
4) The actual write-off of other receivables during the current reporting period:
The actual write-off of other receivables during the current reporting period is RMB393,162.35.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
5) Top five debtors based on corresponding closing balance of other receivables
Unit: RMB
| Entities | Nature | Closing balance | Aging | Proportion of total closing balance for other receivables (%) | Closing balance for credit loss provision |
| Overseas subsidiary A | Cash and bank balances in transit | 53,180,000.00 | Within the contract period | 9.73 | - |
| Overseas subsidiary B | Cash and bank balances in transit | 27,290,774.51 | Within the contract period | 4.99 | - |
| Third party E | Guarantee deposits | 17,848,880.00 | Within the contract period | 3.27 | 117,802.61 |
| Third party F | Guarantee deposits | 7,428,988.00 | Within the contract period | 1.36 | 49,031.32 |
| Third party G | Guarantee deposits | 6,739,162.58 | Within the contract period | 1.23 | 44,478.47 |
| Total | 112,487,805.09 | 20.58 | 211,312.40 |
6) As of December 31, 2022, the Group does not have other receivables related to government subsidies.
7) As of December 31, 2022, there is no termination of other receivables booking due to transfer of a financial asset.
8) As of December 31, 2022, the Group has no assets/liabilities booked due to any transferred other receivables that the Group continues to be involved in.
8. Inventories
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 | 8,590,579,068.82 | 405,402,336.01 | 8,185,176,732.81 | 7,947,851,148.15 | 233,046,765.20 | 7,714,804,382.95 |
| Work-in-progress | 413,355,134.81 | - | 413,355,134.81 | 437,963,160.90 | - | 437,963,160.90 |
| Finished goods | 10,955,174,807.28 | 839,876,008.09 | 10,115,298,799.19 | 9,760,949,606.67 | 702,675,806.16 | 9,058,273,800.51 |
| Contract performance cost | 290,988,057.76 | 6,595,745.76 | 284,392,312.00 | 763,071,063.24 | - | 763,071,063.24 |
| Total | 20,250,097,068.67 | 1,251,874,089.86 | 18,998,222,978.81 | 18,909,834,978.96 | 935,722,571.36 | 17,974,112,407.60 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
2) Provision for decline in value of inventories
Unit: RMB
| Category | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Effect on conversion of financial statements denominated in foreign currencies | Closing Balance | |
| Reversals or write-off | Others | |||||
| Raw materials | 233,046,765.20 | 285,003,215.76 | 112,647,644.95 | - | - | 405,402,336.01 |
| Finished goods | 702,675,806.16 | 271,305,304.25 | 172,730,470.10 | - | 38,625,367.78 | 839,876,008.09 |
| Contract performance cost | - | 6,595,745.76 | - | - | - | 6,595,745.76 |
| Subtotal | 935,722,571.36 | 562,904,265.77 | 285,378,115.05 | - | 38,625,367.78 | 1,251,874,089.86 |
The write-offs of provision for inventories in the current reporting period are due to use or sale of inventories.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
9. Contract Assets
1) Details of contract assets:
Unit: RMB
| Items | Closing Balance | Opening Balance | ||||
| Carrying amount | Provisions for impairment | Book value | Carrying amount | Provisions for impairment | Book value | |
| Constructions | 1,859,628,746.45 | 10,664,372.98 | 1,848,964,373.47 | 1,274,476,664.40 | 9,873,249.73 | 1,264,603,414.67 |
| Maintenance services | 270,901,478.31 | 1,642,480.80 | 269,258,997.51 | 148,057,308.84 | 1,288,098.60 | 146,769,210.24 |
| Total | 2,130,530,224.76 | 12,306,853.78 | 2,118,223,370.98 | 1,422,533,973.24 | 11,161,348.33 | 1,411,372,624.91 |
2) The classification and disclosure of the method of provision for impairment of contract assets during the currentreporting period:
Unit: RMB
| 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 | 2,130,530,224.76 | 100.00 | 12,306,853.78 | 0.58 | 2,118,223,370.98 |
| Total | 2,130,530,224.76 | 100.00 | 12,306,853.78 | 0.58 | 2,118,223,370.98 |
Provision for impairment of contract assets in the current reporting period:
Unit: RMB
| Credit loss provision | Total |
| Balance on January 1, 2022 | 11,161,348.33 |
| Provision/reverse during the current reporting period | 1,145,505.45 |
| Balance on December 31, 2022 | 12,306,853.78 |
Contract assets arise from the Group’s construction works business as well as maintenance services relating to securityprojects. The Group provides construction works and maintenance services based on contracts with customers, andrecognizes revenue based on the performance progress during the term of the contracts. The Group’s customers makemilestone payments for the construction works and maintenance services of the Group as provided in the contracts. Forthe portion where the Group has obtained an unconditional right to consideration, it will be recognized as accountsreceivable, while the remaining portion will be recognized as contract assets; if the contract price received or receivableby the Group exceeds the performance obligation completed to date, the excess portion will be recognized as contractliabilities. The Group presents contract assets and contract liabilities under the same contract on a net basis.
10. Non-current Assets Due within One Year
Unit: RMB
| Item | Closing Balance | Opening Balance |
| Long-term receivables due within one year (Note (V) 12) | 996,902,343.27 | 975,960,437.14 |
| Total | 996,902,343.27 | 975,960,437.14 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
11. Other Current Assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Deductible VAT input | 670,250,077.42 | 671,022,973.90 |
| Prepaid corporate income tax | 61,808,729.93 | 146,600,985.54 |
| Prepaid tariff | 17,113,351.36 | 113,756,173.22 |
| Others | 57,660,782.87 | 91,220,245.12 |
| Total | 806,832,941.58 | 1,022,600,377.78 |
Hikvision 2022 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2022 to December 31, 2022
12. Long-term Receivables
1) Details of long-term receivables
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision for credit loss | Book value | Carrying amount | Provision for credit loss | Book value | |
| Financial leases receivables | 294,708,514.70 | 41,885,999.65 | 252,822,515.05 | 338,676,520.11 | 32,408,674.53 | 306,267,845.58 |
| Including: Unrealized income from financing | 8,548,939.32 | - | 8,548,939.32 | 15,579,721.55 | - | 15,579,721.55 |
| Installments business | 916,676,013.71 | 125,838,244.59 | 790,837,769.12 | 881,821,037.32 | 87,043,902.28 | 794,777,135.04 |
| Including: Unrealized income from financing | 32,175,399.92 | - | 32,175,399.92 | 26,548,778.33 | - | 26,548,778.33 |
| Employee housing loan | 493,890,024.40 | - | 493,890,024.40 | 487,983,401.49 | - | 487,983,401.49 |
| Including: Unrealized income from financing | 44,084,149.81 | - | 44,084,149.81 | 59,389,998.51 | - | 59,389,998.51 |
| Less: Non-current assets due within one year (Note (V) 10) | 1,163,050,529.25 | 166,148,185.98 | 996,902,343.27 | 1,093,138,859.09 | 117,178,421.95 | 975,960,437.14 |
| Total | 542,224,023.56 | 1,576,058.26 | 540,647,965.30 | 615,342,099.83 | 2,274,154.86 | 613,067,944.97 |
2) Credit loss provision
The Group believes that the employees corresponding to the long-term receivable employee housing loans held by the Group all have labor relations with the Group and the Groupassesses that the relevant debtors have good credit records, and the Group believes that there is no significant credit risk and therefore loss of provision is made
As of December 31, 2022, the credit risk and expected credit losses of long-term receivables are as follows:
Unit: RMB
| Age | Closing balance | ||
| Amounts | Credit loss provision | Estimated average loss rate (%) | |
| Within credit period | 456,800,594.29 | 3,014,883.93 | 0.66 |
| Within 1 year after exceeding credit period | 333,625,777.98 | 14,179,095.57 | 4.25 |
| 1-2 years after exceeding credit period | 193,133,173.09 | 34,010,751.77 | 17.61 |
| 2-3 years after exceeding credit period | 143,722,653.49 | 54,686,469.65 | 38.05 |
| 3-4 years after exceeding credit period | 64,906,109.70 | 42,636,823.46 | 65.69 |
| Over 4 years after exceeding credit period | 19,196,219.86 | 19,196,219.86 | 100.00 |
Hikvision 2022 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2022 to December 31, 2022
| Age | Closing balance | ||
| Amounts | Credit loss provision | Estimated average loss rate (%) | |
| Total | 1,211,384,528.41 | 167,724,244.24 | 13.85 |
The changes in the Group's long-term receivables' expected credit loss provision for the current reporting period are as follows:
Unit: RMB
| 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 1, 2022 | 5,623,293.18 | 45,080,318.80 | 68,748,964.83 | 119,452,576.81 |
| On January 1, 2022, the book balance of long-term receivables in the current reporting period | ||||
| Transfer into stage 2 | (2,902,743.16) | 2,902,743.16 | - | - |
| Transfer into stage 3 | - | (26,833,019.41) | 26,833,019.41 | - |
| Provision/(reverse) during the current reporting period | 294,333.91 | 27,039,804.79 | 20,937,528.73 | 48,271,667.43 |
| Balance on December 31, 2022 | 3,014,883.93 | 48,189,847.34 | 116,519,512.97 | 167,724,244.24 |
3) As of December 31, 2022, there is no termination of long-term receivables booking due to transfer of a financial asset.
4) As of December 31, 2022, the Group has no assets/liabilities booked due to any transferred long-term receivables that the Group continue to be involved in.
Hikvision 2022 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2022 to December 31, 2022
13. Long-term Equity Investment
Unit: RMB
| The invested entity | Opening Balance | Increase/Decrease in the current reporting period | Closing Balance | Closing balance for impairment provision | |||||||
| Additional Investments | Investment reduction | Investment Profit (Loss) recognized under the equity Method | Adjustment to 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.) (Note1) | 702,369,339.95 | - | - | 112,680,820.39 | - | 14,775,227.26 | - | - | - | 829,825,387.60 | - |
| Zhejiang City Digital Technology Ltd. (Note2) | 12,214,320.29 | 11,500,000.00 | - | 2,627,190.51 | - | - | - | - | - | 26,341,510.80 | - |
| Zhejiang Haishi Huayue Digital Technology Ltd. | 11,930,512.66 | - | - | 2,726,503.57 | - | - | (1,275,000.00) | - | - | 13,382,016.23 | - |
| Zhejiang Haishi Urban Service Operation Ltd. (formerly known as: Shenzhen Hikvision Urban Service Operation Ltd. (Note2) | 1,264,658.38 | 1,500,000.00 | - | (1,089,851.65) | - | - | - | - | - | 1,674,806.73 | - |
| Guangxi Haishi Urban Operation Management Ltd. (Note2) | 4,632,200.59 | 8,560,000.00 | - | (132,206.62) | - | - | - | - | - | 13,059,993.97 | - |
| Yunnan Yinghai Parking Service Ltd. | 4,558,881.09 | - | - | 519,116.95 | - | - | - | - | - | 5,077,998.04 | - |
| Xuzhou Kangbo Urban Operation Management Service Ltd. | 9,233,201.67 | - | - | 1,152,365.21 | - | - | - | - | - | 10,385,566.88 | - |
| Subtotal | 746,203,114.63 | 21,560,000.00 | - | 118,483,938.36 | - | 14,775,227.26 | (1,275,000.00) | - | - | 899,747,280.25 | - |
Hikvision 2022 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2022 to December 31, 2022
| 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 to other comprehensive income | Other Changes in equity | Declaration of cash dividends or profit distribution | Impairment provision | others | ||||
| 2. Associated companies | |||||||||||
| Wuhu Sensortech Intelligent Technology Ltd. | 75,466,476.84 | - | - | 22,627,903.68 | - | - | - | - | - | 98,094,380.52 | - |
| Maxio Technology (Hangzhou) Co., Ltd. (Note1) | 104,537,528.30 | - | - | (31,228,623.67) | - | 70,591,176.64 | - | - | - | 143,900,081.27 | - |
| Zhiguang Hailian Big Data Technology Ltd. (Note1) | 21,285,843.27 | - | - | (3,378,441.24) | - | 4,517,968.05 | - | - | - | 22,425,370.08 | - |
| Sanmenxia Xiaoyun Vision Technology Ltd. | 3,069,386.03 | - | - | (441,143.16) | - | - | - | - | - | 2,628,242.87 | - |
| Jiaxin Haishi JiaAn Zhicheng Technology Ltd. | 21,654,742.45 | - | - | 2,693,956.92 | - | - | - | - | - | 24,348,699.37 | - |
| Zhejiang Changyun Haibao Technology Ltd. (Note3) | - | 3,000,000.00 | - | (1,408,717.24) | - | - | - | - | - | 1,591,282.76 | - |
| Terapark (Nanjing) Ltd. (Note4) | - | 20,000,000.00 | - | (396,874.31) | - | - | - | - | - | 19,603,125.69 | - |
| Beijing Taifang Techology LLC (Note5) | - | 40,000,000.00 | - | (304,949.40) | - | - | - | - | - | 39,695,050.60 | - |
| Qinghai Qingtang Big Data Co., Ltd. (Note6) | 9,948,454.93 | - | (9,800,000.00) | (148,454.93) | - | - | - | - | - | - | - |
| Subtotal | 235,962,431.82 | 63,000,000.00 | (9,800,000.00) | (11,985,343.35) | - | 75,109,144.69 | - | - | - | 352,286,233.16 | - |
| Total | 982,165,546.45 | 84,560,000.00 | (9,800,000.00) | 106,498,595.01 | - | 89,884,371.95 | (1,275,000.00) | - | - | 1,252,033,513.41 | - |
Note 1: Changes in other equities during the reporting period was due to the changes in equity caused by increasing capital of the investee by other shareholders.
Hikvision 2022 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2022 to December 31, 2022
Note 2: The Group made additional investment in the investee this year, and the subscribed proportion of equity in the investee remained unchanged.
Note 3: In December 2019, a subsidiary of the Group entered into an agreement with Zhejiang Changyun Investment Co., Ltd. and ZBO Fintech Co., Ltd. regarding the establishment ofa joint venture, Zhejiang Changyun Haibao Technology Co., Ltd. ("Changyun Haibao"), acquiring 30% equity in Changyun Haibao. The Group has paid capital contributions as of theyear end. The board of directors of Changyun Haibao consists of seven directors, of whom two are appointed by the Group in accordance with the articles of association of ChangyunHaibao. As the Group exerts a significant influence on Changyun Haibao, it is accounted for as an associate.
Note 4: In September 2022, a subsidiary of the Group entered into an agreement with Terapark (Nanjing) Ltd. ("Terapark") and its former shareholders, acquiring 9.90% equity in Teraparkfor RMB 20 million. The board of directors of Terapark consists of seven directors, of whom one is appointed by the Group in accordance with Terapark's articles of association. As theGroup exerts a significant influence on Terapark, it is accounted for as an associate.
Note 5: In August 2022, a subsidiary of the Group acquired 3.6865 % equity in Beijing Taifang Technology Ltd. ("Beijing Taifang Technology") from Langma 8 (Shenzhen) VentureCapital Center (Limited Partnership) for RMB 12.6 million. In August 2022, the Group increased its capital contributions to Beijing Taifang Technology by RMB 27.4 million. Uponcompletion of this transaction, the Group held 4.4023% equity in Beijing Taifang Technology. The board of directors of Beijing Taifang Technology consists of nine directors, of whomone is appointed by the Group in accordance with Beijing Taifang Technology's articles of association. As the Group exerts a significant influence on Beijing Taifang Technology, it isaccounted for as an associate.
Note 6: Qinghai Qingtang Big Data Co., Ltd. completed its liquidation on December 28, 2022 and completed registration of business cancellation on January 9, 2023.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
14. Other Non-current Financial Assets
Unit: RMB
| Item | Closing balance | Opening balance |
| Investments in equity instruments (Note) | 423,893,239.94 | 438,724,172.22 |
| Total | 423,893,239.94 | 438,724,172.22 |
Note: It refers to the Group’s equity investments of private companies. The Group has no control, joint control orsignificant influence over the invested company. During the current reporting period, the Company received a cashdividend of RMB51,892,209.92 from this investee. (2021: RMB115,644,801.97) and recognized it as current profit andloss. Please refer to Note (V) 52 for details.
15. Fixed Assets
1) Details of fixed assets
Unit: RMB
| Item | Buildings and constructions | General-purpose equipment | Special-purpose equipment | Transportation vehicles | Total |
| I. Total original carrying amount | |||||
| 1. Opening balance | 5,840,580,725.62 | 1,366,124,127.52 | 2,318,809,132.18 | 98,848,289.25 | 9,624,362,274.57 |
| 2. Increase in the current reporting period | 1,593,354,163.97 | 458,315,165.51 | 704,620,607.42 | 9,460,878.06 | 2,765,750,814.96 |
| 1) purchase | 7,211,912.08 | 449,377,016.10 | 568,447,670.68 | 9,460,878.06 | 1,034,497,476.92 |
| 2) transferred from construction in progress | 1,586,142,251.89 | 8,938,149.41 | 78,150,412.05 | - | 1,673,230,813.35 |
| 3) transferred from inventory | - | - | 58,022,524.69 | - | 58,022,524.69 |
| 3.Decrease in the current reporting period | 10,792,551.96 | 39,460,047.05 | 56,682,563.10 | 8,228,804.52 | 115,163,966.63 |
| 1) disposal or write-off | 10,792,551.96 | 39,460,047.05 | 56,682,563.10 | 8,228,804.52 | 115,163,966.63 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | 28,972,579.92 | 10,719,218.99 | (310,967.84) | 1,183,204.65 | 40,564,035.72 |
| 5.Closing Balance | 7,452,114,917.55 | 1,795,698,464.97 | 2,966,436,208.66 | 101,263,567.44 | 12,315,513,158.62 |
| II. Accumulated depreciation | |||||
| 1. Opening balance | 1,215,383,927.62 | 516,132,115.59 | 1,137,960,269.72 | 59,295,290.37 | 2,928,771,603.30 |
| 2. Increase in the current reporting period | 297,505,151.41 | 269,929,474.10 | 347,827,198.67 | 12,852,587.92 | 928,114,412.10 |
| (1) accrual | 297,505,151.41 | 269,929,474.10 | 347,827,198.67 | 12,852,587.92 | 928,114,412.10 |
| 3.Decrease in the current reporting period | 4,102,499.04 | 28,064,250.04 | 45,387,810.12 | 7,412,937.99 | 84,967,497.19 |
| (1) disposal or write- off | 4,102,499.04 | 28,064,250.04 | 45,387,810.12 | 7,412,937.99 | 84,967,497.19 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | 899,312.01 | 2,817,815.54 | (233,016.17) | 267,898.35 | 3,752,009.73 |
| 5.Closing balance | 1,509,685,892.00 | 760,815,155.19 | 1,440,166,642.10 | 65,002,838.65 | 3,775,670,527.94 |
| III. Total book value | |||||
| Closing balance on book value | 5,942,429,025.55 | 1,034,883,309.78 | 1,526,269,566.56 | 36,260,728.79 | 8,539,842,630.68 |
| Opening balance on book value | 4,625,196,798.00 | 849,992,011.93 | 1,180,848,862.46 | 39,552,998.88 | 6,695,590,671.27 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
2) As of December 31, 2022, the Group did not have any significant idle fixed assets.
3) As of December 31, 2022, the fair value of the dedicated equipment rent out through operating leasing by the
Group is RMB81,627,645.88.
4) Fixed assets of which certificates of title have not been granted as of December 31, 2022：
Unit: RMB
| Item | Carrying amount | Reason for certificates of title not granted |
| Office building for branches | 12,722,154.03 | In the process of obtaining the real estate certificates |
| Hangzhou Innovation Industrial Park | 786,659,467.76 | In the process of obtaining the real estate certificates after transferred to fixed assets |
| Total | 799,381,621.79 |
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
16. Construction in Progress
1) Details of construction in progress
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision | Book value | Carrying amount | Provision | Book value | |
| Chengdu Science and Technology Park Project | 1,424,680,236.64 | - | 1,424,680,236.64 | 896,287,490.09 | - | 896,287,490.09 |
| Xi’an Science and Technology Park Project | 510,141,028.55 | - | 510,141,028.55 | 181,009,327.21 | - | 181,009,327.21 |
| Wuhan Intelligence Industry Park Project | 362,495,271.16 | - | 362,495,271.16 | 21,605,140.49 | - | 21,605,140.49 |
| EZVIZ Smart Home Product Industrial Base Project (Infrastructure Part) | 282,125,289.82 | - | 282,125,289.82 | 95,322,172.33 | - | 95,322,172.33 |
| Security Industrial Base (Tonglu) Phase III | 256,401,113.99 | - | 256,401,113.99 | 48,768,905.95 | - | 48,768,905.95 |
| Shijiazhuang Science and Technology Park Project | 240,987,635.91 | - | 240,987,635.91 | 100,184,640.21 | - | 100,184,640.21 |
| Hefei Science and Technology Park Project | 96,324,257.68 | - | 96,324,257.68 | 18,754,774.97 | - | 18,754,774.97 |
| Zhengzhou Science and Technology Park Project | 93,894,775.99 | - | 93,894,775.99 | 42,029,452.82 | - | 42,029,452.82 |
| Chongqing Science and Technology Park Project-Phase Ⅲ | 88,837,517.21 | - | 88,837,517.21 | 538,446.48 | - | 538,446.48 |
| EZVIZ Intelligent Manufacturing Chongqing Base Project(Infrastructure Part) | 72,173,018.20 | - | 72,173,018.20 | - | - | - |
| Nanjing Science and Technology Park Project | 59,330,672.30 | - | 59,330,672.30 | 1,096,879.60 | - | 1,096,879.60 |
| Nanchang Science and Technology Park Project | 55,299,275.67 | - | 55,299,275.67 | 5,811,745.36 | - | 5,811,745.36 |
| Hangzhou Innovation Industry Park | - | - | - | 393,310,782.16 | - | 393,310,782.16 |
| Security Industrial Base (Tonglu) - Phase II Continued Construction Project | - | - | - | 390,702,241.74 | - | 390,702,241.74 |
| Others | 228,113,207.68 | - | 228,113,207.68 | 127,914,099.27 | - | 127,914,099.27 |
| Total | 3,770,803,300.80 | - | 3,770,803,300.80 | 2,323,336,098.68 | - - | 2,323,336,098.68 |
2) Changes in significant construction in progress during the current reporting period
Unit: RMB
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
| 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 | 896,287,490.09 | 528,392,746.55 | - | - | - | 1,424,680,236.64 | 72.36% | 72.36% | - | - | Self-financing | |
| Xi’an Science and Technology Park Project | 227,800.00 | 181,009,327.21 | 329,131,701.34 | - | - | - | 510,141,028.55 | 22.39% | 22.39% | - | - | - | Self-financing |
| Wuhan Intelligence Industry Park Project | 238,700.00 | 21,605,140.49 | 340,890,130.67 | - | - | - | 362,495,271.16 | 15.19% | 15.19% | - | - | - | Self-financing |
| EZVIZ Smart Home Product Industrial Base Project (Infrastructure Part) | 75,300.00 | 95,322,172.33 | 186,803,117.49 | - | - | - | 282,125,289.82 | 37.47% | 37.47% | 3,833,236.08 | 3,833,236.08 | 3.70% | Self-financing/ specific loan |
| Security Industrial Base (Tonglu) Phase III | 77,000.00 | 48,768,905.95 | 207,632,208.04 | - | - | - | 256,401,113.99 | 33.30% | 33.30% | - | - | - | Self-financing |
| Shijiazhuang Science and Technology Park Project | 89,700.00 | 100,184,640.21 | 140,802,995.70 | - | - | - | 240,987,635.91 | 26.87% | 26.87% | - | - | Self-financing | |
| Hefei Science and Technology Park Project | 54,100.00 | 18,754,774.97 | 77,569,482.71 | - | - | - | 96,324,257.68 | 17.80% | 17.80% | - | - | - | Self-financing |
| Zhengzhou Science and Technology Park Project | 48,500.00 | 42,029,452.82 | 51,865,323.17 | - | - | - | 93,894,775.99 | 19.36% | 19.36% | - | - | - | Self-financing |
| Chongqing Science and Technology Park Project-Phase Ⅲ | 48,000.00 | 538,446.48 | 88,299,070.73 | - | - | - | 88,837,517.21 | 18.51% | 18.51% | - | - | - | Self-financing |
| EZVIZ Intelligent Manufacturin | 117,000.00 | - | 72,173,018.20 | - | - | - | 72,173,018.20 | 6.17% | 6.17% | - | - | - | Self-financing |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Note 1: Other reductions during the current reporting period were the completed renovation that transferred to the long-term deferred expenses.
Note 2: This amount is calculated by interest expense for specific foreign currency borrowings, less interest income for unused borrowing fund and profit/loss on exchange rate difference.
As of December 31, 2022, the Group did not have any sign of impairment of projects under construction; therefore, no provision for impairment loss was booked.
| g Chongqing Base Project(Infrastructure Part) | |||||||||||||
| Nanjing Science and Technology Park Project | 58,100.00 | 1,096,879.60 | 58,233,792.70 | - | - | - | 59,330,672.30 | 10.21% | 10.21% | - | - | - | Self-financing |
| Nanchang Science and Technology Park Project | 49,100.00 | 5,811,745.36 | 49,487,530.31 | - | - | - | 55,299,275.67 | 11.26% | 11.26% | - | - | - | Self-financing |
| Hangzhou Innovation Industry Park | 83,100.00 | 393,310,782.16 | 399,241,430.12 | (792,552,212.28) | - | - | - | 95.37% | 100.00% | (77,456,678.27) | (6,493,347.83) | 0.85% | Specific loan |
| Security Industrial Base (Tonglu) - Phase II Continued Construction Project | 58,600.00 | 390,702,241.74 | 195,023,827.62 | (585,726,069.36) | - | - | - | 100.00% | 100.00% | - | - | - | Self-financing |
| Others | 127,914,099.27 | 393,751,550.73 | (294,952,531.71) | 3,097,644.99 | (1,697,555.60) | 228,113,207.68 | - | - | - | - | - | Self-financing | |
| Total | 1,421,900.00 | 2,323,336,098.68 | 3,119,297,926.08 | (1,673,230,813.35) | 3,097,644.99 | (1,697,555.60) | 3,770,803,300.80 | - | - | (73,623,442.19) | (2,660,111.75) |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
17. Right-of-use Assets
Unit: RMB
| Items | Building and construction | General-purpose equipment | Special-purpose equipment | Transportation vehicles | Total |
| I. Total original carrying amount | |||||
| 1. Opening balance | 687,537,465.14 | 230,374.45 | 91,934,144.20 | 22,894,986.96 | 802,596,970.75 |
| 2. Increased | 265,856,017.58 | 69,374.70 | - | 6,569,949.78 | 272,495,342.06 |
| (1)New Lease | 265,856,017.58 | 69,374.70 | - | 6,569,949.78 | 272,495,342.06 |
| 3. Decreased | 103,530,959.39 | - | - | 5,404,203.49 | 108,935,162.88 |
| (1) The lease contract expires or terminates early | 103,530,959.39 | - | - | 5,404,203.49 | 108,935,162.88 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | 11,300,622.04 | (866.34) | - | 808,398.67 | 12,108,154.37 |
| 5. Closing balance | 861,163,145.37 | 298,882.81 | 91,934,144.20 | 24,869,131.92 | 978,265,304.30 |
| II. Accumulated depreciation | |||||
| 1. Opening balance | 160,488,138.26 | 144,576.92 | 68,096,796.36 | 7,473,786.46 | 236,203,298.00 |
| 2. Increased | 223,184,242.30 | 82,192.15 | 14,635,251.10 | 8,471,970.69 | 246,373,656.24 |
| (1) Provisions | 223,184,242.30 | 82,192.15 | 14,635,251.10 | 8,471,970.69 | 246,373,656.24 |
| 3. Decreased | 75,332,041.81 | - | - | 5,204,987.81 | 80,537,029.62 |
| (1) The lease contract expires or terminates early | 75,332,041.81 | - | - | 5,204,987.81 | 80,537,029.62 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | 1,584,511.62 | (209.31) | - | 162,751.06 | 1,747,053.37 |
| 5. Closing balance | 309,924,850.37 | 226,559.76 | 82,732,047.46 | 10,903,520.40 | 403,786,977.99 |
| III. Total book value | |||||
| 1. Closing balance on book value | 551,238,295.00 | 72,323.05 | 9,202,096.74 | 13,965,611.52 | 574,478,326.31 |
| 2. Opening balance on book value | 527,049,326.88 | 85,797.53 | 23,837,347.84 | 15,421,200.50 | 566,393,672.75 |
Note: The Group leased a number of assets, including building and construction, general-purpose equipments, special-purpose equipments and transportation vehicles, for lease terms ranging from 1 to 13 years. The above right-of use assetscannot be used for purposes including borrowing, mortgage, and guarantee, etc.
In the current reporting period, the total amount of the short-term lease expenses and low-value asset lease expenses thatthe Group included in the current profit was RMB99,598,934.33 (2021: RMB82,001,765.42).
The total cash outflow related to leases for the year was RMB327,608,122.43 (2021: RMB272,298,575.65).
As of December 31, 2022, the short-term lease portfolio committed by the Group is consistent with the short-term leasecorresponding to the above lease fee.
18. Intangible Assets
1) Details of construction in progress
Unit: RMB
| Item | Land use right | Intellectual property right | Application Software | Franchise | Total |
| I. Total original carrying amount | |||||
| 1. Opening balance | 1,259,213,465.26 | 69,966,433.88 | 374,982,150.82 | 91,933,517.61 | 1,796,095,567.57 |
| 2. Increased | 323,094,474.37 | 13,387.95 | 29,329,660.01 | 11,296,400.11 | 363,733,922.44 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Item
| Item | Land use right | Intellectual property right | Application Software | Franchise | Total |
| (1) Purchase | 323,094,474.37 | 13,387.95 | 29,329,660.01 | 11,296,400.11 | 363,733,922.44 |
| 3. Decreased | - | - | 7,442,132.75 | - | 7,442,132.75 |
| (1)Disposal or write-off | - | - | 7,442,132.75 | - | 7,442,132.75 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | - | 32,942.04 | 779,318.65 | 12,053.85 | 824,314.54 |
| 5. Closing balance | 1,582,307,939.63 | 70,012,763.87 | 397,648,996.73 | 103,241,971.57 | 2,153,211,671.80 |
| II. Total accumulated amortization | |||||
| 1.Opening balance | 103,592,991.04 | 65,002,594.28 | 311,663,913.28 | 11,588,653.90 | 491,848,152.50 |
| 2. Increased | 31,678,386.25 | 3,356,580.16 | 36,141,067.46 | 8,500,179.34 | 79,676,213.21 |
| (1)Accrual | 31,678,386.25 | 3,356,580.16 | 36,141,067.46 | 8,500,179.34 | 79,676,213.21 |
| 3. Decreased | - | - | 6,042,405.91 | - | 6,042,405.91 |
| (1)Disposal or write-off | - | - | 6,042,405.91 | - | 6,042,405.91 |
| 4. Effect on conversion of financial statements denominated in foreign currencies | - | 19,322.78 | 736,932.70 | 5,890.84 | 762,146.32 |
| 5. Closing balance | 135,271,377.29 | 68,378,497.22 | 342,499,507.53 | 20,094,724.08 | 566,244,106.12 |
| III. loss provision | |||||
| 1.Opening balance | - | - | - | - | - |
| 2. Increased | - | - | - | 42,034,063.49 | 42,034,063.49 |
| 3. Decreased | - | - | - | - | - |
| 5. Closing balance | - | - | - | 42,034,063.49 | 42,034,063.49 |
| Ⅳ. Total book value | |||||
| 1. Closing balance on book value | 1,447,036,562.34 | 1,634,266.65 | 55,149,489.20 | 41,113,184.00 | 1,544,933,502.19 |
| 2. Opening balance on book value | 1,155,620,474.22 | 4,963,839.60 | 63,318,237.54 | 80,344,863.71 | 1,304,247,415.07 |
2) At the end of the current reporting period, the intangible asset of the Group that has not completed the titlecertificate is nil.
19. Goodwill
1) Goodwill book value
Unit: RMB
| 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 | ||||
| SISTEMAS Y SERVICIOS DE COMUNICACI?N, S.A. DE C.V. | 73,308,109.05 | - | - | 6,573,714.57 | 79,881,823.62 |
| HuaAn Baoquan Intelligence and its subsidiaries | 61,322,871.63 | - | - | - | 61,322,871.63 |
| Hangzhou Kuangxin Technology Ltd. | 59,060,454.06 | - | - | - | 59,060,454.06 |
| Zhejiang Zhiyuan Fire Safety Engineering Ltd. ("Zhejiang Zhiyuan Fire") (Note1) | - | 8,199,253.77 | - | - | 8,199,253.77 |
| BK EESTI AKTSIASELTS | 4,341,956.31 | - | - | 122,205.29 | 4,464,161.60 |
| SIA "BK Latvia" | 4,335,930.90 | - | - | 122,035.70 | 4,457,966.60 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
The name of the investee or the matterthat forming a goodwill
| 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 | ||||
| Hangzhou Haikang Zhicheng Investment and Development Ltd. (Note2) | 12,573.42 | - | (12,573.42) | - | - |
| Total | 202,381,895.37 | 8,199,253.77 | (12,573.42) | 6,817,955.56 | 217,386,531.28 |
Note 1: The Group acquired Zhejiang Zhiyuan Fire Safety Engineering Ltd., resulting in a goodwill of RMB8,199,253.77,see Note (VI) 1.
Note 2: Hangzhou Haikang Zhicheng Investment and Development Ltd. was cancelled in 2022, and the goodwill decreasedby RMB12,573.42.
2) Goodwill impairment provision
When the Group conducts impairment test on goodwill at the end of the reporting period, the key assumptions adoptedand their basis are as follows:
The recoverable amount of asset group containing apportioned goodwill is determined according to the present value ofthe estimated future cash flow of the relevant asset group. Its future cash flows are determined based on the 5-year financialbudget from 2023 to 2027 approved by management, with a certain discount rate. Cash flow over 5 years is calculated onthe basis of 2% growth rate. This growth rate is determined based on the relevant industry's growth forecast and does notexceed the long-term average growth rate for that industry. Estimates of future cash flows are based on past performanceand expectations of market development, and are based on the estimated sales, cost of sales, and operating expenses duringthe estimated period.
During the reporting period, the Group did not find that the recoverable amount of the relevant asset group including theapportioned goodwill was lower than its book value, so it is considered that there is no need to accrue impairment loss forgoodwill.
20. Long-term Deferred Expenses
Unit: RMB
| Invested unit | Opening Balance | Increased | Amortized | Other decreased amount | Difference of foreign currency translation | Closing balance |
| Improvement expenditure for leased fixed asset | 98,617,176.50 | 87,543,749.45 | 53,016,110.66 | - | 48,777.31 | 133,193,592.60 |
| Employee housing loan deferred interest | 59,389,998.40 | 18,425,634.64 | 28,470,415.65 | 5,261,067.58 | - | 44,084,149.81 |
| Total | 158,007,174.90 | 105,969,384.09 | 81,486,526.31 | 5,261,067.58 | 48,777.31 | 177,277,742.41 |
21. Deferred Tax Assets/Deferred Tax Liabilities
1) Deferred tax assets that are not presented on net off basis
Unit: RMB
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Item
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for impairment losses of assets | 1,244,117,898.85 | 303,398,701.08 | 746,689,777.87 | 203,337,661.26 |
| Provision for credit loss | 2,592,933,147.29 | 539,409,348.22 | 2,019,377,828.80 | 414,456,930.82 |
| Payroll payables | 866,731,426.46 | 135,343,862.92 | 1,021,696,707.76 | 156,929,402.30 |
| Share-based payment | 102,865,533.19 | 18,154,808.30 | 546,398,398.17 | 92,168,164.61 |
| Provisions | 159,335,457.04 | 26,406,150.70 | 124,817,084.93 | 18,515,337.61 |
| Accrued but unsettled liabilities | 416,294,075.36 | 80,952,178.12 | 224,525,193.17 | 49,859,840.33 |
| Unrealized profit from inter-group transactions | 2,407,578,813.30 | 361,136,821.99 | 2,025,608,612.07 | 303,841,291.79 |
| Changes in the fair value of derivative financial instruments | 68,299,685.57 | 17,074,921.39 | 3,795,920.86 | 948,980.22 |
| Deferred income | 913,846,162.56 | 108,383,170.93 | 400,764,044.74 | 61,186,781.23 |
| Changes in fair value of other non-current financial assets | 32,701,261.48 | 4,905,189.22 | - | - |
| Difference in depreciation of fixed assets and difference in amortization of intangible assets | 305,795,669.55 | 13,305,393.19 | - | - |
| Tax deductible losses | 294,467,968.83 | 39,179,829.21 | - | - |
| Total | 9,404,967,099.48 | 1,647,650,375.27 | 7,113,673,568.37 | 1,301,244,390.17 |
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 depreciation of fixed assets and difference in amortization of intangible assets | 1,439,877,224.17 | 256,804,768.33 | 929,573,058.04 | 170,677,622.00 |
| Long term investment – joint venture accounted by the equity method | 230,000,194.33 | 34,500,029.15 | - | - |
| Changes in the fair value of derivative financial instruments | 12,807,438.36 | 3,201,859.59 | 29,037,242.51 | 7,259,310.63 |
| Changes in fair value of other non-current financial assets | - | - | 38,300,223.10 | 5,745,033.47 |
| Total | 1,682,684,856.86 | 294,506,657.07 | 996,910,523.65 | 183,681,966.10 |
3) Deferred tax assets or deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
| Item | Closing balance | Opening balance | ||
| Offset amount at the end of the reporting period | Deferred tax assets or liabilities at the net amount after offset | Offset amount at the beginning of the reporting period | Deferred tax assets or liabilities at the net amount after offset | |
| Deferred tax assets | 178,003,886.23 | 1,469,646,489.04 | 90,366,814.93 | 1,210,877,575.24 |
| Deferred tax liabilities | 178,003,886.23 | 116,502,770.84 | 90,366,814.93 | 93,315,151.17 |
4) Details of unrecognized deferred tax assets
Unit: RMB
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Item
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 896,347,987.05 | 687,848,166.51 |
| Deductible loss | 2,279,586,556.97 | 2,841,919,737.84 |
| Total | 3,175,934,544.02 | 3,529,767,904.35 |
5) Deductible losses for unrecognized deferred tax assets will expire in the following years
Unit: RMB
| Year | Closing balance | Opening balance |
| 2022 | - | 9,759,663.51 |
| 2023 | 23,615,749.83 | 33,125,518.27 |
| 2024 | 31,698,815.96 | 34,945,616.34 |
| 2025 | 16,588,829.27 | 148,742,047.53 |
| 2026 | 49,208,121.54 | 279,312,175.66 |
| 2027 and beyond | 2,158,475,040.37 | 2,336,034,716.53 |
| Total | 2,279,586,556.97 | 2,841,919,737.84 |
22. Other Non-current Assets
Unit: RMB
| Item | Closing balance | Opening balance | ||||
| Carrying amount | Provision | Book value | Carrying amount | Provision | Book value | |
| Contract assets | 2,229,022,015.47 | 15,524,799.08 | 2,213,497,216.39 | 2,672,243,740.12 | 24,017,466.88 | 2,648,226,273.24 |
| Prepayments for real estate | 363,341,827.45 | - | 363,341,827.45 | 269,600,676.00 | - | 269,600,676.00 |
| Prepayments for acquisition of land | 127,079,348.02 | - | 127,079,348.02 | 278,398,706.94 | - | 278,398,706.94 |
| Prepayments for equipment | 70,134,950.70 | - | 70,134,950.70 | 140,577,165.61 | - | 140,577,165.61 |
| Prepayments for infrastructure | 39,467,612.18 | - | 39,467,612.18 | 4,679,432.89 | - | 4,679,432.89 |
| Others | 2,181,057.96 | - | 2,181,057.96 | 9,044,156.95 | - | 9,044,156.95 |
| Total | 2,831,226,811.78 | 15,524,799.08 | 2,815,702,012.70 | 3,374,543,878.51 | 24,017,466.88 | 3,350,526,411.63 |
23. Short-term Borrowings
1) Categories of short-term borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Credit loan | 3,283,605,167.90 | 4,074,962,469.97 |
| Discounted but not expired notes | 59,466,804.99 | - |
| Total | 3,343,071,972.89 | 4,074,962,469.97 |
2) As of December 31, 2022, the Group did not have any overdue short-term loans that were failed to repay.
24. Held-for-trading Financial Liabilities
Unit: RMB
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Item
| Item | Closing balance | Opening balance |
| Financial liabilities measured at fair value through current profits and losses | 68,299,685.57 | 4,062,317.57 |
| Including: derivative financial liabilities | 68,299,685.57 | 4,062,317.57 |
| total | 68,299,685.57 | 4,062,317.57 |
As of December 31, 2022, derivative financial liabilities are forward foreign exchange contracts, and they are notdesignated as hedging instruments, and the gains or losses arising from changes in their fair values are directly includedin the current profit and loss.
25. Notes Payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Bank acceptance Bill | 1,207,756,963.94 | 1,339,998,383.34 |
| Total | 1,207,756,963.94 | 1,339,998,383.34 |
As of December 31, 2022, the Group did not have any unpaid matured notes payable.
26. Accounts Payable
1) List of accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Payments for goods | 15,803,616,247.96 | 15,585,975,750.26 |
| Payables on equipment | 221,947,555.03 | 303,719,230.86 |
| Total | 16,025,563,802.99 | 15,889,694,981.12 |
2) As of December 31, 2022, the Group did not have any significant accounts payable with aging above one year.
27. Contract Liabilities
1) List of contract liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Advanced receipts from sales of products | 2,177,001,350.72 | 2,181,573,144.68 |
| Advanced receipts for construction settlement payment | 216,246,689.72 | 185,782,167.92 |
| Advanced receipts from services | 276,187,505.46 | 236,278,710.74 |
| Subtotal | 2,669,435,545.90 | 2,603,634,023.34 |
| Less：Contract liabilities included in other non-current liabilities (Note (V), 38) | 24,939,037.54 | 22,739,796.75 |
| Total | 2,644,496,508.36 | 2,580,894,226.59 |
2) Qualitative and Quantitative Analysis on the Above Contract Liabilities:
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 or
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
delivered 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.
3) As of January 1, 2022, the book value of contract liabilities amounted to RMB2,580,894,226.59 has been
recognized as revenue in 2022, including contract liabilities of RMB2,181,573,144.68 arising from advancereceipt of product sales payment, the contract liabilities of RMB185,782,167.92 arising from advance receipt ofproject settlement payment and contract liabilities of RMB213,538,913.99 arising from the advance receipt ofservice payment. As at December 31, 2022, the contract liabilities of RMB2,644,496,508.36 are expected to berecognized as revenue in the coming year.
28. Payroll Payable
1) Details of payroll payable
Unit: RMB
| Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 1.Short-term remuneration | 4,520,802,459.92 | 15,519,933,767.54 | 15,330,843,636.86 | 4,709,892,590.60 |
| 2. Termination benefits – defined contribution scheme | 74,749,613.20 | 1,119,585,045.15 | 1,066,924,793.00 | 127,409,865.35 |
| Total | 4,595,552,073.12 | 16,639,518,812.69 | 16,397,768,429.86 | 4,837,302,455.95 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
2) List of Short-term remuneration
Unit: RMB
| 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 | 4,298,383,537.23 | 13,601,909,847.94 | 13,535,748,474.15 | 4,364,544,911.02 |
| 2.Staff welfare | 11,644.54 | 332,435,539.37 | 332,447,183.91 | - |
| 3.Social insurance contributions | 40,347,586.71 | 641,312,052.88 | 613,993,171.93 | 67,666,467.66 |
| Including: Medical insurance | 38,502,111.67 | 613,409,818.77 | 587,311,412.65 | 64,600,517.79 |
| Injury insurance | 1,366,064.14 | 22,094,410.18 | 20,883,442.62 | 2,577,031.70 |
| Maternity insurance | 479,410.90 | 5,807,823.93 | 5,798,316.66 | 488,918.17 |
| 4.Housing funds | - | 695,452,209.35 | 691,559,595.18 | 3,892,614.17 |
| 5.Labor union and education fund | 182,059,691.44 | 248,824,118.00 | 157,095,211.69 | 273,788,597.75 |
| Subtotal | 4,520,802,459.92 | 15,519,933,767.54 | 15,330,843,636.86 | 4,709,892,590.60 |
3) Defined contribution plan
Unit: RMB
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1.Basic pension insurance | 72,541,942.78 | 1,079,281,000.54 | 1,026,682,019.64 | 125,140,923.68 |
| 2.Unemployment insurance | 2,207,670.42 | 40,304,044.61 | 40,242,773.36 | 2,268,941.67 |
| Subtotal | 74,749,613.20 | 1,119,585,045.15 | 1,066,924,793.00 | 127,409,865.35 |
Note: The Group participates in pension insurance and unemployment insurance plans established by government agenciesin accordance with regulations. According to these plans, the Group pays monthly fees to these plans in proportion to thepayment base. The Group has no other material obligation for the payment of pension benefits beyond the contributionsdescribed above, and corresponding expenses were booked into current profits and losses or corresponding assets.
In 2022, the Group shall pay RMB1,079,281,000.54 and RMB40,304,044.61 to the pension insurance plan andunemployment insurance plan respectively (2021: RMB859,688,761.68 and RMB28,887,040.12). As of December 31,2022, the Group had fees payables of RMB125,140,923.68 and RMB2,268,941.67 (December 31, 2021:
RMB72,541,942.78 and RMB2,207,670.42), which were due but not paid during the reporting period for pension andunemployment insurance plans. The relevant fees payables have been paid after the reporting period.
29. Taxes Payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Corporate income tax | 648,624,680.00 | 927,703,038.55 |
| Value-added tax | 380,413,435.90 | 426,720,008.08 |
| City construction and maintenance tax | 29,362,098.03 | 21,622,541.71 |
| Education surcharges | 13,048,855.45 | 9,380,789.66 |
| Local education surcharges | 9,328,597.02 | 6,529,587.16 |
| Others | 153,254,471.97 | 69,514,064.53 |
| Total | 1,234,032,138.37 | 1,461,470,029.69 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
30. Other Payables
1) Categories
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividend payable | 300,150,894.34 | 247,382,205.37 |
| Other payables | 2,903,157,791.97 | 1,583,244,377.66 |
| Total | 3,203,308,686.31 | 1,830,626,583.03 |
2) Dividends payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Dividends of incentive restricted shares | 187,657,918.50 | 144,401,634.74 |
| Dividends payable to minority shareholders | 112,492,975.84 | 102,980,570.63 |
| Total | 300,150,894.34 | 247,382,205.37 |
3) Other payables
(1) List of other payables according to the nature of the payment
Unit: RMB
| Item | Closing balance | Opening balance |
| Unexpired commercial acceptance bills that were endorsed (Note (V) 3) | 1,182,413,217.20 | 711,238,103.83 |
| Accrued expenses | 988,937,734.54 | 144,958,993.62 |
| Guarantee and deposit fees | 401,628,843.74 | 341,371,587.01 |
| Collection and payment on behalf | 236,839,241.37 | 261,710,850.19 |
| Other expense payable | 93,338,755.12 | 123,964,843.01 |
| Total | 2,903,157,791.97 | 1,583,244,377.66 |
(2) As of December 31, 2022, the Group did not have any significant other payables aging over one year.
31. Non-current Liabilities Due within One Year
Unit：RMB
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year (Note (V) 33) | 562,906,197.43 | 347,587,089.91 |
| Lease liabilities due within one year (Note (V), 34) | 303,328,658.06 | 248,027,043.35 |
| Long-term payables due within one year (Note (V) 35) | 1,962,416.97 | 1,301,227.32 |
| Total | 868,197,272.46 | 596,915,360.58 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
32. Other Current Liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Subscription payment of restricted shares | 465,979,374.84 | 511,594,361.52 |
| Output VAT to be transferred | 457,742,218.94 | 405,885,561.09 |
| Total | 923,721,593.78 | 917,479,922.61 |
33. Long-term Borrowings
Unit: RMB
| Item | Closing balance | Opening balance |
| Pledged loan (Note 1) | 1,363,216,974.37 | 1,455,221,540.20 |
| Mortgage loan (Note 2) | 229,070,200.25 | - |
| Guaranteed loan | - | 387,851,149.01 |
| Credit loan (Note 3) | 6,315,934,364.41 | 1,611,886,043.22 |
| Other borrowing (Note 4) | 177,000,000.00 | 177,000,000.00 |
| Less：Long-term loans due within one year (Note (V) 31) | 562,906,197.43 | 347,587,089.91 |
| Total | 7,522,315,341.60 | 3,284,371,642.52 |
Note 1: As of December 31, 2022, the pledged loan was obtained by the Group with all the rights and benefits pledgedunder relevant PPP Projects. The maturity period is from June 20, 2028 to March 26, 2040, the above annual interest rateof the loan is variable interest rate, ranging from 4.195% to 4.445%.
Note 2: As of December 31, 2022, the mortgage loan was obtained by the Group with the use right of land as the mortgage.The maturity date is on August, 13, 2026 with the annual interest rate of 1-year LPR rate, which is adjusted each 12 months.
Note 3: At the end of the reporting period, the maturity period of credit loan is from September 27, 2023 to December 1,2027, and the annual interest rate ranges from 2.7% to 3.7%
Note 4: During 2016, the Group and CDB Development Fund Ltd. (CDBDF) jointly inject capital into HikvisionElectronics Co., Ltd. ("Hangzhou Electronics"), a subsidiary of the Group. Pursuant to the capital injection agreement,CDBDF would not participate in senior management personnel such as directors, and it would either take part in decision-making or make significant influence on Hangzhou Electronics. The Group shall pay a 1.2% annualized return to CDBDFthrough dividends or interest payments, and the Group is required to redeem the CDBDF's equity investment in the currentreporting period by installments each year from 2021 to 2024. Therefore, the capital injection by CDBDF is treated as along-term loan. As of December 31, 2022, the balance of the loan is 177 million (December 31, 2021: RMB 177 million).
34. Lease Liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Lease liabilities | 580,584,582.89 | 565,978,922.56 |
| Less ：Lease liabilities due within one year (Note (V), 31) | 303,328,658.06 | 248,027,043.35 |
| Total | 277,255,924.83 | 317,951,879.21 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
35. Long-term Payables
Unit: RMB
| Item | Closing balance | Opening balance |
| Purchase goods in installments | 9,532,351.64 | 10,310,558.82 |
| Less: Long-term payables due within one year (Note (V), 31) | 1,962,416.97 | 1,301,227.32 |
| Total | 7,569,934.67 | 9,009,331.50 |
36. Provisions
Unit: RMB
| Item | Closing balance | Opening balance |
| Product quality warranty | 205,095,341.94 | 183,521,316.61 |
| Return payment payable | 14,269,885.68 | 17,154,634.35 |
| Total | 219,365,227.62 | 200,675,950.96 |
37. Deferred Income
Unit: RMB
| Item | Opening balance | Increase in current reporting period | Decrease in current reporting period | Closing balance | Details |
| Government Subsidies | 738,586,458.05 | 479,021,186.81 | 284,347,218.74 | 933,260,426.12 | Note |
| Total | 738,586,458.05 | 479,021,186.81 | 284,347,218.74 | 933,260,426.12 |
As of December 31,
2022, the deferred income related to government subsidies:
Unit: RMB
| 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 Manufacturing Base construction | 40,717,681.34 | - | 2,418,872.16 | - | 38,298,809.18 | Related to assets |
| Other special subsidies | 539,130,528.37 | 141,138,620.81 | 58,978,900.31 | - | 621,290,248.87 | Related to assets |
| Other special subsidies | 158,738,248.34 | 337,882,566.00 | 222,949,446.27 | - | 273,671,368.07 | Related to incomes |
| Subtotal | 738,586,458.05 | 479,021,186.81 | 284,347,218.74 | - | 933,260,426.12 |
Note: Refer to government subsidies received by the Group for projects such as Chongqing Manufacturing Baseconstruction and other special projects; Actual expenses occurred in the current reporting period for other special subsidiesrelated to incomes were recognized in other income; and relevant assets for Chongqing Manufacture Park constructionand other special subsidies related to assets were amortized averagely in other income within the assets’ useful lives.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
38. Other Non-current Liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
| Subscription for restricted stocks | 2,806,169,050.05 | 511,594,361.52 |
| Contract liabilities | 24,939,037.54 | 22,739,796.75 |
| Total | 2,831,108,087.59 | 534,334,158.27 |
39. Share Capital
Unit: RMB
| Opening balance | Changes for the current reporting period | Closing balance | |||||
| New issue of shares | Bonus issue | Transfer from Capital Reserve | Others | Subtotal | |||
| 2022 | |||||||
| Total shares | 9,335,806,114.00 | 97,402,605.00 | - | - | (2,288,095.00) | 95,114,510.00 | 9,430,920,624.00 |
| 2021 | |||||||
| Total shares | 9,343,417,190.00 | - | - | - | (7,611,076.00) | (7,611,076.00) | 9,335,806,114.00 |
Note: On January 18, 2022, in accordance with the authorization by the Company's first Extraordinary General Meetingin 2022, the resolution by the 8
th meeting of the 5
thsession of the Board of Directors and the revised Articles of Association,the Company was approved to issue 97,402,605 additional RMB ordinary shares to 9,738 scheme participants. The facevalue is RMB1 per share, and the issue price is 29.71 per share. Those shares had been completed the share registrationprocedures on February 10, 2022. Therefore, the paid-in capital of the Company increased RMB 97,402,605.00, resultinga capital reserve of RMB 2,796,428,789.55.
In accordance with the authorization by the Company’s second Extraordinary General Meeting in 2018, the resolution bythe 10
th
meeting of the 5
thsession of the Board of Directors on May 5, 2022, the resolution of the second ExtraordinaryGeneral Meeting in 2022 on October 10, 2021 and the revised Articles of Association, the Company repurchased andcancelled the granted 2,288,095 restricted RMB treasury shares that have not been unlocked by cash, reducing the sharecapital of RMB2,288,095.00 and capital reserve of RMB36,563,758.10. The Company completed the deregistration onDecember 21, 2022.
In accordance with the authorization by the Company’s second Extraordinary General Meeting in 2016 ,the authorizationby the second Extraordinary General Meeting in 2018, the resolution by the 20
th meeting of the 4
thsession of the Board ofDirectors on December 25, 2020, the resolution of the first Extraordinary General Meeting in 2021 on March 5, 2021 andthe revised Articles of Association, the Company repurchased and cancelled the granted 7,611,076 restricted RMB treasuryshares that have not been unlocked by cash, reducing the share capital of RMB7,611,076.00 and capital reserve ofRMB115,032,981.28. The Company completed the deregistration on July 2, 2021.
40. Capital Reserves
Unit: RMB
| Item | Opening balance | Increase in the current reporting period (Note 1) | Decrease in the current reporting period (Note 2) | Closing balance |
| 2022 | ||||
| Share premium | 4,800,739,839.94 | 4,532,411,217.65 | 43,336,115.30 | 9,289,814,942.29 |
| Other capital | 603,330,760.13 | 696,045,520.27 | 448,037,787.37 | 851,338,493.03 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
reserves
| reserves | ||||
| Total | 5,404,070,600.07 | 5,228,456,737.92 | 491,373,902.67 | 10,141,153,435.32 |
| 2021 | ||||
| Share premium | 4,747,808,907.38 | 175,364,843.03 | 122,433,910.47 | 4,800,739,839.94 |
| Other capital reserves | 430,968,554.71 | 347,727,048.45 | 175,364,843.03 | 603,330,760.13 |
| Total | 5,178,777,462.09 | 523,091,891.48 | 297,798,753.50 | 5,404,070,600.07 |
Note 1: The increase of RMB2,796,428,789.5 in the share premium in the current fiscal year was due to the 97,402,605additional RMB ordinary shares issued to 9,738 grantees by Company with approval, please refer to Note (V) 39 for details.The increase of RMB448,037,787.37 in the share premium in the current fiscal year was due to the exercise of equity-settled share-based payments, and other capital reserves were transferred to the share premium. The increase ofRMB1,287,944,640.73 in the share premium in the current fiscal year was due to the Company's subsidiary EZVIZNetwork’s initial public offering of shares, and the shareholding ratio has been diluted from 60% to 48%., please refer toNote (Ⅶ) 2 for details.
The increase of RMB578,605,328.33 in other capital reserves in the current fiscal year was calculated with equity-settledshare-based payments which were included in the capital reserve. The increase of RMB29,772,104.11 in other capitalreserves in the current fiscal year was due to the effect of deferred income tax caused by the restricted incentive scheme.The increase of RMB87,668,087.83 in other capital reserves in the current fiscal year was due to changes in the equity ofinvestee in long-term equity investments accounted by the equity method.
The increase of RMB175,364,843.03 in the share premium during the prior year was due to the exercise of equity-settledshare-based payments, and other capital reserves were transferred to the share premium.
The increase of RMB347,727,048.45 in other capital reserves during the prior year was calculated with equity-settledshare-based payments which were included in the capital reserve.
Note 2: The decrease of RMB 36,563,758.10 in share premium during this year was due to the Company’s repurchase of2,288,095 shares of granted but unvested RMB treasury shares by cash, please refer to Note (V) 39 for details; The decreaseof RMB 6,772,357.20 in share premium during the current reporting period was due to share distributions by equitysettlements to minority shareholders.
The decrease of RMB 115,032,981.28 in share premium during the prior year was due to the Company’s repurchase of7,611,076 granted but unvested RMB treasury shares by cash, please refer to Note (V) 39 for details; The decrease ofRMB 7,400,929.19 in share premium during the current reporting period was due to share distributions by equitysettlements to minority shareholders.
41. Treasury Shares
Unit: RMB
| Item | Opening Balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 2022 | ||||
| Restricted shares incentive scheme | 1,023,188,723.04 | 2,893,831,394.55 | 644,871,692.70 | 3,272,148,424.89 |
| Outstanding shares | - | 2,043,885,225.35 | - | 2,043,885,225.35 |
| Total | 1,023,188,723.04 | 4,937,716,619.90 | 644,871,692.70 | 5,316,033,650.24 |
| 2021 | ||||
| Restricted shares incentive scheme | 1,121,918,737.47 | - | 98,730,014.43 | 1,023,188,723.04 |
| Total | 1,121,918,737.47 | - | 98,730,014.43 | 1,023,188,723.04 |
Note: During the current reporting period, the increase of RMB 2,893,831,394.55 in treasury shares was due to the97,402,605 RMB ordinary shares issued to 9,738 grantees at the price of 29.71 per share on January 18, 2022, please referto Note (V) 39 for details.
During the current reporting period, the increase of RMB 2,043,885,225.35 in treasury shares was due to the repurchase
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
of the Company's shares with the amount of 66,987,835 by means of centralized bidding using its own fund. Therepurchased shares were held in the Company's dedicated securities account for repurchase, and the Company hadcompleted the cancellation procedures for the above shares at the Shenzhen branch of China Securities Depository andClearing Ltd. on January 17, 2023.
During the current reporting period, the decreased amount of RMB 644,871,692.70 in treasury shares was due to theprovision of cash dividend allocated to restricted shares and the repurchase and cancellation of 2,288,095 restricted sharesof the 2018 Restricted Share Incentive Scheme, as well as the vesting and exercising the amount of 33,142,730 sharesunder the condition that the second vesting period expired of the 2018 Restricted Shares Scheme.
During the prior year, the decreased amount of RMB 98,730,014.43 in treasury shares was due to the provision of cashdividend allocated to restricted shares and the repurchase and cancellation of 7,611,076 restricted shares of the 2016 and2018 Restricted Share Incentive Scheme.
.
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
42. 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) | |||
| 2022 | |||||||
| Other incomes that may be reclassified subsequently to profit or loss | (77,184,125.29) | 88,691,088.90 | - | - | 34,596,966.48 | 54,094,122.42 | (42,587,158.81) |
| Included: Effect on conversion of financial statements denominated in foreign currencies | (77,184,125.29) | 88,691,088.90 | - | - | 34,596,966.48 | 54,094,122.42 | (42,587,158.81) |
| Other comprehensive income | (77,184,125.29) | 88,691,088.90 | - | - | 34,596,966.48 | 54,094,122.42 | (42,587,158.81) |
| 2021 | |||||||
| Other incomes that may be reclassified subsequently to profit or loss | (84,993,926.94) | 4,631,122.68 | - | - | 7,809,801.65 | (3,178,678.97) | (77,184,125.29) |
| Included: Effect on conversion of financial statements denominated in foreign currencies | (84,993,926.94) | 4,631,122.68 | - | - | 7,809,801.65 | (3,178,678.97) | (77,184,125.29) |
| Other comprehensive income | (84,993,926.94) | 4,631,122.68 | - | - | 7,809,801.65 | (3,178,678.97) | (77,184,125.29) |
43. Surplus Reserves
Unit: RMB
| Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
| 2022 | ||||
| Statutory surplus reserves | 4,672,505,348.00 | 42,954,964.00 | - | 4,715,460,312.00 |
| Total | 4,672,505,348.00 | 42,954,964.00 | - | 4,715,460,312.00 |
| 2021 | ||||
| Statutory surplus reserves | 4,672,505,348.00 | - | - | 4,672,505,348.00 |
| Total | 4,672,505,348.00 | - | - | 4,672,505,348.00 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Note: According to the Company Law of the People's Republic of China and the Articles of Association of the Company,The Company shall withdraw the statutory surplus reserve fund at 10% of the annual net profit of the parent company, andwhen the accumulated amount of the statutory surplus reserve fund reaches more than 50% of the registered capital, it maynot be withdrawn. The Company has withdrawn a statutory surplus reserve of RMB42,954,964.00 during the reportingperiod. As for December 31, 2022, the accumulative statutory surplus reserve has reached 50% of the Company's sharecapital. The statutory surplus reserve can be used to make up for losses or increase the share capital after approval.
44. Retained Earnings
Unit: RMB
| Item | 2022 | 2021 |
| Retained Earnings at the close of the prior reporting period | 45,148,877,451.52 | 35,806,523,826.37 |
| Add: Net profit attributable to the parent company for the current reporting period | 12,837,342,061.07 | 16,800,411,032.05 |
| Less: withdraw the statutory surplus reserve | 42,954,964.00 | - |
| Dividends payable on common shares (Note) | 8,483,023,562.10 | 7,458,057,406.90 |
| Retained earnings at the end of the current reporting period | 49,460,240,986.49 | 45,148,877,451.52 |
Note：According to the resolution of 2021 Annual General Meeting dated on May 13, 2022, based upon the total capitalshare of the Company on the equity distribution date, for each 10 ordinary shares, the Company distributed cash dividendsof RMB 9 (tax inclusive), the rest of retained earnings were all carried forward for future distributions.
45. Revenue/cost of sales and services
45.1 Revenue and cost of sales and services
Unit: RMB
| Item | 2022 | 2021 | ||
| Revenue | Cost | Revenue | Cost | |
| Major business | 82,542,204,243.66 | 47,602,859,697.82 | 80,803,165,490.40 | 44,894,713,863.87 |
| Other business | 624,117,437.48 | 393,394,768.50 | 616,888,048.87 | 434,686,468.78 |
| Total | 83,166,321,681.14 | 47,996,254,466.32 | 81,420,053,539.27 | 45,329,400,332.65 |
45.2 Revenue (By product or business type)
Unit: RMB
| Item | 2022 | 2021 |
| Products and services for main business (Note) | 65,873,570,961.21 | 65,145,683,074.74 |
| Constructions of main business | 2,222,876,059.14 | 4,003,746,727.88 |
| Innovative businesses | 15,069,874,660.79 | 12,270,623,736.65 |
| Including: Smart home business | 4,077,290,933.03 | 3,948,427,896.29 |
| Robotic business | 3,916,176,952.59 | 2,761,636,666.33 |
| Thermal imaging business | 2,790,033,744.03 | 2,214,127,005.65 |
| Auto electronics business | 1,905,289,927.53 | 1,431,895,295.48 |
| Storage business | 1,616,267,518.08 | 1,384,585,038.78 |
| Other innovative businesses | 764,815,585.53 | 529,951,834.12 |
| Total | 83,166,321,681.14 | 81,420,053,539.27 |
Note: Main business refers to the business parts other than the innovative businesses.
45.3 Major business (by business type)
Unit: RMB
| Item | 2022 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Revenue
| Revenue | Cost | |
| Product sales | 78,971,234,689.44 | 45,422,471,442.42 |
| Construction contract | 2,222,876,059.14 | 1,672,876,250.28 |
| Provide services | 1,348,093,495.08 | 507,512,005.12 |
| Total | 82,542,204,243.66 | 47,602,859,697.82 |
45.4 Major business (by the time of revenue recognition)
Unit: RMB
| Item | 2022 | |
| Revenue | Cost | |
| Satisfied at a point in time | 78,971,234,689.44 | 45,422,471,442.42 |
| Satisfied over time | 3,570,969,554.22 | 2,180,388,255.40 |
| Total | 82,542,204,243.66 | 47,602,859,697.82 |
Descriptions of Performance obligations:
The Group sells video surveillance and other main business products, smart home products, robotic products, thermalimaging products, auto electronics products, storage products and other innovative businesses ‘products and relatedservices. For sales of goods to customers, the Group recognizes revenue when the control of the goods is transferred, i.e.when the goods are delivered to the location designated by other party, or delivered to the carrier designated by other party,or delivered to the other party for acceptance. Since the delivery of the goods to the customer represents the right tounconditionally receive the contract consideration, and the maturity of the payment only depends on the passage of time,the Group recognizes a receivable when the goods are delivered to the customer. When the customer prepays for the goods,the Group recognizes the transaction amount received as a contract liability, and recognizes revenue until the goods aredelivered to the customer.
For projects constructed for customers, since the customers could control the assets under construction during theperformance of the Group, the Group recognizes revenue according to the performance progress by treating them as theobligations within certain period, except that the performance progress cannot be reasonably determined. The Groupapplies the output method to determine the performance progress, which is based on the value to the customers of thegoods or services that have been transferred to them. Where the performance progress cannot be reasonably determined,and the costs incurred by the Group are expected to be compensated, the revenue shall be recognized according to theamount of the costs already incurred until the performance progress can be reasonably determined. The customers of theGroup pay the Group for the construction works by milestone payments in accordance with the contract. For the portionwhere the Group has obtained an unconditional right to the payment, it will be recognized as accounts receivable, whilethe remaining portion will be recognized as contract assets; where the contract price received or receivable by the Groupexceeds the performance obligation completed to date, the excess portion will be recognized as contract liabilities. TheGroup presents contract assets and contract liabilities under the same contract on a net basis.
The Group provides customers with operation and maintenance services. Since customers obtain and consume theeconomic benefits generated by the performance of the Group at the same time when the Group performs its obligations,the Group recognizes revenue according to the performance progress by treating them as the obligations within certain
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
period. The customers of the Group pay the Group for the maintenance services by milestone payments in accordance withthe contract. For the portion where the Group has obtained an unconditional right to the payment, it will be recognized asaccounts receivable, while the remaining portion will be recognized as contract assets; where the contract price receivedor receivable by the Group exceeds the performance obligation completed to date, the excess portion will be recognizedas contract liabilities. The Group presents contract assets and contract liabilities under the same contract on a net basis.
According to the project contract, the Group provides both project asset construction services and post-constructionoperation services and maintenance services. The Group identifies construction services, operation services andmaintenance services as individual performance obligations, and allocates the transaction price to each performanceobligation based on the relative proportion of the stand-alone selling price of each performance obligation.
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, 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 (III) 24 and Note (V) 36 for details.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
46. Business Taxes and Surcharges
Unit: RMB
| Items | 2022 | 2021 |
| City construction and maintenance tax | 261,890,379.68 | 271,005,144.60 |
| Education surcharges | 114,135,419.82 | 118,219,501.03 |
| Local education surcharges | 76,090,687.28 | 78,812,578.90 |
| Stamp duty | 69,797,920.71 | 48,719,842.95 |
| Real estate tax | 50,840,111.92 | 38,218,345.28 |
| Tax on use of land | 7,492,257.10 | 5,747,583.10 |
| Vehicle and vessel tax | 144,621.51 | 156,562.97 |
| Others | 1,505,298.49 | 100,448.69 |
| Total | 581,896,696.51 | 560,980,007.52 |
47. Selling Expenses
Unit: RMB
| Items | 2022 | 2021 |
| Payroll | 6,373,360,098.93 | 5,548,436,481.61 |
| Marketing Expenses | 1,327,140,202.21 | 1,351,499,107.82 |
| Shipping, transportation, and vehicle expense | 397,419,186.30 | 300,539,153.45 |
| Travelling expenses | 392,884,475.16 | 272,916,031.74 |
| Office expenses | 265,238,884.68 | 206,708,742.81 |
| Business hospitality expenses | 267,086,429.99 | 251,571,190.72 |
| Rental expenses | 72,212,549.78 | 66,296,932.66 |
| Professional Intermediary expenses | 202,590,077.82 | 192,080,083.00 |
| Depreciation and amortization expenses | 262,935,078.67 | 208,955,480.02 |
| Others | 212,590,352.69 | 187,440,464.19 |
| Total | 9,773,457,336.23 | 8,586,443,668.02 |
48. Administrative Expenses
Unit: RMB
| Items | 2022 | 2021 |
| Payroll | 1,621,419,524.98 | 1,320,787,327.54 |
| Office expenses | 295,789,889.76 | 228,196,179.10 |
| Depreciation and amortization expenses | 237,858,482.96 | 194,491,716.47 |
| Professional Intermediary expenses | 96,942,652.20 | 95,361,861.47 |
| Travelling expenses | 36,736,435.95 | 39,132,306.65 |
| Shipping, transportation, utility expense | 62,093,258.21 | 48,723,035.15 |
| Rental expenses | 5,262,993.41 | 10,375,238.03 |
| Business hospitality expenses | 8,369,231.08 | 11,296,053.97 |
| Others | 277,640,903.45 | 183,886,745.58 |
| Total | 2,642,113,372.00 | 2,132,250,463.96 |
49. R&D Expenses
Unit: RMB
| Items | 2022 | 2021 |
| Payroll | 7,813,245,802.96 | 6,809,382,000.63 |
| Consumables and service fees | 786,747,111.47 | 556,631,898.14 |
| Depreciation and amortization expenses | 318,021,624.81 | 299,364,107.17 |
| Office expenses | 251,800,832.86 | 167,582,498.45 |
| Intermediate testing fees | 264,433,773.09 | 144,910,134.48 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Travelling expenses
| Travelling expenses | 132,053,314.05 | 108,265,517.40 |
| New product design fees | 169,736,403.69 | 106,964,625.53 |
| Rental expenses | 8,122,851.03 | 5,329,594.73 |
| Others | 70,282,546.59 | 53,214,724.86 |
| Total | 9,814,444,260.55 | 8,251,645,101.39 |
50. Financial Expenses
Unit: RMB
| Items | 2022 | 2021 |
| Interest expenses | 296,404,671.30 | 231,787,858.92 |
| Interest expense on lease liabilities | 20,907,764.05 | 17,607,723.12 |
| Less: Interest income | 921,912,411.61 | 885,545,988.62 |
| Foreign exchange losses (gains) | (428,082,371.67) | 354,146,744.37 |
| Less: Capitalized specific loan interests and foreign exchange differences on specific loan | (2,660,111.75) | (124,649,345.63) |
| Others | 39,620,702.86 | 24,011,058.74 |
| Total | (990,401,533.32) | (133,343,257.84) |
51. Other Income
Unit: RMB
| Items | 2022 | 2021 |
| VAT refund | 1,753,740,330.32 | 2,054,594,872.37 |
| Special subsidies | 707,753,385.13 | 558,717,940.38 |
| Tax reduction | 17,631,644.13 | 14,829,396.58 |
| Value-added tax deduction | 3,342,496.39 | 418,611.13 |
| Total | 2,482,467,855.97 | 2,628,560,820.46 |
52. Investment Income
Unit: RMB
| Items | 2022 | 2021 |
| Long-term equity investment gains based on the equity method | 106,498,595.01 | 114,137,281.18 |
| Investment income from other non-current financial assets during the holding period | 51,892,209.92 | 115,644,801.97 |
| Investment income from disposal of non-current financial assets | 1,260,000.00 | - |
| Investment income from disposal of held-for-trading financial assets | 55,194,649.80 | 113,608,106.10 |
| Investment income (loss) from disposal of subsidiaries and other business units | 3,550,851.71 | (169,184,641.43) |
| Total | 218,396,306.44 | 174,205,547.82 |
53. Gains (Losses) from Changes in Fair Values
Unit: RMB
| Sources of gains (losses) from changes in fair values | 2022 | 2021 |
| Held-for-trading financial assets | (21,549,304.93) | 11,711,591.07 |
| Including: gains on the changes in fair value of derivative financial instruments | (21,549,304.93) | 11,711,591.07 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Gains (Losses) from changes in fair value of other non-currentfinancial assets
| Gains (Losses) from changes in fair value of other non-current financial assets | (69,793,177.28) | (53,214,895.05) |
| Held-for-trading financial liabilities | (64,225,038.68) | 3,303,279.51 |
| Including: gains (losses) on the changes in fair value of derivative financial instruments | (64,225,038.68) | 3,303,279.51 |
| Total | (155,567,520.89) | (38,200,024.47) |
54. Credit Impairment Gains (Losses)
Unit: RMB
| Items | 2022 | 2021 |
| Credit impairment gains (losses) of accounts receivable | (532,337,205.31) | (566,389,266.23) |
| Credit impairment reverses gains (losses) of other receivables | (4,552,362.71) | 25,231,443.14 |
| Credit impairment gains (losses) of long-term receivables | (48,271,667.43) | (28,600,342.41) |
| Total | (585,161,235.45) | (569,758,165.50) |
55. Impairment Gains (Losses) of Assets
Unit: RMB
| Items | 2022 | 2021 |
| Gains (losses) on inventory devaluation | (473,766,927.68) | (434,614,231.94) |
| Gains (losses) on impairment of intangible assets | (42,034,063.49) | - |
| Contract assets impairment Gains (losses) | 7,347,162.35 | (13,075,174.66) |
| Total | (508,453,828.82) | (447,689,406.60) |
56. Non-operating Income
Unit: RMB
| Items | 2022 | 2021 | The amount booked into current period non-recurring profits and looses |
| Fines and confiscations | 65,172,834.46 | 59,586,645.03 | 65,172,834.46 |
| Government subsidies | 884,540.66 | 2,653,472.98 | 884,540.66 |
| Income from business combination of enterprises not under the same control | - | 1,163,932.96 | - |
| Others | 21,308,610.36 | 12,340,318.32 | 21,308,610.36 |
| Total | 87,365,985.48 | 75,744,369.29 | 87,365,985.48 |
Government subsidies included in current profit and loss:
Unit: RMB
| Item | 2022 | 2021 | Related to assets/Related to incomes |
| Tax reduction | 2,080.77 | 341,525.58 | Related to incomes |
| Other subsidies | 882,459.89 | 2,311,947.40 | Related to incomes |
| Total | 884,540.66 | 2,653,472.98 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
57. Non-operating Expenses
Unit: RMB
| Items | 2022 | 2021 | The amount booked into current period non-recurring profits and losses |
| Losses on disposal of non-current assets | 1,038,677.10 | 8,156,134.63 | 1,038,677.10 |
| Local water conservancy construction fund | 2,055,980.46 | 1,347,569.92 | 2,055,980.46 |
| Donation expenses | 1,575,092.28 | 51,489,848.19 | 1,575,092.28 |
| Others | 10,404,363.27 | 20,560,553.01 | 10,404,363.27 |
| Total | 15,074,113.11 | 81,554,105.75 | 15,074,113.11 |
58. Income Tax Expenses
58.1 Details of income tax expenses
Unit: RMB
| Items | 2022 | 2021 |
| Income tax for the current reporting period | 1,829,079,291.07 | 1,912,421,635.04 |
| Deferred income tax expenses | (241,980,999.03) | (385,068,762.95) |
| Differences in filing and payment of income tax in previous reporting years | (289,116,386.50) | (569,862,219.93) |
| Total | 1,297,981,905.54 | 957,490,652.16 |
58.2 Reconciliation of income tax expenses to the accounting profit
Unit: RMB
| Item | 2022 | 2021 |
| Total profit | 14,854,951,627.47 | 18,468,211,862.63 |
| Income tax expenses calculated at applicable tax rates of 15% | 2,228,242,744.12 | 2,770,231,779.39 |
| Impact of non-deductible costs, expenses and losses | 53,248,187.90 | 13,462,549.85 |
| Tax effect of non-taxable income | (2,963,187.15) | (20,994,120.30) |
| Impact of deductible temporary differences or deductible losses for which no deferred income tax assets is recognized for the current period | 105,389,667.58 | 126,889,022.94 |
| Impact of using deductible temporary differences or deductible losses for which no deferred income tax assets was recognized for the prior periods | (127,946,065.51) | (124,304,097.81) |
| Differences of income tax annual filing (Note) | (289,116,386.50) | (569,862,219.93) |
| Impact by different tax rates applicable to different subsidiaries | 163,817,215.68 | 117,262,283.11 |
| Impact of additional deduction of R&D expenses | (920,031,766.64) | (853,993,809.22) |
| Others | 87,341,496.06 | (501,200,735.87) |
| Income tax expenses | 1,297,981,905.54 | 957,490,652.16 |
59. Notes to Consolidated Cash Flow Statement Items
59.1 Other cash receipts relating to operating activities
Unit: RMB
| Items | 2022 | 2021 |
| Interest income | 769,911,170.27 | 747,643,940.57 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Items
| Items | 2022 | 2021 |
| Government subsidies | 903,309,813.09 | 1,108,737,358.14 |
| Withdrawal of restricted currency funds | 334,647,085.86 | 870,118,675.99 |
| Others | 94,532,468.51 | 71,926,963.35 |
| Total | 2,102,400,537.73 | 2,798,426,938.05 |
59.2 Other cash payments relating to operating activities
Unit: RMB
| Item | 2022 | 2021 |
| Advertising and Selling services | 1,094,845,870.81 | 1,209,668,231.40 |
| Office expenses and business expenses | 1,357,207,317.97 | 1,244,593,584.01 |
| Shipping and transportation expense | 459,512,444.51 | 380,408,948.15 |
| R&D expense | 1,276,697,213.62 | 702,435,895.72 |
| Travelling expense | 561,674,225.16 | 420,313,855.79 |
| Outsourcing service fees, fees for hiring intermediaries, etc. | 473,912,644.83 | 406,476,311.46 |
| Rental expense | 85,598,394.22 | 82,001,765.42 |
| Deposits to restricted monetary funds | 256,100,102.65 | 553,153,948.19 |
| Others | 415,552,270.26 | 298,285,736.64 |
| Total | 5,981,100,484.03 | 5,297,338,276.78 |
59.3 Other cash receipts relating to investing activities
Unit: RMB
| Item | 2022 | 2021 |
| Receipts of financing lease payments | 47,587,599.27 | - |
| Net cash receipts from acquiring subsidiaries and other business units | 182,816.96 | - |
| Total | 47,770,416.23 | - |
59.4 Other cash payments related to investing activities
Unit: RMB
| Item | 2022 | 2021 |
| Cash payments for investment intention funds | - | 4,000,000.00 |
| Net cash payment for disposal of subsidiaries and other business units | - | 6,196,658.79 |
| Total | - | 10,196,658.79 |
59.5 Other cash payments relating to financing activities
Unit: RMB
| Item | 2022 | 2021 |
| Repurchase of outstanding shares | 2,043,885,225.35 | - |
| Repurchase of restricted shares | 38,851,853.10 | 122,644,057.28 |
| Repayment of lease liabilities | 228,009,188.10 | 190,296,810.23 |
| Total | 2,310,746,266.55 | 312,940,867.51 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
60. Supplementary Information about Cash Flow Statement
60.1 Supplementary information about cash flow statement
Unit: RMB
| Supplementary information | 2022 | 2021 |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 13,556,969,721.93 | 17,510,721,210.47 |
| Add: Impairment of assets | 508,453,828.82 | 447,689,406.60 |
| Provision for credit losses | 585,161,235.45 | 569,758,165.50 |
| Fixed assets depreciation | 928,114,412.10 | 685,029,204.28 |
| Amortization of intangible assets | 79,676,213.21 | 140,708,108.57 |
| Long-term deferred expenses amortization | 81,486,526.31 | 66,502,221.67 |
| Right-of-use assets depreciation | 246,373,656.24 | 198,362,376.40 |
| Gains (losses) on disposal of fixed assets, intangible assets and other long-term assets | 17,578,905.00 | (34,225,603.81) |
| Fixed asset scrapping losses | 1,038,677.10 | 8,156,134.63 |
| Losses from changes in fair value | 155,567,520.89 | 38,200,024.47 |
| Financial expenses | 165,311,194.01 | 302,351,912.74 |
| Investment income | (218,396,306.44) | (174,205,547.82) |
| Share-based payment based on equity settlement | 620,309,681.65 | 369,329,250.11 |
| Decrease (increase) of restricted funds | (78,546,983.21) | 316,964,727.80 |
| Increase in deferred income tax assets | (258,768,913.80) | (390,473,424.46) |
| Increase in deferred income tax liabilities | 20,971,335.55 | 335,327.28 |
| Increase in inventories | (1,510,338,683.95) | (5,936,053,632.80) |
| Decrease (increase) of operating other non-current assets | 560,599,677.46 | (497,739,824.36) |
| Decrease (increase) in operating receivables | (4,921,967,123.64) | (5,478,863,810.65) |
| Increase (decrease) in operating payables | (570,133,160.37) | 4,019,434,922.97 |
| Increase in deferred income | 194,673,968.07 | 547,707,470.36 |
| Others | - | (1,163,932.96) |
| Net cash flows from operating activities | 10,164,135,382.38 | 12,708,524,686.99 |
| 2. Significant investing and financing activities not involving cash receipts and payments: | ||
| 3. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 39,815,390,514.57 | 34,603,944,429.20 |
| Less: Opening balance of cash | 34,603,944,429.20 | 35,024,837,878.31 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net Increase (decrease) in cash and cash equivalents | 5,211,446,085.37 | (420,893,449.11) |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
60.2 Net cash paid for obtaining subsidiaries during the current year
Unit: RMB
| Amounts | |
| Cash or cash equivalents paid for the business combination in this year | - |
| Including: Zhejiang Zhiyuan Fire | - |
| Less: Cash and cash equivalents held by the Company on the acquisition date | (182,816.96) |
| Including: Zhejiang Zhiyuan Fire | 182,816.96 |
| Net cash paid for obtaining the subsidiary | (182,816.96) |
| Booked into: Other cash receipts relating to investing activities | 182,816.96 |
60.3 Constituents of cash and cash equivalents
Unit: RMB
| Item | Closing balance | Opening balance |
| Cash | 39,815,390,514.57 | 34,603,944,429.20 |
| Including: Cash on hand | 1,210,065.16 | 1,851,273.53 |
| Bank deposit for payment at any time | 39,607,767,094.21 | 34,573,786,777.26 |
| Other monetary capital for payment at any time | 206,413,355.20 | 28,306,378.41 |
| Cash equivalents | - | - |
| Closing balance of cash and cash equivalents | 39,815,390,514.57 | 34,603,944,429.20 |
Among the total balance of RMB402,886,840.57 of the other monetary fund(s) at the end of the reporting period(December 31, 2021: RMB146,232,880.57 ), RMB196,473,485.37 are various guarantee deposits and other restrictedfunds, etc. (December 31, 2021: RMB117,926,502.16), not cash and cash equivalents.
61. Assets with Restriction in Ownership or Use Rights
Unit: RMB
| Item | Book value at the end of the current reporting period | Cause of restriction |
| Cash and bank balances | 196,473,485.37 | Various guarantee deposits and other restricted funds |
| Notes receivable | 1,241,880,022.19 | Endorsed to suppliers and discounted to banks |
| Receivables for financing | 10,312.23 | Pledged for issuing bank acceptance bills |
| Accounts receivable | 344,585,345.01 | Pledged for long-term borrowings |
| Contract assets | 120,072,855.46 | Pledged for long-term borrowings |
| Fixed assets | 81,627,645.88 | Fixed assets leased out under operating leases |
| Intangible assets | 39,314,886.51 | Pledged and mortgage for long-term borrowings |
| Other non-current assets | 1,607,546,382.61 | Pledge for long-term debts |
| Total | 3,631,510,935.26 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
62. Monetary Items of Foreign Currencies
Unit: RMB
| Items | 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 |
| Cash and bank balances | |||
| Including: USD | 365,876,681.09 | 6.9646 | 2,548,184,733.10 |
| EUR | 100,728,995.12 | 7.4229 | 747,701,257.88 |
| GBP | 8,805,385.21 | 8.3941 | 73,913,283.96 |
| AED | 13,418,901.49 | 1.8966 | 25,450,288.57 |
| HKD | 22,066,243.26 | 0.8933 | 19,711,775.10 |
| PLN | 8,791,237.76 | 1.5878 | 13,958,727.32 |
| Accounts receivable | |||
| Including: EUR | 296,862,915.28 | 7.4229 | 2,203,583,733.83 |
| USD | 99,615,885.86 | 6.9646 | 693,784,798.66 |
| HKD | 60,473,017.96 | 0.8933 | 54,020,546.94 |
| Short-term borrowings | |||
| Including: EUR | 150,144,922.22 | 7.4229 | 1,114,510,743.16 |
| USD | 30,854,039.57 | 6.9646 | 214,886,044.02 |
| Accounts payable | |||
| Including: USD | 63,196,308.20 | 6.9646 | 440,137,008.09 |
| HKD | 638,003,666.55 | 0.8933 | 569,928,675.33 |
| EUR | 319,432.81 | 7.4229 | 2,371,117.81 |
| Long-term borrowings | |||
| Including: EUR | 142,000,000.00 | 7.4229 | 1,054,051,800.00 |
| Non-current liabilities due within one year - Long-term borrowings | |||
| Including: EUR | 4,035,688.89 | 7.4229 | 29,956,515.06 |
63. Government Subsidies
63.1 By categories
Unit: RMB
| Category | Amount | Financial Report Items | Amount booked in current profit and loss |
| VAT refund | 1,753,740,330.32 | Other Income | 1,753,740,330.32 |
| Special subsidies | 1,641,896,271.14 | ||
| Including: other special subsidies | 1,601,178,589.80 | Deferred income / Other income/ Non-operating income | 706,216,972.86 |
| Chongqing Manufacturing Base construction subsidies | 40,717,681.34 | Deferred income / Other income | 2,418,872.16 |
| Tax Refund/Reduction | 20,976,221.29 | Other income/ Non-operating income | 20,976,221.29 |
| Total | 3,416,612,822.75 | 2,483,352,396.63 |
63.2 There was no refund of government subsidies during the current reporting period.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
VI. Changes in Consolidation Scope
1. Business Combination of Enterprises Not under the Same Control
1.1 Business combination of enterprises not under the same control
Zhejiang Zhiyuan Fire
On December 15, 2021, the Company's subsidiary - Hikfire Technology signed an equity purchase agreement with theoriginal shareholders of Zhejiang Zhiyuan Fire Safety Engineering Ltd. The agreement stipulated that Hikvision FireTechnology would acquire 100% of the equity of Zhejiang Zhiyuan Fire Safety Engineering Ltd. for RMB 15.75 million.On February 28, 2022, the two parties completed the equity transfer of Zhejiang Zhiyuan Fire Safety Engineering Ltd.Therefore, the Group took February 28, 2022 as the acquisition date and the Group incorporated the Subject Companiesinto consolidation scope from the acquisition date. As of December 31, 2022, the Company has completed the equitytransfer payment of RMB 4 million.
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 |
| Zhejiang Zhiyuan Fire Safety Engineering Ltd. | February 2022 | 15,750,000.00 | 100.00% | Cash Payments | February 28, 2022 | Equity delivery date for obtaining control of the purchased party | 132,562,586.63 | 1,566,575.13 |
1.2 Cost of business combination and goodwill
Unit: RMB
| Cost of business combination | Zhejiang Zhiyuan Fire |
| - Cash | 4,000,000.00 |
| - Liability(other account payable ) | 11,750,000.00 |
| Total cost of business combination | 15,750,000.00 |
| Less: The fair value share of identifiable net assets obtained | 7,550,746.23 |
| Goodwill | 8,199,253.77 |
1.3 Acquiree’s book value of assets and liabilities at the date of acquisition
Unit: RMB
| Zhejiang Zhiyuan Fire (Note) | ||
| Book value on the date of acquisition | Fair value on the date of acquisition | |
| Assets: | ||
| Cash and bank balances | 182,816.96 | 182,816.96 |
| Notes receivable | 990,821.94 | 990,821.94 |
| Accounts receivable | 9,894,353.90 | 9,894,353.90 |
| Prepayments | 753,476.00 | 753,476.00 |
| Other receivables | 1,684,461.20 | 1,684,461.20 |
| Inventories | 84,186,707.41 | 84,186,707.41 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
| Zhejiang Zhiyuan Fire (Note) | ||
| Book value on the date of acquisition | Fair value on the date of acquisition | |
| Contract assets | 1,562,030.46 | 1,562,030.46 |
| Other current assets | 31,662.38 | 31,662.38 |
| Liabilities: | ||
| Accounts payable | 10,731,655.87 | 10,731,655.87 |
| Contract liabilities | 71,900,823.14 | 71,900,823.14 |
| Tax payable | 378,277.85 | 378,277.85 |
| Other payables | 7,734,005.22 | 7,734,005.22 |
| Short-term borrowings | 990,821.94 | 990,821.94 |
| Net assets: | 7,550,746.23 | 7,550,746.23 |
| Less: Minority equity | - | - |
| Net assets acquired | 7,550,746.23 | 7,550,746.23 |
Note: The management of the Group believes that the fair value of identifiable assets and liabilities of Zhejiang ZhiyuanFire is close to their book value. Therefore, the fair value of relevant identifiable assets and liabilities is recognizedbased on their book value.
2. Changes of Consolidation Scope due to Other Causes
The subsidiaries newly established and incorporated in the consolidation scope during the current reportingperiod as follows:
| Company Name | Time of establishment | Registered capital |
| Shijiazhuang Sensortech Intelligent Technology Co.,Ltd. | February 2022 | RMB 10 thousand |
| Hikvision Adriatic doo Beograd | February 2022 | RSD 13 million |
| Hikvision Technology Pte. Ltd. | March 2022 | USD 300 thousand |
| Hikrobot Korea Limited | June 2022 | KRW 485 million |
| Hangzhou Xingrong Information Technology Ltd. (Note) | December 2022 | RMB 5 million |
| Microimage Europe B.V. (Note) | December 2022 | USD 800 thousand |
Note: As of the end of this year, Hangzhou Xingrong Information Technology Ltd. and Microimage Europe B.V. have notyet completed their paid-in capital.
The subsidiaries cancelled in the current reporting period and no longer included in the scope of consolidationare as follows:
| Company Name | Date of equity disposition |
| Hangzhou Haikang Zhicheng Investment and Development Ltd. | October 2022 |
| Hangzhou Haikang Ximu Intelligent Technology Ltd. | December 2022 |
| Microwave Solutions Limited | December 2022 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
VII. Interest in Other Entities
1. Equity in Subsidiaries
(1) Composition of the corporate group
| Name | Location of operation | Place of registration | Nature of business | Acquisition Method |
| Hangzhou Hikvision System Technology Ltd. | Hangzhou | Hangzhou, Zhejiang | System integration, Technology development | Establishment |
| Hangzhou Hikvision Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Manufacture | Establishment |
| Hangzhou EZVIZ Network Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology development | Establishment |
| Hangzhou EZVIZ Software Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology development | Establishment |
| Hangzhou Hikrobot Technology Co., Ltd.(Note (VII) 2) | Hangzhou | Hangzhou, Zhejiang | Technology development | Establishment |
| Hangzhou Hikrobot Intelligence Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology development | Establishment |
Note: Hangzhou Hikrobot Technology Ltd. completed the shareholding system reform in 2022 and changed its name toHangzhou Hikrobot Technology Co., Ltd.
2. Changes in the share of owners' equity in subsidiaries and still controls the transactions of subsidiaries.
(1) Description of the change in the share of owners' equity in subsidiaries
Ezviz NetworkOn December 22, 2022, the Ezviz Network, a subsidiary of the Group, issued 112.5 million shares to the public forthe first time at an issue price of RMB 28.77 per share and raised a total of RMB 3,236,625,000.00. The net amountof funds raised after deducting issuance expenses is RMB 3,121,365,252.83 (excluding VAT income tax related toissue expenses). The company's shareholding in Ezviz Network has been diluted from 60% to 48%, and the Group'scontrol over the Ezviz Network has not changed.
(2) The impact of the transaction on minority equity and owners' equity attributable to owner of the Company
| Name | Hangzhou EZVIZ Network Co., Ltd. |
| Consideration for disposal | - |
| Less: Share of net assets of subsidiaries calculated according to the proportion of equity disposed | 1,287,944,640.73 |
| Adjustment of capital reserves | (1,287,944,640.73) |
3. Equity in Joint Ventures or Associates
(1) Aggregated financial information of insignificant joint-ventures and associates
Unit：RMB
| Closing balance / Amount for 2022 | Opening balance / Amount for 2021 | |
| Associates： | ||
| The aggregate carrying amount of investments in associates | 352,286,233.16 | 235,962,431.82 |
| The aggregate amount of the following items calculated based on the Company’s equity share percentage of the associates | - | - |
| - Net income (loss) | (11,985,343.35) | 30,316,393.05 |
| - Other comprehensive income | - | - |
| --Net income (loss) and total comprehensive income (loss) | (11,985,343.35) | 30,316,393.05 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
| Closing balance / Amount for 2022 | Opening balance / Amount for 2021 | |
| Joint Ventures: | ||
| Total investment book value | 899,747,280.25 | 746,203,114.63 |
| The sum of the following items calculated according to the shareholding ratio | ||
| - Net income | 118,483,938.36 | 83,820,888.13 |
| - Other comprehensive income | - | - |
| - Net income (loss) and total comprehensive income | 118,483,938.36 | 83,820,888.13 |
The Group uses the equity method to account for the aforementioned associates and joint ventures.
(2) There are no significant restrictions on the ability of the joint ventures or associates to transfer funds to the Group.
(3) No excess losses were incurred by the joint ventures or associates.
(4) Unrecognized commitments relating to investments in joint ventures
Unit：000 RMB
| Joint Venture | Capital Commitment (Note) |
| Shenzhen Haishi Urban Service Operation Co., Ltd. | 10,500.00 |
| Guangxi Haishi Urban Operation Management Co., Ltd. | 2,440.00 |
Note: The above capital commitments are the capital amounts that the Group has subscribed but not paid in to the abovejoint ventures.
(5) The Group has no contingent liabilities related to investments in joint ventures or associates.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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, long-term receivables, part of the other non-current assets, borrowings, notes payable, accounts payable, other payables, part of the other current liabilities, long-termpayables, part of other non-current liabilities, derivative financial instruments, etc. Details of these financial instrumentsare set out in Note (V). Below are the risks associated with such financial instruments and the risk management policiesadopted by the Group to mitigate such risks. The management of the Group manages and monitors such risk exposures toensure such risks are contained within a prescribed scope.
1. Classification of Financial Instruments
Unit: RMB
| Items | Closing balance of the current reporting period | Opening balance of the current year |
| Financial assets： | ||
| Measured at fair value through current profit and loss | ||
| Held –for-trading financial assets | 12,807,438.36 | 34,320,010.83 |
| Other non-current financial assets | 423,893,239.94 | 438,724,172.22 |
| Measured at fair value through other comprehensive income | ||
| Receivables for financing | 1,484,218,258.74 | 1,316,035,122.06 |
| Measured at amortized cost | ||
| Cash and bank balances | 40,011,863,999.94 | 34,721,870,931.36 |
| Notes receivable | 2,519,988,159.23 | 1,522,760,905.30 |
| Accounts receivable | 29,906,294,410.40 | 26,174,773,100.42 |
| Other receivables | 516,503,485.58 | 359,620,445.88 |
| Other non-current assets | 2,181,057.96 | - |
| Long-term receivables (including those due within one year) | 1,537,550,308.57 | 1,589,028,382.11 |
Unit: RMB
| Items | Closing balance of the current reporting period | Opening balance of the current year |
| Financial liabilities | ||
| Measured at fair value through current profit and loss | ||
| Held-for-trading financial liabilities | 68,299,685.57 | 4,062,317.57 |
| Measured at amortized cost | ||
| Short-term borrowings | 3,343,071,972.89 | 4,074,962,469.97 |
| Notes payable | 1,207,756,963.94 | 1,339,998,383.34 |
| Accounts payable | 16,025,563,802.99 | 15,889,694,981.12 |
| Other payables | 3,203,308,686.31 | 1,830,626,583.03 |
| Other current liabilities | 465,979,374.84 | 511,611,642.53 |
| Long-term borrowings (including those due within one year) | 8,085,221,539.03 | 3,631,958,732.43 |
| Long-term payables (including those due within one year) | 9,532,351.64 | 10,310,558.82 |
| Other non-current liabilities | 2,806,169,050.05 | 511,594,361.52 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
The Group adopts sensitivity analysis techniques to analyze the possible effects of rational and probable changes in riskvariables to profit or loss for the period or to the interests of shareholders. Since risk variables seldom change on a stand-alone basis, while the correlation between variables may have significant influence to the ultimate amount of changeeffected by the change in a single risk variable, the analysis below is based on the assumption that the changes in eachvariable occurred separately.
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, EUR and etc. 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, INR, and etc.
As of December 31, 2022, except for monetary items of foreign currencies set out in Note (V) 62, 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 | 3,241,969,531.76 | 2,310,527,721.21 | 655,023,052.11 | 1,993,012,472.17 |
| EUR | 2,951,284,991.71 | 2,510,521,255.35 | 2,200,890,176.03 | 1,521,742,991.23 |
The Group has been paying close attention to the effect of fluctuation in exchange rate on the foreign exchange risks ofthe Group, and has purchased various financial derivative instruments, such as forward foreign exchange contracts tomitigate the foreign exchange risk exposure.
Sensitivity analysis on exchange rate risk
The sensitivity analysis of the Group's foreign exchange risk includes only monetary items denominated in foreigncurrencies and does not consider the impact of the purchased derivative financial instruments.
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
With other variables unchanged, the exchange rate might float within a reasonable range, and has the following before-tax effect on profit or loss and shareholders’ equity for the current period:
Unit: RMB
| Change in foreign exchange rates | 2022 | 2021 | ||
| Effect on profit | Effect on shareholders’ equity | Effect on profit | Effect on shareholders’ equity | |
| 5% appreciation of USD against functional currency | 129,347,323.98 | 129,347,323.98 | 15,875,762.45 | 15,875,762.45 |
| 5% depreciation of USD against functional currency | (129,347,323.98) | (129,347,323.98) | (15,875,762.45) | (15,875,762.45) |
| 5% appreciation of EUR against functional currency | 37,519,740.78 | 37,519,740.78 | 49,438,913.21 | 49,438,913.21 |
| 5% depreciation of EUR against functional currency | (37,519,740.78) | (37,519,740.78) | (49,438,913.21) | (49,438,913.21) |
2.1.2. Interest rate risk
The risk of changes in cash flow of financial instruments due to changes in interest rates exposed to the Group are primarilyrelated to bank borrowings bearing floating interest rate (please refer to Note (V) 33) and bank deposits bearing floatinginterest rate. The Group's risks of changes in the fair value of financial instruments due to changes in interest rates arerelated to fixed-rate bank borrowings (please refer to Note (V) 23 and Note (V) 33) and fixed-rate bank deposits.
The Group determines the relative proportion of fixed interest rate contracts and floating interest rate contracts based onthe prevailing market environment. On December 31, 2022, the Group’s total long-term and short-term interest-bearingdebts bearing fixed interest rates amounted to RMB 9,106,539,532.31 (December 31, 2021: RMB 5,863,848,513.19) (Note(V) 23 and Note (V) 33). The total amount of long-term and short-term interest-bearing debts bearing floating interestrates is RMB 2,262,287,174.62 (December 31, 2021: RMB 1,843,072,689.21) (Note (V) 33).
The Group expects that the exposure to cash flow risk arising from floating-rate bank deposits and the exposure to changesin fair value arising from fixed-rate bank deposits are not significant.
2.1.3. Other price risks
The Group’s price risk mainly arises from investments in held-for-trading equity instruments and derivative financialinstruments. Held-for-trading equity instrument investments are all investments in unlisted held-for-trading equityinstruments.
The Group is exposed to price risk due to the holding of financial assets measured at fair value. The fair value of certainfinancial instruments is determined by the general pricing model based on discounted future cash flow method or othervaluation techniques, while the valuation techniques are based on certain valuation assumptions. Therefore, the valuationresults are highly sensitive to valuation assumptions. However, at the end of the current reporting period, the amount ofinvestment in held-for-trading equity instruments and derivative financial instruments is not significant, and the changesof the amount due to changes in price of financial instruments as a result of change in valuation assumptions is limited,accordingly, no sensitivity analysis is conducted.
2.2 Credit Risk
As of December 31, 2022, the largest credit risk exposure that may result in financial losses of the Group is mainly due tothe loss of the Group’s financial assets arising from the failure of the counterparty to perform its obligations, including:
cash and bank balances (Note (V) 1), notes receivable (Note (V) 3), accounts receivable (Note (V) 4), receivables forfinancing (Note (V) 5), other receivables (Note (V) 7), contract assets (Note (V) 9 and Note (V) 22), non-current assetsdue within one year (Note (V) 10), long-term receivables (Note (V) 12), etc., and derivative financial assets that are notincluded in the scope of impairment assessment and are measured at fair value through current profit or loss (Note (V) 2).As of the balance sheet date, the book value of the Group’s financial assets represents its maximum credit risk exposure.
In order to reduce credit risk, the Group has formed a team to determine the credit limit, conduct credit approval, andimplement other monitoring procedures to ensure that necessary measures are taken to recover over-due debt. In addition,the Group reviews the recovery of financial assets on each balance sheet date to ensure that sufficient credit loss provisions
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
are 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, the Group regularly monitors the debtor’s credit history. For debtors with poor credit history, theGroup takes various measures such as written payment reminders to ensure that the Group’s overall credit risk ismaintained in a controllable range. For other receivables, the Group calculates the expected credit loss based on theexpected credit loss ratio in the next 12 months or the entire duration based on the default risk exposure. For details of therelevant expected credit loss measurement, see (Note (V) 7).
The Group’s risk exposure is distributed among multiple contractors and multiple customers, so the Group has nosignificant credit concentration risk.
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 31, 2022 | ||||
| Within one year | 1-5 years | More than 5 years | Total | |
| Non-derivative financial liabilities | ||||
| Short-term borrowings | 3,381,341,036.05 | - | - | 3,381,341,036.05 |
| Notes payable | 1,207,756,963.94 | - | - | 1,207,756,963.94 |
| Accounts payable | 16,025,563,802.99 | - | - | 16,025,563,802.99 |
| Other payables | 3,203,308,686.31 | - | - | 3,203,308,686.31 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
December 31, 2022
| December 31, 2022 | ||||
| Within one year | 1-5 years | More than 5 years | Total | |
| Other current liabilities | 465,979,374.84 | - | - | 465,979,374.84 |
| Other non-current liabilities | - | 2,806,169,050.05 | 2,806,169,050.05 | |
| Long-term borrowings (including those due within one year) | 666,754,479.49 | 6,971,138,869.43 | 1,030,617,594.40 | 8,668,510,943.32 |
| Long-term payables (including those due within one year) | 2,326,599.37 | 8,196,420.77 | - | 10,523,020.14 |
| Derivative financial instruments | ||||
| Forward foreign exchange contracts - settled in the gross amount | ||||
| - Cash inflow | 2,319,267,329.02 | - | - | 2,319,267,329.02 |
| - Cash outflow | 2,374,759,576.30 | - | - | 2,374,759,576.30 |
| - Net cash inflow | 55,492,247.28 | - | - | 55,492,247.28 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
IX. Fair Value Disclosure
1. The Financial Assets and Financial Liabilities Measured at Fair Value at the end of the Reporting Period
Unit：RMB
| Items | Closing fair value | |||
| Level 1 | Level 2 | Level 3 | Total | |
| I. Continuous fair value measurement | - | 1,428,726,011.53 | 423,893,239.94 | 1,852,619,251.47 |
| (I) Financial assets measured at fair value through profit and loss | - | 12,807,438.36 | 423,893,239.94 | 436,700,678.30 |
| 1. Held-for-trading Financial Assets | - | 12,807,438.36 | - | 12,807,438.36 |
| - Derivative financial assets | - | 12,807,438.36 | - | 12,807,438.36 |
| 2. Other non-current financial assets | - | - | 423,893,239.94 | 423,893,239.94 |
| (II) Receivables for financing | - | 1,484,218,258.74 | - | 1,484,218,258.74 |
| Total assets measured continuously at fair value | - | 1,497,025,697.10 | 423,893,239.94 | 1,920,918,937.04 |
| (III) Financial liabilities measured at fair value through profit and loss | - | 68,299,685.57 | - | 68,299,685.57 |
| 1. Held-for-trading Financial Liabilities | - | 68,299,685.57 | - | 68,299,685.57 |
| - Derivative financial liabilities | - | 68,299,685.57 | - | 68,299,685.57 |
| Total liabilities measured continuously at fair value | - | 68,299,685.57 | - | 68,299,685.57 |
2. Information on the Estimation Technique and Important Parameters Adopted as for Continuous Level 2 FairValue Measurement Items
Unit: RMB
| Fair value at December 31, 2022 | Estimation technique | Inputs | |
| Forward Foreign Exchange Contracts (Assets) | 12,807,438.36 | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparty |
| Forward Foreign Exchange Contracts (Liabilities) | (68,299,685.57) | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparty |
| Receivables for financing | 1,484,218,258.74 | Discounted cash flow approach | Discounted rate that reflects the credit risk of counterparty |
3. The Third Level of Fair Value Measurement Item, the Valuation Techniques and Important Parameters Used
Unit: RMB
| Items | Fair value on December 31, 2022 | Valuation techniques | Inputs |
| Other non-current financial assets-- Investment in equity instruments of private companies | 423,893,239.94 | Market approach /Income approach | Comparable public companies’ PB (price/book value) ratio within the same industry /Future cash flows, Discount rate |
4. The Third Level of Fair Value Measurement Item, Adjustment Information between the Opening and ClosingBook Value
Unit: RMB
| Other non-current financial assets | Amount |
| Book value on January 1, 2022 | 438,724,172.22 |
| Increase in the current reporting period | 83,962,245.00 |
| Decrease in the current reporting period | 29,000,000.00 |
| Changes in fair value booked into profit and loss during the current reporting period | (69,793,177.28) |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Book value on December 31, 2022
| Book value on December 31, 2022 | 423,893,239.94 |
The total amount included in profit or loss in 2022 includes unrealized losses of RMB69,793,177.28 (2021:
RMB53,214,895.05) related to financial assets measured at fair value at the end of the current reporting period, and suchgains or losses are included in the gains or losses from changes in fair value; the realized gains of financial assets measuredat fair value at the end of the current reporting period which were included in investment income was RMB51,892,209.92(2021: RMB115,644,801.97).
5. Items Measured at Continuous Fair Value. There Were No Transfers between Levels for the Current
Reporting Period. There was No Estimation Technique Change for the Current Reporting Period
6. Fair Values of Financial Assets and Financial Liabilities that not Measured at Fair Value
The Group’s management team believes that financial assets and financial liabilities measured at amortized cost mainlyinclude cash and bank balances, notes receivable, accounts receivable, other receivables, non-current assets due withinone year, long-term receivables, short-term borrowings, notes payable, accounts payable, other payables, part of othercurrent liabilities, non-current liabilities due within one year, long-term borrowings, long-term payables and part of othernon-current liabilities, etc., carrying value of which approximates to its fair value.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
X. Related Party Relationships and Transactions
1. Information on Parent Company of the Company
| Name | Place of registration | Nature of business | Registered capital | Shareholding ratio of parent company in the Company (%) | Percentage of voting rights of parent company to the Company (%) |
| China Electronics Technology HIK Group Co., Ltd. (CETHIK) | Hangzhou, Zhejiang | Industrial investment | RMB 660 million | 36.09 | 36.09 |
The ultimate controlling party of the Company is CETC.
2. Information on the Subsidiaries of the Company
For details of the main subsidiaries of the Company, see Note (VII).
3. Information on the Joint Ventures and Associated Companies of the CompanyJoint ventures and associates that had related party transactions with the Group in the current reporting period, or in theprior periods and formed balances are as follows:
| Name of the associates or joint ventures | Relationship with the Company |
| Wuhu Sensortech Intelligent Technology Ltd. (Wuhu Sensortech) and its subsidiaries (Note1) | Associated company |
| Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries (Note1) | Associated company |
| Zhiguang Hailian Big Data Technology Ltd. and its subsidiaries (Note1) | Associated company |
| Jiaxin Haishi JiaAn Zhicheng Technology Ltd. (Note1) | Associated company |
| Qinghai Qingtang Big Data Ltd. (Note1) | Associated company |
| Sanmenxia Xiaoyun Vision Technology Ltd. (Note1) | Associated company |
| Zhejiang Hailai Yunzhi Technology Ltd. (Note1) | (Note3) |
| Guangxi Haishi City Operation Management Ltd. and its subsidiaries (Note2) | Joint venture |
| Shenzhen Haishi Urban Service Operation Ltd. and its subsidiaries (Note2) | Joint venture |
| Xuzhou Kangbo City Operation Management Service Ltd. (Note2) | Joint venture |
| Yunnan Yinghai Parking Service Ltd. (Note2) | Joint venture |
| Zhejiang City Digital Technology Ltd. (Note2) | Joint venture |
| Zhejiang Haishi Huayue Digital Technology Ltd. (Note2) | Joint venture |
Note 1: Those companies are collectively referred to as "associated companies" in the following disclosures of relatedparty transactions, receivables from related parties, and payable from related parties.
Note 2: hose companies are collectively referred to as "joint ventures" in the following disclosures of related partytransactions, receivables from related parties, and payable from related parties.
Note 3: During the period from January 1, 2021 to June 30, 2021, Zhejiang Hailai (formerly known as: Daishan HailaiYunzhi Technology Ltd.) was a joint venture of the Company. On June 30, 2021, the Company included Zhejiang Hailaiin the scope of the consolidated financial statements, see Note (VI) 1 for details. During the period from January 1, 2021to June 30, 2021, this company is a related party of the Company.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
4. Information on Other Related Parties
| Name (Note1) | Relationship |
| Shanghai Fullhan Microelectronics Co., Ltd. and its subsidiaries (Note2) | Shareholder(s) that hold(s) more than 5% shares of the Company was(were) the director(s) of this company |
| Shenzhen Wanyu Security Service Technology Ltd. and its subsidiaries | The Group’s senior management serve(s) as director(s) of this company |
| Confirmware Technology (Hangzhou) Co., Ltd. | The Group’s senior management serve(s) as director(s) of this company |
| Zhejiang Fast Line data fusion Information Technology Co., Ltd. and its subsidiaries | The Group’s senior management serve(s) as director(s) of this company |
| Chengdu Guoshengtianfeng Network Technology Ltd. and its subsidiaries | The Group’s senior management serve(s) as director(s) of this company |
| Ruihua Innovation Management Research Institute (Hangzhou) Ltd. | The Group’s independent director(s) serve(s) as director(s) of this company |
| Ningbo Industrial Internet Research Institute Co., Ltd. | The Group’s independent director(s) serve(s) as director(s) of this company |
| INESA (Group) Ltd. and its subsidiaries | The Group’s supervisor(s) serve(s) as director(s) of this company |
| Aurotek CORP. and its subsidiaries (Note3) | The Group’s former independent director(s) serve(s) as director(s) of this company (Note 1) |
| Shenzhen Zhongtu Instrument Co., Ltd. (Note4） | The Group's chairman(chairmen) of Board of the Supervisors was(were) he director(s) of this company |
| Suzhou Ximeng Technology Co., Ltd. | The Group's chairman(chairmen) of Board of the Supervisors was(were) he director(s) of this company |
| Subsidiaries of CETC (Note 5) | Under common control of the ultimate controlling party of the Company |
Note 1: Those companies (excluding subsidiaries of CETC) are collectively referred to as "companies in which directors,supervisors, senior management, and related natural persons of the Company serve as directors" in the followingdisclosures of related party transactions, receivables from related parties, and payable from related parties.
Note 2: Gong Hongjia, a shareholder holding more than 5% shares of the Company, once served as a director of thecompany. The term of office of Gong Hongjia was from April 2004 to December 2022. Therefore, this company wasrecognized as a related party of the Group in 2021 and 2022.
Note 3: Cheng Tianzong, a former independent director of the Group, once served as a director of the company. The termof office of Cheng Tianzong was from June 2014 to March 2021. Therefore, this company was recognized as a relatedparty of the Group in 2021, as well as during January 2022 to March 2022.
Note 4: Hong Tianfeng, the chairman of Board of the Supervisors of the Group, once served as a director company. HongTianfeng departed the Company in April 2022, 2022 is the first year of him/her departure. Therefore, this company wasstill recognized as a related party of the Company in the current period.
Note 5: Subsidiaries of CETC, excluding Hikvision and its subsidiaries.
5. Related Party Transactions
(1) Related party transactions regarding sales and purchases of goods, provision of services and receiving services
Purchase of commodities / receiving of services:
Unit: RMB
| Related party | Transaction type | Amount occurred in 2022 | Amount occurred in 2021 |
| Subsidiaries of CETC | Purchase of materials and receiving of services | 2,234,524,161.20 | 1,996,000,573.93 |
| Joint ventures | Purchase of materials and receiving of services | 5,071,741.36 | 127,177.54 |
| Associated companies | Purchase of materials and receiving of services | 417,989,556.67 | 379,325,021.37 |
| Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | Purchase of materials and receiving of services | 1,598,406,260.25 | 1,076,803,192.56 |
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Related party
| Related party | Transaction type | Amount occurred in 2022 | Amount occurred in 2021 |
| Total | 4,255,991,719.48 | 3,452,255,965.40 |
Sales of commodities / rendering of services:
Unit: RMB
| Related party | Transaction content | Amount occurred in 2022 | Amount occurred in 2021 |
| Subsidiaries of CETC | Sales of products and rendering of services | 447,186,616.90 | 434,709,999.06 |
| Joint ventures | Sales of products and rendering of services | 77,751,276.48 | 83,222,278.95 |
| Associated companies | Sales of products and rendering of services | 87,149,633.74 | 88,857,130.72 |
| Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | Sales of products and rendering of services | 11,233,785.52 | 16,831,852.52 |
| Total | 623,321,312.64 | 623,621,261.25 |
(2) Related party lease
Unit: RMB
| Lessor | Type of leased assets | Rental fee confirmed in 2022 | Rental fee confirmed in 2021 |
| Subsidiaries of CETC | Equipment | 13,913,056.77 | 27,826,113.54 |
| Joint ventures | House | 542,554.11 | 486,718.33 |
| Total | 14,455,610.88 | 28,312,831.87 |
Note: At the end of this year, the Company signed a housing lease contract with Subsidiaries of CETC with a lease period of 27 months. OnDecember 31, 2022, the Company confirmed right-of-use assets of RMB 6,514,131.19 and lease liabilities of RMB7,379,632.09. During thereporting period, the depreciation of right-of-use assets was RMB814,266.39 and interest on lease liabilities was RMB51,234.51.
(3) Compensation for key managers
Unit: RMB
| Item | Amount occurred in 2022 | Amount occurred in 2021 |
| Compensation for key managers | 38,836,690.44 | 40,571,163.91 |
(4) Other related party transactions
Statement of capital deposits:
Unit: RMB
| Related Party | Content of related party transaction | Amount occurred in 2022 | Balance at the end of the current reporting period | Amount occurred in 2021 | Opening Balance |
| Subsidiaries of CETC | Deposit into (withdraw from) current deposits | (499,973,215.52) | 33,518.68 | 500,006,734.20 | 500,006,734.20 |
| Subsidiaries of CETC | Deposit into fixed deposits | - | 4,000,000,000.00 | - | 4,000,000,000.00 |
| Total | (499,973,215.52) | 4,000,033,518.68 | 500,006,734.20 | 4,500,006,734.20 |
Note: For the deposit deposited by the Group with China Electronics Technology Finance Co., Ltd., the deposit interestincome during the reporting period was RMB80,026,784.06 (2021: RMB 80,001,932.23).
Information on notes discounted:
In 2022, The face value of bank acceptance bill discounted by the Group to China Electronics Technology Finance Co.,
Ltd. is RMB33,564,209.39 (2021: nil). The face value of the discounted and expired bank acceptance bill is
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
RMB33,564,209.39 (2021: nil). Interest expense arising from discounting the notes amounted to RMB241,747.39 (2021:
nil)
6. Receivables from Related Parties and Payables to Related Parties
(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 CETC | 703,246,712.68 | 226,247,765.93 | 756,888,051.10 | 209,305,306.47 |
| Accounts receivable | Joint ventures | 33,380,436.75 | 1,573,681.64 | 19,862,199.08 | 592,300.61 |
| Accounts receivable | Associated companies | 101,753,693.78 | 5,670,312.45 | 87,093,118.68 | 3,627,594.53 |
| Accounts receivable | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | 3,849,485.72 | 79,488.44 | 4,352,261.48 | 80,947.45 |
| Total | 842,230,328.93 | 233,571,248.46 | 868,195,630.34 | 213,606,149.06 | |
Unit: RMB
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Notes receivable | Subsidiaries of CETC | 170,543,239.65 | - | 78,858,666.10 | - |
| Notes receivable | Joint ventures | 2,500,000.00 | - | 1,444,385.00 | - |
| Notes receivable | Associated companies | 2,358,308.70 | - | 5,000,000.00 | - |
| Notes receivable | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | 281,113.19 | - | - | - |
| Total | 175,682,661.54 | - | 85,303,051.10 | - | |
Unit: RMB
| Item | Related Party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Other receivables | Subsidiaries of CETC | 1,720,917.15 | 240,722.93 | 645,000.00 | 99,483.50 |
| Other receivables | Joint ventures | 374,619.85 | 2,472.49 | 244,182.74 | 2,124.39 |
| Other receivables | Associated companies | - | - | 10,485.27 | 91.22 |
| Total | 2,095,537.00 | 243,195.42 | 899,668.01 | 101,699.11 | |
Unit: RMB
| 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 CETC | 300,478.44 | 1,983.16 | 38,579,578.71 | 2,451,642.33 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Item
| 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) | Associated companies | 43,800,876.33 | 973,106.36 | 37,660,831.90 | 431,834.19 |
| Total | 44,101,354.77 | 975,089.52 | 76,240,410.61 | 2,883,476.52 | |
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
| Prepayments | Subsidiaries of CETC | 6,707,516.94 | 2,705,210.05 |
| Prepayments | Associated companies | - | 49,300,000.00 |
| Total | 6,707,516.94 | 52,005,210.05 |
(2) Payables to related parties
Unit: RMB
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
| Notes Payable | Subsidiaries of CETC | 7,561,539.70 | 40,579,368.55 |
| Notes Payable | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | 31,994,311.07 | 24,314,184.13 |
| Total | 39,555,850.77 | 64,893,552.68 |
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
| Contract liabilities | Subsidiaries of CETC | 8,673,665.99 | 3,446,311.89 |
| Contract liabilities | Joint ventures | 2,558,659.59 | - |
| Contract liabilities | Associated companies | - | 195,416.40 |
| Contract liabilities | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | - | 961,369.66 |
| Total | 11,232,325.58 | 4,603,097.95 |
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
| Other payables | Subsidiaries of CETC | 56,652,471.09 | 56,252,811.73 |
| Other payables | Joint ventures | 10,000.00 | 10,000.00 |
| Other payables | Associated companies | 236,000.00 | 9,397,150.00 |
| Other payables | Companies in which directors, supervisors, senior management, and related natural persons of | 250,000.00 | 250,000.00 |
Item
| Item | Related Party | Closing balance | Opening balance |
| Accounts payable | Subsidiaries of CETC | 759,760,264.93 | 570,856,498.41 |
| Accounts payable | Joint ventures | 966,037.73 | - |
| Accounts payable | Associated companies | 88,750,828.96 | 77,275,644.97 |
| Accounts payable | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | 240,030,055.22 | 409,333,802.57 |
| Total | 1,089,507,186.84 | 1,057,465,945.95 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
the Company serve as directors
| the Company serve as directors | |||
| Total | 57,148,471.09 | 65,909,961.73 |
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
| Lease liabilities (including those due within one year) | Subsidiaries of CETC | 16,863,126.87 | 22,591,498.84 |
| Lease liabilities (including those due within one year) | Joint ventures | - | 1,074,683.57 |
| Total | 16,863,126.87 | 23,666,182.41 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
XI. Share-based Payments
1. Overview of Share-based Payments
Restrictive Share Incentive SchemeAccording to the Approval of the Implementation of the Restrictive Share Incentive Scheme of Hangzhou Hikvision DigitalTechnology Co., Ltd. (Guo Zi Fen Pei [2012] No. 426) issued by the State-owned Assets Supervision and AdministrationCommission of the State Council and the Opinion the Restrictive Share Incentive Scheme of Hangzhou Hikvision DigitalTechnology Co., Ltd. (Shang Shi Bu Han [2012] No. 353) issued by China Securities Regulatory Commission, theCompany convened the ninth meeting of the second session of the Board of Directors on July 25, 2012 and the firstextraordinary general meeting for 2012 on August 13, 2012, whereat the Proposal Relating to the Restrictive Share Scheme(Amendments to the Draft) of the Company and Highlights was reviewed and passed. The purpose of the Share IncentiveScheme is to: further improve the Company’s governance structure to establish a good and balanced value allocationsystem; establish a profit-sharing and restriction mechanism among shareholders, the Company and its employees, so asto provide shareholders with sustainable return; fully mobilize the positivity of core employees to support the Companyin realizing its strategies and long-term sustainable development; attract and retain core employees to ensure theCompany’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, revenue growth rate, and economic value added), and by grantees’ individualperformance criteria simultaneously. Where, during the unlocking period, any one or more unlock criteria for the Companyor individuals is or are not fulfilled, such portion of subject shares shall be cancelled. The cancelled restricted shares willbe repurchased by the Company based on the relevant regulations under the scheme.
On December 20, 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.
On January 18, 2022, authorized by the 1
st
extraordinary general meeting of 2022 and reviewed by the Board of Directors,the Company granted 97,402,605 restricted shares to grantees at a grant price of RMB29.71 per share ("2021 ShareIncentive Scheme"). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing on thegrant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up and are nottransferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares (including Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by the scheme being satisfied, apply forunlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months following the grant date and the numberof shares to be unlocked shall be 40% of the aggregate number of the Subject Shares granted; the second unlocking periodshall be the 36 to 48 months following the grant date and the number of shares to be unlocked shall be 30% of the aggregatenumber of the Subject Shares granted; the third unlocking period shall be the 48 to 60 months following the grant date andthe number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted. The Companyhas completed the equity registration work in February 2022.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Unit: share
| 2018 Share Incentive Scheme | 2022 | 2021 |
| Total of equity instruments outstanding at the beginning of the reporting period | 68,762,683 | 68,762,683 |
| Total of equity instruments granted (share dividend) during the current reporting period | - | - |
| Total of equity instruments vested during the current reporting period | 33,142,730 | - |
| Total of equity instruments forfeited during the current reporting period (Note) | 35,619,953 | - |
| Total of equity instruments outstanding at the end of the reporting period | - | 68,762,683 |
| 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 | Inapplicable | RMB16.98/share & 24 months |
Note: In accordance with the authorization by the Company’s second Extraordinary General Meeting in 2018, theresolution by the 10
th meeting of the 5
thsession of the Board of Directors on May 5, 2022, the resolution of the secondExtraordinary General Meeting in 2022 on October 10, 2022 and the revised Articles of Association, the Companyrepurchased and cancelled the granted 2,288,095 restricted RMB treasury shares that have not been unlocked by cash. TheCompany completed the deregistration on December 21, 2022.
In accordance with relevant regulations under 2018 Restricted Share Incentive Scheme (revised draft), the vestingconditions of third vesting period were not met, and the amount of 33,331,858 shares granted but not vested accordinglywas forfeited during the current period.
| 2021 Share Incentive Scheme | 2022 | 2021 |
| Total of equity instruments outstanding at the beginning of the reporting period | - | - |
| Total of equity instruments granted (share dividend) during the current reporting period | 97,402,605 | - |
| Total of equity instruments vested during the current reporting period | - | - |
| Total of equity instruments forfeited during the current reporting period (Note) | - | - |
| Total of equity instruments outstanding at the end of the reporting period | 97,402,605 | - |
| 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 | RMB29.71/share & 48 months | Inapplicable |
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
On October 22, 2015, Hikvision considered and approved Management Measures for Core Staff Co-Investment inInnovative Businesses (Draft) (hereafter referred to as "Management Measures") at the 2
nd
extraordinary general meeting.On March 7, 2016, representative congress of labor union of Hikvision passed Implementation Provisions for ManagementMeasures for Core Staff Investment in Innovative Businesses (hereafter referred to as "Provisions"), to initiate andimplement the incentive mechanism of staff co-investment (hereafter referred to as "Staff Co-Investment Plan") ininnovative business subsidiaries. Staff who participate in the Staff Co-Investment Plan (hereafter referred to as "Co-Investment Staff") signed an Entrusted Investment Agreement with the labor union committee of Hikvision (hereafterreferred to as "Hikvision Labor Union"), to entrust Hikvision Labor Union to make investments. Hikvision Labor Union,as a principal, shall cooperate with a trust company, which shall be a limited partner (LP) of a partnership enterprise, toestablish a trust plan, and to invest trust funds into innovative business subsidiaries. (Investment form described above isreferred to as "Co-Investment Platform").
Staff Investment Plan is classified as plan A and plan B according to applicable grantees. Grantees of plan A are comprisedof medium-and-senior level management personnel and core competent staff from Hikvision and its subsidiaries are ableto invest in all innovative businesses. Grantees of plan B are comprised of core and full-time staff from innovative businesssubsidiaries, and could participate in investment on innovative business subsidiaries and their subsidiaries where they
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
serve. The Co-Investment Platform will increase capitals annually, the corresponding increased equity of which will bedistributed to core staff who meets investment conditions pursuant to particular rules. The waiting period shall be fiveyears after equity of Co-Investment Platform is held by the staff. Within the waiting period, if the labor relationshipbetween the grantees and the Company or its subsidiaries is released or terminated, equity of Co-Investment Platform heldby the grantees shall be refunded and settled 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. On December 25, 2020, the Company held the 20
th
meetings of 4
th
sessionof the Board of Directors, which reviewed and approved the Proposal on Revising Management Measures for Core StaffCo-Investment in Innovative Businesses. The updated version of Management Measures for Core Staff Co-Investment inInnovative Businesses (hereinafter referred to as "updated version of Management Measures"), The new version adds rulesrelating to the confirmation of shares held directly by employees under Staff Co-Investment Plan and equities of innovativebusiness subsidiaries held indirectly by employees, clarifies the treatment of shares under Co-Investment Plan after thedisqualification about co-investment of employees, adds rules of management committee.
On December 31, 2020, the Executive management committee of the Co-Investment Plan approved the Provisions forManagement Measures for Core Staff Investment in Innovative Businesses (hereafter referred to as "New Provisions". Inaccordance of the New Provisions, for the confirmed Plan A shares, the waiting period is five years since the employeehas worked for the company or its subsidiaries and for the confirmed share of Plan B, the waiting period is five years sincethe employee has worked for the innovative business subsidiary corresponding to the Plan B or its subsidiaries.
2. Information of the Share-based Payment through Equity Settlements
Restrictive Share Incentive Scheme
Unit: RMB
| 2018 Share Incentive Scheme | 2021 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 vesting period and turnover rate | Determined based on the results estimation of each vesting period and turnover rate |
| Reasons of the significant difference between the estimates of the current reporting period with that of the prior year | None | None |
| Accumulative amount of share-based payment through equity settlement and further included in the capital reserve | 807,558,807.12 | 628,733,458.52 |
| Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period | (233,622,413.77) | 646,300,305.69 |
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
Unit：RMB
| 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 | 482,406,503.60 |
| Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period | 207,631,789.73 |
RMB48,476,710.52 of the total expenses of paid and confirmed by equity settlements was shared by minority shareholdersand RMB909,665.51 of the total deferred tax impact arising from the restricted share incentive scheme was shared by
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
minority shareholders.
3. There is no share-based payment through cash settlements
4. There is no modification or termination of share-based payment during the current reporting period.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 | 16,521,850 | 11,659,026 |
| - Commitment on external investments | 12,940 | 34,500 |
| Total | 16,534,790 | 11,693,526 |
2. Contingencies
The Group has no significant contingencies to be disclosed.
XIII. Events after the Balance Sheet Date
1. Significant Unadjusted Events
As of April 13, 2023, the Company has no significant events after the balance sheet date that need to be disclosed
2. Profit Distribution
Pursuant to the proposal of the 17
th meeting of the 5
th
session of the Board of Directors on April 13, 2023, the Companyproposed to distribute cash dividend of RMB7 (tax inclusive) per each 10 shares to all shareholders. The above dividenddistribution plan is still subject to the approval of the general meeting of shareholders.
XIV. Other Significant Events
1. Segment Information
1.1 Report segment determining and accounting policy
According to the Group's internal organization structure, management requirements and internal report principles, theGroup has only one operating segment, which is the research and development, production and sales of AIoT products andservices.
1.2 Segment financial reporting
External revenue by geographical area & non-current assets by geographical locationUnit: RMB
| Item | 2022 | 2021 |
| External revenue generated in domestic area | 56,890,890,769.45 | 59,434,989,705.17 |
| External revenue generated in overseas area | 26,275,430,911.69 | 21,985,063,834.10 |
| Total | 83,166,321,681.14 | 81,420,053,539.27 |
Unit: RMB
| Item (Note) | On December 31, 2022 | On January 1, 2022 |
| Non-current assets in domestic area | 16,808,935,279.10 | 13,823,326,864.88 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Non-current assets in overseas area
| Non-current assets in overseas area | 831,488,767.27 | 777,156,474.79 |
| Total | 17,640,424,046.37 | 14,600,483,339.67 |
Note: the non-current assets above did not include other non-current financial assets, long-term receivables, long-termequity investment, and deferred tax assets.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
XV. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts Receivable
(1) Disclosure by age
Unit: RMB
| Aging | Closing Balance | ||
| Accounts receivable | Credit loss provision | Proportion (%) | |
| Within credit period | 7,024,926,501.10 | 8,144,151.71 | 0.12 |
| Within 1 year after exceeding credit period | 16,771,801,690.71 | 87,553,778.78 | 0.52 |
| 1-2 years after exceeding credit period | 513,230,879.82 | 92,194,242.75 | 17.96 |
| 2-3 years after exceeding credit period | 312,592,580.10 | 119,434,198.71 | 38.21 |
| 3-4 years after exceeding credit period | 180,224,406.31 | 119,634,534.57 | 66.38 |
| Over 4 years after exceeding credit period | 164,982,539.08 | 164,982,539.08 | 100.00 |
| Subtotal | 24,967,758,597.12 | 591,943,445.60 | 2.37 |
(2) Classification and disclosure of by credit loss provision methods
Unit: RMB
| 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 | 24,967,758,597.12 | 100.00 | 591,943,445.60 | 2.37 | 24,375,815,151.52 | 24,366,746,971.10 | 100.00 | 488,628,899.68 | 2.01 | 23,878,118,071.42 |
| Total | 24,967,758,597.12 | 100.00 | 591,943,445.60 | 2.37 | 24,375,815,151.52 | 24,366,746,971.10 | 100.00 | 488,628,899.68 | 2.01 | 23,878,118,071.42 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Accounts receivable provision for credit loss by portfolios
Unit: RMB
| Customer | Closing balance | ||
| Carrying balance | Credit loss provision | Proportion (%) | |
| Subsidiaries’ customers | 20,790,257,807.56 | - | - |
| Portfolio A | 592,263.40 | 311,519.72 | 52.60 |
| Portfolio B | 4,176,689,050.71 | 591,412,450.43 | 14.16 |
| Portfolio C | 219,475.45 | 219,475.45 | 100.00 |
| Total | 24,967,758,597.12 | 591,943,445.60 | 2.37 |
Description of accounts receivable for credit loss provision by portfolios
As part of the Company's credit risk management, the Company uses the over-credit age of accounts receivable to assess the expected credit losses of accounts receivable formed bydomestic and overseas sales businesses, and the risk characteristics are divided according to different business area and target into portfolio A, portfolio B and portfolio C. For the accountsreceivable generated by the Group’s related parties, because the payment time is arranged by the Group according to the cash flow of the companies in the Group, the Company believesthat the credit risk is low and no provision for credit loss is required. The aging information can reflect the solvency of these three types of customers when the accounts receivable aredue.
(3) Credit loss provision
The provision for credit loss in the current reporting period is RMB 119,419,773.02.
The actual write-off of accounts receivable for the current reporting period is RMB 16,303,736.16, and RMB 198,509.06 is recovered after write-off.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
(4) Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
| Name of the Party | Book value balance of accounts receivable | Proportion (%) of the total balance of accounts receivable at the end of the current reporting period | Closing balance for credit loss provision |
| Subsidiary A | 20,685,756,539.48 | 82.85 | - |
| CETC’s subsidiary company A | 130,418,142.77 | 0.52 | 53,524,319.86 |
| Third party H | 107,975,664.71 | 0.43 | 4,115,824.12 |
| Third party I | 71,179,765.58 | 0.29 | 2,169,926.56 |
| Third party J | 37,596,997.02 | 0.15 | 1,597,872.37 |
| Total | 21,032,927,109.56 | 84.24 | 61,407,942.91 |
(5) As of December 31, 2022, there is no termination of accounts receivable booking due to transfer of a financial asset.
(6) As of December 31, 2022, the Company has no assets/liabilities booked due to transferred accounts receivable that the Company still continue to be involved in.
2. Other Receivables
2.1 By categories
Unit：RMB
| Category | Closing balance | Opening balance |
| Dividends receivable | 85,323,007.51 | 22,910,404.14 |
| Other receivables | 2,324,554,929.22 | 1,491,231,959.91 |
| Total | 2,409,877,936.73 | 1,514,142,364.05 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
2.2 Dividends receivable
Unit：RMB
| Investees | Closing balance | Opening balance |
| Subsidiaries of Hikvision | 85,323,007.51 | 22,910,404.14 |
| Total | 85,323,007.51 | 22,910,404.14 |
2.3 Other receivables
(1) Other receivables by aging
Unit: RMB
| Item | Closing balance | ||
| Other receivables | Credit loss provision | Proportion (%) | |
| Within contract period | 2,291,096,654.42 | 957,238.60 | 0.04 |
| Within 1 year | 33,503,835.61 | 1,372,301.44 | 4.10 |
| 1-2 years | 2,112,945.32 | 372,089.67 | 17.61 |
| 2-3 years | 341,396.88 | 120,389.01 | 35.26 |
| 3-4 years | 946,880.46 | 624,764.75 | 65.98 |
| Over 4 years | 646,571.70 | 646,571.70 | 100.00 |
| Subtotal | 2,328,648,284.39 | 4,093,355.17 | 0.18 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
(2) Other receivables by nature of the payment
Unit: RMB
| Nature | Closing balance | Opening balance |
| Payments by related parties within the Group | 2,137,185,066.96 | 1,365,117,094.96 |
| Temporary payments for receivables | 109,945,554.93 | 61,128,645.72 |
| Guarantee deposit | 69,392,171.01 | 60,966,840.82 |
| Others | 12,125,491.49 | 7,274,266.75 |
| Total | 2,328,648,284.39 | 1,494,486,848.25 |
(3) Provision for credit losses
The amount of credit loss provision in the current period was RMB 1,198,466.83.
(4) The actual write-off of other receivables in the current reporting period was RMB 360,000.00.
(5) Top 5 debtors of other receivables in terms of closing balance
Unit：RMB
| The name of entity | Nature | Closing balance | Aging | Percentage to total other receivables (%) | Closing balance for credit loss provision |
| Subsidiary B | Internal Payment | 618,349,570.66 | Within contract period | 26.55 | - |
| Subsidiary C | Internal Payment | 495,712,569.41 | Within contract period | 21.29 | - |
| Subsidiary D | Internal Payment | 196,728,403.47 | Within contract period | 8.45 | - |
| Subsidiary E | Internal Payment | 111,136,286.84 | Within contract period | 4.77 | - |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
The name of entity
| The name of entity | Nature | Closing balance | Aging | Percentage to total other receivables (%) | Closing balance for credit loss provision |
| Subsidiary F | Internal Payment | 98,983,544.27 | Within contract period | 4.25 | - |
| Total | 1,520,910,374.65 | 65.31 | - |
(6) At the end of the current reporting period, the Company had no other receivables involving government subsidies.
(7) At the end of the current reporting period, there were no other receivables derecognized due to the transfer of financial assets.
(8) At the end of the current reporting period, there were no assets or liabilities formed by continuing involvement in transferred other receivables.
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 | 6,629,092,230.54 | - | 6,629,092,230.54 | 6,870,285,292.68 | - | 6,870,285,292.68 |
| Investments in associated enterprises and joint ventures | 1,106,666,564.96 | - | 1,106,666,564.96 | 915,631,339.20 | - | 915,631,339.20 |
| Total | 7,735,758,795.50 | - | 7,735,758,795.50 | 7,785,916,631.88 | - | 7,785,916,631.88 |
(1) Investment in main subsidiaries
Unit：RMB
| 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 | Balance of impairment loss provision at the end of the current reporting period |
| Hangzhou Hikvision System Technology Ltd. | 860,512,480.17 | 12,957,650.20 | - | 873,470,130.37 | - | - |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
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 | Balance of impairment loss provision at the end of the current reporting period |
| Hangzhou Hikvision Technology Ltd. | 1,074,046,955.60 | 25,602,054.03 | - | 1,099,649,009.63 | - | - |
| Hangzhou EZVIZ Network Co., Ltd. | 63,243,651.86 | - | 2,612,485.31 | 60,631,166.55 | - | - |
| Hangzhou EZVIZ Software Ltd. | 40,105,053.11 | - | 7,739,544.83 | 32,365,508.28 | - | - |
| Hangzhou Hikrobot Technology Co., Ltd. | 142,392,287.50 | - | 4,785,473.57 | 137,606,813.93 | - | - |
| Hangzhou Haikang Intelligence Ltd. | 10,200,142.51 | - | 1,801,683.82 | 8,398,458.69 | - | - |
(2) Investments in associated enterprises and joint ventures
Unit：RMB
| Name of investee | Opening balance | Closing balance | Balance of impairment loss provision at the end of the current reporting period | ||||||||
| Additional investments | Reduced investments | Investment income (losses) recognized under the equity method | Other comprehensive income adjustment | Other changes in equity | Declared cash dividends or profit distribution | Provision for impairment | Others | ||||
| 1. Joint Ventures | |||||||||||
| Hangzhou Haikang | 702,369,339.95 | - | - | 112,680,820.39 | - | 14,775,227.26 | - | - | - | 829,825,387.60 | - |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Name of investee
| Name of investee | Opening balance | Closing balance | Balance of impairment loss provision at the end of the current reporting period | ||||||||
| Additional investments | Reduced investments | Investment income (losses) recognized under the equity method | Other comprehensive income adjustment | Other changes in equity | Declared cash dividends or profit distribution | Provision for impairment | Others | ||||
| Intelligent Industrial Equity Investment Fund Partnership (L.P.) | |||||||||||
| Zhejiang City Digital Technology Ltd. | 12,214,320.29 | 11,500,000.00 | - | 2,627,190.51 | - | - | - | - | - | 26,341,510.80 | - |
| Zhejiang Haishi Huayue Digital Technology Ltd. | 11,930,512.66 | - | - | 2,726,503.57 | - | - | (1,275,000.00) | - | - | 13,382,016.23 | - |
| Shenzhen Haishi Urban Service Operation Ltd. | 1,264,658.38 | 1,500,000.00 | - | (1,089,851.65) | - | - | - | - | - | 1,674,806.73 | - |
| Guangxi Haishi City Operation Management Ltd. | 4,632,200.59 | 8,560,000.00 | - | (132,206.62) | - | - | - | - | - | 13,059,993.97 | - |
| Yunnan Yinghai Parking Service Ltd. | 4,558,881.09 | - | - | 519,116.95 | - | - | - | - | - | 5,077,998.04 | - |
| Xuzhou Kangbo City Operation Management Service Ltd. | 9,233,201.67 | - | - | 1,152,365.21 | - | - | - | - | - | 10,385,566.88 | - |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Name of investee
| Name of investee | Opening balance | Closing balance | Balance of impairment loss provision at the end of the current reporting period | ||||||||
| Additional investments | Reduced investments | Investment income (losses) recognized under the equity method | Other comprehensive income adjustment | Other changes in equity | Declared cash dividends or profit distribution | Provision for impairment | Others | ||||
| Subtotal | 746,203,114.63 | 21,560,000.00 | - | 118,483,938.36 | - | 14,775,227.26 | (1,275,000.00) | - | - | 899,747,280.25 | - |
| 2. Associated Companies | |||||||||||
| Wuhu Sensortech Intelligent Technology Ltd. | 75,466,476.84 | - | - | 22,627,903.68 | - | - | - | - | - | 98,094,380.52 | - |
| Maxio Technology (Hangzhou) Co., Ltd. | 62,727,449.53 | - | - | (18,684,479.79) | - | 42,356,564.37 | - | - | - | 86,399,534.11 | - |
| Zhiguang Hailian Big Data Technology Ltd. | 21,285,843.27 | - | - | (3,378,441.24) | - | 4,517,968.05 | - | - | - | 22,425,370.08 | - |
| Qinghai Qingtang Big Data Ltd. | 9,948,454.93 | - | (9,800,000.00) | (148,454.93) | - | - | - | - | - | - | - |
| Subtotal | 169,428,224.57 | - | (9,800,000.00) | 416,527.72 | - | 46,874,532.42 | - | - | - | 206,919,284.71 | - |
| Total | 915,631,339.20 | 21,560,000.00 | (9,800,000.00) | 118,900,466.08 | - | 61,649,759.68 | (1,275,000.00) | - | - | 1,106,666,564.96 | - |
(3) As of December 31, 2022, there were no restrictions on the capability of transferring fund to the Company from investees in which the Company held long-termequity investment.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
4. Revenue/cost of sales and services
Unit：RMB
| Item | 2022 | 2021 | ||
| Revenue | Cost | Revenue | Cost | |
| Major business | 21,018,811,109.28 | 4,962,133,305.77 | 24,756,059,967.30 | 5,102,605,625.81 |
| Other business | 3,265,694,229.07 | 135,606,040.90 | 3,316,533,294.57 | 138,183,248.51 |
| Total | 24,284,505,338.35 | 5,097,739,346.67 | 28,072,593,261.87 | 5,240,788,874.32 |
5. Investment Income
Unit：RMB
| Item | 2022 | 2021 |
| Long-term equity investment income calculated by the cost method | 205,293,907.63 | 16,316,000.00 |
| Long-term equity investment income measured by the equity method | 118,900,466.08 | 109,087,538.20 |
| Investment income (losses) from disposal of long-term equity investments | 1,709,563.80 | (3,387,647.37) |
| Investment income of other non-current financial assets during the holding period | 51,892,209.92 | 115,644,801.97 |
| Investment income (losses) from disposal of held of trading financial assets | 8,227,196.70 | (461,953.09) |
| Investment income from disposal of other non-current financial assets | 1,260,000.00 | - |
| Total | 387,283,344.13 | 237,198,739.71 |
6. Related Party Transactions
(1) Sales and purchase of goods, provision of services and receiving services
Purchase of goods/receiving of services:
Unit：RMB
| Related party | Transaction type | 2022 | 2021 |
| Subsidiaries of Hikvision (Note) | Purchase of materials and receiving of services | 6,144,557,450.80 | 6,136,340,294.33 |
| Subsidiaries of CETC | Purchase of materials and receiving of services | 115,654,935.67 | 23,888,681.71 |
| Associated companies | Purchase of materials and receiving of services | 76,150,000.00 | 36,783,800.00 |
| Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | Purchase of materials and receiving of services | 20,744,901.95 | 1,787,764.68 |
| Total | 6,357,107,288.42 | 6,198,800,540.72 |
Note: Subsidiaries of Hikvision are subsidiaries of the Company.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
Sales of goods/rendering of services:
Unit：RMB
| Related party | Transaction type | 2022 | 2021 |
| Subsidiaries of Hikvision | Sales of products and rendering of services | 18,556,146,320.10 | 22,294,952,493.31 |
| Subsidiaries of CETC | Sales of products and rendering of services | 39,345,286.87 | 20,263,330.33 |
| Joint ventures | Sales of products and rendering of services | 6,434,024.76 | 2,000,114.83 |
| Associated companies | Sales of products and rendering of services | 250,870.35 | 20,709,343.81 |
| Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | Sales of products and rendering of services | 4,824,922.37 | 7,006,078.70 |
| Total | 18,607,001,424.45 | 22,344,931,360.98 |
(2) Related party lease
At the end of this year, the Company signed a housing lease contract with Subsidiaries of CETC with a leaseperiod of 27 months. On December 31, 2022, the Company confirmed right-of-use assets of RMB6,514,131.19and lease liabilities of RMB7,379,632.09. During the reporting period, the amount of interest on lease liabilitieswas RMB51,234.51.
(3) Guarantees with related parties
In the current reporting period, the Company has provided guarantees for its 31 subsidiaries in an amount notexceeding an equivalent of RMB17.90 billion (2021: RMB16.10 billion), including the joint liability guarantee forthe payment obligations on purchase from suppliers in an amount not exceeding an equivalent of RMB320 million(2021: RMB370 million), and the joint liability guarantee for the general credit limit applied from commercial banksand other financial institutions or other financing methods through agreed methods in an amount not exceeding anequivalent of RMB17.58 billion (2021: RMB15.73 billion).
(4) Funding from related parties
In April 2022, the Company held the 9th Meeting of the 5th Session of the Board of Directors, which consideredand approved the Proposal on Providing Financial Assistance to Seven Innovative Subsidiaries. Under this proposal,the Company will offer a loan of up to RMB1,200 million RMB1,500 million, RMB300 million, RMB700 million,RMB200 million, RMB300 million and RMB300 million to Hangzhou HikAuto Technology Co., Ltd. ("HikAutoTechnology"), Wuhan HikSemi Technology Co., Ltd. ("Wuhan HikSemi"), HikFire Technology, HikMicro Sensing,HikImaging Technology, Rayin Technology and HikAuto Software, respectively. The loans are intended to meetthe operating capital needs of these innovative subsidiaries and the specific amount of a loan will be provided based
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
on the actual business needs of each subsidiary. The proposal was considered and approved by the shareholders'meeting of the Company on May 13, 2022. The validity period of the loan is 3 years from the date of proposalconsideration and approval by the shareholders' meeting of the Company, and the loan (balance) can be taken outseveral times during the validity period. The annual loan interest rate shall be determined by the parties to theagreement in accordance with the market-based principles without violating the relevant laws and regulations, andshall be subject to the specific contract. The entry into effect of the proposal shall automatically invalidate anyunused amount of the loan for 2021 as described below. In 2022, the Company lent a total of RMB4,058,597,035.23to these innovative subsidiaries, and recovered RMB3,969,815,977.03 with interest income totalingRMB31,573,270.34.
In April 2021, the Company held the 2nd meeting of the 5th session of the Board of Directors, deliberated andpassed the Proposal on Providing Financial Assistance to Five Innovative Business Holding Subsidiaries, andprovided related party borrowing limits of not more than RMB 500 million, RMB 500 million, RMB 200 million,RMB 100 million and RMB 50 million to Wuhan HikStorage, HikAuto Technology, HikFire Technology,Hangzhou Rayin Technology and HikImaging Technology, respectively. It will be used for each innovative businesssubsidiary to supplement the operating capital needs, and the specific loan amount will be provided according tothe actual business needs of each innovative business subsidiary. The proposal was deliberated and approved by theCompany's General Meeting of Shareholders on May 14, 2021, and the validity period of the related party loan limitis 3 years from the date of deliberation and approval by the Company's General Meeting of Shareholders, and theamount (balance) can be recycled in batches during the validity period. The annual borrowing interest rate offinancial assistance shall be determined through negotiation between the parties to the agreement without violatingrelevant laws and regulations, and the borrowing interest rate shall be determined in accordance with the principleof marketization, and the specific contract shall prevail. In 2021, the Company withdrew a total ofRMB1,354,700,000.00 for various innovation business subsidiaries, received RMB737,000,000.00, and received atotal interest income of RMB6,391,607.18.
In order to meet the R&D funding needs, China Development Bank and the Company signed long-term loancontracts with Hangzhou Systems, Hangzhou Rayin Technology, HikStorage Technology, HikMicro Sensing,HikRobot and HikAuto Software (hereinafter referred to as "R&D loan recipient"), subsidiaries of the Group. Underthe loan arrangement, the Company is the borrower, a R&D loan recipient is the recipient and China DevelopmentBank is the lender. A R&D loan recipient will apply for a loan from China Development Bank via the Companybased on its R&D project progress and loan needs. After approval by the bank, the loan will be allocated to therecipient via the Company. The borrowing period is from December 31, 2021 to December 2, 2026 and a floatinginterest rate is used for the loan. RMB287,020,000.00 of the Company's long-term receivables represented theborrowings applied by the R&D loan recipients as of December 31, 2022, and interest income of RMB5,118,686.47was recognized in 2022.
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
(5) Other related party transactions
Statement of capital deposits
Unit: RMB
| Related Party (Note) | 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 CETC | Deposit into (withdraw from) current deposits | (499,973,215.52) | 33,518.68 | 500,006,734.20 | 500,006,734.20 |
| Subsidiaries of CETC | Deposit into fixed deposits | - | 4,000,000,000.00 | - | 4,000,000,000.00 |
| Total | (499,973,215.52) | 4,000,033,518.68 | 500,006,734.20 | 4,500,006,734.20 |
Note: For the deposit that the Company deposited into China Electronics Technology Finance Co., Ltd., the depositinterest income was RMB 80,026,784.06 in 2022 (2021: RMB 80,001,932.23).
Statement of discounted note
In 2022, The face value of bank acceptance bill discounted by the Group to China Electronics Technology FinanceCo., Ltd. is RMB 33,564,209.39 (2021: nil). The face value of the discounted and expired bank acceptance bill isRMB 33,564,209.39 (2021: nil). Interest expense arising from discounting the notes amounted to RMB 241,747.39(2021: nil)
7. Receivables from Related Parties and Payables to Related Parties
(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 | 20,790,257,807.56 | - | 20,638,547,619.01 | - |
| Accounts receivable | Subsidiaries of CETC | 245,305,306.90 | 98,031,982.92 | 232,683,754.63 | 59,533,322.73 |
| Accounts receivable | Joint ventures | 2,379,952.00 | 101,147.96 | - | - |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Accounts receivable | Associated companies | 8,072,547.52 | 2,436,481.82 | 10,721,469.72 | 1,091,672.49 |
| Accounts receivable | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | 1,902,966.26 | 44,955.65 | 2,504,232.29 | 23,633.21 |
| Total | 21,047,918,580.24 | 100,614,568.35 | 20,884,457,075.65 | 60,648,628.43 | |
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Notes receivable | Subsidiaries of Hikvision | 35,619,298.47 | - | 37,441,937.40 | - |
| Notes receivable | Subsidiaries of CETC | 1,681,429.40 | - | 12,417,231.80 | - |
| Total | 37,300,727.87 | - | 49,859,169.20 | - | |
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Other receivables | Subsidiaries of Hikvision | 2,137,185,066.96 | - | 1,365,117,094.96 | - |
| Other receivables | Subsidiaries of CETC | 1,190,907.15 | 49,197.51 | 145,000.00 | 6,133.50 |
| Other receivables | Joint ventures | 228,543.65 | 1,508.39 | 104,182.74 | 906.39 |
| Total | 2,138,604,517.76 | 50,705.90 | 1,365,366,277.70 | 7,039.89 | |
| Item | Related party | Closing balance | Opening balance |
| Prepayments | Subsidiaries of Hikvision | 772,949.48 | 3,274,287.66 |
| Prepayments | Subsidiaries of CETC | 625,681.13 | 26,700.00 |
| Prepayments | Associated companies | - | 49,300,000.00 |
| Total | 1,398,630.61 | 52,600,987.66 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
| 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 Hikvision | 287,020,000.00 | - | - | - |
| Long-term receivables (including those due within one year) | Subsidiaries of CETC | 300,478.44 | 1,983.16 | 18,579,578.71 | 161,642.33 |
| Total | 287,320,478.44 | 1,983.16 | 18,579,578.71 | 161,642.33 | |
| Item | Related party | Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Dividends receivable | Subsidiaries of Hikvision | 85,323,007.51 | - | 22,910,404.14 | - |
| Total | 85,323,007.51 | - | 22,910,404.14 | - | |
(2) Payables to related parties
Unit：RMB
| Item | Related party | Closing balance | Opening balance |
| Accounts payable | Subsidiaries of Hikvision | 516,915,904.84 | 441,107,077.18 |
| Accounts payable | Subsidiaries of CETC | 6,494,664.60 | 5,000,503.43 |
| Accounts payable | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | - | 648,139.19 |
| Total | 523,410,569.44 | 446,755,719.80 |
| Item | Related party | Closing balance | Opening balance |
| Contract liabilities | Subsidiaries of Hikvision | 8,000,394.52 | 10,138,872.51 |
| Contract liabilities | Subsidiaries of CETC | 273,933.15 | 242,618.30 |
| Contract liabilities | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | - | 687.00 |
| Total | 8,274,327.67 | 10,382,177.81 |
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
| Item | Related party | Closing balance | Opening balance |
| Other payables | Subsidiaries of Hikvision | 667,461,756.46 | 793,064,398.78 |
| Other payables | Subsidiaries of CETC | 278,540.00 | 190,790.00 |
| Other payables | Joint ventures | 10,000.00 | 10,000.00 |
| Other payables | Associated companies | 2,040.00 | 9,312,040.00 |
| Other payables | Companies in which directors, supervisors, senior management, and related natural persons of the Company serve as directors | 100,000.00 | 100,000.00 |
| Total | 667,852,336.46 | 802,677,228.78 |
| Item | Related party | Closing balance | Opening balance |
| Lease liabilities (including those due within one year) | Subsidiaries of CETC | 7,379,632.09 | - |
| Total | 7,379,632.09 | - |
8. Supplementary Information to the Cash Flow Statement
(1) Supplementary information to the cash flow statement
Unit：RMB
| Supplementary information | 2022 | 2021 |
| 1. Reconciliation of net profit to cash flows from operating activities: | ||
| Net profit | 9,597,855,108.17 | 14,088,727,668.02 |
| Add: Assets impairment provision | 1,195,518.35 | 2,669,913.88 |
| Credit loss provision | 122,761,912.01 | 119,440,900.17 |
| Depreciation of fixed assets | 352,312,160.94 | 271,966,196.58 |
| Amortization of intangible assets | 30,908,858.01 | 42,715,421.78 |
| Depreciation of right of use assets | 51,303,066.27 | 35,547,052.78 |
| Amortization of long-term deferred expenses | 33,629,517.18 | 66,502,221.67 |
| Losses (gains) on disposal of fixed assets, intangible assets and other long-term assets | 2,215,205.61 | (30,917,301.16) |
| Financial expenses | 49,308,908.32 | 138,779,449.86 |
| Losses from change in fair value | 74,432,284.58 | 48,725,796.17 |
| Investment income | (387,283,344.13) | (237,198,739.71) |
| Share-based payment through equity settlement | 334,727,555.19 | 238,045,712.93 |
| Decrease (increase) in restricted funds | (38,774,781.68) | 195,005,634.49 |
| Decrease (increase) in deferred income tax assets | 108,152,533.65 | (171,826,866.94) |
| Decrease (increase) of inventories | 58,285,769.30 | (145,289,110.09) |
Notes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
| Supplementary information | 2022 | 2021 |
| Increase in operating receivables | (676,508,556.07) | (651,204,315.31) |
| Increase (decrease) in operating payables | (288,706,205.97) | 1,539,868,467.24 |
| Increase in deferred income | 97,602,421.09 | 243,243,770.27 |
| Net cash flow from operating activities | 9,523,417,930.82 | 15,794,801,872.63 |
| 2. Major investing and financing activities not involving cash receipt and payment: | ||
| 3. Net change in cash and cash equivalents: | ||
| Closing balance of cash | 27,771,201,246.40 | 26,639,582,696.49 |
| Less: Opening balance of cash | 26,639,582,696.49 | 23,264,693,578.70 |
| Add: Closing balance of cash equivalents | - | - |
| Less: Opening balance of cash equivalents | - | - |
| Net increase in cash and cash equivalents | 1,131,618,549.91 | 3,374,889,117.79 |
(2) Composition of cash and cash equivalents
Unit：RMB
| Item | Closing balance | Opening balance |
| I. Cash | 27,771,201,246.40 | 26,639,582,696.49 |
| Including: Cash on hand | 360,563.22 | 261,314.61 |
| Bank deposit for payment at any time | 27,609,458,740.05 | 26,639,219,718.83 |
| Other monetary funds for payment at any time | 161,381,943.13 | 101,663.05 |
| II. Cash equivalents | - | - |
| III. Closing balance of cash and cash equivalents | 27,771,201,246.40 | 26,639,582,696.49 |
On December 31, 2022, the Company’s closing balance of other monetary funds was RMB 217,063,841.70(December 31, 2021: RMB 17,008,779.94), of which RMB 55,681,898.57 were various guarantee deposits(December 31, 2021: RMB 16,907,116.89), not cash or cash equivalents.
Hikvision 2022 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2022 to December 31, 2022
XVI. Supplementary Information
1. Details of Current Non-recurring Gains and Losses
Unit：RMB
| Item | Amount | Description |
| Profit or loss from disposal of non-current assets | (18,617,582.10) | / |
| 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) | 726,269,569.92 | / |
| Investment gains from disposal of subsidiaries and other business units | 3,550,851.71 | |
| 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 (losses) | (99,112,871.09) | / |
| Other non-operating income and expense except the items mentioned above | 72,446,008.81 | / |
| Impact of income tax | (74,392,826.66) | / |
| The impact of minority equity | (103,496,968.14) | / |
| Total | 506,646,182.45 | / |
2. Return on Net Assets and Earnings per Share
The return on net assets and earnings per share have been prepared by Hangzhou Hikvision Digital Technology Co.,Ltd. in accordance with the Information Disclosure and Presentation Rules for Companies Making Public Offeringof Securities No. 9 – Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revised in 2010)issued by China Securities Regulatory Commission.
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 | 19.62 | 1.370 | 1.370 |
| Net profit excluding non-recurring items of profit or loss attributable to ordinary shareholders of the Company | 18.85 | 1.315 | 1.315 |
Section XI 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 15, 2023
Note:
This document is a translated version of the Chinese version 2022 Annual Report ("2022年年度报告"), and the published announcements in the Chinese version shall prevail. The complete publishedChinese 2022 Annual Report may be obtained at www.cninfo.com.cn.