Hangzhou Hikvision Digital Technology Co., Ltd.
2021 Annual Report
April 16
th2022
To ShareholdersThe year 2021 marks the 20
th
anniversary of Hikvision’s establishment and the 12
thanniversaryof its listing. Through 20 years of efforts, the Company has accumulated a wealth of successfulexperience in a number of technological segments, and is now positioning its field of business as theArtificial Intelligence of Things (AIoT). We believe that the company will continue to grow rapidlyin the next 10 years with the development of AIoT.
Over the past few years, the company has been bearing pressures from reverse globalizationand has been making great efforts to offset some of the negative effects, in order to enable itsproducts to serve more customers in the global market. At present, the company has established 66sales branches and service offices, as well as 3 manufacturing plants and 11 logistics centers in theoverseas market, operating business in 155 countries and regions where we have sales and servicepartners. Dedicated to build ourselves into a global company, Hikvision will continue progressingpersistently despite all the difficulties we may encounter. We believe that global economicintegration is the best option for all people in the world.
Technological innovation is the driving force behind Hikvision’s development, and only throughcontinuous technological innovation can we realize sustainable development. Thanks to the consistentpursuit of technological innovation, Hikvision has achieved impressive results in the past 20 years.The company went public and raised RMB 3.4 billion in May 2010. In the past 12 years since, it hasinvested a total of RMB 35.4 billion in research and development, accumulated RMB 89.1 billion innet profits attributable to shareholders, and (will have) paid an accumulated dividend of RMB 43.2billion to shareholders. From 2017 to 2021, Hikvision’s R&D investment accounted for 7.62%,
8.99%, 9.51%, 10.04% and 10.13% out of the total revenue respectively, with the proportionincreasing year by year. In the next 10 years, the company will continue to increase its R&Dinvestment. We believe that technological innovation is the only way to better create value for ourcustomers and reward our shareholders.
Since 2015, Hikvision has been encouraging internal innovation and intrapreneurshipthrough establishing a co-investment scheme, establishing eight innovative businesses over the
years. In 2021, there were five innovative businesses with revenue exceeding RMB one billion,realizing a positive net profit. Among them, EZVIZ Network has submitted the IPO application, andthe suggestive announcement on the spin-off of HikRobot for an independent listing has also beendisclosed with relevant preparatory work currently underway. We believe that only when we sharethe profits with our employees can we unite the whole team working towards the same direction,and only by motivating the vitality of employees’ innovation and entrepreneurship can the companycontinue to thrive.
Hikvision has built up a strong customer base and technology accumulation in the field of AIoT.As an effort to better create value for customers and enhance customer satisfaction, we are constantlystriving to improve the company’s operational capabilities and efficiency, while persevering intechnological innovation. With the improvement of our operational capabilities and efficiency as along-term goal, we will keep up with the changing times and continue to build, optimize and refineour systems. We believe that there are no gains without pains.
In the future, we will pace ourselves to encounter the challenges ahead and accept them as partof the evolution of the company. Being open, transparent, and honest as always, we will make bestefforts to resolve uncertainties brought by these challenges. We believe that adversity will make usstronger.
Finally, we’d like to extend our sincere thanks to all shareholders for your trust and support tothe Company's management team! And express our special thanks to the public shareholders for theirtrust and support for the management team over the past 12 years!
See far, go further!
Board of Directors of Hangzhou Hikvision Digital Technology Co., Ltd.
April, 2022
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 of9,433,208,719 shares, the Company proposed to distribute cash dividend of RMB 9 (tax inclusive)per each 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 2021 Annual Report (“2021年年度报告”), and the published announcements in the Chinese version shall prevail. The complete publishedChinese 2021 Annual Report may be obtained at www.cninfo.com.cn.
Please read the full annual report and pay particular attention to the following risk factors:
1) Global COVID-19 epidemic risk: The global threat of COVID-19 epidemic is difficult to subside, and
epidemic prevention has a direct impact on the economic development. The Company will pay closeattention to the changes in the epidemic and respond in a timely manner. If the epidemic causes thedomestic and foreign economic or business environment to deteriorate, the adverse impact on theCompany's business will increase accordingly.
2) Economic downside risk: The current domestic and foreign economic environment is complex and
volatile. The domestic macroeconomic growth has entered a new stage of medium-low growth. If demandrecovers slowly and investment growth is sluggish, it will bring adverse impacts on the Company'sbusiness development.
3) Geopolitical environment risk: The current global geopolitical uncertainty has greatly increased, and
the economic and social impact caused by local wars and confrontations is huge. The Company'soperations in the countries and regions where the conflict is located may be adversely affected.
4) Global business risks: The Company operates in more than 150 countries and regions around the world.The potential risks such as the trend of deglobalization, economic fluctuation and debt default around theworld are difficult to eliminate, so the Company’s overseas business operations may be adversely affected.
5) Supply chain risks: The global supply system is suffering from a variety of adverse impacts, such asrising commodity prices, restrictions on global production and logistic, and technological competitionamong major powers. The Company has been making efforts to enhance management for our supply chainand optimize inventory adjustment and control. However, if systemic risks arise in the global supply chain,the Company’s operating capabilities may be affected.
6) Legal and compliance risk: The world's multilateral trading system is facing adverse impacts. The lawsand regulations of various regions that need to be complied with for business activities are verycomplicated. China and overseas countries have stricter data supervision and business compliancerequirements. If the Company's legal compliance capabilities cannot keep up with the situation, it willbring adverse impacts on the Company's operations.
7) Risk of exchange rate fluctuation: The Company carries out operations in various countries and regionswith different currencies, mainly settled in non-RMB currency (mainly in USD). Exchange rate
fluctuations could have impact on foreign exchange exposures arising out of sales, procurement andfinancing, which could likely affect the profitability level of the Company.
8) Risk of technology upgrade: Technologies such as artificial intelligence (AI), big data, cloud computing,and edge computing are developing rapidly. The speed of technology diffusion is accelerating. If theCompany is unable to closely track and adapt to the changes in cutting-edge technologies, or fails toquickly realize business innovation, the risk of uncertainty in the Company's future development willincrease.
9) 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 the stable operation in history, and the financing cost is low. If the liquidity riskincreases, it will adversely affect the Company’s account receivables.10) Risk of internal management: The continual expansion of business scale, the continuous increase of
new 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 and higher requirements on the Company management system. The Company’s sustainabledevelopment will face certain risks if the management level fails to proportionally address the Company’sbusiness expansion.
11) Risk of cybersecurity: The Company has always attached great importance and taken active measuresto enhance cybersecurity performance of our products and systems. However, in the context of Internetapplications, there is still a possibility of deliberate attempts, including computer viruses, malicioussoftware, hacker and others to intentionally attack our systems or products, causing cybersecurity issues.
12) 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 ...... 15
Section IV Corporate Governance ...... 139
Section V Environmental and Social Responsibility ...... 182
Section VI Significant Events ...... 183
Section VII Changes in Shares and Information about Shareholders ...... 210
Section VIII Information of Preferred Shares ...... 224
Section IX Bonds ...... 225
Section X Financial Report ...... 226
Section XI Documents Available for Reference ...... 402
Definitions
Term | Definition |
Reporting Period | From January 1st 2021 to December 31st 2021 |
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 Co., Ltd. (According to the context, also refers to the corresponding business) |
HikMicro, Micro Sensing, Thermal imaging business | Hangzhou Hikmicro Sensing Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
HikSemi, HikStorage, Storage business | Wuhan Hikstorage Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
HikImaging | Hangzhou Hikimaging Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
HikFire | Hangzhou Hikfire Technology Co., Ltd. (According to the context, also refers to the corresponding business) |
Rayin, HikSecurityCheck | Hangzhou Rayin Technology Co., 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 Base | 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. |
Innovative Business | A long investment cycle, business prospects uncertain, has the high risk and uncertainty, in need for direct or indirect investment in exploration, in order for the Company to timely enter into new areas of business. Initially disclosed in Announcement about Management Measures for Core Staff Investment in Innovative Business (《核心员工跟投创新业务管理办法》) (www.cninfo.com.cn). In this report, innovative business also refers to EZVIZ, HikRobot, HikAuto, HikMicro, 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 | ||
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 | Zhou Xinyi |
Address | No. 518 WuLianWang Street, Binjiang District, Hangzhou | No. 518 WuLianWang Street, Binjiang District, Hangzhou |
Tel. | 0571-88075998; 0571-89710492 | 0571-89710492 |
Fax | 0571-89986895 | 0571-89986895 |
hikvision@hikvision.com | hikvision@hikvision.com |
III. Information Disclosure and Place of the Report
Media designated by the Company for information disclosure | Securities Times, China Securities Journal |
Website specified by CSRC for release of the Annual Report | www.cninfo.com.cn |
Place where the Annual Report is available for inspection | Office of the Board of Directors of the Company |
IV. Company Registration and Alteration
Organization code | 91330000733796106P |
Changes in principle business activities since the Company was listed (if any) | During the reporting period, the Company added the following to the business scope: manufacturing of special labour protective supplies; sales of special labour protective supplies; sales of digital cultural and creative technological equipment; parking lot services; digital cultural and creative content application services; environmental protection monitoring; production of Class II and Class III radiation devices; sales of Class II and Class III radiation devices; radioisotope production (except for short-half-life radioactive pharmaceuticals for medical use); sales of Class II, Class III, Class IV and Class V radioactive sources; goods import and export and technology import and export. At the same time, the Company adjusted the 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 for short-half-life radioactive pharmaceuticals for medical use); sales of Class II, Class III, Class IV and Class V radioactive sources; all kinds of engineering and construction activities; goods import and export and technology import and export (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 service consumption robots; manufacturing of industrial robots; manufacturing of robots for special operations; sales of intelligent robots; 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 labour protective supplies; sales of special labour protective supplies; 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; 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; for-profit private training institution engaged in science and technology training (excluding subjects and language cultural education and training for primary and secondary school students). (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 InformationAccounting 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, Gao Sunchao |
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
VI. Key Accounting Data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
Unit: RMB
2021 | 2020 | YoY Change (%) | 2019 | |
Operating income (RMB) | 81,420,053,539.27 | 63,503,450,891.78 | 28.21% | 57,658,110,065.22 |
Net profit attributable to shareholders of the Company (RMB) | 16,800,411,032.05 | 13,385,526,714.15 | 25.51% | 12,414,587,690.45 |
Net profit attributable to shareholders of the Company excluding non-recurring gains and losses (RMB) | 16,444,723,630.97 | 12,805,839,276.44 | 28.42% | 12,037,518,321.42 |
Net cash flows from operating activities (RMB) | 12,708,524,686.99 | 16,088,156,566.67 | -21.01% | 7,767,720,171.14 |
Basic earnings per share (RMB/share) | 1.810 | 1.445 | 25.26% | 1.343 |
Diluted earnings per share (RMB/share) | 1.806 | 1.444 | 25.07% | 1.343 |
Weighted average ROE | 28.99% | 27.72% | 1.27% | 30.53% |
At December 31st 2021 | At December 31st 2020 | YoY Change (%) | At December 31st 2019 | |
Total assets (RMB) | 103,864,543,195.18 | 88,701,682,384.20 | 17.09% | 75,358,000,240.29 |
Net assets attributable to shareholders of the Company (RMB) | 63,460,886,665.26 | 53,794,311,162.05 | 17.97% | 44,904,033,876.83 |
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) | 9,433,208,719 |
Fully diluted earnings per share calculated with the latest share capital
Fully diluted earnings per share (RMB/share) calculated with the latest share capital | 1.781 |
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 | 2021 | 2020 | 2019 |
Profits or losses from disposal of non-current assets (including the write-off for the impairment provision of assets) | 26,069,469.18 | -5,836,675.36 | -2,053,875.22 |
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) | 576,619,421.07 | 571,403,657.30 | 413,790,429.84 |
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 | - |
Net gains and losses from beginning of the reporting period to the merge date for the subsidiary merged involving enterprises under common control | - | - | -885,138.65 |
Profits and losses attributed to change in fair value for held-for-trading financial assets and held-for-trading financial liabilities; and investment income from disposal of held-for-trading financial assets, held-for-trading financial liabilities, and other available-for-sale financial assets, excluding the effective hedging business related to the regular business operation of the Company. | 75,408,081.63 | 98,373,869.75 | 26,872,639.66 |
Investment losses on disposal of subsidiaries and other business units | -169,184,641.43 | - | - |
Other non-operating income and expenditures except the items mentioned above | -1,471,007.77 | 74,007,631.14 | 52,155,026.79 |
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
Operating income | 13,988,385,531.58 | 19,913,712,836.52 | 21,727,169,122.78 | 25,790,786,048.39 |
Net profit attributable to shareholders of the Company | 2,169,440,312.25 | 4,311,984,341.14 | 4,484,216,504.72 | 5,834,769,873.94 |
Net profit attributable to shareholders of the Company excluding non-recurring gains and losses | 2,022,056,316.46 | 4,199,420,311.52 | 4,472,421,937.46 | 5,750,825,065.53 |
Net cash flows from operating activities | -2,018,107,114.23 | 3,980,960,886.38 | 1,969,077,130.08 | 8,776,593,784.76 |
Less: Impact of income tax | 29,930,824.64 | 109,931,807.07 | 86,193,406.35 |
Impact of the minority interests (after tax) | 122,987,029.92 | 48,610,431.55 | 26,616,307.04 |
Total | 355,687,401.08 | 579,687,437.71 | 377,069,369.03 |
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
After more than 20 years of development, the Internet of Things (IoT
) is integrated with AI (ArtificialIntelligence) to form the AIoT. When devices are able to perceive changes, connect with each other, and interactwith people and things, they could bring about changes like never before. And those changes are happening rightnow.
AIoT is a fundamental capability that provides the possibility of connection and interaction between peopleand things as well as between things. This possibility is not exclusive to any industry, but there are pioneer, typicalindustrial scenarios in AIoT, such as intelligent security, industrial IoT, smart home, etc. We believe that AIoT willset off a wave of technological innovation that will sweep across many industries. And armed with technologyaccumulations in multiple fields and years of deep engagement in the industrial market, we are confident thatHikvision will be able to seize the opportunities brought by the rapid development of AIoT. Through constantexpansion and iteration of the industrial AIoT application, Hikvision continues to improve the business organizationfor public services, enterprises, and SMEs, and has successively developed innovative businesses such as EZVIZNetwork, HikRobot, HikMicro, HikAuto, HikSemi, HikFire, Rayin and HikImaging, with a focus on theimplementation of businesses for large-scale scenarios.Generally speaking, the Internet of Things is divided into three layers, namely the perception layer, the networktransmission layer and the application layer. Starting with video technology and driven by technological innovation,Hikvision continues to expand and deploy in such fields as visible light, millimeter wave, infrared rays and X-raysetc., while integrating sound, temperature, humidity, pressure, magnetic and other perception means to create acomprehensive, multi-dimensional perception technology platform to provide technical support for AIoT on theperception layer. The Company focuses on the external conditions of network transmission as it is not a major areaof business for Hikvision. In terms of the application layer, the three business groups (3 BGs) and innovativebusinesses of Hikvision are working together with industrial partners to explore and promote the AIoT applications.
IoT:Internet of Things.
As the application scenarios of AIoT are highly fragmented, products and solutions will continue to be defined byscenarios as we work to meet user demands for a long time in the future. A rich and comprehensive set of hardwareand software products are needed to support the scenario-based demands of AIoT. In the future, Hikvision will stickto its product R&D approach combining generic baselines with customizations, identify the common demands ofvarious segments and fields in the process of expanding the market, and pushes further the modularization ofproducts and the optimized combination of modules, thereby providing personalized, customized and highlyconverged IoT solutions in an efficient and cost-effective manner.In the past two decades, Hikvision has witnessed and participated in the development and expansion of thesecurity industry. Intelligent security is a major battleground for the implementation of AIoT. In the future,Hikvision is committed to serving various industries through its cutting-edge technologies of machine perception,artificial intelligence, and big data, leading the future of AIoT:Through comprehensive machine perceptiontechnologies, we aim to help people better connect with the world around them; With a wealth of intelligent products,we strive to identify and satisfy diverse demands by delivering intelligence at your fingertips; Through innovativeAIoT applications, we are dedicated to empowering every individual to enjoy a better future by building anintelligent world that is more convenient, efficient and secure.
2. Core Business Capabilities
Hikvision, focusing on technological innovation in IoT perception, AI and big data, offers serialized AIoTproducts integrating software and hardware, cloud and edges, IoT and information network, and big data and AI,with the whole-process service capability for building complex large-scale AIoT systems. Over the past 20 years,Hikvision has expanded its coverage of perceptive technology from visible light to millimeter wave, infrared rays,X-rays and sound wave etc., widened its product range from IoT perceptive devices to AIoT products, ITinfrastructure products, platform service products, data service products and application service products which arefully integrated with AI and big data technologies. As a result, the Company has extended beyond comprehensivesecurity to such fields as smart home, digital enterprises, intelligent industries and smart cities. As a productcompany equipped with system capabilities, Hikvision builds an open and cooperative ecosystem with businesscovering more than 150 countries and regions around the world.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 systemcapabilities 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.In the field of AIoT, Hikvision has been focusing on technological innovation, enriching product systems andbuilding system capability for many years, with its technological capabilities, product capabilities and systemcapabilities complementing each other and growing together.
2.1 Integration of Software and Hardware: Constant Mutual Promotion between Software and HardwareProduct SystemsIn recent years, Hikvision has unified the software development system, standardized the hardwaredevelopment process, provided a unified embedded software platform for various equipment, and unified interfacespecifications for networking accessing and operation and maintenance management of various equipment, usheringthe development of software and hardware products into a benign iterative cycle.
2.1.1 Unified Equipment Software Platform
Various hardware product types, diversified product operating environments, and different product operationand maintenance management ways have posed major challenges to the development of the IoT business. In thiscontext, Hikvision has launched HEOP (Hikvision Embedded Open Platform) to support containerized independentdeployment and flexible scheduling of algorithms or components for the sustainable development of AIoT.
Hikvision’s new products are all developed based on this platform. On this unified embedded software platform,all AIoT equipment of Hikvision will feature the same software foundation to avoid the differences between varioushardware development and operating environments, and support function changes of hardware products through
software upgrades to improve development efficiency significantly.In addition, partners can realize iterative development of intelligent application functions of AIoT equipmentbased on HEOP efficiently, and work with Hikvision to create value for customers.
2.1.2 Unified Software Support for Equipment
Hikvision provides various AIoT equipment with unified access, networking, operation and maintenancesupport capabilities through a unified intelligent perception networking platform, making the large-scale AIoT areality.The unified device access framework supports the connection of various video equipment, multi-dimensionalsensing equipment, and intelligent equipment. With open interfaces and protocols, various AIoT equipment canaccess Hikvision’s software platforms. And the development of equipment network access drivers is relativelyseparated from application software, that is, we can set up the platform first and then develop device drivers.
Networking is possible in a large scale to support a variety of IoT perception equipment in line with nationalstandards and multi-industry standard specifications. And the integrated operation and maintenance service platformis applicable to a variety of IoT devices and IT equipment.
Moreover, partners, through the interface provided by the intelligent perception networking platform, canconnect other manufacturers’ IoT equipment to the same software platform.
2.1.3 R&D Synergy between Software and Hardware
At Hikvision, the R&D of software or hardware meeting customer requirements, application scenarios,industry characteristics and other demands is not carried out separately in most cases. Offering the best solutions tomeet users’ demands is our top priority. So, you will find that the hardware development demands may be completedby the software R&D team, while the software development demands may be undertaken by the hardware R&Dteam. We have formed a synergy between these two R&D types with the two teams supporting each other. Whencommunicating with users on business needs, software personnel will advise them on the hardware equipment theyneed; and for the newly developed intelligentequipment, the software team will develop application software thatmaximizes their value.
Software demand drives hardware R&D. When understanding the demands of relevant industries anddesigning software functions, the business team will analyze the demands for hardware products at the same time,
and timely feedback to the hardware products and AI algorithm team.Hardware capabilities drives software development. Leveraging Hikvision’s strong hardware research anddevelopment capabilities, the hardware team is committed to introduce new hardware devices. The software team,through in-depth communication with the hardware team, keeps abreast of the latest developments in hardwareproducts, and rolls out new application software R&D in a timely manner to maximize the functions of hardwareequipment and reflect the application value of the equipment.
2.2 Cloud-Edge Fusion: the Promotion of Perception Fusion Empowering Platform has AchievedRemarkable Progress
2.2.1 Perception Fusion Empowering Platform: Realizes Intelligent Fusion and Utilization of Front and BackEnds
Aiming at “co-construction of locations, resource sharing, algorithm co-management, computing powerintegration, and service sharing”, Hikvision’s perception fusion empowering platform is geared towards the fusionand utilization of industrial or urban IoT perception resources. As for perception resource construction, it supportsaccess networking, lean management and planning and deployment of front-end devices to realize “co-constructionof locations”. For perception resource utilization, the label association, fast retrieval, and on-demand access ofperception data are readily available for “resource sharing”. In terms of algorithm management, the open training,unified management, and flexible programming of intelligent algorithms together make “algorithm co-management”possible. In the aspect of intelligent computing power integration, the platform supports the unified management,load monitoring and reasonable scheduling of computing power resources to achieve “computing power integration”.Lastly, in terms of intelligent analysis service, there are directory publishing, business application and serviceconfiguration of intelligent services for “service sharing”.Hikvision’s perception fusion empowering platform provides competence center, application center,programming center, investigation and judgment center, operation center, and management center. The competencecenter provides the classification and search services of perception resources, and releases intelligent servicecapabilities; the application center serves for the application and review management of perception resources andintelligent analysis services; the programming center is for scene tag management, scene configuration, andintelligent analysis algorithm programming for the perception resources of the IoT; the investigation and judgmentcenter features functions such as automatic push of intelligent analysis events, manual investigation and judgment,
event statistics and retrieval; the operation center offers intelligent service applications, intelligent service taskmonitoring, execution statistics, regular operation reports and other functions to business managing personnel; themanagement center is characterized by management functions covering background resource managementscheduling platform, IoT resources and algorithm resources for technical operation and maintenance personnel.
2.2.2 AI Open Platform: Makes Front-End Intelligent and Definable
In the process of industrial upgrading, there are a lot of intelligent application demands, which are closelyrelated to users’ business scenarios. Hikvision’s AI open platform, as a one-stop algorithm training platform forfragmented industrial application scenarios, is capable of training high-accuracy algorithms based on small sampledata. Easy to operate, the AI open platform can generate targeted intelligent algorithms through sample datacollection, online data labeling and online algorithm training, which can then be deployed to Hikvision’s varioushardware devices.In 2021, the AI open platform has been enhanced with a number of core capabilities: the launch of voiceclassification, text recognition and data intelligence marks the expansion of its open platform capabilities fromvisual capabilities to multi-modal capabilities; the launch of self-learning enables users to continuously improvealgorithm accuracy by using data generated in actual use without calibration; the launch of programming platformhas further lowered the barrier to entry by equipping the platform with low-code development capability for complexintelligent applications.By the end of 2021, the AI open platform has served more than 8,000 enterprise users, generated 50,000 modelsand implemented 4,000 projects in total.
2.2.3 The Self-Learning System: Support the Autonomous Improvement of Algorithm AccuracyCurrently, most AI algorithms are based on supervised learning and require a lot of manpower to annotate data.Labeled training data is finite and incomplete, but real-world scenarios for algorithm deployment are characterizedby infinite possibilities.Hikvision has built a self-learning system that can autonomously screen, annotate and train real data inapplication scenarios without human intervention, continuously improving the accuracy of algorithms and evolvingon its own. The system supports both cloud and edge deployment and co-evolves on the two ends. At the edge, inparticular, Hikvision launched the first self-learning device with ultra-low power consumption—less than 15watts—based on domestically made chips in the industry. In the perimeter prevention application of a steel mill, thefalse alarm rate was reduced by 97% within 10 months after the self-learning algorithm was deployed. The relatedtechnology has won two championships in the autonomous learning/continual learning competition of theInternational Conference on Computer Vision (ICCV).
Self-learning products applicable to perimeter prevention, urban management (roadside stalls, illegalconstruction projects, manhole cover anomalies and etc.) and other scenarios have been released. Hikvision believesthat through self-learning technology, machines can be endowed with the ability to evolve on their own, so that themore the system is used, the smarter and more user-friendly it gets.
2.2.4 Algorithm Database: Provides a Basis for Algorithm Reuse
Hikvision’s algorithm database manages algorithms of different vendors, different functions, and differentforms in a unified way, providing a basis for the reuse of intelligent algorithms.Formulating a complete algorithm description specification, Hikvision’s algorithm database can describe andmanage the name, type, function, technical parameters, application scenarios, operating environment and othercharacteristics of the algorithm, so as to provide the appropriate technical environment or scheduling parameters todeploy, arrange, and manage algorithms, and work together with the resource management scheduling platform torealize the unified management of intelligent algorithms and on-demand scheduling.
2.3 Fusion of IoT and Information Network: Data Resource Platform Continues to Play an Important Rolein Multiple Industries
Hikvision’s iDatafusion platform has been applied and promoted in various fields such as public safety, trafficmanagement, bus scheduling, water conservancy and water affairs, natural resources, financial anti-fraud, andcampus management. Through the fusion, management, mining and service of perception data and business data, itprovides users with data models and applications, and meets users’ business application needs.
2.3.1 iDatafusion Platform: Brings Out a Complete Product System
Hikvision’s iDatafusion platform provides users with data integration, data processing, data analysis, datasharing, data services, and model repository capabilities.
The data resource platform provides data integration tools such as data integration workbench, general datacollector, data exploration, data definition and data simulation, etc., data processing tools such as data developmentworkbench, data desensitization and quality inspection, etc., data analysis tools such as BI
visual analysis, datamining engines, knowledge graphs, data cubes, and space-time engines, etc., data sharing tools such as API(Application Programming Interface) gateways, data cascades, etc., and data service capabilities such as datacatalogs, IoT catalogs, API catalogs, data subscriptions, data exchanges, etc. Among them, data mining engines andknowledge graphs together constitute the intelligent cognitive open capabilities based on the AI open platform, andthe data analysis operators and data models formed thereby can be further utilized by other analysis tools such asthe data cubes.
To effectively improve the quality of IoT data, Hikvision advocates IoT data management from the source, andprovides comprehensive management applications for IoT elements, offering a series of management tools such asequipment management, space calibration, and transportation unit management; to better serve industries, we alsoprovide a series of optional data service product add-ons packages such as perception data service, multi-dimensional data fusion service, general application data service, industry application data service, etc., to elevatethe efficiency of application development based on the data resource platform.
2.3.2 Model Repository: Provides a Basis for Model Reuse
With models as the granularity, Hikvision’s model repository provides unified data model deliverables
BI:Business Intelligence.
description specifications to manage the process or task of data tools such as data integration workbench, datadevelopment workbench, data mining engines, data cubes, BI visualization analysis, and API gateways associatedwith models. Possessing such capabilities as model release, version management, information inquiry, statisticalanalysis, and integrated deployment to serve all 3
rdparties developing models based on tools of the iDatafsionplatform, this repository can facilitate model reuse between various projects.The final deliverable of the data model can be the dataset, API service, or BI visualization chart that supportsthe application. A data model can be used for multiple applications, and an application can rely on the support ofmultiple data models.The model repository functions as a foundation for the reuse of data models in multiple application sites.
2.4 Big Data-Intelligence Fusion: Intelligent Application Open Platform Empowers More Industries
2.4.1 Intelligent Application Open Platform: Support Universal Intelligent Application Scenarios
Hikvision has set up the intelligent application open platform for edge node applications, edge domainapplications, cloud center applications, and Internet operation applications respectively, to support universalintelligent application scenarios.Edge Node Hikvision Embedded Open Platform (HEOP): HEOP has been connected with the HikvisionInfocloud application market in 2021, complete with processes for partner admission, APP development, APPtransaction and APP deployment. By developing, listing and trading APPs online, our developer partners providevalue-added services for device users. Once the device is added to the Infocloud Platform, users will be able tomanage and control the device for the ordering, deployment and use of APPs on a mobile terminal. Under the HEOParchitecture, all kinds of hardware will be containerized and various algorithms generated on demand and switchedfreely. Developers can also use IDE tools with built-in APP code templates to deploy the development environmentwith just one click and complete model tuning and packaging. Hikvision continues to host HEOP developer training
camps to help ecological partners reach thousands of industries with products and applications by virtue of theCompany’s platform capabilities.
Edge Domain Intelligent Application Platform (Hikvision iSee): Provides a development framework foredge domain intelligent applications, and general service capabilities that can be integrated into this framework,including video live view and playback, access control, video intercom, elevator control and other connectedperception capabilities and video intelligent analysis functions, in addition to a number of optional commonfunctional components. Developers can further develop dedicated components that meet specific applicationrequirements on this basis.
Cloud Center Intelligent Application Platform (Hikvision iFar): Provides a development framework forcloud center intelligent applications, and general service capabilities that can be integrated into this framework,including comprehensive data intelligence application support capabilities such as IoT perception, intelligentanalysis, and big data analysis. Developers can further develop dedicated components that meet specific applicationrequirements on this basis.
Internet operation application open platform (Hikvision Infocloud): Based on EZVIZ cloud, providesbusiness operation service support capabilities for cities and industries, and a public Internet underlying platform(supporting the access and management of hundreds of millions of devices) and Internet-based high-concurrencybusiness services for industry users. The tenant platform integrates shared service units such as resource servicesand user services for the rapid up integration by business platform; the operating platform mainly delivers productservices, project services, etc., for operators to manage products and projects; intelligent services support people-vehicle identification, OCR text recognition, intelligent voice recognition, AI training service, data annotation,
intelligent application engine, etc. So far, we have provided cloud-based platforms for online business operation formore than ten fields, including parking operation, smart community operation, body temperature screeningoperation, fire protection operation, intelligent waste classification management, vehicle safety management andonline cloud-based court trials etc.
2.4.2 Component Database: Provides a Basis for Software Reuse
Hikvision’s unified software technology system supports the “architecture + component” development model.And our component database has gathered over 4,800 components of various types for four developmentarchitectures.
Hikvision’s component database manages the component development of internal software development teamsaround the world in a unified manner to avoid repeated component development plans, and combine and dividecomponents with repeated functions, thereby reducing development and maintenance costs.
The Hikvision component database, as an alternative source for software function reuse, offers a large numberof common functional components which support multiple development frameworks at the same time. Developerscan further develop dedicated components that meet specific application requirements on this basis, and use thetools provided by Hikvision’s unified technology system to package, deploy and manage components. The softwaredevelopment process based on Hikvision’s unified software technology system can be boiled down to “selectingarchitecture + selecting components + configuring components + developing new components + integration”,thereby improving the consistency and compatibility of the software released by us while ensuring high softwarequality.
2.5 Systems Engineering: Undertake the Engineering Implementation of Large-Scale Complex IoT System
Compared with regular IT systems, AIoT systems are characterized by high fragmentation, difficulties in front-end survey and design, difficulties in construction process management, multiple system-integrated elements, anddifficulties in operation and maintenance, etc. As a result, problems such as uncontrollable project duration andconstruction quality have been found in the implementation of small-scale AIoT systems, let alone the engineeringcomplementation of large-scale complex AIoT systems.
Looking at the construction of intelligent industries and smart cities in recent years, the scale of AIoT systemshave been constantly expanding. Provincial-level forest fire prevention, water conservancy supervision, border
control and other industrial construction projects, as well as city-level construction projects such as smart cities,safe cities and Xueliang projects, continue to emerge. Engineering projects like these require a construction team ofhundreds or even thousands of people, with a wide range of construction operations, multiple types of front-endperception devices and complex intelligent application functions. In other words, we have to upgrade the Company’sAIoT system engineering implementation capabilities to the next level.For this reason, Hikvision has been explicitly and constantly required by users to directly undertake the totalintegration task of ultra-large-scale complex AIoT system projects in recent years. And in response to suchrequirements, Hikvision makes full use of its advantages in AIoT products and unified software technology systemsas well as its technical service teams distributed all over the country, and provides whole-process services fromsystem design and development, system project implementation to system operation and maintenance managementfor the implementation of some large-scale complex AIoT systems engineering projects based on project scale,system complexity and the degree of urgency of users’ demands.Hikvision is capable of undertaking the total integration of large-scale projects thanks to the Company’s unifiedsoftware technology system that has been fully built. Based on the component-based development model, thesoftware of large-scale projects can be developed through distributed collaboration and integrated efficiently by theheadquarters and regional teams; based on the unified device access framework, the Company’s own products canbe quickly integrated with third-party IoT perception products; based on Hikvision’s iDatafusion platform, it canquickly integrate users’ existing multi-source heterogeneous perception data and business data, and providegovernance services of perception data and business data at the same time; based on the Intelligent ApplicationOpen Platform, intelligent application systems involving multiple algorithms, multiple roles and multi-terminallogin can be quickly built; based on the Integrated Operation and Maintenance Service Platform, it can provideoperation and maintenance service support capabilities integrating front and back ends, internal and external fields,and upper and lower levels.In 2021, by taking on some large-scale complex AIoT systems engineering projects, Hikvision has furtherenhanced its platform support capacity and team collaboration in complex system design and development, IOTdata governance, construction process management, system operation and maintenance etc., and optimized andreorganized the Company’s system project implementation team, laying a solid foundation for undertaking moreintelligent industry and smart city projects in the future.Meanwhile, Hikvision has explored a mode of closer cooperation with ecological partners in practice. Inaddition to the integration of ultra-large-scale complex systems where users have specific requirements, Hikvision
will continue to play its role as a product provider, supporting more integrators and operation and maintenanceservice providers with products and technologies.
2.6 Ecological Empowerment: Forms an All-round Open Ecological Cooperation and Empowerment System
2.6.1 Open System: Open Equipment + Open Platform + Open Data + Open ApplicationHikvision offers comprehensive open capabilities spanning equipment, platforms, data, and applications toindustry application developers in all aspects.Hikvision intelligent application open platform provides four development frameworks, more than 1,500 openinterfaces, more than 1,100 common components, and totally 278 software platform products including basicsoftware, general software, and industry software.Our integrated operation and maintenance service platform offers equipment probes for the access of third-party sensing devices, operation and maintenance data interfaces for data output and report output of operation andmaintenance data; and the partner operation and maintenance team management and cascading assessment functionfor various teams to deliver operation and maintenance services based on the same platform.Hikvision’s IoT-information integrated data resource platform supports the access of third-party data storagemanagement systems or data formats in addition to mainstream data access; the IoT data management tools providedis capable of managing elements of various types of IoT devices from multiple vendors while evaluating locationdeployment; and data service interfaces support the development of business applications.Hikvision provides more than 90 related standards and specifications including overall technical specifications,general technical specifications, software interface specifications, IoT perception technical specifications,intelligent algorithm technical specifications, big data management and service specifications, technicalmanagement specifications, etc., to ensure the seamless integration between ecological partners’ technicalachievements and Hikvision’s software and hardware products.
2.6.2 Empowerment System: System Operation and Maintenance +Algorithm Training + Data Engineering+ Application DevelopmentTo support more partners to deliver application values for users based on Hikvision’s open system, Hikvision,based in Hangzhou has established a training and certification system, three software R&D centers in the northeast,northwest and southwest, the offline training empowerment mechanism of 19 provincial-level software R&D
departments, as well as an online training mechanism offering over 330 courses.
The training empowerment system, oriented to system operation and maintenance, algorithm training, dataengineering and application development, issues certifications of associates, professionals and experts based on theHikvision training and certification system and the training content and evaluation system.
3. Software and Hardware Products
3.1 Hardware Product Family: Edge Node Comprehensive Perception + Edge Domain Scenario Intelligence+Central Intelligent Storage and Computing
Hikvision has been putting together years of expertise around intelligent sensing to further facilitatetechnological capabilities and enrich the branded hardware lineup. Currently the hardware family is flourishing inedge nodes, edge domain, and cloud-center devices.
3.1.1 Edge nodes: Comprehensive Intelligent Perception and Enriched Product Mix
1) Front-end Cameras
With the rise of digital transformation and expansion of real-world scenarios, Hikvision is adhering to a “fullfield perception and intelligent integration” strategy based on its firm grasp of both the software and the hardware.All developments are based on real world demands, with five excellences, namely ultra-HDand full-color,panoramic details, multi-dimensional perception, scenario-based customization,universal intelligence.
Ultra-HD and full-color: Gorgeous Imaging All-time and All-weather
Hikvision has been pushing the boundaries of digital imaging technbologies, particularly for scenarios withDarkfighterX and ColorVu, where color representation can be challenging. As of now, there are multiple series ofUltra-HD ColorVu products to address the issue at its root.Hikvision cameras are enhanced with multispectral fusion technology, which works on both visible light andinfrared to compensate the loss of color during nighttime. The AI-ISP image processing engine is introduced toreduce noise in night shots. To compensate for low ambient lighting while minimizing the visual impact on driversand pedestrians at night, Hikvision has developed a patented real-time supplementary lighting matrix system, whichis capable of zoned lighting, enhancing only portions of the picture that needs more light. The traced focusingtechnology excels in capturing multiple moving targets in varied speed in the same frame at night, dynamicallycombining multiple capturing parameters to make sure every target is clearly visible and in focus.
Panoramic Details: Everything Clearly in ViewHikvision solutions are known for impeccable details across the panorama, thanks to its comprehensiveness ofstatic and dynamic imaging, and multi-camera videoing.The 4
thgeneration of PanoVu camera is designed with harsh weather in mind. The top of the device is shelteredwith eaves and gutter to avoid flooding. The camera unit itself is fully enclosed, with self-heated glass and 7/24working dehumidifier to avoid lens fogging. The enclosure itself is made with sapphire crystal to avoid wear andtear by grains of sand. Images captured by different lens inside the camera are stitched into a full panoramic view,with trimmed edges and warp correction to represent the actual scene as it is.
Multi-Dimensional Perception: Profile the TargetsBuilding upon visual perception, Hikvision is integrating multi-dimensional perceptive data through expending
into sound wave, radar, and other IoT technologies, in order to achieve spatial-temporal correlation, IoT perception,information fusion, and build a solid Data-AI Fusion Base.In industry inspection and smart manufacturing, visual capturing alone is only capable of basic environmentmonitoring, as it only “sees” how every machine appears to be operating. With the addition of industrial grademicrophones and bone-conduction audiology, the collection of precise audio data is possible. Given integratedencoders, voiceprint matching algorithm, and AI Open Platform, it takes merely one hour of training data collectedin a normal working environment to generate an automated AI model that detects malfunctions. Therefore, bycombining the audio with video, visualized inspection could be realized, so we can accelerate the digitaltransformation of manufacturing.
Scenario-Based Customization: Designed for Practical Scenario ApplicationHikvision merge engineering thinking with technology, anddevelop cameras based on different scenarios, builtfor real-life usage, with optimized structure, imagine, intelligence, maintenance, and security.One example is specialized cameras to detect act of high-rise littering, an event of danger. These cameras areinstalled facing the sky. Consequently, the cameras have the dust accumulating on the lens. Hikvision optimized thesystem with a self-cleaning module, which collects water, and cleans the lens unit with a sprinkle/brush combination.A shade is added to minimize over-exposure in daylight, and there’s a heating unit thaws the lens in cold days tominimize human intervention.
Another example is elevator surveillance. Electronic mopeds are forbidden in most high-rise buildings becauseits unstable battery may cause fire, hence there is a need to monitor if the electronic moped goes into elevators, andtrigger the alarm. Hikvision’s AI algorithm can also identifies electronic moped from regular bikes and strollers.ToF detection is introduced in case of blocked vision. If the security camera is blocked, the elevator itself will belocked up to avoid risky entry. The camera also is aware of the floor it’s currently on, and helps to locate the elevatorin cases of emergency, which can secure the golden window for rescue.Universal Intelligence: Designed Scenario-Based Product Solution with Better SuitabilityHikvision designs its hardware and algorithm for the specific needs of each scenario and industry, to ensure asmooth digital transformation.The restaurant industry needs to regularly examine kitchens for the proper dressing of staff, and this processshould be ideally human-free, for the efficiency of labor. Hikvision’s solution is powered by an AI platform thatspecifically examines human objects for white gowns, white hats, and white face masks. Improper dressing, onceidentified, triggers the alarm, so that the kitchen is constantly monitored in real time.
In scenarios such as waste incineration, metallurgy, and power generation, the temperature of burners is usuallyextremely high, which need to be carefully monitored. Hikvision developed specialized cameras for such needs,protected with wind cooling and enhanced with telescope imaging, to capture real time images inside the burner.The camera also monitors blower nozzles and pipes, and trigger the alarm if the burner flame went out or if there isany leakage.. So that the operators are timely informed there be anything out of the ordinary within the burner.
Meteorological observation involves outdoor working. Hikvision sky imaging system captures the open sky ina 360° panorama, which expels birds with auditory alarms. Power source is a primary challenge of outdoor working.To address this issue, Hikvision equipped its products with low power 4G radio and solar panels to facilitate quickdeployment in the field. Hikvision provide open visual sensing, smart computing, and software development kits toits partners via standard API. So that meteorological algorithms that can be quickly deployed on devices.
2) Smart Traffic and Mobile Devices
Smart Traffic: Hikvision traffic management products adhere to the objectives of “improving traffic order,alleviating traffic congestion, preventing traffic accidents, improving traffic safety, and facilitating transportationand travel”. All technological developments are based on actual needs, resulting in products and solutionscustomized for actual scenarios. The eco-friendly series, which is being rapidly deployed across the country, hasminimized light pollution. The radar-assisted series cameras is being adopted for multiple scenarios to promoteindustry upgrading and business innovation. The Radar-Assisted Road Pre-alarm Series product line provides 24/7roadways surveillance and accident alarm, with an emphasis in traffic regulation enforcement and rural surveillancein order to effectively reduce road safety risks. The Radar-Assisted Smart Monitoring Unit product line controls the
fill-in lighting module in a smart way to enhancing ambient lighting only when needed, to improve energy efficiencyand high precision detection. The Radar-Assisted Vehicle Detector offers 24/7 precise, remote monitoring ofroadways, together with proprietary smart signal systems and “weight balancing” adaptive algorithms, it constitutesa holistic self-contained signal control system that spans diagnostics, simulation, operation, evaluation andadjustment. With extensive research on the capabilities of radar systems, innovative application, combined withindustrial synergy advantages, Hikvision is realizing business applications in many fields such as ultra-remotesurveillance, radar imaging, and frequency measurement, formulating professional applications in digital traffic,ship inspection, vital examination, falling prevention, and etc., opening up new market segments.
Stationary Traffic Systems: Hikvision offers smart, automated stationary traffic solutions that coverentry/exit, parking lots, street parking, and charging piles to save man-power. The recently launched product series,such as “Guardian” series and “Roadside” series, has enriched the product matrix. Through construction of intensivesystem, capabilities in intelligence and informatization, we have continuously improved the competitiveness of theproduct system. By gathering experience of vertical scenarios and in-depth field research, we promoted thepenetration of the vertical market. Through in-depth field research in urban parking management, the Companykeep improving the urban parking efficiency and the parking experience of the citizens.Mobile Solutions: Hikvision has been constantly optimizing the imaging quality and smart features of mobiledevices. The Company launched anti-vibration cameras, 5G recorders, and protable cameras, ideal for law
enforcement and industry safety management. Pocketable AI-based recorders and helmet-mounted camerasaugmented by the latest low-power technologies are widely used in railways, healthcare, financial, construction,and manufacturing sectors. The Company also launched handheld scanner PDA line that is primarily used forbarcode and character scanning, which is helpful to open the data terminal market.
3) Access Control and Intercom Systems
With years of excellence in visible light, infrared, sound wave, multi-dimensional perception, audio & videointeraction, and electromechanical control, Hikvision continues to refine its access control and intercom products.The Company improve the access control product series’ competitiveness rely on MinMoe, which emphasis inhuman and objects management in different scenarios ;enrich multi-modal technologies and build an HEOPhardware ecosystem that required only minimum software development, offering well-rounded intelligent solutionto the customer. On a hot streak of innovation and quick delivery, the Company has released a new integratedturnstile line to expand its share in the access control sector. The video intercom product line is constantly refinedto be widely adapted for all industries.Hikvision access control, turnstile and intercom products combined with vertical applications, have formed acomprehensive, rapid-growing solution ecosystem covering access control and attendance, temperature screening,elevator control, financial checkout, inventory management, building intercom, industrial grade intercom, publicaddress (PA) , professional audio, turnstile , and advertising signage.
4) Alarm Systems
Hikvision continues to serve clients with cloud-based alarm systems that benefit from its excellence in radiofrequency, optical fiber sensing, detection optics, integrated perception, and intelligent analysis. The Company hasreleased its 2nd generation wireless and hybrid intrusion alarm systems, which are especially well received both inchina and overseas. For perimeter alarm field, the Company constantly extending its product line, and launched thenext generation distributed vibrating optical fiber system, which helps to enrich the border/coast control application.For security radar field, the Company has developed a plethora of situational perceptional radar products based ondemands from marine safety, railways, and fishery industries, such as land radar, shore-based water surface radar,laser radar, and LiDAR and Camera Integration System.
3.1.2 Edge Domain Products: Extending Intelligent Business with In-depth Industrial Experience
Hikvision edge domain products centered around industrial vertical applications, further deepened AIapplication, enhanced system/products opening. They are designed to empower customers with artificialintelligence and serve the digital and intelligent transformation process.
1) Integrated Devices for Intelligent Applications
DeepinMind NVR, AI-Powered Core Product for Edge Domain Application: Hikvision’s DeepinMindseries products flourished in 2021, covering both generic and industrial-specific scenarios with a comprehensivelineup.Hikvision is the first to propose the concept of “inclusive AI” for universal smart surveillance. Promoting thewidely use of smart NVRs (network video recorders), the Company’s “AcuSense” series NVRs features HDrecording, lightweight AI applications, multi-dimensional perception, and on-demand data aggregation, offering anupgrade option with remarkable price performance for small and medium enterprises, buildings, and communities.For industrial scenarios, Hikvision’s DeepinMind products are augmented by cutting-edge, powerful AIprocessors with high hashrate that could run multiple algorithms in parallel. The Company is committed to buildingan ecosystem, where clients have access to the open platform to quickly train their own AI models with datacollected in real-life fragmented scenarios. On the other hand, with HEOP, the hardware itself is built as a“container”, and can be quickly switched between proprietary or third-party algorithm and software, creating smartintegrated devices with high flexibility.Fusion Storage, Only One-Step to Comprehensive Ddge Domain Solution. In normal circumstances, 80%of the collected data is video related data. As the amount of data grows exponentially, indexing and retrievingvaluable information from data is becoming increasingly a challenge. Hikvision constantly integrates “smart fusion”storage with computing, storage, and smart analysis with cutting-edge technologies such as GPU&HDD hybrid hotswapping. Users are given the freedom of adjusting software plugins, which massively improve the video data post-analysis ability, extending the storage cycle of key data and speeding up the access to key clips.
2) Conference Surfaces
Conference Management Software: An Enriched Solution MatrixHikvision conference surface products keeps upgrading. Take the latest smart conference management V2.0for example, it forms a lite smart conference solution by adopting the interactive display as the heart of the scenario,supported by other devices, such as conference room digital signage for announcement, and HikMicro ThermalPresence Detector for attendance check. The result is a flexible solution that broadly covers the entire process ofevents, including: making appointments, administrational approval, multi-screen display of conference information,non-contact sign-in before the event; remote collaboration, wireless screen sharing, shared whiteboard writing, andmulti-party conference call during the event; relocating conference room, generating meeting minutes, automateddata analysis, centralized device/facility management, event process optimization, and intelligent resourceallocation after the event. The software solution can be connected to smart campus and security guard platforms asa component, adding new ability to existing platforms in one-click.
Conference Tablet Hardware: Taking over the Premium MarketHikvision D5D, one of the Company’s premium conference tablet, features a slick anodized body, ultra-powerful processor, 8 GB of RAM and 64 GB of internal storage, AI-powered conference software, and cloud-
based application marketplace. With 48 MP camera that automatically focuses on the speaker, automated directionalaudio capture with an 8-Mic array, remote conference and collaboration is made an experience. Better still, amotorized cover automatically obstructs the camera when it’s not in use, further ensuring the privacy.
3) Intelligent Video Transmission
The transmission products is the key nodes and nexuses for Internet of Things. Hikvision designs its smartvideo feed delivery system based on the philosophy of “visualized topology, unified management, intelligentoperation and maintenance”. A single hardware unit can handle up to 5,000 video channels. Based on intelligentvideo transmission system, the Company has widely built network delivery solutions for many scenarios andindustries. Port authorities benefit from connected areas and unified management offering by the system. Residentcommunity managers are relieved by the integration of video surveillance and network management, whereeverything can be done in the same user interface, making the process intuitive and cost-effective. For enterprisecampus operators, being able to quickly identify and resolve issues in the surveillance network really cuts downtheir cost and improve their efficiency. The Company is well aware of its excellence, and striving from good tobetter. In the future, the Company will keep expand its vertical applications to help the customer reach a smart wayto operate and maintain the network.
3.1.3 Cloud Center Product: A Solid Ground with Steady Improvements in Storage and ComputingCapabilitiesThe age of big data has come, and it depends on IT infrastructure with outstanding performance and reliability.Hikvision has solid lineup of servers for general computing, big data, and artificial intelligence to address stable,reliable, safe and advanced needs.
1) General Computing Products
With over a decade of experience, Hikvision generic server products covers single, double, and multipleprocessor setups, with different forms like workstations, tower servers, rack servers, and edge servers, with varietyproduct series and powerful performance to keep the market well-served.Hikvision generic server products are compatible with domestic and international mainstream technologies.The product family is well segmented for the most competitive, addressing general needs of data centers and specificindustrial scenarios, such as government, internet, energy, finance, and telecom verticals. All Hikvision clients haveaccess to general computing infrastructure with outstanding performance, reliability, and security.
2) Intelligent Computing Products
Thanks to the Company’s accumulation of industries experience and outstanding technological abilities,Hikvision’s smart server business has been excelling in domains such as AI-IOT, big data and business intelligence,continuing to outperform competitors.
“Intelligent server” covers many forms, including all-in-one, hardware only, and algorithm software only,which satisfy different clients and sales model. All products are compatible with domestic and internationalmainstream CPU and GPU, backed by a prosperous ecosystem and robust supply chain. For centralized computing,the Company just released the next generation of GPU rack servers in 1/2/4 units, maximizing cost efficiency withtiered options. For edge computing, the Company offers servers that are heat/corrosion/dust proof and low energyconsumption, adapted to various working environments.
As a leader of algorithms, Hikvision has released over a hundred commercial algorithms with scientific ratingstandards. The Company is experienced in the development and sales of algorithms. Added self-learning abilitymake Hikvision algorithms especially adaptable, minimizing the workload of data collection and labeling.
3) Universal Storage Products
Hikvision constantly evolving universal storage line of products, which covers SAN, NAS and object-basedstorage. The storage products are designed in two different architecture: server & controller distributed deployedand all-in-one, with support from industry-leading technologies such as SDS
and HCI
. They are already widelyadopted in a plethora of sectors, including office automation, database hosting, manufacturing management, anddata center infrastructure, regularly rated the very top brand in IDC network storage.
SDS: Software Defined Storage.
HCI: Hyper Converged Infrastructure.
4) Stream Storage
Based on the raw data and multi-dimensional application, Hikvision has developed a streaming storage modelfor raw data. The model is non-file-based, hence free from data fragmentation and performance degradation afterlong period data overwriting. By optimizing data writing mode, the solution further boosts file server performance,while systematic, well-streamlined anti-virus measures keep data safe. In a decade since the initial launch, Hikvisionstorage products are adopted by public security, traffic and transportation, finance, education, real estate, petroleumindustry and electricity sectors across over 100 countries and regions.Hikvision streaming storage products have to been ranked as the top 1 in global video storage brands selectionby Omdia (previously IHS), propelled by sales far exceeding competitors. The Company is poised to strengthen itsbrand power of streaming storage and continue to lead the industry.
5) Large Screen Displays
Hikvision’s display products, powered by renowned video processing technology, image restorationtechnology, image augmentation technology, ultra-high-definition, and smart interaction technolog, is well receivedin sectors such as monitoring centers and command centers, cloud center and big data center.The Company continues to invest in Mini LED and energy efficient series products, improving heatmanagement with innovations such as reversed positioning and common cathode technology, and expanding itspresence to conference room. The current emphasis is on improved color consistency and higher resolution, which,coupled with convincing price performance, will increase Hikvision’s leverage in the professional/commercialdisplay market.
3.2 Software Product Family: Software Platforms + Intelligent Algorithms + Data Models + Business Services
Hikvision’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: In 2021, the ecosystem of “two pools, three databases, seven platforms and oneenvironment” was continuously enriched and improved. “Two pools” refer to computing storage resource pool anddata resource pool for edge cloud and central cloud computing platform, cloud storage platform, and big datafundamental platform; “three databases” refer to component database, algorithm database, and model repository,
respectively supporting the management and reuse of components, algorithms and models; “seven platforms” referto the resource management scheduling platform, intelligent perception networking platform, AI open platform,perception fusion empowering platform, iDatafusion platform, intelligent application open platform, and integratedoperation and maintenance service platform, providing intelligent application scenarios with storage and computingresource scheduling and equipment network access, intelligent algorithm training, intelligent service publishing,data aggregation management, intelligent application development, and integrated operation and maintenanceservice capabilities; “one environment” refers to the four-dimensional space operation environment, that is, thevirtual space-time operation environment instead of the physical world, supporting the storage, correlation andanalysis of perception resources and data resources in the same space-time environment. The ecosystem alsoformerly featured “one screen,” referring to the large-screen visual application development tools, “one screen” isintegrated with “one environment,” which supported the configuration of visual applications and the associationwith data without coding, realizing the visualization of data in the same space-time environment from multipleangles.
General software platforms: Provides general software functions across industries, including general securityand protection, visual command, alarm management, inspection supervision, conference interaction, and contentrelease. The general software platform of visual command, as an example, includes AR scene tag platform, ARvirtualization platform, AR command platform, VR panoramic application platform, integrated communicationapplication platform, and portable law enforcement integrated management platform.
Industry-specific software platforms: Hikvision, serving over 70 sub-industries, has gradually built morethan 200 application software platforms for various industries. Taking the traffic police industry as an example, weprovide platforms such as the traffic violation management platform, the comprehensive traffic management andcontrol platform, the urban traffic situation analysis and judgment platform, the traffic accident investigation andjudgment platform, the law enforcement comprehensive management platform, the smart traffic signal controlplatform, the highway traffic safety monitoring and management platform, the smart check station applicationplatform, and the intelligent driving management video inspection platform.
3.2.2 Intelligent Algorithms: General Algorithms + Industry-Specific Algorithms
Offering services to all walks of life, Hikvision has accumulated a large number of video artificial intelligenceanalysis algorithms which can be divided into general algorithms and industry-specific algorithms.
General Algorithms: Algorithms that can be used for the development of intelligent applications in multipleindustries. For example, algorithms to detect and classify transportation equipment, motor vehicles and non-motorvehicles, and algorithms to detect traffic flow of people and vehicles, etc.Industry-Specific Algorithms: Algorithms developed for industry-specific application demands. Forexample, algorithms for the detection of exposed garbage, bagged garbage, misplacement of kitchen trash bins,road messiness, road ponding, road damages, road leftovers, abnormal sidewalk piles, anti-collision bucketdamage, transformer box abnormalities, non-decorative tree hangings, billboard damage, tree protection facilitydamage, incineration of garbage leaves, illegal parking of non-motor vehicles, and messy materials onconstruction sites, etc.
3.2.3 Data Model: Industry Business Data Model
Hikvision provides big data application services for all walks of life based on the big data collection,management, analysis and service capabilities provided by the iDatafusion platform. In this process, we haveaccumulated a batch of industry business data models, which can be managed by the model repository, and can bereplicated and optimized in other similar application scenarios.
Taking transportation as an example, we provide an illegal parking remediation model, urban road trafficoperation evaluation and diagnosis model, urban road traffic tracing analysis model, urban road traffic short-termprediction model, high-precision real-time online traffic flow simulation model, changeable lane feature researchand judgment and control model, tidal lane feature research and judgment and control model, public transportationpriority signal control model, time-space analysis and judgment model for fake-licensed vehicles, racketeering caranalysis model, traffic accident address analysis model based on standard semantic analysis, public transportationOD
passenger flow analysis model, highway truck detour analysis model, driving behavior habit label andcomprehensive scoring model, driving behavior safety risk management and control model, and risky sectionmining 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.
OD: O stands for Origin, which refers to the departure location, and D stands for Destination, which refers to the end of thejourney.
System Operation and Maintenance Services: Hikvision provides system operation and maintenanceservices to certain industry users. For systems and equipment out of warranty, the operation and maintenance teamwill offer professional system operation and maintenance services.Data Engineering Services: Hikvision delivers data engineering services for IoT resource management, andintegration of data collection, management and services.
Business 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 200 cities, and its coverage scope is expanding rapidly; business operation platforms for fireprotection operation, security check operation, community operation services, and waste classification intelligentmanagement cloud have also been put into use.
4. Business Organizations
With the evolution of core capabilities and business scope, the business organization model of Hikvision isbeing constantly upgraded. In the new era of AIoT, Hikvision’s domestic business is built in layers, with the threebusiness groups progressing their businesses based on the demands of different industries, while its internationalbusiness is tailored to different countries, with its business and technology systems iterated and elevated accordingto the characteristics of the international market. Targeting different business models, the Company explores marketdemands, coordinates internal resources and strengthens its capabilities, as a way to facilitate digital transformationfor customers and users at all levels including countries, cities, industries, enterprises and public institutions, andSMEs.
4.1 Public Business Group (PBG): Enhance Product and System Capabilities to Boost the DigitalTransformation of Industries and Cities
4.1.1 Overview
As 2021 kicked off the implementation of China’s 14
thFive-Year Plan, the digital reform led by the governmentshowed a trend towards intensive and scientific construction featuring “construction of perception technologies ina systematic way, unified management by one network, unified operation and maintenance, empowerment throughbig data and AI, and promoting construction through application”. Combining its continuous innovation in suchtechnology fields as IoT perception, AI and big data and years of in-depth understanding of the industrial users’
demands in public services, and centering around “AI universal empowerment and deepening of data value”,Hikvision has constantly expanded its product portfolio in terms of “hardware, platforms, algorithms, models andservices” and deeply integrated product and system capabilities with a focus on the value fulfillment of solutions.Ultimately, it serves to facilitate the digital transformation of public services and cities through the comprehensiveexpansion of intelligent businesses in public security, transportation, urban governance, services concerningpeople’s livelihood, ecological and environmental protection, etc.
4.1.2 Core Technologies: Enhance Big Data-AI Fusion Base Capabilities, Enrich Industry Service Items andStrengthen Systems Engineering CapabilityClosely following the demands of customers and users in public services, Hikvision continues to expand itsproduct lineup across industries, enhance the capabilities of the “Perception Base, Intelligence Base and Data Base”,enrich industry service items, and strengthen systems engineering capability, thereby contributing to the digitaltransformation of industries and cities.
(1) Continue to expand industrial products and enrich application scenariosUtilizing its solid technological foundation and first-mover advantage in AIoT and big data, Hikvision digsdeep and taps industrial demands, continuously enhances fundamental support capabilities such as the PerceptionBase, Intelligence Base and Data Base, and enriches intelligent applications in smart cities, public security,
intelligent transportation, ecological and environmental protection and other industries.The Perception Base: Hikvision continues to focus on electromagnetic spectrum perception technology,extending its AIoT products from visible light to infrared rays, X-rays, millimeter wave and other multispectraltechnologies, from video surveillance to multi-dimensional perception, and from the traditional perception of peopleand vehicles to the perception of all elements. We have incubated a number of new industrial blockbuster products,such as the Dual-Lens Bullet Camera, the Hyperspectral Multi-Parameter Water Quality Monitor, the Radar-Assisted Camera and the Intelligent Security Inspection System, enabling all industries to quickly build visualized,intelligent and three-dimensional perception capabilities.The Intelligence Base and Data Base: Drawing on its technological innovation in artificial intelligence andbig data, Hikvision provides customers and users with a rich variety of hardware products, software platforms,intelligent algorithms and data models. Hikvision’s Big Data-AI Fusion Software Family is growing day by daywith basic software such as the “two pools, three databases, seven platforms, one screen, and one environment” andmore than 70 pieces of general software in 10 categories such as visualized command and alarm management. ThePerception Fusion Empowering Platform, for example, empowers users of various segments of public servicesthrough such capabilities as the co-construction of locations, resource sharing, algorithm co-management,computing power integration, capacity sharing and event co-governance etc., and is widely used in urbangovernance, environmental protection and other scenarios. In addition, hundreds of intelligent algorithms and datamodels that fit industrial businesses have been created, covering most business scenarios in public services.
Based on the three bases, Hikvision fully opens its Big Data-AI Fusion capabilities covering equipment,platforms, data and applications to gradually create a Big Data-AI Fusion business ecosystem, work with partnersto build an industrial innovation consortium, and keep exploring the business segments of various industries withmore than 120 pieces of software developed to meet the business demands of different industries, providing a wealthof scenario-based intelligent applications. In the edge node and edge domain, it deepens agile and highly intelligentapplications with device coordination and interconnection; in the cloud center, intelligent applications such as the“be responsible for general sanitation, green covering and keeping good social order in a designated area outsidethe unit building” management system, intelligent monitoring of safety of small reservoirs, full-lifecycle supervisionof solid waste, and intelligent monitoring of water quality are further improved for fields such as public security,social governance, transportation, epidemic prevention and control, conservation of natural resources and ecologicalprotection, which has been implemented in hundreds of cities, hundreds of sub-industries and thousands of scenarios,contributing to Beijing 2022 Winter Olympics, Hangzhou 2022 Asian Games, the 14
thNational Games of China
and other important events.
(2) Continue to enrich industrial service items and enhance user engagementBased on its deep industrial understanding and insights, Hikvision continues to enrich industrial servicecapabilities in data engineering, business operations and other areas, and enhance the engagement of industry users.Data engineering services: Hikvision delivers data engineering services involving multi-dimensionalperception data and business data for some industrial users, including factor calibration, data exploration, datagovernance, data organization, BI visualization analysis and other services.Business operation services: Hikvision offers an increasingly broader scope of business operation servicesbased on the Internet operation platform, covering many fields such as integrated urban operation, video enablingplatform operation, urban parking operation, fire protection operation, community security operation, security checkoperation, and intelligent management of waste classification etc.
(3) Steadily improved systems engineering capability to ensure closed-loop project managementHikvision continues to strengthen product and business integration, comprehensively improve systemengineering analysis and design as well as implementation and delivery capabilities covering scientific deploymentand management of perception devices, intelligent analysis and association of perception data, and the applicationof in-depth IoT-Information Network data integrated application, reinforce project management in complex systemconstruction with stronger project management capability in the start-up, planning, execution, monitoring andclosing stages, and collaborate with industrial customers to fill gaps and provide users with closed-loop projectmanagement.
4.1.3 Value Fulfillment
While deepening its understanding of business in public security, transportation, urban governance, people’slivelihood, ecological and environmental protection and other fields, Hikvision strives to build the capabilities ofthe “Perception Base, Intelligence Base and Data Base” for cities with a focus on “perception, intelligence and data”,and continuously expand intelligent industrial services through the Perception Fusion Empowering Platform. Bythe end of 2021, it has provided a total of 346 system solutions in different business scenarios for governmentcustomers and users.Hikvision is committed to making cities smarter, society safer, transportation more convenient, governance
more refined, services more targeted, and the ecology more livable. In the meantime, the Company will undertakeits corporate responsibility and fulfill its social mission in primary-level governance, rural revitalization, andepidemic prevention and control etc., contributing to modern urban governance.
(1) Smarter Cities
In the field of smart cities, Hikvision aims to strengthen the city’s overall perception capability, optimizeurban business processes and collaborative sharing capability, build decision-making support and early warning andprediction capabilities for urban areas, and develop modern urban governance capability. Take “perception,intelligence and data” as the core, IoT, AI, big data and other technologies are used by Hikvision to continuouslyupgrade the architecture of “cloud-edge fusion, IoT-information network fusion, big data-AI fusion” and expandthe technology system comprised of “hardware, platforms, algorithms, models and services”. We have covered thesmart city sector in operation and further mined its value, delivering support for smart city operation andmanagement as well as cross-industry intelligent businesses in various fields.Focusing on the perception fusion empowering platform, we offer the total solutions of intelligent perceptionmiddle platform for the construction of smart cities. The platform provides unified video and IoT access andaggregation capabilities, establishes full-lifecycle archives, and helps urban managers gain insights into theconstruction, operation and use of urban perception resources. Through the intelligent arrangement and schedulingof various perception algorithms and cloud-edge computing power, the platform has doubled the effect of perceptionresources application. By means of perception openness, intelligent efficiency enhancement and data fusion, theplatform quickly enables intelligent applications in various commissions, offices and bureaus, assists cities inbuilding modern governance capability, and helps elevate refined urban management.The perception fusion empowering platform focuses on video value mining, and, with the idea of “one videowith multiple algorithms and one event with multiple streams” in mind, provides capabilities such as the co-construction of locations, video sharing, co-management of algorithms, capacity sharing, computing powerintegration and co-governance of events, in order to meet the demand of intelligent video applications in multipleindustries and departments. Over the past year, the perception fusion empowering platform has been successfullyapplied to nearly 100 projects in 72 cities in 19 provinces across China, covering various industries such as smartcities, smart water conservancy, smart environmental protection, emergency management, park management, publicsecurity and politics and law, etc.In the area of primary-level governance, Hikvision continues to penetrate into every segmentation scenario
of towns and streets, collaborates with primary-level party organizations in towns and streets across the country toexplore key areas such as integrated command, public management, safe construction, public services, Partyconstruction, Party-government integration, regional development, and comprehensive law enforcement, andimplement industry-specific applications at primary-level in public security, transportation, urban management,emergency response, civil affairs and other industries. We have pioneered hundreds of applications, including theearly warning, investigation and judgment of events, command and dispatch management, living environmentimprovement, town and street fire control supervision, and elderly care services, which help effectively tackle thedifficulties in traditional town and street primary-level management, primary-level law enforcement, primary-levelservices and inter-departmental coordination, forming a new proactive, forward-looking and preventive closed-loopof primary-level management that fully elevates the intelligent management of towns and streets.In terms of rural revitalization, the Company focuses on production, ecological and daily life scenarios inrural areas. Through video, thermal imaging, AI, IoT and other technological means, we deliver the capabilitiesincluding construction of digital infrastructure and public support platforms to realize intelligent perception ofproduction monitoring, environmental anomalies, ecological risks, potential hazards in facilities and other elements.Focusing on rural governance, ecological monitoring, rural industries and other elements, Hikvision providesintelligent applications for industrial development, ecological supervision, primary-level governance, people’slivelihood services, etc. and creates a new primary-level management model featuring multi-dimensional perception,transparency and visibility, and primary-level co-governance, thereby facilitating the digital construction of ruralareas.
In epidemic prevention and control, Hikvision contributes to scientific and precise measures in cities. Basedon the self-developed non-contact temperature screening technology and products, the Company has built aHikvision Infocloud TM—a cloud-based temperature measurement data platform for the cloud networking of suchdata with services covering various scenarios such as scenic spots, schools, hospitals, farmers’ markets andtransportation hubs, ensuring the normalization of epidemic prevention and control as well as public travel safety.From temperature measurement, health code scanning and verification to data networking and big data tracing,Hikvision integrates innovative technologies such as multi-dimensional perception, AI and big data to makeepidemiological surveys more efficient and accurate, assist the government to quickly cut off transmission routes,and effectively guarantee the work resumption and production for urban enterprises. To help facilitate borderepidemic prevention and control, Hikvision has built a three-dimensional, intelligent, integrated, practical anditerablesystem. Based on rich varieties of intelligent perception devices including visible light, thermal imaging,
radar, vibrating optical fibers, electronic fence, radio frequency identification. Combined with complex borderscenarios, the Company has been constantly refining and optimizing the adaptability of multi-perception devices toscenarios, the intelligent linkage of multi- perception devices, the unified access of multi-type devices, the intelligentanalysis of multi-type algorithms, and the strategy optimization of multi-type early warning. The result is the omni-directional intelligent perception, all-weather intelligent perception, intelligent recognition, intelligent tracking andearly warning of cross-border targets, providing defense-related technologies to help crack down on cross-bordersmuggling and effectively prevent the spread of the epidemic across borders.
(2) Safer societies
In 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 andat every moment. Meanwhile, a series of new products which adapted to the “Peaceful China Initiative” have beencreated to realize the comprehensive perception of public safety elements through thermal imaging, sound wave,radar and other perception technologies.
Based on the capabilities of its video image intelligent 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.
From the Skynet project to the Xueliang project, to today’s intelligent communities, primary-level governance,public security prevention and control, Hikvision has worked with ecological partners to transform public securitymanagement from post-accident tracking to in-process investigation and judgment combined with prediction andearly warning in advance by utilizing “perception integration, computing fusion, intelligence integration, dataaggregation, application integration, and the combination of operation and maintenance”. Empowered bytechnology, the Company strives to help build a peaceful China by reducing burden and increasing efficiency forusers at all levels.
In terms of traffic safety, Hikvision provides intelligent detection capability for road traffic violations suchas red-light running, wrong road side, overrun, overspeed, improper hanging of the number plate, deliberateshielding and defacement of the number plate, inconsistent driving model, disqualified driving, non-motor vehicleviolation, pedestrian violation, dangerous driving, truck compartments carrying passengers, vehicle overload, truckturning right without stopping, etc., and data applications for real-time traffic conflict warning, traffic accident
portrait analysis, road network structural hazards analysis, analysis of dynamic conflict domain of road network,road network safety optimization, investigation and judgment on vehicles with hidden dangers and overloadedvehicles bypassing, to help ensure a safe transportation environment. Among them, the new technologies fordetecting truck compartments carrying passengers, vehicle overload, truck turning right without stopping and truckblind spot warning that were launched in 2021 provides help for the traffic control department to effectively managerisk factors in traffic accidents that occur frequently in recent years. The traffic accident portrait analysis usesautomatic restoration technologies ranging from natural language to GIS
coordinates, enabling traffic controldepartments to conduct large-scale machine analysis of historical accident data and assisting in the investigation ofhigh-frequency hidden danger points and accident root cause rules. Based on data provided by radar, video, laserand other trajectory recognition technologies, the dynamic conflict domain analysis of road network provides apowerful tool for traffic control departments to intelligently determine the accident-prone points in road confluencecollision, rear-end collision and steering collision.
Hikvision provides vehicle sensing technologies to ensure vehicle safety, generating collision warning,panoramic view, blind spot detection and other applications for buses, passenger vehicles, freight vehicles andonline ride-hailing vehicles and serving hundreds of transportation enterprises.Hikvision delivers multi-dimensional perception capabilities to ensure road safety, providing perception, dataanalysis and warning for scenarios such as road event detection, safety warning of sharp road turns, road slopefalling rock warning empowering most of the country’s road infrastructure construction with its solutions andcapabilities to help reduce road safety risks.In emergency management, Hikvision provides comprehensive capabilities to prevent and handleemergencies. To deal with the production safety risks of hazardous chemicals companies, fireworks and firecrackersbusinesses, non-coal mining enterprises, tailings ponds and all types of small and micro enterprises, the Companyestablishes a production safety monitoring and early warning system offering data access, data analysis, intelligentearly warning, hierarchical push notifications, information backup for reference and other applications thateffectively address the supervision pain points of users. Hikvision’s solutions for forest fires, floods, geologicaldisasters and other natural disasters feature functions such as comprehensive monitoring of all elements, disasterearly warning, comprehensive risk assessment, analysis, consultation, investigation and judgment of disasterprogression, laying a solid foundation for disaster prevention and mitigation and establishing a sound system for
GIS:Geographic Information System.
natural disaster monitoring and early warning. For different kinds of sudden accidents and disasters, whole-processemergency command and dispatch capability is designed, including key applications such as on-duty management,emergency plans management, coordination and consultation, command and dispatch, summary and evaluation, tohelp users enhance emergency response and rescue capabilities, reduce disaster losses, and build a completeemergency command and rescue system.
(3) More convenient transportation
As 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 and bus priority control. TheCompany delivers professional smart travel service capabilities such as city-level traffic situation investigation andjudgment, intersection problem diagnosis, traffic flow traceability, traffic simulation, intelligent guidance, vehicletraffic management, real-scene command, information analysis, investigation and judgment, intelligent serviceinvestigation and judgment, key vehicle traffic protection, green parking, etc., which are combined with a “BigData-AI Fusion Traffic Management Base” incorporating road network computing, data computing and modelcomputing to achieve “smart traffic management”. After years of engagement in signal control, Hikvision shippedmore than 8,900 units of signal controllers in 2021, firmly ranking in the forefront of the industry. Intersectionproblem diagnosis has been upgraded in 2021, extending from the previous single intersection signal configurationdiagnosis to the more practical diagnosis of complex matters such as intersection and road section signal,organization and anomalous events. The “Big Data-AI Fusion Traffic Management Base” integrates basiccapabilities such as perception access, data governance operation, model operation, road network computing andthematic databases commonly used in intelligent traffic management. Thanks to its openness and professionalperformance, it arms customers and users with cost-effective solutions to jointly tackle traffic managementchallenges.In urban transportation, Hikvision fully combines the IoT perception technology with industry scenarios todeliver safe and efficient monitoring capabilities for highway maintenance, bridges, slopes, tunnels and otherscenarios, as well as visualized industry supervision capabilities for engineering construction and industrymanagement, serving thousands of industry users.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,
and early warning of port machines’ blind spot , which cover “people, vehicles, goods, machines and environment”and other elements, and serve nearly 100 port enterprises, ensuring port operation safety and improving managementefficiency.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,intelligent operation, intelligent maintenance, digital service and other scenarios in over 100 urban rail transit linesin the country, providing support and guarantee for the safe, efficient and smooth operation of urban rail transit andcreating a better and more comfortable ride experience for citizens.
As for airport travel, Hikvision offers passengers convenient and intelligent parking guidance, automaticparking, intelligent navigation display, paperless customs clearance, easy transfer guidance and other applicationsin nearly 100 airports, helping to build a safe, green and intelligent airport with humanistic care and culturalexpression.
(4) More refined governance
Hikvision is committed to building solutions for different industries in the field of city governance. In termsof municipal administration, the Company designs industry solutions for the intelligent management of municipalfacilities, including monitoring capability for manhole covers, garbage cans, ancient and valuable trees, billboardsand other facilities, and IoT perception capability for pipe network’s liquid level, water quality, water flow andother data. A closed-loop process that integrates problem collection, dispatching and handling, and feedback andevaluation has been established to facilitate targeted municipal management services. For city appearance andenvironmental sanitation, Hikvision delivers industry solutions to waste sorting, including intelligent supervisionapplications throughout the whole process from sorted drop, sorted collection, sorted transportation to sorteddisposal, which helps improve waste sorting operation and enhance the refined management capacity for cityappearance and environmental sanitation. As for urban management, the Company develops industry solutionsoriented towards intelligent urban management, offering mobile intelligent collection, intelligent inspections ofviolations, “be responsible for general sanitation, green covering and keeping good social order in a designated areaoutside the unit building” management system, urban flooding monitoring, command and dispatch management,the operation monitoring center and other applications, and building a five-in-one technology system incorporating
perception, analysis, service, command and supervision to help create a clean, tidy and orderly urban environment.
(5) More targeted services
Hikvision is dedicated to creating solutions for different industries in services concerning people’s livelihood.With regard to elderly care services by civil administration departments, the Company creates systematicsolutions for homes, communities and institutions, featuring applications such as elderly security, intelligent nursing,health monitoring and caring services, providing technology support for the safety of the elderly, intelligent andconvenient means to ensure the smooth operation of nursing institutions for the aged, and service data support forcivil administration departments. To improve primary-level services, the Company focuses on such scenarios astowns, streets, communities and villages, delivering various applications including primary-level workstations,comprehensive violation handling, home safety warning for the elderly, school gate security supervision, fire safetyprevention and control and store information library to achieve closed-loop management from event gathering,distribution to handling, assist in collaborative intelligent business control for various commissions, offices andbureaus, and provide technological support for modernizing primary-level governance systems and capabilities.
(6) A more livable ecological environment
With the help of video, radar-assisted technology, thermal imaging, hyperspectral, monitoring equipment, bigdata, AI, knowledge graphs and other multi-dimensional perception and intelligent analysis technologies, Hikvisionstrives to build an ecological monitoring, management and service system for natural resources, forest and grass,water conservancy, ecological environment, meteorology and other businesses, so as to create a more livableecological environment.
To help protect land resources, Hikvision sets up an intelligent management platform for nature reserves.Bi-spectrum thermal imaging, wildlife protection cameras, insect detection lamps and unmanned aerial vehicles arecombined with animal identification, fireworks identification and other algorithms for such application as wildlifemonitoring, forest and grass fire prevention, pest monitoring, ecological live streaming, human activity managementand emergency command, to assist in natural ecological protection as well as science popularization and education.The forest fire monitoring and early warning platform is built to monitor forest fires and human activities throughhigh-point bi-spectrum thermal imaging and low-point intelligent cameras, realizing fire monitoring and earlywarning, fire investigation and judgment, firefighting command, situation analysis, disaster damage assessment, firesupervision and other functions, and enhancing comprehensive forest fire prevention and control capabilities. An
intelligent monitoring platform for natural resources is created to identify characteristic elements of suspected illegalactivities through high-point intelligent cameras and AR cameras, which are then integrated with data on spatialgeography and national land for analysis to implement applications such as farmland protection, post-approvalsupervision of construction land and supervision of illegal mining at night, thereby effectively enhancing ourcapability to oversee natural resources. A cloud platform for geological disaster monitoring is built to combinesensor devices such as rainfall gauge, GNSS
and soil moisture meter with intelligent video equipment to monitorrainfall, surface displacement, soil moisture content and other factors, realizing three-dimensional and visualmonitoring of geological disasters such as landslides, collapses and debris flows, and providing intelligent assistancein geological disaster warning and relief.For the purpose of water conservancy and flood prevention, Hikvision provides an intelligent managementplatform for river and lake management and protection. Through video AI analysis, multi-spectrum visualperception, satellite remote sensing interpretation and other technologies, the platform can intelligently detect thedisorder and chaos events of rivers and lakes, such as illegal sand excavation, shoreline destruction and garbagestacking, so to help improve the long-term protection and dynamic control of rivers and lakes, revive the ecologyof rivers and banks, and create a beautiful environment. An intelligent and comprehensive water safety managementplatform is set up to achieve such applications as safety monitoring of dams, embankments, and water gates andpumping stations, condition monitoring of electromechanical equipment and intelligent patrol through displacementmeter, seepage and seepage pressure meter, video water level meter, thermal imaging, etc., and integrate informationon work conditions and rain conditions with real-time panoramic AR images, so as to obtain real-time updates onsafe project operation and protect water conservancy projects during floods. A command and scheduling platformfor water disaster prevention is provided to integrate audio and video resources such as voice and video conferencethrough the integrated communication gateway, offer GIS scheduling, conference scheduling, video scheduling andother functions, 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. A soil and waterconservation monitoring platform provides satellite remote sensing monitoring, unmanned aerial vehicles, videomonitoring, sensors and other integrated monitoring capabilities for key monitoring scenarios of soil and waterconservation, such as production and construction projects and check dams, to improve the ability to forecast andgive early warning of soil erosion. Comprehensive monitoring and management schemes are formulated to protect
GNSS: Global Navigation Satellite System, a system built by the European Space Agency.
the safety of small reservoirs during floods.As for ecological protection, Hikvision provides an intelligent monitoring platform for the atmosphericenvironment, using LiDAR, hyperspectral Fourier transform, thermal imaging, video AI and other technologies toachieve 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, so as to help defend the blue sky. An intelligent monitoring platform for the waterenvironment is created to monitor water quality factors such as chlorophyll, total nitrogen and total phosphorus inrivers and lakes in situ with the self-developed hyperspectral water quality monitor, providing water qualitymonitoring, trend analysis, water quality evaluation, pollution traceability and other intelligent applications, so asto help users gain an understanding of the status and changing trend of water environment quality and providesupport for rapidly treating water pollution. An intelligent whole-process supervision platform for solid waste iscreated to achieve the closed-loop management of solid waste throughout the process from generation, collection,storage, transfer disposal through such technologies as IoT, video AI and big data. Dynamic data collection andintelligent analysis and early 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 the weathermodification prototype on Tianquan Mountain in Deqing County, achieving intelligent control of key places ofweather modification and coordinated command between superiors and subordinates,and improving safetysupervision capability in weather modification operations. An intelligent meteorological observation andmanagement platform is built for the intelligent observation of cloud cover, cloud shape, visibility, snow cover andother meteorological elements by means of video AI and multi-dimensional perception. AR panorama, radar-assisted linkage and other new technologies are used to enable such applications as unattended observation stations,video review of weather phenomena and integrated display, generating more accurate and timely observation dataand taking meteorological observation to the next level.The 14
thFive-year Plan period has created a huge opportunity for rapid development of the digital economy,digital society and digital government. Together with multiple ecological partners, Hikvision will continue to
VOCs: volatile organic compounds.
promote the upgrading and iteration of products, systems and services, facilitate digital governance of thegovernment, and ensure social harmony and prosperity.
4.2 Enterprise Business Group (EBG): deepen digital transformation and accelerate efforts to improve theinnovation capacity of enterprises
4.2.1 Overview
The digital economy is playing a leading role in high-quality economic growth amid the prominent uncertaintyin the macro environment. Revolution of new energy, new energy vehicles, new infrastructure and machinesreplacing humans, for instance, demonstrate strong vitality and immense potential as they guide this new wave ofindustrial digital transformation and continue to contribute to new growth in the digital industry. Digitaltechnologies such as the Internet of Things (IoT), artificial intelligence (AI), big data and cloud computing havebeen integrated, applied and innovated by enterprises in managing their production and operation, assets andfacilities, personnel organization and cost control, enabling various industries to increase efficiency, innovateoperation, optimize organization and control costs. Together with partners, Hikvision will continue to innovatearound products, solutions and service systems. With abundant practical experience and keen industry insight, theCompany is committed to making itself the preferred brand of intelligent scenarios IoT, a major supplier ofequipment and facilities IoT, and a strategic partner for digital transformation.
4.2.2 Core Technologies: build an AIoT product and solution system and implement digital applications
Based on the unified software technology architecture, Hikvision builds its domain-end intelligent perceptioncapability and creates intelligent scenarios IoT and equipment and facilities IOT by utilizing AIoT technologies,develops data aggregation, analysis and mining capabilities with IoT-information network fusion data, and pushesforward the closed-loop implementation of intelligent applications by drawing on its AI engineering capabilities.By building the Huipin Application Empowerment Platform for smart parks and providing the Hik-Cloud enterprise-level SaaS service for chain users, the Company responds rapidly to user needs, supports the innovation of industrialapplications and helps with the implementation of digital applications in numerous industries.
Hikvision will continue to refine digital enterprise solutions integrating enterprise informatization, equipmentand facilities IoT and intelligent scenarios IoT, enhance industrial insight, and innovate applications for digitaltransformation in such fields as digital energy, intelligent manufacturing, intelligent buildings, education andteaching, financial services, digital countryside, intelligent medical services, intelligent communities, culturaltourism, intelligent construction sites, retail chains and intelligent logistics.
(1) Constantly innovate AIoT products featuring comprehensive perception of elements
Using its technological strengths in AIoT, Hikvision continues to innovate and strives to build a full-domainintelligent perception product system by expanding the perception boundary of the physical world throughcontinuous breakthroughs in the multi-dimensional perception technology system.
Diversified product forms enable devices to better fit into the deployment environment. For example, themicro-distance meter-reading camera is easy to deploy and install thanks to its compact design, and energy-efficientwith a long battery life; the anti-corrosion cameras, featuring a special structural design for airtightness, are widelyused for monitoring offshore wind turbines; HikMicro Thermal Presence Detector blends right into conferencerooms and other business settings with its futuristic look.
Challenging on-site environments demand higher levels of equipment performance. For instance, high-temperature highlighting cameras can be used for furnace observation and steel slag scraping to gain visibility intothe operation process in harsh environments; the anti-fumigation camera can operate continuously in hazardous andhigh-risk environments such as a grain depot; in centralized control applications, professional low-latency cameras
have reduced the end-to-end image delay to 70 milliseconds, and the response delay is almost imperceptible to thenaked eye.
Flexible applications focus more on device portability. For example, designed with low power consumption,the small AI badge can provide continuous audio and video recording for 11 hours, documenting the entire serviceprocess; the safety helmet with an anti-shake camera helps manage site construction by recording videos clearly andreliably, ensuring that the construction process is safe and controllable; explosion-proof PTZ cameras can be quicklyand efficiently installed for temporary control and emergency management on the construction work site.With a vertical product system established across coal, electric power, communities, education and otherindustries, Hikvision hopes to work with partners in the future to create industry-specific products, expandthe scope of business application and facilitate the digital transformation of our users.
(2) Push the limits of AI engineering capabilities to accelerate business implementation
Hikvision vigorously explores a common path for AI empowerment, improves the efficiency of ecologicalempowerment and assists in rapidly completing the business layout of partners. Meanwhile, the Company sharpensits industrial insight, deeply integrates intelligent applications with the business process, and helps users’applications go online quickly, form a closed-loop system of intelligent application business and fulfill their value.To boost the efficiency of ecological empowerment, Hikvision has made its HCA-AIOPE (Hikvision CertifiedAssociate-AI Open Platform Engineer) technology certification system available for ecological partners, enablingthem to build an AI technology team and expand into more business fields together with the Company.
Hikvision’s AI engineering continues to serve users in education, electric power, chemical engineering,agriculture, food and other industries. For example, in the energy industry, guided by the technology roadmap ofthe AI+ automatic control system, technologies such as automatic belt deviation correction and dynamic fan speedcontrol have been successfully implemented; in real estate, the low-code AI+ engine can rapidly increase businessefficiency, reduce labor cost in operation and maintenance, and assist in intelligent building inspection, etc.,demonstrating its business value in providing convenience, improving efficiency and control processes; in logistics,the combination of AI and AGVs has further contributed to flexible robot dispatching, making it possible to adjustcapacity at any time according to on-site status; in retail, AI+Hik-Cloud empowers enterprises to carry out intelligentremote store inspections and create a monitoring system for cleaner kitchens so as to manage closely with greaterefficiency.
In the past year, Hikvision has cooperated with more than 1,000 ecological partners and jointly developed more
than 13,000 intelligent applications. We will work with partners to continue to advance the digitalization processfor various industries.
(3) Achieve closed-loop business management through the Huipin Application Empowerment PlatformBased on the unified software technology architecture and in accordance with the design concept of “intelligentapplications by putting modules together”, Hikvision has learned from successful digitalization practices in variousindustries to build the Huipin Application Empowerment Platform, providing users with out-of-the-box modularcomponent services and using low-code technology engines to facilitate rapid innovation of applications.Based on low code engines and the componentization technology, the Huipin Application EmpowermentPlatform can be used to implement digital business applications quickly and conveniently. Take the inspectionengine as an example. In 2021, it provided extensive services to thousands of users in energy, finance,manufacturing, construction, education and other industries, constructing applications such as property inspection,equipment inspection and production line inspection, and driving the implementation of value-creating businesses.Using IoT middle platform capabilities, the platform has realized comprehensive perception of elements in parksand enabled closed-loop management for production safety, park management, equipment and facilities, personnelmanagement, emergency operation, auxiliary for centralized control, data map walls, achieved digitalizationempowerment across all business scenarios, and built an agile operation system for parks. So far, the HuipinApplication Empowerment Platform has achieved the fully quantified implementation of applications for multipleusers including Langjiu Group, Xi 'an Electronic Technology University and Guoneng Shouguang Power Plant.The Huipin Application Empowerment Platform can serve users from various industries such as enterpriseparks, chemical industrial parks, campus scenic spots and industrial parks. Under the scenario of equipment andfacilities management in enterprise parks, for example, low-code engine capabilities including processes, workorders and report forms are fused into equipment lifecycle management covering spot inspection, repair,maintenance, scrap, spare parts and ledgers, enabling the equipment management department to effectivelystandardize business processes and improve the efficiency of equipment quality management. Under the scenarioof daily inspection of industrial parks, inspection engine is applied, where offline and online integration, AI-assistedautomatic inspection and other methods are adopted to form a closed business loop from inspection plan executionto rectification and optimization, enabling the operation and maintenance department of the park to raise inspectionquality and efficiency and guard against security risks. Under the scenario of directing operation of chemicalindustrial parks, a new UI is built for the digital world based on low-code engine capabilities, which has reshaped
the interactive management experience by enriching it with multi-screen interaction, interaction between the virtualworld and the real world, data analysis, remote command and other capabilities, thereby providing managers witha panoramic view of the overall situation as well as insight into the details.Addressing the challenges faced by parks with constantly updated technologies and ideas, the HuipinApplication Empowerment Platform incorporates all kinds of new digital technologies to provide overall solutionsfor the construction of intelligent parks. As a firm believer in openness and integration, Hikvision cooperates closelywith partners to jointly empower users to achieve digital transformation and continues to create value.
(4) Provide segmented scenario-based applications through the Hik-Cloud enterprise-level SaaS serviceUtilizing such technologies as AIoT, the mobile Internet and AI, Hik-Cloud focuses on intelligent store systems,intelligent community business, intelligent logistics services and digital management of schools with moresegmented scenario-based applications, while continuing to expand business in new scenarios such as intelligentconstruction site management and intelligent agricultural IoT.
For example, Hik-Cloud is combined with AI to provide closed-loop applications for intelligent cashier riskidentification, traceability and statistics in chain stores, thereby increasing management efficiency. In K12 schools,Hik-Cloud bridges the communication gap between parents and school, through Education Digital Signage, a multi-scenario interactive terminal, and helps build an intelligent campus. In residential real estate, Hik-Cloud serves tonormalize community epidemic prevention by rapidly launching the “temperature measurement and health codechecking for entrance control” program boasting digital traceability of “one person, individual temperature andindividual code”, enabling communities to carry out epidemic prevention more efficiently. Hik-Cloud also continuesto serve customers in logistics, construction, agriculture and other chain industries with a steady stream of digitalsolutions of connectivity, management, intelligence and insight.
In 2021, the number of Hik-Cloud users and access devices continue to grow rapidly. Hik-Cloud has beenapplied to more than 40,000 offices, 280,000 retail stores and 600,000 logistics nodes, serving 4.16 millioncommunity home owners and 3.5 million parents of students, and accessed by 2.5 million devices. With a focus onvarious fields such as enterprise-level SaaS digital marketing and content operation, Hik-Cloud will continue tocreate new business value for industry users.
4.2.3 Value Fullfillment
Parks are cities in miniature, spaces for industrial development and key bases for digital transformation, which
is why the digital operation of parks and the operation, maintenance and management of equipment and facilitieshave become focus areas in the digital transformation of enterprises. Based on a value system centered on“shortening management distance, improving business efficiency, regulating operation behaviors and preventingsafety risks” and a value delivery methodology covering “vision setting, value matching and value fulfillment”,Hikvision has been exploring, practicing and summarizing its applications in various park-like settings such asenterprise parks, industrial parks, chemical industrial parks, business parks, campuses, hospitals, scenic spots andvenues. The result is a digital approach for intelligent parks combining “a security closed loop from the entry andexit of people and vehicles to overall management, a logistics closed loop from service delivery to feedback onresults, a safe production closed loop from manpower, machine, material and environment to event handling, anequipment management closed loop from point inspection to work order management, and an auxiliary controlclosed loop from the command center to emergency response”, empowering more partners to forge the path todigital transformation.
(1) Create a security closed loop from the entry and exit of people and vehicles to trackingHikvision is committed to building new digital intelligent parks, constantly expanding the security businessboundary, extending the management scope from local management to global management, and transforming the
management method from governance by people to digital governance. A security closed loop from the entry andexit of people and vehicles to tracking based on the comprehensive perception of personnel, vehicles, perimeter andother elements has been created and implemented for multiple users including Langjiu Group.
In industrial parks, with people and vehicles as key management objectives, a park operation managementsystem with a panoramic view and a controllable process is built to manage personnel, vehicles, visitors and others.Thanks to the B-visual Engine, a digital board is set up to display details of park operation in real time.In logistics parks, a multi-dimensional system for crime prevention and control centering around people,vehicles, goods and warehouses is built in such scenarios as warehouses, freight yards, platforms and roads in thepark. At the same time, it is connected to the scheduling system to realize the full control of vehicle entry and exitand intelligent guidance of platform scheduling, thus improving the utilization rate of platforms in the park by morethan 50%.In chemical industrial parks, a park supervision system characterized by intelligent prevention and scientificcontrol is built on “prevention, management and control” as its core focus. Digital applications such as themanagement of vehicles carrying hazardous chemicals and closed park management have been implemented toachieve whole-process control of vehicles carrying hazardous chemicals from booking, waiting for inspection,guiding them into storage, queuing and paying fees.In hospitals, an efficient, reliable, intelligent, visualized and multi-directional personnel management andcontrol system is built for access control and intelligent security check. The health code system, the hospitalinformation system (HIS), inpatient management and other systems are interconnected to facilitate security checkand identity verification, providing strong support for hospital security work.
(2) Create a logistics closed loop from service delivery to feedback on results
Hikvision focuses on enterprise operations and services, providing green and efficient conference management,comfortable and convenient canteen management, safe and energy-saving dormitory management, easy and flexibleinformation release, and smooth, high-end smart showrooms. A logistics closed loop from service delivery tofeedback on results, which is established to improve operation and management efficiency and user experience, hasalready been put into practice by Xidian University and other users.
In Campus, a smart campus security system integrating management, prevention and control has been createdto achieve intelligent management of restaurants, dormitories, attendance, meetings, information announcement andother services, incorporating data from the campus information network to provide convenient and high-quality
campus services for teachers and students.Aimed at improving the service level at venues, an intelligent large screen and a query and guidance systemare built to broadcast event information repeatedly in rotation and perceive the information about the latest eventsin advance. At the same time, it is inter-connected with the ticketing system to guide the audience to quickly checkseat information and the recommended routes through information release, thereby improving the service level.In enterprise parks, based on the dormitory management platform and smart locks, Hikvision providesdormitory supervisors and residents with information-based management capabilities, making room status visibleand allowing for intelligent and convenient room allocation, quick and convenient asset repair reports, precise accesscontrol, accurate dormitory statistics, and meticulous expense settlement.An energy consumption management system featuring intelligent identification and active response is createdto support device running detection, production energy efficiency analysis, energy waste supervision, energyconsumption data display and other functions, so as to increase energy consumption management efficiency andcontinuously optimize energy performance. As show in our user cases, total energy consumption can be reduced byroughly 1% to 3%.
(3) Create a safe production closed loop from manpower, machine, material and environment to eventhandling
Based on the perception of elements in the production process, Hikvision establishes a safety managementsystem to ensure safe and stable production. Utilizing the full-stack spectral perceptive technology and AIengineering capabilities, a management closed loop boasting real-time monitoring, intelligent identification, linkagedisposal and event archiving is targeting on key production factors such as personnel, equipment and environment,so as to eliminate potential safety hazards in time and ensure normal and orderly production. This has beenimplemented by multiple users including Anshan Iron and Steel Group Corporation (Ansteel Group).In coal mining enterprises, with the goal of “identifying hidden dangers and creating closed loops” in mind,we build an “intelligent and complete visualized AI security control system” combining videos and AI to achieveclosed-loop management (ranging from hazard identification to security control) of ten production factors includingmanpower, vehicles, materials and environments, offering underground miners a 24-hour “safety net”.Centering on construction work site safety, a safety control mechanism featuring “project-enterprise synergyand intensive supervision” is established at the site to provide intelligent monitoring of equipment running status,early warning of potential risks related to personnel and operation, and traceability of key construction processes.
Real-time on-site data are gathered to assist the refined management of projects and help enterprises with intensivemanagement.
In iron and steel enterprises, focusing on the goal of “intelligent manufacturing and intelligent safetymanagement”, online diagnosis of thermal faults, online monitoring of running and leaking, online supervision ofcrane operation, belt abnormality detection and other functions have been realized in the material plant as well assintering, coking, iron-making and steelmaking processes, as a way to lower the risk of production accidents andensure stable operation.
At gas stations, real-time intelligent analysis is conducted on personnel, vehicles and materials, and a safetyoperation control system is created to implement more than 20 intelligent applications such as oil unloading statusidentification, oil stabilization time detection, operator detection and safety precautions detection, therebyimproving the efficiency of safety control and ensure the safe operation of gas stations.
(4) Create an equipment management closed loop from point inspection to work order management
With a focus on the utilization efficiency of equipment and facilities, which are the core assets of enterprises,Hikvision facilitates the transformation of equipment and facilities management from general operation andmaintenance to intelligent operation and maintenance through management and predictive maintenance, and createsan equipment management closed loop from point inspection to work order management. This has been put intopractice by Guoneng Shouguang Power Plant and other users.
In power plants, the intelligent inspection robot, infrared temperature measurement and other intelligentperceptive terminals form a real-time perception network, contributing to closed-loop performance of inspectiontasks from planning, execution, review to analysis in the operation and maintenance of key equipment assets suchas coal handling equipment, steam engines and boilers, and resulting in a greater efficiency of equipmentmanagement and defect management.
In intelligent manufacturing bases, combined with the intelligent inspection, an equipment inspection report isgenerated with the equipment operating status information collected by the front-end perceptive device. Anequipment management ledger is thus formed, and a full-cycle equipment management system covering installation,operation, maintenance and scrapping is created to assist decision-making concerning equipment operation andmaintenance.
In liquor-making enterprises, we focus on the status and hazard analysis of such core production equipment aspackaging lines, boilers, water devices and desulfurizers and cover the entire lifecycle of equipment and facilities
from pre-shift inspection, daily inspection, warranty servicing, routine maintenance to asset inventory, with thepurpose of promoting equipment management execution, standardizing business processes and substantially raisethe overall efficiency of equipment.In metal smelters, thermal-imaging cameras, orbit robots, environmental sensors and other devices can beconnected through IoT gateways to realize online monitoring of equipment abnormalities, real-time warnings,maintenance task assignment and other functions, in hope of “putting safety first and increasing both quality andefficiency”.
(5) Create an auxiliary control closed loop from the command center to emergency response
Hikvision helps enterprises build AIoT perceptive systems with enriching full-scale total data on all factors,effectively enhancing their ability to prevent and respond to emergencies. Real-time closed-loop business handlingis achieved in such business areas as fire management, park inspection and situation analysis. Through freeviewpoint, augmented reality (AR), data cockpit and other applications, an auxiliary control system featuring multi-dimensional presentation and three-dimensional visualization has been created for closed-loop auxiliary controlfrom the command center to emergency response, and implemented by Robam and other users.In iron and steel enterprises, a free viewpoint stitching together images taken by multiple cameras isconstructed to panoramically monitor the process of iron and scrap conversion of converters in production settings,and the ladle hook is displayed through picture-in-picture with a low-latency camera to remotely control craneoperation and reduce the risk of personnel working on-site.In manufacturers, a digital AR workshop, the most intuitive way to present production status, is connected toan Manufacturing Execution System (MES) to obtain equipment and facilities information and material information,which is then integrated with an AR real map to build a digital twin of the production scene, thereby assisting inmaking management decisions and enhancing production efficiency through digital means.In pharmaceutical enterprises, centering on the concept of “multi-dimensional perception, data sharing andbusiness linkage”, we build an agile operation command center, which uses big data technologies to mine the IoTperceptive data and present the overall situation of production parks and achieve visualized command andscheduling based on 3D maps and real-scene command applications.
In hydroelectric power station, the communication platform and the business system are inter-connected andintegrated to create a “agile, well-coordinated, orderly and unified” emergency command system, which willprovide dynamic risk monitoring and early warning based on the intelligent perception network and support decision
making with data intelligence through data sharing and fusion.As digital transformation continues to bring new development and business opportunities, Hikvision focuseson the continuous innovation of AIoT and relies on the capabilities of its products and solutions system to create anopen, co-built and win-win ecosystem that empowers partners to grow together and facilitates digital transformationfor users.
4.3 SME Business Group (SMBG): Enhance the Digital Transformation Service Capability of the WholeIndustry and Improve the Generic-Security Industrial Internet
4.3.1 Overview
Small and medium-sized enterprises (SMEs) are an important part of the national economy. The interwovenpressures and forces of epidemic control, economic fluctuations, policy guidance and technological iteration areencouraging SMEs to seek change in adversity and accelerate digital transformation and upgrading. As estimatedby iResearch, the market size of digital upgrade services for SMEs will reach 330 billion RMB in 2022, with hugemarket potential. For SMEs, to engage in digital transformation is essentially to improve the efficiency of productionand operation. SME users require generic-security IoT devices to connect various scenarios and lay a datafoundation as well as timely and effective services that fit the business. Despite constantly emerging digital demands,the project contractors that provide products and services for SMEs are inefficient in reaching users and obtainingbusiness opportunities, and the cost of project implementation, operation and maintenance, and managementremains high. Therefore, the project contractors face an increasingly urgent demand to sharpen their digitalmarketing capability. As a result, the market is in need of an industrial platform with a wide-ranging influence tolink the vast number of channels, project contractors and SMEs, enable digital marketing, and better meet thedemands for digital transformation of customers and users.Working with general practitioners and drawing on technological elements such as big data and AIoT,Hikvision integrates industrial chain resources, empowers channel customers, project contractors and ecologicalpartners, offers standardized services, builds an open and interconnected generic-security industrial platform, anddevelops intelligent omni-scenario IoT solutions, all in hopes of driving digital transformation and upgrading forSMEs.
4.3.2 Core Technology: Mutual Promotion Between Online and Offline Channels Driven by HikvisionInterconnectivity and Hikvision SMBG E-commerceThe product matrix of the generic-security industrial Internet created by Hikvision is comprised of twomainline platforms: SMBG-SII HikLink and Hikvision SMBG E-commerce, which provide a channel digitalizationplatform, a project contractor workbench, an SME service platform and an open platform for ecological cooperationthat serve channel customers, project contractors and SME users. Based on the infrastructure capacity of Hikvisionand the marketing network of partners, an empowerment platform is built to adapt to the traditional industrialstructure.
SMBG-SII HikLink: It creates a service platform for SME users, integrating the capabilities in devicemanagement, solution applications, cloud-edge fusion, content purchase guide, value-added services and etc. toprovide one-stop scenario-specific solutions. The platform can access video, access control, intercom, fire protection,transmission and other major categories of products, including nearly 10,000 SKUs, linked to millions of equipment;the platform builds SaaS solution packages around communities, offices, stores, factory parks and other scenarios,and increases business value through subscription services; based on SMBG-SII HikLink, the Company has derivedan open platform for ecological cooperation, drawing on the strength of ecological partners to achieve the expansionof solutions in vertical segments and horizontal business fields. The SMBG-SII HikLink Project Contractor Platform
provides equipment management, project management, and tool & service capabilities to accumulate project data,improve the business efficiency of project contractors, and help them increase revenue in the long term.Hikvision SMBG E-commerce: It provides channel customers with a digital platform that empowers the vastnumber of security practitioners and integrates supply chain empowerment, marketing empowerment, tool provisionand service operation to create a marketing service system, enable industrial chain digitalization, and move businessonline; the platform relies on digital marketing tools to enable employees and users to be online, accumulate andanalyze business data assets, and support decisions with data.The SMBG-SII HikLink and Hikvision SMBG E-commerce platforms are mutually supportive and spirallydriven to help channel customers excel in digital supply chain and digital marketing and enable project contactorsto efficiently manage equipment and projects, enhance professional capabilities and serve users efficiently, therebycreating one-stop preferred products and services defined by omni-channel, whole-process and omni-scenariooffering for SMEs.
4.3.3 Value Fulfillment
(1) Build a generic-security industrial platform
Hikvision provides a working interface for project contractors and software and hardware service providers toassist in equipment management, efficiency improvement, business operation and service professionalismenhancement, and combines its strengths with those of its partners and sharpens its competitive edge throughecological cooperation to better empower the industry. SMBG-SII HikLink has further expanded its client coverage,supports access and control of all kinds of intelligent devices with an open architecture, and enables out-of-the-boxthird-party business plug-ins in a component-based development mode, providing users with multi-scenario optionsand realizing data visualization and flexible use of multiple terminals. Hikvision continues to extend the productline, providing channel customers and SME users with one-stop procurement, embrace a wider range of professionalgeneric-security channels for a two-wheel drive composed of high quality channels and high quality products, andestablish localized channels to provide products and services with better qualities for localized markets. TheCompany works with channel customers to build a localized service ecosystem, provide inclusive AIOT capabilitiesand applications for SMEs, improve whole-process service before/during/after sales, and promote subscription-based value-added services, thereby facilitating the implementation and service upgrading of one-stop intelligentsecurity.
(2) Promote channel digitalization
Hikvision’s channel digitalization for SMEs focuses on digital supply chain and digital marketing.In terms of digital supply chain, Hikvision opens up transaction links between the Company’s production,channel customers, contractors and SME users to integrate purchasing and marketing. At present, nearly ten beehivelogistics centers have been built nationwide to move the whole process from order to delivery online, reduce costand prevent loss, release the energy of channel customers, and focus on improving marketing capability; fully onlinemanagement of purchase, sale and inventory data is achieved to help increase the efficiency of inventorymanagement; the intelligent goods sorting capacity is enhanced to ensure sorting efficiency during periods of tightsupply; the intelligent prediction/channel business intelligent (BI) system is enhanced for greater predictionaccuracy and a stronger approach to data management.
In terms of digital marketing, Hikvision builds digital stores to enhance overall competitiveness and brandinfluence. The store image and system are upgraded with modular display and application scenario expansion toelevate in-store user experience, and an information-based system is introduced to manage information and storeinspection tours, laying a foundation for digital operation. The Company has strengthened integrated marketing,successfully communicated the value of key products and programs, and significantly increased omni-channelexposure; it has helped launching hundreds of online marketing events in epidemic-stricken areas, empoweringmore than 100,000 security professionals to improve their professional and marketing capabilities; it pushes forwardthe creation of digital marketing platforms, helps customers realize the digitalization of whole-chain, multi-channelmarketing, and facilitates the digitalized management of business opportunities, customers and assets.Looking to the future, SMBG will continue to work with channel customers, project contractors and ecologicalpartners to create a new vision of intelligent security, help enable the digital transformation of SME users, build theInternet of Things, and open up more possibilities.
4.4 International Business: Continue to Build a Global Marketing Network and Optimize the Channel andIndustry Layout Step by Step
4.4.1 Overview
Starting from its initial foreign trade model, Hikvision’s international business has gradually evolved to buildregional centers for localized sales, and now it has established sales and service channels all over the world, and
ushered in the stage of localized marketing based on the “one country, one strategy” tactic. By 2021, the Companyhas set up 66 branches in the international market as well as Hong Kong, Macao and Taiwan, providing localizedservices in more than 150 countries and regions.
In the international market, Hikvision focuses on channel product sales while actively expanding into verticalmarkets, covering a wide range of industries including transportation, education, retail, logistics, health care, energyand manufacturing, to provide customers and users with products and integrated solutions. In addition tocontinuously developing the video business, the Company offers non-video products with a rich set of features, suchas access control, alarms, intercoms as well as security and AIoT management software, to cater to differentapplication scenarios. Meanwhile, AI-based applications and solutions are being applied in more and more countriesand regions and continuing to deliver business value to users.In recent years, geopolitical issues and the global epidemic have brought many challenges and uncertainties tobusiness development. Facing such complicated external environment, the Company focuses on meeting thedemands of customers and users, designing and developing suitable products and solutions, strengthening the supplychain system, improving and optimizing internal operations, and ensuring the effective operation of local servicesand local businesses. Although some countries and regions are affected by force majeure, the international businessas a whole is still progressing steadily.
4.4.2 Core Technologies: Lay a Sound and Solid Technological Foundation and Create a Targeted Researchand Development System
Hikvision perseveres in technological innovation and proceeds from industry needs to expand the Company’stechnological boundaries. Based on the overall technological basis of the Company, a unique product andtechnology system in line with the international business strategy and market demand has been formed for theinternational business. The Company provides users with products and solutions suitable for different applicationscenarios with solid product capabilities, sophisticated AI algorithms, various multi-dimensional perspectivetechnologies and diverse fusion applications.
(1) High-resolution image technology
Products with a strong competitive edge are one of the most important factors for customers and users to choosea brand in the international market. Hikvision integrates visible light, infrared and other image perceptivetechnologies to produce clear images and capture details throughout the day in all weather conditions. Using high-performance sensors and ISP (Image Signal Processing) technologies, the Company continues to explore cameraimaging technology at night and in complete darkness with no light, and has developed a series of devices that tailorto different scenarios and applications, such as“ColorVu ” camera series, and “DarkFighter X” series featuring bi-spectrum imaging, which are very popular in the international market. In addition, 4K Ultra HD, multi-lens seamlessimage stitching, high magnification zoom lenses and other technologies enable users to broaden their horizons andachieve HD preview and playback.
(2) Extensive application of artificial intelligence
The value of artificial intelligence (AI) as one of the basic technologies reshaping the security industry isincreasingly recognized by industry users in the international market who have started to put it into extensive use.According to the application demands, development stages and policy differences concerning AI in differentcountries and regions, Hikvision has launched intelligent product series based on deep learning algorithms, such asDeepInview, DeepinMind and AcuSense. These products have been applied in the international market to help usersdiscover new uses of AI in various scenarios such as target detection, target recognition, perimeter alarm, passengerflow statistical analysis, queuing detection, safety helmet detection and license plate recognition etc., ensuringefficiency and safety for users while creating more business value.
(3) Rich multi-dimensional perception
Combining visual perception with the multi-dimensional perceptive technology, Hikvision is constantlyexpanding the scope of global perception through high-precision radar, audio, temperature measurement and etc,based on which the Company has launched the radar-assisted camera, the radar-assisted PTZ dome camera, visualintercoms, thermal imaging cameras and other products, combining multi-dimensional perception with traditionalvideo to offer a more complete perception capability and provide users with a more comprehensive reference fordecision-making. At the same time, the Company has further introduced access control, alarms, interactive screensand other product lines into the international market, released non-video systems including “MinMoe” smart accesscontrol and AX PRO, combining with video applications, to constantly enrich the application scenarios of physicalsecurity from various dimensions.
(4) Diverse integrated applications
As the security industry continues to change and develop, the integration of different technologies and systemsis being widely used to effectively address practical user problems. The Company integrates video applications andnon-video applications, such as access control, alarms, fire prevention and emergency management, into a unifiedmanagement platform, and has successively launched HikCentral series platform management software that meetsthe demands of different scenarios. Through diversified integrated applications, the Company fully satisfies thebusiness needs of integrated security systems. In the meantime, Hikvision also provides multi-business systemintegrated solutions, integrating security systems with various enterprise information systems (such as humanresources, finance, inventory, logistics systems, etc.) to break down information silos, strengthen collaborationbetween systems, and equip users with more comprehensive data and analysis to support decision-making.
4.4.3 Value Fulfillment
Oriented by user value, Hikvision has refined complete solutions that match different business needs andcontinues to provide in-depth localized services, striving to create value for customers and users.
(1) Enable SMEs to upgrade management
With the progress of intelligent technologies, the demand of SMEs for security is no longer limited to videorecording; instead, they are further pursuing more intelligent applications, images with higher quality, and remoteaccess and management at anytime and anywhere. Hikvision has launched a series of solutions targeting SME
scenarios, integrating advanced intelligent applications, the high-definition image technology, cloud managementand rich product lines to ensure the safety of personnel and property, enhance the efficiency of business operations,and help SMEs to upgrade their security systems.
(2) Facilitate digital transformation of enterprises
Driven by user value, Hikvision provides AIoT industrial solutions to automate enterprise workflows andprocedures, and collaborates with ecological partners to create best practices for industrial digital transformation,boosting the development of energy, logistics, manufacturing, retail, education, health care and other industries. Forexample, in the logistics industry, we help users to ensure transportation safety, lower transport costs and improvetransport efficiency and quality; in education, we help promote ubiquitous access to education through synchronousclassroom teaching.
(3) Promote extensive ecological cooperation
Together with ecological partners, Hikvision provides customers and users with more diversified products andsolutions in the security industry and more cross-industry fields. The Company provides open capability forhardware devices based on the HEOP architecture to run algorithms of partner manufacturers, thereby meeting thepractical needs of users in different scenarios and applications. At the same time, the Company opens its platformsoftware integration capabilities to partners and collaborates with other application systems to enable users tomanage more comprehensively and efficiently.
(4) Contribute to the harmonious development of society
Hikvision is committed to making contributions to improving social security and the ecological environmentthrough technological innovation and enhancing incident warning and safety protection capabilities. For example,safety risks in the production process can be lowered through the application of safety helmet detection andpersonnel off-duty detection; based on the high-precision radar and video fusion technology, real-time roadconditions can be predicted effectively to reduce traffic accidents. In addition, the company implementsenvironmental protection requirements in its daily operation and production, actively responds to the call for low-carbon development, practices green manufacturing and fulfills corporate social responsibility.
Hikvision continues to improve the global marketing service network and remains committed to more timelyand efficiently response to customer and user needs. In addition to branches located globally, Hikvision hasestablished research and development centers in Canada, the U.K. and other places to design and develop products
and solutions tailored to local needs at a faster pace. The company has also built a number of overseas manufacturingbases and regional logistics centers, which cover trans-regional distribution while ensuring product delivery capacity.In addition, Hikvision has set up a number of call centers around the world and after-sales service outlets in morethan 70 countries, providing customers and users with timely and excellent after-sales service.Hikvision will continue to intensively explore the international market, utilize cutting-edge perceptiontechnologies and intelligent applications to provide customers and users with high-quality products and solutions aswell as exceptional localized services, so as to better meet market demands and become a reliable technologicalpartner for customers and users.
5. Innovative Businesses
Hikvision’s continuous efforts in technical reserves and expanding business scope provide a good basis forinnovative business development. Currently, the innovative business camp includes EZVIZ Network, HikRobot,HikMicro, HikAuto, HikSemi, HikFire, Rayin and HikImaging. The solid development and growth of innovativebusiness has continuously injected new impetus into the long-term stability and sustainable development of theCompany.
5.1 Innovative Business - EZVIZ Network
EZVIZ Network is committed to becoming a reliable provider of smart home services and IoT Cloud Platform.For consumers in smart home scenarios, EZVIZ Network possesses whole-chain capabilities covering the design,R&D, productions, sales, operation and technical services of smart home products. Alongside with signatureproducts including smart home cameras, smart home entry, smart control, and smart service robots, it also providesvalue-added services such as cloud storage, phone reminders, screen abnormal detection, intelligent recognition,and crying detection. For industrial consumers, EZVIZ Network offers open cloud platform services, includingproduct intelligence solutions and software development technologies and tools. With such services, it assiststraditional manufacturing clients with the intelligent upgrade of products, and help solution clients to developsolutions for complex scenarios.
As of the end of December 2021, 159 million IoT devices were connected to the EZVIZ IoT Cloud Platform,with the number of connected video IoT devices remains the leading position in China. The number of users of theEZVIZ IoT Cloud Platform recorded over 90 million, including over 35 million monthly active users; EZVIZ
Network Cloud Video application had more than 1.5 million average monthly paying users, and more than 200,000registered domestic and overseas industrial clients at EZVIZ IoT open platform.
5.1.1 Core Technologies
Adhering to independent technological innovation, EZVIZ Network independently owns core technologies andresponds rapidly to user demands, having thus established a mature and proven technology R&D managementsystem. A great deal of technology R&D has been undertaken surrounding cloud platform construction, visual andaudio AI technology, and product intelligence. EZVIZ Network is among the first in China to develop a video IoTCloud Platform – the EZVIZ IoT Cloud Platform – and to independently establish an infrastructure for the IoT era.
Smart home products: EZVIZ Network works on the intelligent upgrade and transformation of all kinds ofhousehold equipment, focusing on integrating intelligent technology into products. In specific, general-purposeintelligent technologies are centered on equipment’s universal capabilities, such as interconnectivity andinteroperability, wireless communication and visual interaction, with the constant iteration of codec andtransmission technology, wireless communication technology, intelligent interconnection technology,comprehensive low-power technology, multi-dimensional perception technology, differential and modular IoTdevice upgrade technology, adaptive image delivery technology, multi-lens computing visual technology, fogcomputing application and other technologies; special-purpose intelligent technologies are developed around thefour smart home product categories identified by the Company, including camera adaptation to home environmenttechnology, smart lock structure and smart application technology, sensor-controlled equipment capacity expansiontechnology, and robot control and application technology, etc.
IoT Cloud Platform: Oriented for cloud infrastructure, IoT access, operation & maintenance assurance, andservice middle platform, EZVIZ Network independently develops cloud infrastructure technology, IoT accesstechnology, multimedia technology, cloud security technology, cloud platform operation & maintenance assurancetechnology, application development technology, platform messaging technology and many other core technologiesrequired for the construction of cloud platform. An IoT Cloud Platform featuring access of hundreds of millions ofdevices, all-time operation & maintenance, real-time security protection, and high-bandwidth traffic has beenconstructed upon public cloud using the above technologies. Meanwhile, based on the AI computing framework ofthe cloud platform, the Company concentrates on the development of visual and audio AI algorithms, and hasacquired video codec optimization technology, video detection and classification technology, video recognitiontechnology, audio processing technology, audio analysis technology and other core algorithm technologies, thereby
developing the intelligent analysis capabilities of middle platform. Also, it owns holistic platform-based capabilitiesfor various IoT devices, which range from access, encryption, forwarding, to storage and intelligent analysis,providing consumers with value-added services and industrial clients with open platform services.EZVIZ Network has produced a number of scientific research findings in the fields of cloud platformconstruction technology, visual and audio AI algorithm technology, and product intelligence technology. TheCompany had more than 50 authorized invention patents by the end of December 2021.
5.1.2 Major Products and Services
For consumers, EZVIZ Network's smart home products and services, based on the long-standing expertise invisual and audio AI technology and product intelligence technology, focus on exploring visual interactions, resultingin four featured product lines of smart home cameras, smart home entry, smart control and smart service robots, aswell as diverse ecosystem products such as smart water purifier, smart fresh air system, smart wristband, and smartpet feeder. On the basis of smart home products, EZVIZ Network provides consumers with cloud storage, phonereminders, voice assistants, screen abnormal detection, intelligent identification, key escrow and other value-addedservices tailored for home or home-like scenarios, thanks to its robust IoT Cloud Platform capabilities. With theabove product and cloud services, EZVIZ Network now offers whole-house intelligence solutions to users inhousehold scenarios, covering home security, home access security, emotional care, comfortable environment, andinteraction etc. Based on value-added services, EZVIZ Network has established an algorithm store for the flexibledeployment of AI algorithms on smart home devices, allowing consumers to choose AI algorithms and developcustomized solutions.Smart Home Cameras (SHC): In 2021 EZVIZ Network continued to innovate on hardware and software,and launched a 2K smart home camera with hyper-comprehension capability that supports the algorithm store.Consumers may select AI algorithms in the store and dynamically load them via smart home products, meeting theirown differentiated demands in smart home scenarios. The Company has leveraged its powerful AI algorithmcapabilities and EZVIZ IoT Cloud Platform’s global services to upgrade the cameras from “being able to see” to“being able to understand.” Through algorithm innovation, it has given birth to diversified services such asintelligent identification, irregularity detection, baby/pet care, and elderly care etc. Meanwhile, to meet users’personalized demand, EZVIZ Network has launched C8PF dual-lens pan-tilt-zoom camera, BC2 battery-poweredcamera, BM1 baby camera, and C6WI 4K extra-high-definition camera, among others.
Smart home entry: EZVIZ integrates emerging technologies into products such as smart door locks, smartvisualized door viewer and smart visualized doorbells, to upgrade their technologies and functions. In April 2021,the Company released DL31FVS, the first face recognition smart lock with dual-lens 3D structured lighttechnologies. It has been greatly improved in safety and environmental universality, and won the OutstandingTechnological Innovation Award from Tech G. In the same period, the DP2S smart door viewer was launched,featuring face recognition, water-proof, and large screen, the product is designed to meet the needs of users whopursue a premium lifestyle, and was honored the 2021Award for Recommended Product by Zol.com.cn.Smart control: It mainly includes smart sensors, smart display, smart central control, and whole-housewireless coverage solutions for smart home scenarios. In particular, the whole-house wireless solutions, primarilycomposed of wireless AP and AC controllers, provide stable, high-speed and complete wireless network coverageboth indoors and outdoors for smart home products and home users. The whole-house wireless coverage seriesproducts are the Company’s cornerstone in the field of smart home, as well as a new start for EZVIZ Network toestablish presence in the wireless network products market.Smart service robots: EZVIZ Network has developed a robot product line to address the diversified demandsof consumers in smart home scenarios, including smart companion robots and smart robot vacuums. In March 2021,EZVIZ Network launched RK2, an intelligent companion robots for kids that supports remote video control,intelligent voice chatting, two-way video calling and other functions. Equipped with intelligent applications such asface recognition, intelligent reminder, and picture book reading, the robot is able to think independently according
to the results of face recognition, actively greet different family members and give tailored intelligent reminders. Itcan also interact with and follow users leveraging body recognition and visual tracking technologies. The robotvacuum RS1N released concurrently, featuring separated dToF
LiDAR for accurate mapping and positioning, andoffers multiple functions such as area division, no-cleaning area setting, smart path planning, automatic charging,and fixed-point cleaning. Moreover, the product is equipped with a ToF 3D imaging camera and a 720P HD camera,both on the course direction, to enable visualized housekeeping in addition to cleaning and sweeping.For industrial clients, EZVIZ Network is committed to providing product intelligence solutions andtechnologies and tools for application development. Based on EZVIZ IoT Cloud Platform’s holistic middle-platformservice capabilities, it intends to increase the openness of cloud platform. For product-oriented clients in need ofintelligent transformation, EZVIZ Network has launched an Open IoT Platform to provide solutions for productintelligence and cloud service application, which helps clients easily make their products networked, digital, andintelligent; for application-oriented clients’ demand for application development in complex scenarios, theCompany has created an Open Software Platform, which provides clients with APIs, SDKs, SaaS components andSaaS boosters to develop SaaS-layer applications, thereby helping them to form tailored solutions under complexscenarios.
dToF: direct Time of Fly. That is to measure the distance from the object by measuring the time it takes for the reflected light toreturn after emitting a short pulse of light.
According to the statistics by the iResearch mobile big data platform, among all smart home applications theEZVIZ Cloud Video Application’s number of monthly active users ranks among the top two in the industry.iResearch’s data also shows, in 2020 the worldwide shipment of household cameras was 88.89 million, whileEZVIZ Network's smart home camera shipment was approximately 12.79 million, accounting for approximately
14.39% global market share, leading in the global market. Its smart door viewer has ranked top one in the brandranking of Access Control/Door Viewer on 11.11 Global Shopping Festival, 618 Shopping Festival, and other onlineshopping festivals on Tmall for many consecutive years; smart door lock has also ranked among the top ten in thecategory of electronic door locks on November 11, June 18 and other online shopping festivals on Tmall for manytimes, and climbed to the top three at the June 18 shopping festival on Tmall in 2021. EZVIZ Network’s smartcontrol, smart service robots and other innovative smart home products are also expanding their presence: itscompanion robot for kids ranked among the top ten of the children's robot category on Tmall at the June 18 shoppingfestival in 2021.
In the sector of IoT Cloud Platform, as of the end of December 2021, 159 million IoT devices were connectedto the EZVIZ IoT Cloud Platform, with the number of connected video IoT devices remains leading in China.
5.1.3 Outlook
EZVIZ Network adheres to the IoT Cloud Platform as its business foundation, and visual technology as itscore feature. Dedicated to the smart home industry and the IoT Cloud Platform industry, it aspires to become areliable provider of smart home services and IoT Cloud Platform.
With the wide application of the IoT, cloud services and AI technologies to smart home scenarios, the smarthome industry is evolving from single smart products to an interconnected smart system, and is expected to upgradeto human-centered personalized services, driven by the extensive application of privacy computing architecture andAI algorithms. EZVIZ Network will insist on continuous investment in visual technology and cloud platformtechnology, and continue to strengthen its own visual and audio AI capabilities. It aims to bring greater applicationvalue to consumers and users through its core technical capabilities, by developing the video IoT into the visual IoT,transforming the 2D image processing capability into the spatial information processing capability, and upgradingfrom “able to see” to “able to understand” and from simple intelligence to advanced intelligence.
5.2 Innovative Business - HikRobot
Centered on technologies such as visual perception, AI and navigation control, relying on its solid algorithm
accumulation, strong software and hardware development capabilities, and a complete marketing system, HikRobotfocuses on intelligent manufacturing, and continuously invests in the fields of mobile robots and machine vision topromote the digitization and intelligence of production and logistics.
5.2.1 Mobile Robots: Focus on Intralogistics and Promote Intelligent Logistics of FactoriesAs a dedicated provider of mobile robot products and solutions, HikRobot continuously concentrates onbreakthroughs and upgrades in products and technologies, in a bid to improve efficiency of the entire process fromdesign and development to implementation and deployment, and create more value for users using technologicalinnovation. In 2021 the company released its new-generation AMR (Automatic Mobile Robot) architecture platform– “Intelligent Base” and new hardware products based on this platform. Meanwhile, as required by businessdevelopment, product lines have been integrated into four new hardware products series, with the first generationof low-code application development platform unveiled.Four hardware product seriesLMR (Latent Mobile Robot) series: As HikRobot’s signature product series, LMR is the first to apply themodularization and componentization technologies of the new-generation “Intelligent Base” to new productdevelopment, thus leading to higher safety standards and offering higher flexibility. With faster delivery and moreconvenient operation and maintenance methods, it can efficiently respond to complex and scenario-basedrequirements in reality. In 2021, HikRobot released the fourth-generation products Q7 and Q3, with greatlyimproved intelligence features and enable easy deployment in more application scenarios.CMR/HMR (Conveyor/Heavy-duty Mobile Robot) series: The CMR/HMR product line, focused onindustrial applications, aims to develop differentiated products to meet the demands of cargo tranship, cargo delivery,heavy-duty handling, etc. In 2021, the series was further improved in performance, to meet the industry’s generalrequirement for accuracy with a driving positioning accuracy of ±5mm and a docking accuracy of ±2mm; and tomeet safety requirements in the case of mixed traffic flows of people and vehicles with a 360-degree safetyprotection scheme. HikRobot CMR/HMR product series is now widely used in the panel display and SMTproduction lines in the 3C industry, lithium battery and photovoltaic production lines in the new energy industry, aswell as automaking, machinery manufacturing and other sectors.
FMR (Forklift Mobile Robot) series: Thanks to a new system architecture, FMR product series has beenimproved in terms of storage capacity, efficiency, security, and scenario-based intelligent perception. HikRobot’sindependently-developed 3D SLAM laser navigation algorithm has simplified implementation and improved the
rapid deployment capability of products without compromising positioning accuracy and reliability. Apart fromconventional omni-directional, stacking and handling forklifts, in 2021 the Company extended to two sub-series –reach and counterbalance forklifts, with the maximum stacking height of over 5 meters.CTU (Cargo Transport Unit) series: The entire CTU range has been upgraded based on a new structure,aiming for diversified types, maximum storage capacity and optimal efficiency. The new cargo transport unit appliesto a wider range, available in three sub-series – small, medium and large; the actuator structure has been expandedfrom clamping to lifting; the weight of the product is reduced by more than 20%, and the single-machineproductivity has greatly improved. The ST6 workstation independently developed by HikRobot features a floor areathat is only 20% of that of some competing products, and the overall operating efficiency of its system is greatlyboosted.Software product seriesThe RCS (Robot Control System) independently developed by HikRobot features three systems – scheduling,simulation and digital twin through the construction and combination of varied components. It is designed to instructmore than 1,000 AMRs of different types and different navigation modes for collaborative work, realizing swarmintelligence. The iWMS (intelligent Warehouse Management System), which is independently developed forwarehousing, is deeply engaged in core fields such as data fusion, human-computer interaction, service orchestration,and algorithm services on the technology side, and adapts to the trends of industry-specific system and scenario-based application on the service side. The purpose is to advance the intelligent logistics model of “goods to people”towards “multi-industry, all-scenario, and full coverage.”Solution developmentAutomotive industry: The AMR solutions for the automotive industry include a variety of software accessmodes, multi-category AMR collaboration and scheduling, and multi-level caches, so as to adapt to differentmaterial preparation models and determine different inbound and outbound strategies. Harnessing the underlyingopen architecture of software platforms, it enables the smooth connection of production data, helping customers tosteadily achieve agile manufacturing and solidly promote lean management.3C industry: HikRobot has developed and designed an array of AMR models, equipped withiWMS/RCS/WCS (Warehouse Control System), as well as hoists, automatic doors and other equipment. Now it hasbeen applied to cell phone production, PCB processing and other typical whole-plant logistics scenarios in the 3Csector, covering all stages of intralogistics such as material warehousing, material delivery, production and handling,
and finished product warehousing. It is expected to realize unmanned, automated and intelligent material handlingthroughout the plant.New energy industry: HikRobot boasts highly standardized solutions for the photovoltaic and lithium batterysegments. In each key production stage, the combination schemes of LMR+CMR+FMR can help businesses savelabor costs and increase production capacity.
The mobile robot market is expected to maintain a rapid growth, as the demand for transformation andupgrading continues in the conventional manufacturing industries, and the demand for automated logistics maintainsat a high level. In 2022, HikRobot plans to introduce AI applications in AMR’s perception, planning, control, andcollaboration, and leverage 3D vision and other perception technologies to enhance the autonomous capability ofAMR, striving to expand application scenarios and market presence. To empower partners, HikRobot will build anindustrial software platform in the field of AMR, so that partners will be able to more easily customize robots, morerapidly tailor systems, and better serve end users.
5.2.2 Machine Vision: Focus on Industrial Perception and Drive Digital and Intelligent Production
As the core of industrial perception, machine vision is the eyes of robots and automation equipment. It is a keytechnology for building the industrial Internet and the perception network for digital factories. It is also an integralpart of flexible and intelligent production. In 2021, HikRobot continued to enrich and optimize machine visionproducts, and gradually extended from 2D vision to 3D vision, giving birth to three new product lines: 2D visionproduct line, intelligent ID product line and 3D vision product line. In the meantime, it tried to cultivate a visionapplication ecology centered on the Visual Master (VM) Algorithm Software Platform, and work with partners tomeet the application demands of fragmented industrial scenarios.
2D vision product line: HikRobot provides industrial customers with a holistic visual imaging and acquisitionsolution that is centered on industrial cameras, and supported by industrial lens, industrial light sources and
industrial capture cards. In 2021, based on the new FPGA platform architecture, HikRobot continued withperformance optimization and product expansion, and achieved comprehensive improvements in powerconsumption control, image quality and transmission stability, resulting in two complete product series – the newCS second-generation industrial camera and the CU universal camera. The CH high-speed and high-resolutioncamera series was expanded to better meet high-end applications; and the 8K and 16K CL line scan cameras wereintroduced, completing the CL line scan camera product layout from 2K to 16K. HikRobot has also developed a 25-megapixel industrial lens series, which is adaptive to C-mount ultra HD image sensors. As for industrial light sources,it joined hands with partners to design and develop a new series, as part of HikRobot’s light source product serieswith consistent product family design and higher quality. Capture cards supporting CoaXPress, Cameralink, GigabitEthernet, and USB3 interfaces have been developed; and FPGA processing, protocol optimization, driver layeroptimization and other technologies were used to boost transmission stability, reduce packet loss rate, and ease theload on the post-processing end.
Intelligent ID product line: HikRobot provides the industry with an high-efficient and high-performanceintelligent processing platform, centered on vision algorithms, and focusing on open algorithm platforms andgeneral-purpose intelligent hardware products. In 2021, concerning vision algorithms, HikRobot thoroughlyoptimized the AI algorithms for industrial applications, developed AI detection algorithms, unsupervised defectdetection algorithms, and ultra-high-resolution image analysis algorithms based on small samples, and increasedthe application width and depth of vision algorithms. Concerning intelligent products, the open-architecturealgorithm platform VM4.0 was released. It is open from underlying modules to solutions, supports two-waysecondary development of algorithm layer and application layer, and adapts more efficiently and flexibly to highlydifferentiated industrial scenarios and rapidly changing application development. HikRobot unveiled the 20-megapixel deep learning enabled smart camera SC7000Pro, which supports AI applications of larger field of viewand higher precision. Concerning ID products, a number of compact high-speed smart code readers of ID2000 andID3000 series were unveiled to address difficulties in industrial applicationa such as ultra-small codes, problematiccodes, high takt time and small space. HikRobot has also released a number of handheld code readers to meet theinformation collection needs in scenarios of logistics, intelligent manufacturing and others, which enriched methodsof information collection.3D vision product line: HikRobot provides one-stop 3D vision application solutions for industrial customers,taking 3D sensing technology as the core and 3D software system as the platform. In 2021, HikRobot increasedinvestment in the 3D technology, a key development direction of machine vision, and launched a variety of RGBD
3D cameras. Meanwhile, focusing on the application of robotic arms, the first 3D Random Picking Platform wasreleased, together with a number of solutions such as single-piece separation and automated robotic conveyortailored for the express delivery and logistics industry. HikRobot continued to optimize and enrich linear laser 3Dmeasurement products, gradually building up a product lineup. With improved accuracy and environmentaladaptability in 3D measurement and inspection applications, the products have been recognized by users in logistics,lithium battery, 3C and other industries.Ecosystem constructionBased on hardware and software offerings, HikRobot endeavors to establish a new ecosystem of machinevision. At the beginning of 2021, HikRobot initiated the Ecosystem Partner Program. It includes free machine visionengineer training and certification nationwide – to explore and cultivate ecosystem partners – and engagement inmachine vision application training, textbook compilation, skills competition etc. in colleges and universities – tosupport the fostering of intelligent manufacturing talent. As a result, a machine vision application ecosystem basedon the VM Platform has been initially established. At the same time, HikRobot has formed up an ecosystempromotion team, which is dispatched to respective regions to better empower system integrators and equipmentvendors. V Community, a vision technology forum also went live, serving as a professional technical exchange andcommunication platform for ecosystem partners.The machine vision industry is expected to maintain rapid growth, with the continuous transformation andupgrading of traditional industries, the rapid development of new energy, semiconductor and other industries, andthe drive of AI, 3D and multispectral technologies. In 2022, driven by technological innovation and guided bymarket demands, HikRobot will focus on the upgrading and iteration of products and platforms, and continue toprovide customers with simpler and more open hardware and software products and systems. More resources willbe invested to establish a new ecosystem of machine vision, serving partners at all levels of the industry chain andcreating value together.
In the future, HikRobot will continue to focus on intelligent manufacturing. It will remain committed to thetwo business areas – mobile robots and machine vision, and improve quality & efficiency, downsize staffs andreduce costs for users through technological innovation of software and hardware products and platforms andcontinuous improvement of delivery processes. HikRobot will facilitate the development of global intelligentmanufacturing.
5.3 Innovative Business – HikMicro
Centered on infrared thermal imaging technology and with MEMS-based technology, HikMicro provides coredevices, detectors, modules, infrared thermal imaging products and overall solutions to the world. It works hard tosubstantially reduce the cost of core components and expand application scenarios, promoting infrared thermalimaging products from a niche to the general public.
5.3.1 Core Devices: Steady Upgrade of Technology and Process, Continued Increase in Mass ProductionCapacity
In 2021, HikMicro continued to develop uncooled infrared focal plane detector technology, and tap into itsfive core technology fields – readout integrated circuit design, MEMS design, MEMS and encapsulation processdevelopment, high vacuum encapsulation, and industrialization capability. Through technology upgrade, it seeks tooptimize product cost, improve product performance, and continuously enhance product competitiveness. On the
basis of the original 17um product platform, HikMicro has developed and completed the construction of a 12umproduct platform, further launched and mass-produced a full range of 12um detectors with area arrays. With aminimal resolution of 160*120 and a maximal resolution of 1280*1024, the series can meet the personalized needsof customers in varied scenarios. The full range of 12um detectors features superior performance, with NETD
≤40mk. All arrays are available in advanced wafer-level packaging, which means smaller size and lower cost. Built-in analog-digital converter modules are used to improve the anti-interference ability of detectors and simplify thecircuit design of peripheral hardware, which facilitates subsequent application development.In 2021 HikMicro further improved its detector industrialization capacity, with its detector industrializationbase in Tonglu, Hangzhou put into use. The new MEMS production line has also been activated, serving as a strongdriving force for the popularization of thermal imaging.
5.3.2 Product Solutions: Technology-based Performance Improvement, Demand-driven Iteration andInnovation
Over years, HikMicro has established five advantages in finished products – clear image, smart algorithms,efficient temperature measurement, stable application and reliable manufacturing. The business has seen rapidgrowth, relying on its technical advantages in independently developed sensors and product design. In 2021,oriented for market demand, HikMicro continued to expand, optimize, and upgrade its three categories: generic-security products, temperature measurement products, and commercial vision products.Generic-security products: In the segment of civilian security, commanding heights are a typical applicationscenario, where equipment usually undertakes security surveillance in large space, and is required to performfrequent cruise and focusing. Therefore, positioning accuracy becomes a key to application performance, and theerror control of motors and the service life of lens are also much concerned. To improve positioning accuracy,HikMicro has developed an attitude perception feature to accurately monitor the equipment attitude information inreal time, and then combine the attitude information with GIS map. It has managed to reduce the positioning errorto a maximum of 87M within 5 kilometers – becoming new industry benchmark. To address the accumulated errorcaused by cruise and focusing, HikMicro has launched an intelligent closed-loop control function to ensure thatequipment can self-correct motor’s loss of synchronism after long time cruise, permanently preventing deviation
NETD: Noise-Equivalent Temperature Difference, that is, the minimum temperature difference that an infrared detector candetect, is one of the primary indicators to measure the performance of infrared detectors.
from the preset position. Based on the thermal imaging lens of the non-contact servo-control system, and coupledwith smart focusing algorithms, the service life of lens has been increased by nearly 10 times, significantlyimproving the reliability and stability of devices. Products with improved functions have been widely used in forestfire prevention, fishery administration vessels, prohibition of straw burning, border and coast defense and othercommanding height scenarios, and received positive feedback.Temperature measurement products: Thermal imaging has long been a helpful tool for epidemic preventionand inspection, flaw detection, equipment predictive maintenance, and temperature monitoring duringmanufacturing process. Since the scenario-based demands for temperature measurement is fragmented, it is difficultfor one single product or solution to meet the needs of different users. In 2021, HikMicro completed its temperaturescreening product category by improving the online temperature measurement, handheld temperature measurement,and inspection robot product series. It developed a self-adaptive distance compensation algorithm, which ensurestemperature measurement accuracy without manually configuring distance parameters. Suitable for targets ofdifferent sizes and similar distances, it has greatly improved the reliability of temperature measurement accuracyand the convenience of device usability.Commercial vision products: Thermal imaging’s outdoor applications are mainly for hiking, expedition,search and rescue, criminal manhunt, and crackdown on drug and smuggling, among other scenarios. Theapplication scenarios are roughly divided into two categories. In outdoor applications, which are demanding on thecost performance of equipment and ease of use, HikMicro has launched 256*192 resolution single-lens handheldobservation products and mobile phone modules to bring users a professional-grade imaging experience. For verticalapplications, HikMicro has integrated DarkfighterX technology, thermal imaging and laser ranging as one, andmatched it with the industry's debut scroll-adjusted unbounded continuous zooming function, to enable high-precision one-click distance measurement and one-handed operation. It has redefined outdoor single-lens equipment,offering great convenience to professional users. HikMicro provides a full series of commercial vision products ofvarious models and prices, from detectors, components to finished products, and delivers one-stop integratedservices to partners.
Following HikMicro’s launch of its 160*120 resolution signature product in 2019, which brought down thegeneral price of thermal imaging to less than RMB 1,000(namely “thousand-RMB era”), thermal imaging productshave been applied in more and more industries, stimulating more fragmented demands. In 2020, HikMicro fullyupgraded its economical products, and empowered applications with open AI platforms, to meet more fragmentedand customized needs of customers. In 2021, HikMicro launched a full series of 256*192 resolution products pricedat around RMB 1,000, further broadening the product category. The large-scale applications of the original 160*120resolution products has further reduced the cost and popularized thermal imaging, benefitting thousands ofindustries. As for the high-end market, HikMicro introduced high-resolution products such as 1280*1024 resolutionzoom camera module and positioning system in 2021, to strongly benefit to professional industry applications.
With independently-developed capability of core components, HikMicro will continue to consolidate itsproduct technical superiority, explore more application scenarios, and consistently lead thermal imaging from aniche to the general 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 passenger vehicle users, commercial vehicle users, and other types of consumption as wellas industry users globally.
5.4.1 Improving Day by Day in the Passenger Vehicle Before-market
2021 saw significant changes to the before-market structure of the passenger car. China’s vehicle market has
achieved positive year-on-year growth for the first time during the past three years, reaching 21.48
millionvehicles. Amid the trend of electric and intelligent vehicles, domestic brands have greatly improved their productperformance, and expanded their market share, while creating more business opportunities for domestic suppliers.Capitalizing on the trend, in 2021 the HikAuto’s passenger vehicle before-market delivered doubled growth, andthe number of new designated projects doubled as well. The expected sales of new contracts quadrupled comparedwith the end of 2020, laying a solid foundation for continued growth in later stages.
With the rapid expansion of intellignent driving applications, HikAuto has made significant breakthroughs inall of its product lines. It has acquired a leading market share of vision sensors in China. Capturing the opportunityof the explosive growth in demand for intelligent driving perception cameras, it has achieved industry-leadingcoverage of customers and vehicle models, laying a foundation for expanding market share and maintaining rapidgrowth. In terms of intelligent driving, HikAuto started from fully automatic parking system, relying on itsadvantages in full-stack self-developed system solutions and UV fusion
perception algorithms, and developedindustry-leading product performance. It has won over 10 designated projects of production car models from leadingindependent brands such as Great Wall Motor, Geely, and Chang’an. Regarding intelligent cockpit, HikAutofocusing on both exterior and interior visual perception systems, has launched the VIMS (Video Intelligent MonitorSystem). The system supports up to 8 channels of HD video access, and is equipped with smart algorithms for facerecognition inside and outside the car, fatigue driving monitoring, driving behavior analysis, gesture recognition,etc. It is designed to help customers build more powerful smart cockpits, and has won more than 10 official
Data from the China Association of Automobile Manufacturers.
Ultrasonic Vision fusion, refers to the combination of ultrasonic radar and vision.
designated projects including Great Wall Motor, Geely, Chang’an and other customers.In the meantime, HikAuto continued to develop joint ventures and international brand markets, and obtain anumber of designated platform-based product projects including Volkswagen, Volvo, Mazda, Toyota and otherbrands on in 2021.In 2022 HikAuto will continue to increase investment in intelligent driving sensors, algorithms and systemproducts, give full play to its advantages in the technology of vision, ultrasonic and millimeter-wave radar fusionperception, and develop a more competitive driving-parking integrated full-stack system. Active efforts will bespared to explore integrated application solutions of intelligent driving and intelligent cockpit, so as to providecustomers with more smart options.
5.4.2 Innovating in the Passenger Vehicle Aftermarket
In the automotive aftermarket, passenger car owners' demand for dashcams and panoramic view monitorscontinues to increase, and driving video recording, rear-end collision evidence, injured feigning prevention , andparking view assist have gradually become rigid demands. In 2021, HikAuto’s dashcams and panoramic viewmonitors maintained rapid growth, with both sales and shipments doubling year-on-year.
Based on differentiated technical capabilities such as night vision, AI, and networking, HikAuto has enrichedits dashcam product line, which is divided into two series: general-purpose and special-purpose, completing acomprehensive product mix ranging from 2-megapixel to 4K. The products have covered all channels includingmainstream online e-commerce platforms, 4S store groups, and offline auto parts sales channels. The iconic F6/C6dashcam series has become a market benchmark of 5-megapixel HD intelligent networked recorders. On such basis,
HikAuto launched C8, a new 4K series in 2021, which has introduced the exclusive night vision technology,elevating the night vision performance of driving recorders to a new height.Regarding the Panoramic View Monitor system, HikAuto has expanded to 7 major vehicle lines and over 50vehicle models on the basis of 5 major vehicle lines and 31 vehicle models in 2020. The system has become anindustry leader in key indicators such as image definition, night visibility, seamless splicing, ultra-low delay, andproduct reliability. In 2021, the whole industry was challenged by supply chain stress. With the support from itssuppliers, HikAuto ensured the normal delivery of products and offered superior and reliable products and serviceexperience to the majority of car owners and consumers.HikAuto has established a solid brand image and won the trust of customers in the automotive aftermarket. Inthe future, HikAuto will remain committed to the aftermarket and innovation, to meet the needs of customers andcar owners.
5.4.3 Booming in the Commercial Vehicle Market
In 2021, the commercial vehicle market went through subtle changes, and it has become a consensus that theapplication of on-board video surveillance should be expanded from specified buses, coaches and trucks to allfreight vehicles. Intelligent technologies such as ADAS (Advanced Driving Assistance System) and DMS (DriverMonitor System) have been largely applied to millions of vehicles; while urban public transportation embracedfurther transformation driven by intelligent networking technologies. HikAuto's commercial vehicle businessdoubled in 2021.
HikAuto has completed the cross-platform development of fundamental technologies, using middlewaretechnology to rapidly transplant application development to different chip platforms. This improves its responseefficiency to customers’ tailored needs, and greatly reduces the delivery risk caused by chip shortage. With regardto key technologies, the focus is on the optimization of memory read/write performance, BeiDou positioningaccuracy, and intelligent algorithms such as ADAS/DMS. Related products and solutions are being applied tospecial-purpose vehicles, trucks, buses, construction vehicles, taxis, ride-hailing, and metro vehicles as scheduled.Cloud platforms have enabled access to more than 200,000 vehicle-mounted video channels, providing customerswith cost-effective O&M solutions. Furthermore, HikAuto has completed transactions with over 1,200 customers,and established more than 10 best practice cases, including the Heilongjiang Special-purpose Vehicles for typicalalpine regions, the Shenzhen Public Transport as a window to the entire world, the Shou Qi Tailored Taxi Servicesserving the Winter Olympics, and the Yutong Bus, the world's top bus seller.In 2022, the commercial vehicle market is expected to continue the reform and embrace more applicationamount, higher integration level and greater practicability. In the special-purpose transport vehicles for passengerand dangerous goods and freight vehicles market, HikAuto plans to speed up the application of ADAS/DMS, aswell as the integration of mobile monitoring system and overload/overspeed monitoring systems; in the market forpublic transport, it will promote the intelligent public transport 3.0 system starting with provincial capital cities, andadvance the integrated application of subsystems such as those for bus monitoring, public transportation scheduling,ADAS/DMS, blind zone collision warning, illegal bus lanes occupation, pedestrian priority at crosswalk, electronicrearview mirrors, and 5G-V2X; in the construction vehicle market, fatigue driving monitoring, aggressive drivingmonitoring and blind zone collision warning systems will be widely applied and connected with police traffic checkpoint and E-police for composite management, to lower the traffic accident rate; and in international markets, videosurveillance networks will be built for school buses, public transport, and other fields, in order to accelerateintelligent application. HikAuto will continue to increase investment in R&D in the commercial vehicle market,innovate products and solutions, and improve customer satisfaction, contributing to reduced traffic accidents, loweraccident losses, and improved transportation efficiency.
5.5 Innovative Business - HikSemi
HikSemi is committed to providing worldwide users with professional overall storage solutions, with focusingon application scenarios such as industrial control, data center, video surveillance, and consumer business. Boasting
complete design, development and manufacturing capabilities, it is now operating four product lines: solid-statehard disk SSD, front-end storage, embedded storage and flash memory application.
5.5.1 Products and Technologies
Centered on user needs, HikSemi is consistently engaged in technology innovation, to constantly develop andimprove its four product series.
Solid-state hard disk SSD products: In 2021 HikSemi upgraded the Zoned 2.0 algorithm cluster, and improvereliability and service life of the products to enhance its application advantages in the field of video servers. Andthe first dedicated disk for video surveillance based on QLC
technology was released in 2021, offering a betteroption for high-performance, large-capacity, and high-density video surveillance applications. Based on customerservice data and its established technological capabilities, HikSemi has successively launched services such asservice life warning, fault diagnosis, data migration from out-of-warranty failed disks and product life extension tooptimize user experience.
Front-end storage product line: Relying on the powerful status of the high-end video surveillance sector andlong-standing expertise in video storage technologies, HikSemi has launched cost-effective video surveillance cardssuitable for continued data writing scenarios. Meanwhile, it continuously expands the memory cards market, withthe introduction of cost-effective and highly compatible consumer memory cards to be widely used in civiliansecurity, mobile phones, cameras, speakers and other products, as well as dashcam cards for driving recording, andhandheld gaming cards favored by gamers. HikSemi is also actively investing in the market for memories – a integralpart of overall storage solutions, and has launched consumer memory products for personal computers and industrialmemory products for autonomous servers.Embedded storage product line: Since its launch in 2019, the range has been providing customers with highlyreliable and highly compatible products and local services, relying on continued R&D investment, rigorous qualitycontrol standards and extensive experience in embedded storage application. As of 2021, HikSemi’s embedded
QLC: Quad-Level Cell, is a type of flash memory.
storage was available in SLC
NAND, eMMC
, LPDDR
, DDR4
and other product series, meeting the needsof customers in electric power, networking, mobile phones, security, smart home and other industries.Flash memory application product line: HikSemi regards satisfying the diverse storage needs of consumersas its responsibility, with continued efforts to innovate products and optimize software systems. In terms of mobilestorage, HikSemi has released up to 10 X-series USB flash drive products. Tailored for different groups ofconsumers, the products feature varied materials, appearance and design, and are powered by self-developedfirmware. They have been well received among users, rapidly emerging as a leading brand. Regarding the mobilesolid-state hard disk SSD series, EliteX, a benchmark product with a bandwidth of up to 40Gbps, was released inJuly, in order to meet the strong demand for ultra-high-speed reading and writing among professionals and thetechnology-fancier. Its transfer rate is as high as 3000MB/s, making the product a great helper for office work. Asfor the cloud storage series, combined with years of technical expertise, HikSemi released a crowdfunding G1Master of single-disk edition on Xiaomiyoupin.com, to meet the needs of Xiaomi fans. Once released, the productbecame an instant hit for its appealing design and premium use experience. 7,000 units were crowdfunded in just14 days, demonstrating the popularity of HikSemi's products.
SLC: Single-Level Cell, is a type of flash memory.
eMMC: embedded Multi Media Card, formulated by the MMC Association, is the standard embedded memory specifications forproducts such as mobile phones or tablets.
LPDDR: Low Power Double Data Rate SCRAM (Synchronous Dynamic Random Access Memory), is a communication standarddeveloped by the US JEDEC Solid State Technology Association for low-power memory. Known for low power consumption andsmall size, it is specially used for mobile electronic products.
DDR4: 4th generation Double Data Rate SCRAM (Synchronous Dynamic Random Access Memory), is a component used to storeprograms and data in computers.
5.5.2 Business development
HikSemi continues to build a marketing network, and pays equal attention to the industry and channels byactively expanding the industry market and steadily developing the channel market. While continuously improvingits user service system, it sees steady growth in the total number of customers, which reached over 3,000 in 2021,and the sales revenue delivered rapid growth as well.Depending on the characteristics of different channels of industry, consumption and OEM, HikSemi has beenbuilding differentiated manufacturing and operation models. Powered by production management tools ERP, PLMand SRM, it is committed to developing a digital supply chain in line with strict and improvement-oriented qualitymanagement systems, continuously enhancing its delivery capability and quality.As an irreplaceable functional device in the sectors of consumer electronics, communication equipment andIoT, semiconductor memory is one of the most fundamental core components of modern information industryapplications. Chinese semiconductor memory manufacturers are expected to embrace greater opportunities, withthe continuous development and growth of emerging industries such as big data, cloud computing, AI, and 5G.
HikSemi will stay true to its original intention of “storing every beautiful moment and using intelligence to changelives” and adhere to its user service concept of “dedicated to customers’ continual success, adding value tocompanies and communities.” Oriented for user demand, it aspires to gain insight into economic trends, and keepproviding enterprises and consumers with safe and reliable storage devices, systems and solutions through productinnovation, technological innovation, marketing innovation and brand building, aiming for a leading supplier ofoverall memory solutions in China.
5.6 Innovative Business - HikFire
HikFire is dedicated to the construction of the fire protection IoT, visual management and digitaltransformation of fire protection, driven by emerging technologies such as multi-dimensional perception, IoT,Internet of Vision, cloud computing, big data and AI, as well as professional image processing technologies,innovative security-fire protction integration and IoT-information network integration applications. HikFire’sbusiness covers traditional fire protection, smart fire protection, fire safety e-commerce, operation services and othersectors, and is committed to developing one-stop fire safety system solutions and one-stop fire management servicesolutions. The aim is to enable smart perception, smart prevention and control, smart management and smart rescueof fire protection, making the environment safer and life better.
5.6.1 Smart Fire Protection: Innovative Technologies for the IoT for Fire Protection
As the traditional fire protection industry undergoes continued changes, the smart fire protection marketbecomes increasingly mature. HikFire has released a full range of smart fire protection products and operationmanagement platform software to meet the organization level, industry level and city level’s fire-fighting IoTconstruction and operation needs, featuring 3D, full coverage and full time domain. Through multi-dimensionalperception, security-fire integration, system coordination, data sharing and service integration, HikFire aims toenable the early warning, early prevention and control, and early handling of fires, reduce fire safety risks, andimprove fire management efficiency.
Promoting technological innovation: In 2021, HikFire released a bi-spectrum
smoke detector to reducethe false alarm rate. With active exploration of the integrated application of thermal imaging, AI-based imagerecognition, and spectral analysis technologies, Hikfire released a multi-spectral fire detector that combines thermalimaging technology and AI flame analysis to improve the accuracy and timeliness of flame identification. In orderto enrich the application of security-fire integration in IoT, HikFire has also unveiled a smart terminal graphicdisplay device that is integrated with multiple systems such as fire-fighting IoT access, video surveillance, fire alarmreview, and collaborative firefighting. Through the fusion of the wired advantages of traditional fire protection andthe wireless technology of smart fire protection, HikFire offers more fire management options for diverse scenarios.Advancing industrial application: According to the characteristics of various industries, HikFire hasdeveloped fire-fighting IoT solutions for a wide range of industries, including financial services, cultural relics andancient buildings, education, communities, smart buildings, industrial and commercial enterprises, energy andmetallurgy, elderly care, commercial chains, and new energy. In 2021, HikFire improved product performance indifferent scenario and the efficiency of platform-based management, make the products easy to install, use, andmaintain, and reduce the comprehensive cost of fire protection establishment and operation, bringing long-termvalue to users.
Bi-spectrum detection: The scattering and reflection features of particles of different sizes vary in different wavelengths ofinfrared light and visible light, so that interference sources such as water vapor and dust can be better distinguished from smokeparticles.
5.6.2 Traditional Fire Protection: System Integration and Upgrading for the Digital Transformation of FireProtectionHikFire’s traditional fire protection product portfolio continues to expand, in order to cover the general fireprotection market. The offerings are divided into four sectors – early warning, fire alarm, emergency evacuation,and automatic fire control. For these four sectors, nine systems have been launched – including automatic fire alarmsystem, emergency lighting and evacuation indicator system, fire broadcasting and phone call system, electrical firemonitoring system, fire equipment power monitoring system, residual pressure monitoring system, fire doormonitoring system, combustible gas detection alarm and gas fire extinguishing control system. Through continuouscommitment and investment, HikFire aims to strengthen the R&D and accumulation of the underlying technologiesof traditional fire protection products, promote the integration and upgrade of systems, and improve the applicationcapabilities of traditional fire protection systems.
The new-generation digital technologies such as the IoT for fire protection, multi-dimensional perception, andbig data are accelerating the fusion of traditional fire protection and smart fire protection, leading the fire protectionsector into the era of AIoT with physical-digital interconnection. Combining industries’ characteristics and realisticscenarios, HikFire leverages the three-in-one technical advantages of “traditional fire protection + smart fireprotection + smart security,” and continuously upgrades security-fire integration solutions that are gradually
covering various industries and scenarios. HikFire proactively explores solutions for security-fire integration andprevention-control integration, in a bid to develop a new integrated fire safety solution for both private and publicsectors, all industries and cities.
5.6.3 Fire Safety E-commerce: Pursuit of a Green, Smart and Safe Lifestyle
As fire emergencies frequently take place in residences and vehicles, people’s safety awareness andenvironmental protection awareness are rapidly rising, which further stimulates individual consumers’ and SMEs’demand for new green and safety products. HikFire has been accelerating its e-commerce retail business. The gasdetectors, smoke detectors, and emergency kits are gaining popularity, with sales and reputation on continuous riseon leading e-commerce platforms. According to the statistics by the China Bicycle Association, the annual sales ofelectric bicycles in China is over 30 million, and the total ownership is nearly 300 million. In active response to thestate-level goals for carbon peaking and neutrality, HikFire launched a comprehensive solution for electric bicyclefire safety management to facilitate orderly parking and centralized charging control. Featuring a chargingprotection mechanism and connected firefighting, the solution is expected to contributed to a smart and safe life.
5.6.4 Operation Services: Provider of One-stop Fire-fighting Operation and Trusteeship Services
A digital platform is the key to digital transformation. HikFire’s fire protection operation and trusteeshipplatform provides on-duty services, maintenance services, electric moped management services and unitmanagement, and employs multi-dimensional monitoring indicators to ensure the quality of operation services.Seeing the Internet of Everything as the cornerstone of an intelligent world, HikFire works with fire-fightingoperation partners to explore a one-stop fire prevention operation and trusteeship model combining “technology +service + insurance.” This is designed to promote fire-fighting operation at the town and sub-district levels, and
assist grass-roots grid fire management. HikFire seeks to offer standard service models, build a knowledge andtechnology empowerment system which covering training and certification to improve the technical servicecapabilities of fire protection engineers, fire protection operators, fire maintenance service providers and key socialorganizations. With the consistently high maintainability of systems and the premium and efficient O&M services,HikFire brings more powerful support and greater value to partners.
5.6.5 Outlook: Standards Upgrade, Imports Substitution, Welcoming Market GrowthDomestic products are increasingly replacing their foreign counterparts in the traditional fire protectionindustry, and the general-purpose fire protection
market is seeing the constant upgrade of specifications andtechnologies. While further expanding the market capacity, the new policies are expected to further expand themarket capacity and enhance the technical threshold of upgrade intelligent applications. Taking GB51309-2018Technical Standard for Fire Emergency Lighting and Evacuate Indicating System as an example, the standard hasproposed changes to the conventional practices of fixed installation and nearby evacuation, requiring to evacuateusing the evacuation guideline that best suits the fire situation; at the same time, the positioning of the system inconstruction projects is in transition from the strong electricity sector to the weak electricity sector.The establishment and release of industry standards, regional standards, and group standards for smart fire-fighting products are gaining maturity. The demand for integrated management is emerging among schools,hospitals, commercial enterprises and other enterprises and institutions. The industry is presenting a trend of IoTintegration, prevention-control integration, security-fire integration, and data-intelligence integration, which ishighly consistent with HikFire's philosophy. HikFire will actively participate in the dialogue with industry platforms,work hard to promote the establishment of standards, develop the AIoT for fire protection, and assist the visual
General-purpose fire protection: It mainly refers to civil and general commercial fire protection, as opposed to industrialand special-purpose fire protection.
management and digital development of fire protection, jointly shaping the digital and intelligent future of the fireprotection industry chain.
5.7 Innovative Business - Rayin
Rayin is focusing on X-ray detection technologies, dedicated to be a leading technology R&D, manufacturing,equipment sales and leasing services provider of invisible light detection equipment . Relying on the long-standingexpertise in X-ray, millimeter-wave, other multidimensional perception technologies, AI, IoT, etc., Rayin keepenabling technology and creating value for the fields of intelligent security inspection and intelligent industrialmanufacturing.
5.7.1 Luggage Security Inspection
Rayin continues to expand its intelligent luggage security inspection product category. On the basis of theexisting 5030/6550/100100 conventional security inspection machines, in 2021 Rayin released the 140100 securityinspection machine designed for logistics and the 4233 lightweight security inspection machine to meet the needsof luggage inspection in different scenarios. Data networking, intelligent recognition, person-luggage associationand other technologies are employed to expand intelligent applications and provide one-stop security inspectionofferings, empowering users for the closed-loop management of security inspection.
Committed to the research on X-ray imaging technology, Rayin has released the Ji Xian series of intelligentsecurity inspection machines equipped with high-performance security inspection dedicated processors for and thenew-generation image enhancement engine. While realizing the vivid recovery of image information, it offersclearer images and more details, significantly optimizing the experience of staff checking tiny items in the luggage.
Keyboard sample/ Details rendered by traditional X-ray imaging/ Details rendered by new-generation
image processing engine
5.7.2 Human Security Inspection
In the early stage of the COVID-19 pandemic in 2020, Rayin innovatively integrated and expanded a varietyof IoT sensing methods based on the conventional metal detection technology, for the purpose of non-contact andquick temperature measurement and security inspection. In 2021, the temperature measurement and securityinspection product continued to be optimized and upgraded. It was networked with the Health Code, and meanwhileimproved in metal detection and classification capabilities, to meet the fragmented and personalized needs ofcustomers.Rayin also released a millimeter-wave human body check gate integrated with active high-frequencymillimeter-wave imaging technology, intelligent recognition technology, and image processing technology.Intended to detect and alarm potential dangerous goods such as metals, liquids, and plastics, it has expanded theinspection scope of prohibited goods and improved detection accuracy, ensuring the safety of key locations.
5.7.3 Industrial Detection
Rayin leverages the penetrating and imaging capabilities of X-ray and advanced AI analysis algorithms toidentify different detection targets according to their specific imaging characteristics, thereby enabling theintellignet detection of foreign objects and defects in industrial production. Integrated industrial detection productsand solutions are also developed to empower business partners to jointly create new applications in industrialintelligent manufacturing.Rayin has launched product series for industrial flaw detection, electronic inspection, food inspection andothers, which greatly improves the accuracy and efficiency of industrial detection. The products have been appliedto a number of projects for industrial flaw detection, foreign matter/defect detection, and intelligent materialcounting.
Detection of foreign matters and defects in food/ SMT material counting/Result of defect detection
Based on its understanding of detection technologies such as X-ray and millimeter-wave, Rayin implementsHikvision full-spectrum IoT strategy and plans to continue increasing R&D investment in invisible light imagingtechnology. The aim is to improve product performance, expand market coverage, and tap into application potential.Rayin focus on developing more innovative applications of intelligent security check and industrial intelligentmanufacturing, and consistently contribute to the creation of a safer, more convenient and better society.
5.8 Innovative Business – HikImaging
HikImaging probes into the needs of users in the medical industry, committed to the research on vision imaging,multi-dimensional perception, AI and other related technologies in medical scenarios, so as to provide customerswith products and related solutions. HikImaging’s business scope covers medical vision and digital healthcare,among other professions.
5.8.1 Core Technologies
To address the professional requirements of the medical industry for specific imaging effects, HikImaging hasdeveloped certain competitive advantages in full-link 4K, real-time streaming media transmission, and intelligentAI algorithms based on its technology accumulation and continuous R&D in video images:
Full-link 4K: 4K Ultra HD produces images that are four times the resolution of traditional HD images. Inmedical practice, 4K Ultra HD endoscopy allows users to observe fine blood vessels, nerves and fascia, as well asdetails of lesions and biopsy sites that are difficult to see using traditional HD endoscopy. Compared with traditionalendoscopy, 4K Ultra HD, with higher resolution, definition, and color distinction, is able to provide physicians witha stronger sense of depth and better control over surgeries. With years of operation experience in the video field,HikImaging not only possesses multi-spectral fusion and 4K imaging technologies for front-end acquisition, but hasalso enabled full-link 4K vision imaging from transmission, storage and display, with clearer details and better colorreproduction.
Real-time streaming media transmission: Depending on mainstream real-time transmission technologies,HikImaging has optimized the underlying media transmission engine and combined it with HikImaging’s CODECexpertise to improve QoE (Quality of Experience). In the case of private deployment, HikImaging's real-timetransmission technology supports more than 500 users for simultaneous real-time audio and video interactionsacross the Internet, and dynamically adjusts coding parameters to adapt to various network conditions, guaranteeingthe real-time ability of media transmission and the integrity of interaction information. For the medical industry, itis also adaptive to the complex images of endoscopes, and enables the smooth transmission of 4K streams acrossInternet environment.
Intelligent AI algorithms: HikImaging combines intelligent AI technologies with endoscopes. By buildingmapping knowledge domains and applying AI-based automatic recognition, it assists physicians in diagnosis andtreatment and reduces missed diagnosis of lesions. Through determination powered by AI algorithms, the inspectionscreen can present digital and characterized information to help doctors quickly determine whether there is a lesionin inspection sites, and accurately locate the lesion, making diagnosis more efficient, faster and accurate.
5.8.2 Solutions
1) Medical Vision:
In minimally invasive surgeries, diagnosis and treatment, endoscopes are used to help the doctor see lesions
that cannot be displayed by X-ray, MRI and other external examination approaches. Therefore, endoscopy systemsplay a crucial role in inspections and are considered to be an extension of modern doctors' hands and brains, almost“pervasive”.
In 2021 HikImaging launched a series of hard endoscopy solutions (4K auto-focus camera system, 4Kfluorescence camera system, 3D camera system, ultra-HD optical endoscopy, etc.) and medical display solutionsfor minimally invasive surgeries; and for minimally invasive diagnosis and treatment, it has introduced an array ofelectronic endoscopy solutions (electronic endoscopic camera system, reusable electronic endoscope and disposableelectronic endoscopes and other overall solutions.) These solutions have now covered gastroenterology, respiratory,general surgery, thoracic surgery, urology, orthopedics, gynecology and other departments, becoming indispensablemedical diagnostic and surgical devices.HikImaging’s medical vision products all comply with the general requirements for electromagneticcompatibility in the YY0505 standard for medical electrical equipment and the general requirements for basic safetyin the standard GB9706.1. Together with the independently-developed test software HIKMED iTest, it can performperformance parameter tests in line with the YY/T1603 and YY/T1587 standards, which greatly shortens the cycleof registration and inspection. In 2021, HikImaging helped 8 domestic customers obtain registration certificates formedical endoscopic imaging equipment (4K camera systems, etc.), while assisting customers with registration anddeclaration in 4 provinces.
Hard endoscopy solutions/ Electronic endoscopy solutions
Endoscope is a medical device that directly contact with the skin, mucous membranes and sterile tissues ofpatients. However, since the endoscope contains many small, narrow and long open channels, it potentially providesan environment for the survival and cross-infection of microorganisms, secretions and blood, which may lead tomedical malpractice. In 2021 HikImaging introduced fully compatible disposable electronic endoscopes rangingfrom 40,000-2 million pixels, catering to the needs of different departments and surgical procedures. Also, a full-link solution consisting of a disposable scope + host was unveiled. Lightweight, portable, and free from
decontamination, it gives endoscopy more flexible application scenarios.
2) Digital Healthcare
In 2021, HikImaging continued to upgrade its digital medical products, and introduced high-frame-rate 4Ksurgical field camera, 4K panoramic camera, medical video recording terminal, 5G medical video communicationterminal, 5G mobile teaching demonstration system and other products. Powered by 5G technologies, the ultra-HDvideo products have been flexibly and rapidly applied to digital operating room, digital ward, telemedicine, medicaleducation and training and other professions.Digital operating room: By professional 4K surgical field imaging, panoramic recording, image access ofCT/surgical microscope/DSA/monitor and other medical equipment, multi-screen fusion, lip synchronization, audioand video two-way interaction, public network cloud interaction, cloud live broadcast and other technologiesHikImaging is able to meet demand for patient information access, intraoperative image scheduling, remote surgicalteaching demonstration, cloud live broadcast of surgeries, remote surgical instruction, surgical consultation,intraoperative remote family communication, surgical process recording and documentation, and medical exchangesduring the clinical operations at hospitals. The purpose is to establish information-driven, networked and digitaloperating rooms.Digital ward: HikImagin intelligent nursing system has introduced smart bedside cards, smart interactivescreens, smart doorway screens, corridor screens, nurse station call management hosts and nurse station smart carescreens surrounding the varied requirements of doctors, nurses, patients, medical staff, nursing managers, andhospital managers. It is thus able to provide wards with a new model of timely, mobile, continued, closed-loop, anduser-friendly information management.
Telemedicine: Based on its technical capabilities in audio and video processing, IoT, big data, and AI,HikImaging has independently developed a series of telemedicine products (5G remote system, 5G medical videocommunication terminal, remote consultation system, remote ward round system, 4K shot camera system, etc.) formedical and health institutions at all levels from province, city, county, township, to village. With access capabilitiesto all scenarios and terminals, it enables remote consultation, remote surgical diagnosis, remote teaching, remotemonitoring, remote ward rounds, two-way referral and other services.Medical education and training: The traditional teaching model of watch & learn is limited by limitedobservation space, as well as little practice time and few practices for students, which undermines the effect ofmedical teaching and training. In response to the above shortcomings, HikImaging has launched a comprehensivesolution for visual medical teaching for medical education scenarios, and a comprehensive solution for experimentaltraining and teaching for middle and higher vocational training scenarios. With professional medical education andtraining equipment, fixed/mobile teaching systems, medical teaching platforms, comprehensive application
platforms for experimental training and other software and hardware, a holistic range of teaching services frompreview before class, class teaching, to after-school review has been established. At the same time, supported bycloud interactive platforms, teaching activities are extended to a wider range, powering famous teachers' classes,large-scale teaching, and remote interaction between schools and hospitals, schools and companies.During the pandemic, HikImaging helped medical staff with non-contact communication and consultation withpatients through digital equipment. With nurse station call management host, visual hospital bed extensions, andhospital bed intercom extensions installed, two-way visual intercom and non-contact remote consultation betweenpatients and medical staff are realized, which makes it convenient for medical staff to know about the patients’illness in time and lower the risk of infection among medical staff.The construction of a healthy China will be comprehensively advanced, according to the Resolution on theOutline of the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through theYear 2035. In the Medical Equipment Industry Development Plan (2021-2025), the Ministry of Industry andInformation Technology has made a detailed plan for the key priorities and breakthroughs of medical equipment.In particular, medical endoscopes and other imaging diagnostic equipment are one of the strategic objectives thatrequire breakthroughs.
In 2022, HikImaging will stay committed to the healthcare field, probing into the needs of users in the medicalindustry, and making continuous investment in the R&D of ultra HD, AI, 3D, miniaturization, and multi-spectraltechnologies. By focusing on the image effects and intelligent applications of audio and video medical products,HikImaging aspires to consolidate its core competitiveness and develop differentiated products. It will also prioritizethe investment in the automatic manufacturing technique of miniaturized products, establish a production qualitycontrol system, and build up a complete supply chain system, providing industry users and customers with moreprofessional products and solutions.
II. Analysis of Core Competitiveness
Demand 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. The fragmentation and personalization of user demands make it difficult to get anaccurate picture of customer/user demands, making the product diversification and customization necessary, thus
the characteristics of industrial segmentation and demand customization of solutions are increasingly prominent.Providing marketing support for customers and users is also becoming delayering and more specialized due tofragmented demand. Small orders and flexibility in the production process have become a necessity, while otheraspects of business operations have also changed to accommodate the fragmented industry characteristics. With itsover two decades of experience in the fields of security and AIoT, Hikvision is able to adapt to the fragmentationof industry demands, understand the limitations of such fragmentation on efficiency improvement, and also foreseethe feasibility of certain degrees of scalability. Hikvision firmly believes that AIoT breeds broad marketopportunities, helping people to establish perception, connections, computing, and applications between people andthings as well as between things. This is the best platform for Hikvision to grow alongside the industry. We expendgreat effort pursuing science and technology for good, in a hope to enable everyone to enjoy a brighter future.In 2021, the predictability of the internal and external environment is extremely poor. The difficulties broughtby the global epidemic, sanctions, chip shortage, rising raw material/labor costs, industry reshuffle, etc., pose greatchallenges to the continuity and stability of enterprise operations. The external environment is ever changing, posingextremely high requirements on the enterprise management strategy of long-term stability, short-term flexibility andaggressiveness, and other aspects. Adhering to the business philosophy of "professionalism, honesty, and integrity”,Hikvision strives for development in difficulties and survival in challenges. The performance achieved by Hikvisionin 2021 demonstrates the company's aggressiveness, tenacity and stability, which is also the result of the company'slong-term approach.
1. Continuous increase in R&D investment, advancement of platform-based operation of software andhardware R&DWith video technology as the starting point, Hikvision has gradually expanded perception technology fromvisible light to infrared, X-ray, millimeter wave and other fields, continued to explore perception methods such assound, temperature, humidity, pressure and magnetism, and further expanded upon multi-dimensional perceptioncapabilities. Hikvision’s technical capabilities in the fields of AI and big data is increasingly profound. TheCompany expanded AIoT applications to thousands of industries, forming a complete system from perception tocognition, from products to solutions, and from data to applications. In addition, we have continued to improve ourpractice-oriented capabilities through the design, implementation and operation of medium and large-scale projects,while improving technologies, products and solutions through real project practice, forming a virtuous circle fromR&D to the market and from the market back to R&D.
During the reporting period, Hikvision’s investment in R&D accounted for over 10% of its total operatingincome, while the number of R&D and technical service personnel continued its stable growth, accounting for nearly50% out of Hikvision’s total workforce. The Company will continue to maintain high intensity of technicalinvestments, consolidate the foundation of intelligent technology, enrich the varieties of intelligent devices,concentrate on exploring the performance and efficiency of intelligent applications, and build comprehensivecapabilities through continuous R&D investments, in order to lay a solid foundation for Hikvision’s steadydevelopment in the AIOT industry.
2. In-depth exploration of user demands to enhance regional marketing capabilities
Facilitated by its provincial business centers, Hikvision continues to localize business footprint, with over 300city branches covering most cities across China, forming a hierarchical city-based marketing system prioritized byeconomic development and population density, while taking the pilot area as the benchmark. The Company hasestablished 23 regional functional centers and corresponding 66 branches overseas, forming a marketing networkarchitecture 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’s long-term and consistent investment in the construction of marketingsystem has formed a broad and strong network of domestic and overseas marketing organizations, local talent, andpartners, enabling marketing teams to quickly communicate demands with customers and users and engage inproductive information exchange and business communication.
Hikvision has expanded industry applications through dividing domestic business into three business groups:
public business group (PBG), enterprise business group (EBG) and SME business group (SMBG); overseasdistribution and industry are complementary to one another, and put into practice “one policy for one country”. Theorganic synergy of industry-driven region, region-driven industry, marketing-driven R&D, and R&D-drivenmarketing helps the company to gain insight into user demands, enabling both marketing and technical R&D workto be performed in a targeted manner, thereby steadily driving the Company’s business forward.
3. Constantly improving resilience to ensure supply chain stability
Hikvision sells nearly 30,000 different models of hardware equipment and often encounters scattered orders,frequent changes in demands, and high requirements for the completeness of supply chain. Therefore, its supplychain system must have flexible and efficient manufacturing capabilities to meet the fragmented and diverseindustry needs. During the reporting period, the Company appropriately responded to the adverse effects of chip
shortages and raw material price hikes resulting from the imbalance of chip production capacity and supply,ensuring the continuous and stable supply of its products.With its domestic manufacturing bases in Hangzhou Tonglu and Chongqing, Hikvision has proceeded with theconstruction of a manufacturing base in Wuhan and expansion plans in Tonglu and Chongqing, while establishinglocal factories in India, Brazil and the United Kingdom to support global product supply. The Company hasestablished an agile and flexible manufacturing system and industry-leading automated production capabilities,which allows it to continuously improve its capacity for lean production and intelligent manufacturing to meet thedemands of small batch, multi-batch, and large-scale product manufacturing.Taking advantage of its procurement scale, Hikvision has developed stable and mutually beneficial cooperativerelations with suppliers, helping them quickly iterate and improve upon products over the long-term. The Companyhas helped over a thousand supplier partners around the world to achieve rapid development, which in turn hasstrengthened the stability of the overall industrial supply chain. In response to supply chain uncertainty caused bysanctions and the COVID-19 epidemic in recent years, the Company has continued to maintain large stockpiles ofraw materials and to hedge the risks brought by changes in the external environment through high inventory level.4. Continuously improving internal management capabilities through optimizing methods and toolsAmidst an ever-changing competitive landscape, whether a company can perform internal resource allocationmore efficiently than competitors and lower the cost of internal information exchange is an important aspect ofenterprise competitiveness. Irrespective of how the internal and external environment and times have been changing,Hikvision has always taken a realistic and pragmatic approach to its business and has remained focused on how tomake the business better and stronger, while adhering to the business philosophy of “professionalism, honesty, andintegrity” as the guidance of the business development and the belief system to be upheld by all employees.As its business continues to evolve, Hikvision has consistently updated its resource organization andmanagement methods accordingly. As for business direction and goal setting, the company has formed a systematicstrategic planning method which is regularly updated and applied universally, facilitating effective communicationand alignment of each business and functional department to ensure clear goals and division of responsibility. Interms of internal management, Hikvision has promoted customer-centered management reform, implementing over100 management reform initiatives each year to continue optimizing resource layout and streamlining collaboration.The Company focuses its efforts on IT system construction to continuously optimize and improve the efficiency ofbusiness systems. The company is striving for continuous improvements in many aspects including promoting the
identification and management of financial risks, building a digital quality management system, improving internalcontrol mechanisms, pursuing the construction of compliance systems, protecting innovation achievements, and etc.
5. Attracting and uniting outstanding talents, building a people-oriented organizational climate
Hikvision considers talents as the most important source of enterprise competitiveness, recruiting talent fromall around the world, while adhering to the employment concept of “talent-focused, growing together.” TheCompany has formulated a dual career development path consisting of management sequence and professionalsequence, constantly improving upon the talent discovery and performance appraisal mechanism and identifyingand assigning people in an empirical manner, to boost the morale and creativity of employees and improveorganizational capabilities. The comprehensive employee reward system has initially taken shape, which consistsof compensation and benefits, equity incentives and innovative business co-investment etc., further developing thedistribution mechanism for employees to participate in and benefit from the Company’s growth. Employeesparticipating in incentives shares and co-investment can obtain long-term individual returns through theircontributions to the Company’s performance, coordinating the long-term development of business with thecontinuous employee growth.Hikvision provides multi-level training courses for employees on various career tracks, which provides impetusfor the consolidation and upgrading of the Company’s crucial role players and reservation and development ofbackup talent. Hikvision provides extensive and in-depth training services to all employees, which guarantees thecontinuous reinforcement of the Company’s values and improvement of professional capabilities. The Companyencourages its employees to freely organize hobby clubs and regularly hold diversified cultural and recreationalactivities to create an equal, open-minded and positive organizational climate. In addition, themed events such as“Face-to-Face with Executives,” “Dialogue with Managers,” “Humanities Lecture Hall” and “Book Club” havepromoted well-rounded growth of employees.
III. Core Business Analysis
1. Overview
As the global COVID-19 epidemic persisted in 2021 for the second year, epidemic prevention and anti-epidemic continued to have a huge impact on the regional economy. With the intensification of reverse globalization,conflicts and confrontations between certain countries continued to increase, and the political and economiclandscape posed increasingly severe challenges to business operations. Global chip shortages continued, and soaringraw material prices exacerbated rising manufacturing costs, while domestic policy adjustment in the education andreal estate industries led to a reshuffle of the industry and resulted in significant changes.Amidst the complex and rapidly changing domestic and foreign landscape, the challenges for enterprises toachieve sustainable and stable growth are ever increasing. Faced with various external uncertainties, Hikvisionremained focusing on developing its inherent capabilities, maintained a consistent business strategy, and ensuredthe smooth development of global business through steady and continuous supply chain management. During thereporting period, the Company achieved a total operating income of RMB 81.42 billion, representing year-over-year growth of 28.21%, and realized a net profit attributable to shareholders of the Company of RMB 16.80 billion,representing year-over-year growth of 25.51%.
(1) Sustained investment in R&D, forming a solid foundation for company development
In 2021, Hikvision invested RMB 8.25 billion in R&D, accounting for 10.13% of the company’s total operatingincome. The Company had over 20,000 R&D and technical service personnel, upholding its commitment tosignificant R&D investment. Technological innovation serves as the driving force for the development of Hikvision,and only through continuous technological innovation can the Company continue to grow.
Hikvision continued to advance technology accumulation in AIoT fields, gradually expanding its full-spectrumperception technology platform from visible light to infrared, X-ray, millimeter wave and other bands. After yearsof product R&D and innovation, the Company currently has nearly 30,000 product models for sale, enabling it tobetter meet the fragmented demands of users. Hikvision will continue to exploit the advantages of transformingtechnology to product engineering, and continue to develop new technologies and products to lead the developmentof the industry.
(2) Building a technology platform to enhance comprehensive technical strength
In 2021, the Company continued to promote the construction of technology platforms, further strengthened the
construction of underlying technology capabilities and specialized technologies, and improved R&D efficiency,quality and skills through the reuse and empowerment of technical capabilities, thereby concentrating superiorresources to break through the core technical pain points and forming the technical foundation to support the long-term development of product business. At present, the Company has formed a number of general technologyplatforms and product technology platforms.In 2021, leveraging its unified software technology framework, the company has gradually unlocked softwaredevelopment efficiency and gradually improved its software development platform, continuously supporting thecustomization and development capability of regional software.
(3) Continuous increase in inventory level to ensure continuous and stable supply
In 2021, the company proactively responded to the fluctuations and challenges caused by the imbalancebetween supply and demand of certain raw materials and supply chain switching, working closely with its upstreampartners to continue to increase inventory levels, effectively cope with the industrial-wide shortage of chips, stabilizethe adverse effects caused by fluctuations in commodities, in order to ensure supply continuity. Through prudentsupply chain planning, the company was able to further solidify its advantages in product supply and pricecompetition.In 2021, the company also continued to promote lean production management, improved the level of intelligentmanufacturing, optimized delivery efficiency, and overcame various challenges brought by labor and energyconsumption to ensure the steady development of business.
(4) Innovative business layout to support long-term solid growth
In 2021, five innovative business companies achieved operating income in excess of RMB one billion withpositive net profits. With the rapid development of innovative businesses, the overall contribution of innovativebusinesses to the company’s total sales has further increased, and is becoming an increasingly important growthdriver for the company.
In 2021, real estate, education and other industries in China experienced large fluctuations as a result of policyadjustments, which had a certain impact on the overall growth of EBG business. However, real estate and educationare closely related to the national economy and livelihood of the people, so they still have plenty of potentials forfuture development, and it is expected that there will still be great growth in the future. SMBG and PBG businessmaintained solid growth. Despite the impact of the COVID-19 epidemic in overseas markets, the company’s
overseas market share continued to increase thanks to its good supply capacity and solid business development onthe marketing end. Diversified business layout is the guarantee for the stable growth of the company, and differentbusinesses form good synergy and interaction, which together help the company to achieve stability and long-termsustainable development.
(5) Continuous promotion of digital marketing to improve the marketing system
In 2021, the Company continued to expand its marketing service network, bringing itself closer to customersand users. At present, Hikvision has 32 provincial business centers and 309 city branches and offices nationwide,as well as 66 overseas branches to provide products and services to 155 countries and regions around the world,solidifying its marketing and service network presence around the world.The Company continues to advance process management reform, enhance company-wide operationalefficiency, and improve organizational management capabilities, ensuring that it evolves and keeps up with thetimes to support the company’s long-term business development.
2. Operating Incomes and Operating Costs
1) Operating income structure
Unit:RMB
2021 | 2020 | YoY Change (%) | |||
Amount | Proportion to operating income | Amount | Proportion to operating income | ||
Total operating income | 81,420,053,539.27 | 100.00% | 63,503,450,891.78 | 100.00% | 28.21% |
Classified by industry | |||||
AIoT products and services | 81,420,053,539.27 | 100.00% | 63,503,450,891.78 | 100.00% | 28.21% |
Classified by product | |||||
Products and services for main business 20 | 65,145,683,074.74 | 80.01% | 55,720,857,614.39 | 87.74% | 16.91% |
Constructions | 4,003,746,727.88 | 4.92% | 1,614,246,940.42 | 2.54% | 148.03% |
Subtotal | 69,149,429,802.62 | 84.93% | 57,335,104,554.81 | 90.29% | 20.61% |
Smart home business | 3,948,427,896.29 | 4.85% | 2,918,904,302.62 | 4.60% | 35.27% |
Robotic business | 2,761,636,666.33 | 3.39% | 1,358,653,520.55 | 2.14% | 103.26% |
Main business refers to the business parts other than the innovative businesses.
2021 | 2020 | YoY Change (%) | |||
Amount | Proportion to operating income | Amount | Proportion to operating income | ||
Thermal imaging business21 | 2,214,127,005.65 | 2.72% | 35,203,088.48 | 0.06% | 6,189.58% |
Auto electronics business | 1,431,895,295.48 | 1.76% | 654,061,647.69 | 1.03% | 118.92% |
Storage business | 1,384,585,038.78 | 1.70% | 791,441,667.03 | 1.25% | 74.94% |
Other innovative businesses22 | 529,951,834.12 | 0.65% | 410,082,110.60 | 0.65% | 29.23% |
Subtotal | 12,270,623,736.65 | 15.07% | 6,168,346,336.97 | 9.71% | 98.93% |
Classified by region | |||||
Domestic | 59,434,989,705.17 | 73.00% | 45,806,567,913.73 | 72.13% | 29.75% |
Overseas | 21,985,063,834.10 | 27.00% | 17,696,882,978.05 | 27.87% | 24.23% |
Note: The data listed in the subtotals may differ slightly from the aggregated results of the relevant individual datadue to rounding.
Operating income structure
Unit: RMB 100mn
2021 | 2020 | YoY Change (%) | 2019 | ||
Domestic main business | PBG | 191.61 | 159.87 | 19.85% | 153.14 |
EBG | 166.29 | 147.24 | 12.94% | 124.49 | |
SMBG | 134.90 | 92.09 | 46.49% | 93.46 | |
Other products and services for main business | 9.43 | 9.71 | -2.88% | 8.26 | |
Overseas main business | Products and services for main business | 189.26 | 164.44 | 15.09% | 152.86 |
Innovative businesses24 | 122.71 | 61.68 | 98.93% | 44.37 | |
Total | 814.20 | 635.03 | 28.21% | 576.58 |
The thermal imaging business' 2020 operating income only includes thermal imaging sensor’s operating
income.
Other innovative businesses include the products and services of the innovative business subsidiaries, such as
HikFire, 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 mainbusiness’s products and services, excluding operating income from innovative businesses.
Innovative businesses’ operating income includes its domestic and overseas operating income
2)Industries, products or regions accounting for more than 10% of the Company’s operating income oroperating profit
√ Applicable □ Inapplicable
Unit: RMB
Operating income | Operating cost | Gross margin | YoY Change (%) of operating income | YoY Change (%) of operating cost | YoY Change (%) of gross margin | |
Classified by industry | ||||||
AIoT products and services | 81,420,053,539.27 | 45,329,400,332.65 | 44.33% | 28.21% | 33.49% | -2.20% |
Classified by product | ||||||
Products and services for main business | 65,145,683,074.74 | 34,944,137,550.04 | 46.36% | 16.91% | 21.60% | -2.07% |
Constructions | 4,003,746,727.88 | 3,084,364,818.86 | 22.96% | 148.03% | 127.88% | 6.81% |
Innovative businesses | 12,270,623,736.65 | 7,300,897,963.75 | 40.50% | 98.93% | 88.77% | 3.20% |
Subtotal | 81,420,053,539.27 | 45,329,400,332.65 | 44.33% | 28.21% | 33.49% | -2.20% |
Classified by region | ||||||
Domestic | 59,434,989,705.17 | 33,005,873,384.67 | 44.47% | 29.75% | 30.84% | -0.46% |
Overseas | 21,985,063,834.10 | 12,323,526,947.98 | 43.95% | 24.23% | 41.15% | -6.71% |
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 recentperiod.
□ Applicable √ Inapplicable
3)If revenue from physical products sales greater than revenue from providing services
√ Yes □ No
Industry | Item | Unit | 2021 | 2020 | YoY Change (%) |
AIoT products and services | Sales volume | Per unit | 194,410,923 | 139,309,170 | 39.55% |
Output volume | Per unit | 207,744,025 | 138,254,927 | 50.26% |
Explanation on why the related data varied by more than 30% on a YOY basis
√Applicable □Inapplicable
During the reporting period, the Company's performance maintained steady growth, while implementing a highinventory strategy to secure the supply chain, resulting in an increase in both sales and production.
4) Fulfillment of signed significant sales contracts and procurement contracts by the reporting period
□ Applicable √ Inapplicable
5) Operating cost structure
Classified by industry
Unit: RMB
Industry | Item | 2021 | 2020 | YoY Change (%) | ||
Amount | Proportion to operating cost | Amount | Proportion to operating cost | |||
AIoT products and services | Operating cost | 45,329,400,332.65 | 100.00% | 33,957,697,857.73 | 100.00% | 33.49% |
Classified by product
Unit: RMB
Product | Item | 2021 | 2020 | YoY Change (%) | ||
Amount | Proportion to operating cost | Amount | Proportion to operating cost | |||
Products and services for main business | Operating cost | 34,944,137,550.04 | 77.09% | 28,736,623,697.81 | 84.62% | 21.60% |
Constructions | Operating cost | 3,084,364,818.86 | 6.80% | 1,353,524,939.67 | 3.99% | 127.88% |
Innovative businesses | Operating cost | 7,300,897,963.75 | 16.11% | 3,867,549,220.25 | 11.39% | 88.77% |
Subtotal | Operating cost | 45,329,400,332.65 | 100.00% | 33,957,697,857.73 | 100.00% | 33.49% |
6) Any change in consolidation scope during the reporting period
√Yes □ No
During the reporting period, the Company has newly set up one wholly-owned subsidiaries and four holdingsubsidiaries, acquired two subsidiaries, added a new subsidiary due to the change in voting rights, liquidated andcancelled four subsidiaries, reduced one subsidiary due to the cancellation of the entrusted management agreement,which have caused the change in consolidation scope. For more details, please refer to Financial Report Note (VI)“Changes in consolidation scope” of the financial statement.
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) | 2,763,453,340.67 |
Total sales to top five customers as a percentage of the total sales for the year (%) | 3.39% |
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 | 786,004,392.08 | 0.97% |
2 | Second | 751,944,177.56 | 0.92% |
3 | Third | 471,189,238.44 | 0.58% |
4 | Fourth | 402,390,635.86 | 0.49% |
5 | Fifth | 351,924,896.73 | 0.43% |
Total | -- | 2,763,453,340.67 | 3.39% |
Other information of major customers
□Applicable √Inapplicable
Major suppliers of the Company
Total purchases from top five suppliers (RMB) | 8,818,154,553.89 |
Total purchases from top five suppliers as a percentage of the total purchases for the year (%) | 17.81% |
Total purchases from the related parties in the top five suppliers as a percentage of the total purchases for the year (%) | 2.93% |
Information on top five suppliers of the Company
No. | Supplier Name | Purchase Amount (RMB) | Percentage of total purchase for the year |
1 | First | 4,045,973,116.10 | 8.17% |
2 | Second | 1,499,990,535.26 | 3.03% |
3 | Third | 1,448,578,862.48 | 2.93% |
4 | Fourth | 947,822,146.38 | 1.91% |
5 | Fifth | 875,789,893.67 | 1.77% |
Total | -- | 8,818,154,553.89 | 17.81% |
Other information of major suppliers
□ Applicable √ Inapplicable
3. Expenses
Unit: RMB
2021 | 2020 | YoY Change (%) | Note of significant change | |
Selling expenses | 8,586,443,668.02 | 7,377,790,744.58 | 16.38% | Continue to increase investment in domestic and overseas marketing networks |
Administrative expenses | 2,132,250,463.96 | 1,790,013,088.76 | 19.12% | Due to the expansion of the Company's business scale and increased number of employees |
Financial expenses | -133,343,257.84 | 396,254,772.56 | -133.65% | Affected by foreign exchange rate fluctuations, foreign exchange losses decreased |
R&D expenses | 8,251,645,101.39 | 6,378,651,762.42 | 29.36% | Continue to increase R&D investment |
4. R&D Investment
√Applicable □Inapplicable
R&D personnel of the Company
2021 | 2020 | Change Percentage | |
Number of R&D staff (ppl) | 25,352 | 20,597 | 23.09% |
R&D staff as percentage of Total headcount | 48.06% | 48.25% | -0.19% |
Education structure of R&D staff | - | - | - |
Bachelor degree | 16,305 | 12,873 | 26.66% |
Master’s degree | 7,159 | 6,275 | 14.09% |
Master’s degree or above | 129 | 100 | 29.00% |
others | 1,759 | 1,349 | 30.39% |
Age composition of R&D staff | - | - | - |
Under 30 years old | 15,388 | 12,945 | 18.87% |
30-40 years old | 9,425 | 7,324 | 28.69% |
Over 40 years old | 539 | 328 | 64.33% |
R&D investment of the Company
2021 | 2020 | Change Percentage | |
Amount of R&D expenses (RMB) | 8,251,645,101.39 | 6,378,651,762.42 | 29.36% |
R&D expenses as a percentage of operating income | 10.13% | 10.04% | 0.09% |
2021 | 2020 | Change Percentage | |
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 operating income 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 | 2021 | 2020 | YoY Change (%) |
Subtotal of cash inflows from operating activities | 90,984,859,750.26 | 72,871,160,858.85 | 24.86% |
Subtotal of cash outflows from operating activities | 78,276,335,063.27 | 56,783,004,292.18 | 37.85% |
Net cash flows from operating activities | 12,708,524,686.99 | 16,088,156,566.67 | -21.01% |
Subtotal of cash inflows from investing activities | 6,370,051,168.33 | 1,904,368,743.55 | 234.50% |
Subtotal of cash outflows from investing activities | 9,526,380,351.62 | 4,459,002,700.82 | 113.64% |
Net cash flows from investing activities | -3,156,329,183.29 | -2,554,633,957.27 | -23.55% |
Subtotal of cash inflows from financing activities | 6,123,487,832.52 | 7,057,371,569.92 | -13.23% |
Subtotal of cash outflows from financing activities | 15,914,985,474.12 | 11,617,474,855.16 | 36.99% |
Net cash flows from financing activities | -9,791,497,641.60 | -4,560,103,285.24 | -114.72% |
Net increase in cash and cash equivalents | -420,893,449.11 | 8,509,169,869.91 | -104.95% |
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 stockingduring the reporting period; the main reason for the change in net cash flow from investing activities was thepurchase of long-term assets and the increase in external equity investment during the reporting period; the mainreason for the change in net cash flow from financing activities was mainly due to the net outflow of borrowingsand the increase in dividend distribution 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 31st 2021 | January 1st 2021 | YoY Change (%) | Note of significant change | |||
Amount | Percentage of total assets | Amount | Percentage of total assets | |||
Cash and bank balances | 34,721,870,931.36 | 33.43% | 35,459,729,108.27 | 39.82% | -6.39% | No significant change |
Accounts receivable | 26,174,773,100.42 | 25.20% | 22,056,067,917.79 | 24.77% | 0.43% | No significant change |
Contract assets | 1,411,372,624.91 | 1.36% | 319,404,544.10 | 0.36% | 1.00% | Operating income of constructions increased |
Inventories | 17,974,112,407.60 | 17.31% | 11,477,906,040.70 | 12.89% | 4.42% | Increase in sales led to increased stocking |
Long-term equity investment | 982,165,546.45 | 0.95% | 864,026,710.23 | 0.97% | -0.02% | No significant change |
Fixed assets | 6,695,590,671.27 | 6.45% | 5,830,677,198.85 | 6.55% | -0.10% | No significant change |
Construction in process | 2,323,336,098.68 | 2.24% | 1,425,235,193.72 | 1.60% | 0.64% | Increase in construction investments on Science and Technology Parks in various locations |
Right-of-use assets | 566,393,672.75 | 0.55% | 392,997,553.30 | 0.44% | 0.11% | Increase in rental of buildings |
Lease liabilities | 317,951,879.21 | 0.31% | 230,055,273.70 | 0.26% | 0.05% | |
Short-term borrowings | 4,074,962,469.97 | 3.92% | 3,999,246,634.59 | 4.49% | -0.57% | No significant change |
Contract liabilities | 2,580,894,226.59 | 2.48% | 2,161,166,671.26 | 2.43% | 0.05% | No significant change |
Long-term borrowings | 3,284,371,642.52 | 3.16% | 1,961,167,761.30 | 2.20% | 0.96% | Decrease in project borrowings |
Non-current liabilities due within one year | 596,915,360.58 | 0.57% | 3,644,798,414.28 | 4.09% | -3.52% |
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 | 22,679,846.77 | 11,711,591.07 | -71,427.01 | 34,320,010.83 | ||||
2. Other non-current financial assets | 491,939,067.27 | -53,214,895.05 | 438,724,172.22 | |||||
3. Receivables for financing | 1,959,601,195.25 | -643,566,073.19 | 1,316,035,122.06 | |||||
Subtotal of financial assets | 2,474,220,109.29 | -41,503,303.98 | -71,427.01 | -643,566,073.19 | 1,789,079,305.11 | |||
Financial Liabilities | 7,405,771.15 | 3,303,279.51 | -40,174.07 | 4,062,317.57 |
Whether there were any material changes on the measurement attributes of major assets of the Company during thereporting period:
□ Yes √ No
3. Assets right restrictions as of the end of reporting period
Unit: RMB
Item | Closing Book Value (RMB) | Reasons for being restricted |
Cash and bank balances
Cash and bank balances | 117,926,502.16 | Various cash deposits and other restricted funds |
Notes receivable | 711,238,103.83 | Endorsed to suppliers |
Receivables for financing | 4,337,929.69 | Pledge for issuance of bank’s acceptance bills |
Accounts receivable
Accounts receivable | 197,358,387.51 | Pledge for long-term debts |
Contract assets | 104,842,914.69 | Pledge for long-term debts |
Intangible assets | 62,497,900.00 | Pledge for long-term debts |
Other non-current assets
Other non-current assets | 1,667,721,944.32 | Pledge for long-term debts |
right-of-use assets | 23,923,145.37 | Fixed assets leased under finance leases |
Total
Total | 2,889,846,827.57 |
VI. Investments
1. Overview
√Applicable □ Inapplicable
2. Significant equity investment during the current reporting period
□Applicable √Inapplicable
Investment in 2021 (RMB) | Investment in 2020 (RMB) | YoY (%) |
2,534,882,042.80 | 2,666,845,621.23 | -4.95% |
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 | 374,660,696.76 | 896,287,490.09 | Self-fund | 45.52% | None | September 23rd 2017 | Announcement on Investment and Construction of Chengdu Science and Technology Park Project in Chengdu (No. 2017-033) |
Chongqing Science and Technology Park Project-Phase II | Self-built | Yes | AIoT products and services | 175,974,725.06 | 425,784,975.85 | Self-fund | 100.00% | None | September 23rd 2017 | Announcement on Investment and Construction of Chongqing Science and Technology Park Project in Chongqing (No. 2017-035) |
Hangzhou Innovation Industry Park | Self-built | Yes | AIoT products and services | 55,489,079.67 | 393,310,782.16 | Specific Loan | 38.33% | None | September 23rd 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 | Self-built | Yes | AIoT products and | 315,975,312.09 | 390,702,241.74 | Self-fund | 45.91% | None | October 16th 2014 | Announcement on Investment and establishment of a wholly-owned subsidiary in Tonglu and new |
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) |
Project | services | construction of Hikvision Security Industrial Base (Tonglu) Project (2014-044) | ||||||||
Xi’an Science and Technology Park Project | Self-built | Yes | AIoT products and services | 168,330,152.28 | 181,009,327.21 | Self-fund | 7.95% | None | September 23rd 2017 | Announcement on Investment and Construction of Xi’an Science and Technology Park in Xi’an (2017-031) |
EZVIZ Industrial Base (Infrastructure Part) | Self-built | Yes | Smart home business | 92,990,105.25 | 95,322,172.33 | Self-fund | 12.67% | None | - | - |
Shijiazhuang Science and Technology Park Project | Self-built | Yes | AIoT products and services | 98,124,086.75 | 100,184,640.21 | Self-fund | 11.16% | None | March 22nd 2018 | Announcement on Investment and Construction of Shijiazhuang Science and Technology Park in Shijiazhuang (2018-016) |
Security Industrial Base (Tonglu) Phase III | Self-built | Yes | AIoT products and services | 48,109,601.71 | 48,768,905.95 | Self-fund | 6.33% | 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) |
Zhengzhou Science and Technology Park Project | Self-built | Yes | AIoT products and services | 28,500,043.29 | 42,029,452.82 | Self-fund | 8.67% | None | - | - |
Wuhan Intelligence Industry Park Project | Self-built | Yes | AIoT products and services | 19,234,593.60 | 21,605,140.49 | Self-fund | 0.91% | None | September 23rd 2017 | Announcement on Investment and Construction of Wuhan Intelligence Industry Park in Wuhan (2017-036) |
Total | -- | -- | -- | 1,377,388,396.46 | 2,595,005,128.85 | -- | -- | -- | -- | -- |
Note: In accordance with the Company's Authorization Management System, EZVIZ Industrial Base project, Security Industrial Base (Tonglu) Phase III project andZhengzhou Science and Technology Park project were 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
Unit: 0,000 RMB
Operation party of derivatives investment | Whether Related party | Whether related transaction | Type of derivatives investment | Initial investment amount of derivatives investment | Initial date | Termination date | Opening investment amount | Purchased amount during the reporting period | Sold amount during the reporting period | Impairment provisions (if any) | Closing investment amount | Proportion of closing investment amount to the Company’s net assets at the end of the reporting period | Actual gain or loss during the reporting period |
Commercial bank | No | No | foreign exchange contract | 351,670.38 | October 21st 2020 | August 30th 2024 | 351,670.38 | 693,947.52 | 205,031.34 | 3.14% | 11,360.81 | ||
Total | 351,670.38 | -- | -- | 351,670.38 | 693,947.52 | 205,031.34 | 3.14% | 11,360.81 | |||||
Capital source of derivatives investment | Company’s own fund | ||||||||||||
Prosecution (if applicable) | Inapplicable | ||||||||||||
Announcement date for approvals of derivatives investment from the Board of Directors (if any) | April 17th 2021 | ||||||||||||
Announcement date for approvals of derivatives investment from the general meeting of shareholders (if any) | Inapplicable | ||||||||||||
Risk analysis and control measures | For details of the risk analysis and control measures, please refer to the Announcement on Conducting Foreign Exchange Hedging Transactions in |
(including but not limited to, market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) of holding derivatives during the reporting period | 2021 (NO. 2021-030) dated April 17th 2021 of the Company |
Change of market price or fair value of invested derivatives during the reporting period; specific methods, related assumptions and parameter setting of the derivatives’ fair value analysis should be disclosed | The Company 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 RMB 15.01 million of gains 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. |
During the current reporting period, whether there was significant changes of accounting policies and accounting principles of the Company’s derivatives comparing to the prior reporting period | 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. |
5. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund
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 CompaniesInformation 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 |
Daishan Hailai Yunzhi Technology Co., Ltd. | Change in voting rights | Business development |
EQUIPOS PROFESIONALES DE COMUNICACI?N S.A. DE C.V. | Transfer of equity in cash | Expand overseas sales channels |
SISTEMAS Y SERVICIOS DE COMUNICACI?N, S.A. DE C.V. | Transfer of equity in cash | Expand overseas sales channels |
Shanghe Smart City Technology Co., Ltd. | Cash contribution | Business development |
Chongqing EZVIZ Electronics Co., Ltd. | Cash contribution | Business development |
Hangzhou Hikrobot Automation Co., Ltd. | Cash contribution | Business development |
Hangzhou Haina Yuzhi Entrepreneurship Investment Partnership Co., Ltd. | Cash contribution | Business development |
Hikvision Chile SpA | Cash contribution | Expand overseas sales channels |
Hangzhou EZVIZ Technology Co., Ltd. | Releasing the entrustment agreement | Reorganization |
Hundure Technology (Shanghai) Co., Ltd. | Liquidation & cancellation | Reorganization |
Secure Holding Limited | Liquidation & cancellation | Reorganization |
Guangzhou Hikvision Technology Co., Ltd. | Liquidation & cancellation | Reorganization |
Hikvision Joint-Stock Company (Original name: ZAO Hikvision) | 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 set off a wave of technological innovation that willsweep across thousands of industries with unprecedented changes.
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 2022
(1) Continuously investing in R&D to preserve advantages in technical and product R&D.
(2) Firmly implement business strategies and seize more business opportunities.
(3) Continue to expand city-based business layout in Chinese, promote the differentiated layout of “OneCountry, One Policy” in overseas, and optimize the coordination and division of responsibilities between theheadquarters and regional centers.
(4) Expand the scale of innovative businesses, pursuing better market positions in their respective segments,and strengthen the cooperation between core business and new innovative businesses.
(5) Strengthen the coordination of R&D, production and sales, and maintain prudent supply chain managementto ensure supply chain security.
(6) Promote the integration and mutual promotion of the Company’s organizational framework, improveoperational efficiency, and give full play to the advantages of economies of scale.
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 |
December 22nd 2020 – January 11th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 106 investors including China Asset Management-Zhang Fan, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From December 22nd 2020 to January 11th 2021 |
January 12th 2021 – January 29th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 138 investors including Huachuang Securities-Meng Can, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From January 12th 2021 to January 29th 2021 |
February 1st 2021 – March 2nd 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 56 investors including Haitong Securities-Wang Jing, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From February 1st 2021 to March 2nd 2021 |
March 3rd 2021 – March 17th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 145 investors including Orient Securities-Kuai Jian, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From March 3rd 2021 to March 17th 2021 |
April 17th 2021 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | 928 investors including E-fund Management-Ni Chunyao, etc. | The Company's operations in 2020 and the first quarter of 2021 | CNINF, Investor Relations Activity Record: April 17th 2021 |
April 18th 2021 – April 30th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 220 investors including Ping An Fund Management-Zhu Chunyu, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From April 18th 2021 to April 30th 2021 |
May 10th 2021 – May 21st 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 95 investors including Bosera Asset Management-Chen Pengyang, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From May 10th 2021 to May 21st 2021 |
May 24th 2021 | Headquarters | Site Research | Institutional | 79 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 |
– June 11th 2021 | meeting room of the Company | and telephone communication | investors | including Orient Securities Asset Management-Zhang Mingyu, etc. | operating conditions and future prospects | Activity Record: From May 24th 2021 to June 11th 2021 |
June 15th 2021 – June 25th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 39 investors including Shenwan Hongyuan Asset Management-Qin Qing, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From June 15th 2021 to June 25th 2021 |
July 24th 2021 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | 908 investors including Essence Fund-Chen Zhenyu, etc. | The Company's operations in the first half of 2021 | CNINF, Investor Relations Activity Record: July 24th 2021 |
July 26th 2021 – August 6th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 136 investors including Perseverance Asset Management-Zhang Jifeng, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From July 26th 2021 to August 6th 2021 |
August 9th 2021 – August 27th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 84 investors including Taikang Asset Management-Li Xiaojin, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From August 9th 2021 to August 27th 2021 |
August 30th 2021 – September 17th 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 68 investors including Yinhua Fund Management-Du Yu, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From August 30th 2021 to September 17th 2021 |
October 23rd 2021 | Headquarters meeting room of the Company | Performance result conference call | Institutional investors; individuals | 620 investors including ICBC Credit Suisse-Yang Ke, etc. | The Company's operations in the third quarter of 2021 | CNINF, Investor Relations Activity Record: October 23rd |
November 15th 2021 – December 3rd 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 39 investors including Fullgoal Fund-Zhou Zongzhou, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From November 15th 2021 to December 3rd 2021 |
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 |
December 14th 2021 – December 31st 2021 | Headquarters meeting room of the Company | Site Research and telephone communication | Institutional investors | 37 investors including Tianhong Fund-Zhang Tao, etc. | The Company's operating conditions and future prospects | CNINF, Investor Relations Activity Record: From December 14th 2021 to December 31st 2021 |
Section IV Corporate GovernanceI. Basic Situation of Corporate GovernanceSince the inception of the Company, we have been strictly following relevant laws and regulations such as the“Company Law”, “Securities Law”, “Code of Corporate Governance of Listed Companies”, “Rules Governingthe Listing of Shares on Shenzhen Stock Exchange”, and “Shenzhen Stock Exchange Listed Companies Self-Regulatory Supervision Guidelines No. 1 - Standardized Operation of Main Board Listed Companies” as well asthe requirements of the regulations and regulatory documents of the regulatory authorities, through continuousimprovement of 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, andstrictly follow the principle of disclosing information in a true, accurate, complete, timely and impartial manner; wehave also established and improved internal management and control system, promoted the standardized operationof the Company and ensured the legitimate rights and interests of the Company and investors. During the reportingperiod, the basic details of corporate governance is as follows:
1. Shareholders and shareholders’ meeting
We have ensured the equal status and full rights for all shareholders, especially small and medium shareholders.During the reporting period, the Company held a total of 3 general meetings of shareholders, all of which wereconvened by the Company's Board of Directors, and witnessed by lawyers on-site with legal opinions issued.Proposals were reviewed in compliance with legal procedures to ensure that all shareholders have the right to know,participate, and vote on major issues of the Company and to fully exercise their legal rights.
2. The controlling shareholders and listed company
The Company’s controlling shareholders had no improper conduct and have never directly or indirectlyinterfered with the Company’s decision-making and operating activities overriding shareholders’ meeting. Thereare no such cases that controlling shareholders occupy the Company's funds or the Company provides guaranteesfor controlling shareholders. The Company, with its own complete business system and management capabilities,has been independent of controlling shareholders in terms of business, personnel, assets, organizations, and finances.The Company's Board of Directors, Board of Supervisors and internal institutions has been operating separately toensure that major company decisions are made and implemented by the Company.
3. Directors and the Board of Directors
The Company's Board of Directors, operating in a normalized way, has performed its functions invested by the“Articles of Association” and relevant laws and regulations, and implemented the relevant decisions of theshareholders’ meeting. The number and composition of the Company's Board of Directors comply with therequirements of laws and regulations. There are four 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 their independent opinions on matters involving the interests of smalland medium investors such as related transactions and external guarantees, which ensured the standardizedoperation of the Company.
During the reporting period, the Company convened 9 board meetings, reviewed and approved 84 proposalsincluding the “Annual Report 2020 and its Summary”, “Proposal on the Initial Public Share Offering and Listingon the STAR Market of the Shanghai Stock Exchange of the Subsidiary, Hangzhou EZVIZ Network Co., Ltd”, “2021Restricted Stock Plan (Revised Draft) and its Summary” and “Proposal on Authorizing the Company's Managementto Start the Spin-off for the Preliminary Preparations for Listing on the Domestic Stock Markets of the Subsidiary,Hangzhou Hikrobot Technology Co., Ltd..”, etc.
4. Supervisors and Board of Supervisors
The number and composition of the Company’s Board of Supervisors meet the requirements of laws andregulations; the Company’s supervisors have diligently performed their duties and obligations, and carried outsupervision and inspection functions being responsible to shareholders, and supervised the Company’s financialstatus, operating conditions and related transactions, and the performance of duties by directors and senior managersto fully protect the legal rights and interests of the Company and all shareholders.
During the reporting period, the Company held 9 Board of Supervisors’ meetings, reviewed and approved 40proposals including the "2021 Restricted Stock Scheme (Revised Draft) and its Summary" and " Participant List ofthe 2021 Restricted Stock Scheme ", and to verify the participant list specified in the "2021 Restricted Stock Scheme(Revised Draft)". It concludes that the participants listed in the restricted stock scheme are qualified according torelevant laws, regulations and normative documents such as the "Measures for the Management of Equity Incentives
of Listed Companies", and are within the scope of the participants specified in the Company's 2021 restricted stockscheme, and their qualifications as the participants in the 2021 restricted stock scheme are legal and effective, whichis conductive to the effective performance of the responsibilities of the Board of Supervisors.
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 “Company InformationDisclosure Management Measures” to disclose relevant information truthfully, accurately, completely, timely andimpartially, and thoroughly implemented the “Company Information Insider Registration Management System” toregister insiders and file to further standardize inside information management and to ensure that all shareholdersand other stakeholders of the Company have equal access to company information. During the reporting period, theCompany disclosed 4 periodic reports and 78 temporary announcements. The Company's information disclosurehas been recognized by the regulatory authorities: the Company has been rated as Level A by the Shenzhen StockExchange for 11 consecutive years in the main board listed company information disclosure assessment.
7. Continue to improve the internal management system
In accordance with the latest revisions of relevant laws, administrative regulations and normative documentssuch as the “Company Law” and the “Securities Law”, the Company revised the “Rules of Procedure for theGeneral Meeting of Shareholders”, the “Rules of Procedure for the Board of Directors”, the “Work Regulations forthe Independent Directors” and other internal management systems based on the actual situation of the Companyduring the reporting period. The Company strengthened the internal management, further improved the corporategovernance structure, promoted the Company's compliance operation, and protected the legitimate rights andinterests of the Company and shareholders.
8. Investor relations activities
The Company has proactively organized performance briefings after the disclosure of regular reports, heldinvestor reception activities to actively listen to investors’ opinions and suggestions, and released the “InvestorRelations 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’s investor relations effortshave been recognized by the capital market through the following awards: “Top 100 Chinese Main Board ListedCompanies” in the 15th China’s Most Valuable Listed Company Selection hosted by the Securities Times, “Top 50Companies of Market Value” in the Wind 2021 Listed Company Market Value Ranking, “Top 5 Companies inTechnology Hardware and Equipment Industry”, “Top 50 Most Popular Listed Companies Ranked by Institutions”,“Top 50 A-share Companies in the Hot List by Institutional Research” by Wind, “Top 100 Companies with HighQuality Development” in the 2021 China’s Listed Company with High Quality Development Selection hosted byYinshi Finance and Economics, “Outstanding Company with Investment Value for the Year” and “Listed CompanyMost Preferred at Public Offerings for the Year” in the 2021 Jing Luan Award for Chinese Listed Companies hostedby JHB show.
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 Controller
The 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 personnelof 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 intervention in the Company’s personnel decisions in general meetings of the Board orshareholders.
(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 2021 | Extraordinary General Meeting of Shareholders | 70.0131% | March 5th 2021 | March 6th 2021 | 9 proposals including the Proposal on Election of Non-Independent Directors of the 5th Session of the Board of Directors were reviewed and voted. For details, please refer to the Company's announcement: No. 2021-020. |
2020 Annual General Meeting | Annual General Meeting | 70.2837% | May 14th 2021 | May 15th 2021 | 20 proposals including the 2020 Annual Report and Summary were reviewed and voted. For details, please refer to the Company's announcement: No. 2021-039. |
The 2nd Extraordinary General Meeting of Shareholders in 2021 | Extraordinary General Meeting of Shareholders | 69.1732% | September 27th 2021 | September 28th 2021 | 10 proposals including the Proposal on the spin-off of the Company’s subsidiary Hangzhou EZVIZ Network Co., Ltd. to be listed on the Science and Technology Innovation Board in compliance with relevant laws and regulations were reviewed and voted. For details, please refer to the Company's announcement: No. 2021-058. |
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) | Shares held at the end of the Period (Shares) | Reasons for increase or decrease of shares |
Chen Zongnian | Chairman | Incumbent | Male | 57 | June 19th 2008 | March 4th 2024 | 0 | 0 | 0 | 0 | -- |
Qu Liyang | Director | Incumbent | Male | 58 | March 7th 2018 | March 4th 2024 | 15,750 | 0 | 0 | 15,750 | -- |
Wang Qiuchao | Director | Incumbent | Male | 71 | March 5th 2021 | March 4th 2024 | 35,000 | 0 | 0 | 35,000 | -- |
Hu Yangzhong | Director, General Manager (CEO) | Incumbent | Male | 57 | December 28th 2001 | March 4th 2024 | 182,186,477 | 0 | 26,940,000 | 155,246,477 | Personal financial needs |
Wu Weiqi | Director, Standing Deputy General Manager | Incumbent | Male | 58 | March 1st 2003 | March 4th 2024 | 11,371,389 | 0 | 2,740,300 | 8,631,089 | Personal financial needs |
Wu Xiaobo | Independent Director | Incumbent | Male | 62 | March 5th 2021 | March 4th 2024 | 0 | 0 | 0 | 0 | -- |
Hu Ruimin | Independent Director | Incumbent | Male | 58 | March 5th 2021 | March 4th 2024 | 0 | 0 | 0 | 0 | -- |
Li Shuhua | Independent Director | Incumbent | Male | 51 | March 5th 2021 | March 4th 2024 | 0 | 0 | 0 | 0 | -- |
Name | Title | Tenure status | Gender | Age | Commencement of term of office | Termination of term of office | Shares held at the beginning of the Period (Shares) | Shares increased during the Period (shares) | Shares decreased during the Period (Shares) | Shares held at the end of the Period (Shares) | Reasons for increase or decrease of shares |
Guan Qingyou | Independent Director | Incumbent | Male | 45 | March 5th 2021 | March 4th 2024 | 0 | 0 | 0 | 0 | -- |
Hong Tianfeng | Supervisor Chairman | Incumbent | Male | 56 | March 5th 2021 | March 4th 2024 | 0 | 0 | 0 | 0 | -- |
Xu Lirong | Supervisor | Incumbent | Male | 59 | March 21st 2018 | March 4th 2024 | 303,000 | 0 | 0 | 303,000 | -- |
Lu Jianzhong | Supervisor | Incumbent | Male | 68 | March 5th 2021 | March 4th 2024 | 0 | 0 | 0 | 0 | -- |
He Hongli | Senior Deputy General Manager | Incumbent | Female | 49 | December 18th 2005 | March 11th 2024 | 331,500 | 0 | 0 | 331,500 | -- |
Cai Changyang | Senior Deputy General Manager | Incumbent | Male | 51 | April 8th 2016 | March 11th 2024 | 109,500 | 0 | 0 | 109,500 | -- |
Xu Ximing | Senior Deputy General Manager | Incumbent | Male | 49 | October 11th 2016 | March 11th 2024 | 197,000 | 0 | 0 | 197,000 | -- |
Bi Huijuan | Senior Deputy General Manager | Incumbent | Female | 51 | October 11th 2016 | March 11th 2024 | 273,000 | 0 | 0 | 273,000 | -- |
Pu Shiliang | Senior Deputy General Manager | Incumbent | Male | 45 | March 21st 2018 | March 11th 2024 | 295,900 | 0 | 0 | 295,900 | -- |
Jin Duo | Senior Deputy General Manager | Incumbent | Male | 57 | March 10th 2015 | March 11th 2024 | 109,500 | 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) | Shares held at the end of the Period (Shares) | Reasons for increase or decrease of shares |
Jin Yan | Senior Deputy General Manager, Person in charge of finance | Incumbent | Female | 43 | July 22nd 2015 | March 11th 2024 | 284,000 | 0 | 0 | 284,000 | -- |
Huang Fanghong | Senior Deputy General Manager, Board Secretary | Incumbent | Female | 40 | April 8th 2016 | March 11th 2024 | 402,500 | 0 | 0 | 402,500 | -- |
Chen Junke | Senior Deputy General Manager | Incumbent | Male | 51 | March 21st 2018 | March 11th 2024 | 0 | 0 | 0 | 0 | -- |
Xu Peng | Senior Deputy General Manager | Incumbent | Male | 46 | March 12th 2021 | March 11th 2024 | 128,740 | 0 | 51,496 | 77,244 | Personal financial needs |
Guo Xudong | Senior Deputy General Manager | Incumbent | Male | 50 | March 12th 2021 | March 11th 2024 | 73,800 | 0 | 29,520 | 44,280 | Personal financial needs |
Gong Hongjia | Vice Chairman | Resigned | Male | 57 | June 19th 2008 | March 5th 2021 | 1,016,614,814 | 0 | 54,110,000 | 962,504,814 | Personal financial needs |
Cheng Tianzong | Independent Director | Resigned | Male | 70 | March 6th 2015 | March 5th 2021 | 0 | 0 | 0 | 0 | -- |
Wang Zhidong | Independent Director | Resigned | Male | 55 | March 6th 2015 | March 5th 2021 | 0 | 0 | 0 | 0 | -- |
Cheng Huifang | Supervisor Chairman | Resigned | Female | 69 | March 6th 2015 | March 5th 2021 | 0 | 0 | 0 | 0 | -- |
Name | Title | Tenure status | Gender | Age | Commencement of term of office | Termination of term of office | Shares held at the beginning of the Period (Shares) | Shares increased during the Period (shares) | Shares decreased during the Period (Shares) | Shares held at the end of the Period (Shares) | Reasons for increase or decrease of shares |
Fu Baijun | Senior Deputy General Manager | Resigned | Male | 50 | January 20th 2009 | March 12th 2021 | 495,000 | 0 | 126,000 | 369,000 | Personal financial needs |
Jiang Yufeng | Senior Deputy General Manager | Resigned | Male | 51 | December 18th 2005 | March 12th 2021 | 325,500 | 0 | 0 | 325,500 | -- |
Total | -- | -- | -- | -- | -- | -- | 1,213,552,370 | 0 | 83,997,316 | 1,129,555,054 | -- |
Note:
(1) Number of shares held at the beginning of the period, shares increased during the period, shares decreased during the period for directors, supervisors, and seniormanagement personnel above are all shares directly held by them accordingly, including restricted shares.
(2) On March 5
th2021, Gong Hongjia resigned as a director of the Company at termination of term of office, Cheng Tianzong and Wang Zhidong resigned asindependent directors of the Company at termination of term of office, Cheng huifang resigned as the board supervisor of the Company at termination of term ofoffice. Wang Qiuchao was elected as a director of the Company's 5
thsession of the Board of Directors, Hong Tianfeng and Lu Jianzhong were elected as supervisorsof the Company's 5
th
session of the Board of Supervisors.
(3) On March 12
th
2021, Gong Hongjia, Fu Baijun and Jiang Yufeng resigned from the Company’s senior management position. Xu Lirong resigned from theCompany’s person in charge of internal audit.
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
Name | Position | Types of change | Date | Reason |
Wang Qiuchao | Director | Appointment and dismissal | March 5th 2021 | General election |
Wu Xiaobo | Independent Director | Elected | March 5th 2021 | General election |
Hu Ruimin | Independent Director | Elected | March 5th 2021 | General election |
Li Shuhua | Independent Director | Elected | March 5th 2021 | General election |
Guan Qingyou | Independent Director | Elected | March 5th 2021 | General election |
Hong Tianfeng | Chairman of the Board of Supervisors | Appointment and dismissal | March 5th 2021 | General election |
Lu Jianzhong | Supervisor | Appointment and dismissal | March 5th 2021 | General election |
Gong Hongjia | Director | Left the position after the expiry of his tenure | March 5th 2021 | Tenure expires |
Cheng Tianzong | Independent Director | Left the position after the expiry of his tenure | March 5th 2021 | Tenure expires |
Lu Jianzhong | Independent Director | Left the position after the expiry of his tenure | March 5th 2021 | Tenure expires |
Wang Zhidong | Independent Director | Left the position after the expiry of his tenure | March 5th 2021 | Tenure expires |
Hong Tianfeng | Independent Director | Left the position after the expiry of his tenure | March 5th 2021 | Tenure expires |
Cheng Huifang | Chairman of the Board of Supervisors | Left the position after the expiry of her tenure | March 5th 2021 | Tenure expires |
Wang Qiuchao | Supervisor | Left the position after the expiry of his tenure | March 5th 2021 | Tenure expires |
Xu Peng | Senior Deputy General Manager | Hired | March 12th 2021 | General appointment |
Guo Xudong | Senior Deputy General Manager | Hired | March 12th 2021 | General appointment |
Gong Hongjia | Vice Chairman | Left the position after the expiry of his tenure | March 12th 2021 | Tenure expires |
Fu Baijun | Senior Deputy General Manager | Left the position after the expiry of his tenure | March 12th 2021 | Tenure expires |
Jiang Yufeng | Senior Deputy General Manager | Left the position after the expiry of his tenure | March 12th 2021 | Tenure expires |
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
nd
Research 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 deputygeneral 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 Regulatory
Commission (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.
Mr. Gong Hongjia (龚虹嘉): Born in 1965, Hong Kong permanent resident. Gong holds a bachelor degree ofengineering, technology entrepreneur, and angel investor. He has established and invested over 10 enterprisesincluding TECSUN Co. Ltd., AsiaInfo Dekang, Funian Technology, and Woqi Data, and etc. He took part in theestablishment of the Company in November 2001 and served as a director (left after the expiry of his tenure onMarch 5
th
2021) and vice chairman (left after the expiry of his tenure on March 12
th
2021) of the Company.
Mr. Cheng Tianzong (程天纵): Born in 1952, Taiwanese, master degree in business administration. Cheng servedas president and a director of Hewlett-Packard Development Company, L.P. (China) from 1992 to 1997; served asthe president of the Asia Pacific of Texas Instruments Incorporated (德州仪器) from 1997 to 2007; served as a vice-president of Hong Hai Corporation (鸿海集团) from July 2007 to 2012, and the chief executive officer of FIHMobile Limited, a subsidiary of Hong Hai Corporation (鸿海集团), a company listed on the Hong Kong StockExchange in 2011. He retired in June 2012 and devoted himself to China Maker Campaign (中国创客运动) to helpand guide those start-up companies in September 2013. Cheng served as an independent director of the Company
(left after the expiry of his tenure on March 5
th2021)
Mr. Wang Zhidong (王志东): Born in 1967, Hong Kong permanent resident, bachelor degree of science. He servedas a deputy general manager and chief engineer of Beijing Haidian District Suntendy Electronic TechnologyResearch Institute (北京海淀区新天地电子信息技术研究所) from April 1992 to August 1993; He served as ageneral manager of Beijing Richwin Information Technology Co., Ltd. (四通利方信息技术有限公司), and servedas chief executive officer and a director of SINA Corporation (新浪网) from December 1993 to June 2001; Heserved as chairman and chief executive officer of Beijing Dianji Technology, Ltd. (北京点击科技有限公司) fromDecember 2001 to July 2013. Mr. Wang has served as an independent director of the Company (left after the expiryof his tenure on March 5
th
2021). He currently serves as chairman and chief executive officer of BeijingYilianyisheng Techonology Co. Ltd.(北京易连忆生科技有限公司).
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 Venture Investment Management Co., Ltd. (上海方广创业投资管理有限公司), 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 Zhongxinghua
Certificated 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 charteredaccountant of Zhongxinghua Certificated Public Accountants LLP Shanghai Branch, MPAcc/Maud EnterpriseMentor of Antai College of Economics & Management,Shanghai Jiao Tong University (上海交通大学安泰管理学院), and a supervisor of the Company.
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.
Ms. Cheng Huifang (程惠芳): Born in 1953, PhD in international finance. She was a member of the 8
th and 9th
Zhejiang CPPCC (浙江省政协). Cheng has served as a supervisor of the Company (left after the expiry of hertenure on March 5
th2021). Cheng currently serve as dean of the Global Development Research Institute of ZhejiangBusinesses under Zhejiang University of Technology (浙江工业大学全球浙商发展研究院), professor (level II),president of Zhejiang Yangtze River Delta of the Institute of Innovation Management (浙江长三角创新管理研究院), president of the Zhejiang Financial Engineering Society (浙江省金融工程学会).
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. Jin
currently 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
nd
Research 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.
Mr. Fu Baijun (傅柏军): Born in 1972, bachelor degree in economics, Chinese Certificated Public Accountant,professor-level senior accountant. He served as an accountant of the accounting division of the 52
ndResearchInstitute and a deputy general manager of Zhejiang Haikang Information Technology Co. Ltd. (浙江海康信息技术股份有限公司) from July 1996 to December 2008. He joined Hikvision in January 2009, and served as a deputy
general manager and the person in charge of accounting department, a deputy general manager, and a senior deputygeneral manager of the Company (left after the expiry of his tenure on March 12
th
2021).
Mr. Jiang Yufeng (蒋玉峰): Born in 1971, bachelor degree of engineering, an engineer. He joined Hikvision inJanuary 2005 and held various positions in the Company, including general manager of Beijing branch, marketingdirector, assistant to general manager, deputy general manager and marketing director, a deputy general manager,and a senior deputy general manager of the Company (left after the expiry of his tenure on March 12
th
2021).
Position held in shareholders’ entities
√Applicable □ Inapplicable
Name | Shareholder's entity | Position in shareholders’ entities | Commencement of the term | Termination of the term | Compensation and allowance from the shareholders' entity |
Chen Zongnian | China Electronics Technology HIK Group Ltd. | Chairman, Secretary of Party Committee | November 2013 | -- | Y |
Hu Yangzhong | China Electronics Technology HIK Group Ltd. | Director | December 2013 | -- | N |
Xu Lirong | China Electronics Technology HIK Group Ltd. | Supervisor, Member of Commission for Discipline Inspection | December 2013 | -- | N |
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 | February 2004 | N | |
Cheng Zongnian | CETC Finance Ltd. | Director | December 2012 | January 2021 | N |
Cheng Zongnian | Phoenix Optics Co., Ltd. | Chairman | December 2019 | N | |
Wang Qiuchao | Zhejiang T&C Law Firm | Partner | August 1993 | Y | |
Wang Qiuchao | KaiShan Group Co., Ltd. | Independent Director | May 2015 | May 2021 | Y |
Wang Qiuchao | Botsy Technology Co., Ltd | Independent Director | May 2020 | Y | |
Wu Weiqi | Xinjiang Pukang Investment Management Limited | Executive Partner | April 2011 | 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 |
Partnership | |||||
Wu Weiqi | Wuhu Sensor Tech Intelligent Technology Ltd. | Director | January 2017 | N | |
Wu Weiqi | Maxio Technology (Hangzhou) Co., Ltd. | Director | May 2017 | December 2021 | N |
Wu Weiqi | Hangzhou Qianmo Tongzhou Enterprise Management Consulting Partnership (Limited Partnership) | Executive Partner | July 2021 | N | |
Wu Xiaobo | Shanghai Yirui Management Consultants Co., Ltd | Director | April 2004 | N | |
Wu Xiaobo | Hangzhou Co-Rui Enterprise Management Consulting Co., Ltd | Director | April 2011 | N | |
Wu Xiaobo | Ningbo Industrial Internet Research Institute Co., Ltd | Independent director | May 2018 | Y | |
Wu Xiaobo | Eddy Co., Ltd | Independent director | August 2018 | Y | |
Wu Xiaobo | Zhongliang Holdings Group Co., Ltd | Independent director | June 2019 | Y | |
Wu Xiaobo | Ruihua Innovation Management Research Institute (Hangzhou) Co., Ltd | Director | November 2019 | N | |
Wu Xiaobo | UCloud Technology Co., Ltd | Independent director | June 2020 | Y | |
Wu Xiaobo | Zhongtian Holding Group Co., 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 of Oriental Fortune M&A Fund | July 2018 | Y | |
Li Shuhua | Shenzhen Yuanzhi Fuhai Investment Management Co., Ltd. | Chairman of the Board of Supervisors | July 2018 | N | |
Li Shuhua | Luoyang Yuchuan Yuye | Independent | August 2018 | Y |
Name | Name of other Entity | Position in other entity | Commencement of the term | Termination of the term | Compensation and allowance from the other entities |
Group Co., Ltd | director | ||||
Li Shuhua | BOMESC Offshore Engineering Company Limited | Independent director | December 2018 | December 2021 | Y |
Li Shuhua | Changzhou Guangyang Holdings Co., Ltd | Director & CEO | August 2019 | N | |
Li Shuhua | Changzhou NRB Co., Ltd | Chairman | October 2019 | Y | |
Li Shuhua | Weihai Shiyi Electronics Co., Ltd | Legal representative and Chairman of the board | 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 | |
Guan Qingyou | Beijing Minjin Information Consulting Services Co., Ltd | Supervisor | September 2017 | N | |
Guan Qingyou | Beijing Rushiwo Research Information Consulting Service Co., 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 Co., 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 | Shandong Expressway Road and Bridge Group Co., Ltd | Independent director | January 2021 | Y | |
Guan Qingyou | Beijing Rushi Chengjin Information Consulting Service Co., Ltd. | CEO | October 2016 | N | |
Guan Qingyou | Beijing Rushiwo Research | Executive | May 2020 | 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 |
Institute of Science and Technology Co., Ltd. | Director&CEO | ||||
Guan Qingyou | Beijing Rushi Wancheng Technology Development Co., Ltd. | Executive Director& CEO | June 2020 | N | |
Guan Qingyou | Hainan Wuyongtang Information Technology Co., Ltd. | Executive Director& CEO | July 2020 | N | |
Guan Qingyou | Beijing Yaocen Yuanmu Information Technology Co., Ltd. | Executive Director& CEO | July 2020 | N | |
Guan Qingyou | Qingdao Rushiwo Research Investment Management Co., Ltd. | Executive Director& CEO | September 2020 | N | |
Guan Qingyou | Beijing Ruoan Jiatai Technology Co., Ltd. | Executive Director& CEO | December 2020 | N | |
Hong Tianfeng | Shanghai Fangguang Investment Management Ltd. | Executive Director | February 2012 | Y | |
Hong Tianfeng | Shanghai Fangguang Venture Investment Management Partnership Enterprise (Limited Partnership) | Managing Partner | June 2012 | N | |
Hong Tianfeng | Shanghai Fangguang Venture Investment Partnership Enterprise (Limited Partnership) | Managing Partner | August 2012 | N | |
Hong Tianfeng | Shanghai Fangguang Erqi Venture Investment Partnership Enterprise (Limited Partnership) | Managing Partner | September 2016 | N | |
Hong Tianfeng | Suzhou Fangguang Venture Investment Management Partnership Enterprise (Limited Partnership) | Managing Partner | September 2012 | N | |
Hong Tianfeng | Suzhou Fangguang Venture Investment Partnership Enterprise (Limited Partnership) | Managing Partner | September 2012 | N |
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 | Suzhou Fangguang Venture Investment Phase II Partnership Enterprise (Limited Partnership) | Managing Partner | July 2016 | N | |
Hong Tianfeng | Shenzhen Pengfenghui Venture Investment Ltd. | Executive Director & CEO | June 2014 | March 2021 | N |
Hong Tianfeng | Shenzhen Fangguang Enterprise Management Consulting Ltd. | Executive Director & CEO | May 2016 | N | |
Hong Tianfeng | Sannuo Biology Sensor Co., Ltd. | Director | September 2013 | Y | |
Hong Tianfeng | Shenzhen YunZhiXun Network Technology Ltd. | Director | May 2014 | N | |
Hong Tianfeng | Jiangsu JiTaiKe Electrics Co., Ltd. | Director | July 2015 | December 2021 | N |
Hong Tianfeng | Zhongwei Dahe Cloud Connection Network Technology Ltd. | Director | November 2016 | N | |
Hong Tianfeng | Shenzhen DongFengMingTu Enterprise Management Ltd. | Supervisor | August 2016 | N | |
Hong Tianfeng | Beijing ZhiZhangYi Sicence and Technology Ltd. | Director | December 2016 | N | |
Hong Tianfeng | CETC Huayun Information Technology Ltd. | Director | March 2017 | N | |
Hong Tianfeng | Shenzhen YingFeiYuan Technology Ltd. | Director | October 2017 | N | |
Hong Tianfeng | Shenzhen Chip and Semi-conductor Technology Ltd. | Director | February 2018 | N | |
Hong Tianfeng | Guangzhou Smart Software Ltd. | Director | March 2018 | N | |
Hong Tianfeng | Shanghai Daxian Intelligent Science and Technology Ltd. | Director | June 2018 | N | |
Hong Tianfeng | Quanzhi Technology (Hangzhou) Co., Ltd. | Director | July 2018 | N | |
Hong Tianfeng | Shenzhen Zhongtu Instrument Co., Ltd. | Director | February 2021 | 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 | Shanghai Fanglan Enterprise Management Center | Executive Director & CEO | March 2021 | N | |
Lu Jianzhong | Antai College of Economics and Management, SJTU | Corporate mentor | December 2013 | N | |
Lu Jianzhong | Dahua Certificated Public Accountants LLP | Chartered Accountant | January 2016 | December 2021 | N |
Lu Jianzhong | Zhongxinghua Certified Public Accountants LLP (Shanghai Branch) | Chartered Accountant | January 2022 | N | |
Lu Jianzhong | ChangShu FengFan Electric Power Equipment Co., Ltd. | Independent Director | September 2015 | November 2021 | Y |
Lu Jianzhong | Ningbo Lehui International Construction Equipment Co., Ltd. | Independent Director | March 2016 | December 2021 | 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 | Huatai Baoxing Fund Management Co., Ltd. | Director | July 2016 | Y | |
Lu Jianzhong | Shanghai Vico Precision Mold &Plastics Co,. Ltd. | Director | May 2021 | Y | |
Lu Jianzhong | BOMESC Offshore Engineering Company Limited | Independent Director | December 2021 | Y | |
Xu Ximing | Shenzhen Wangyu Security Service Science and Technology Co., Ltd. | Director | November 2019 | N | |
Xu Ximing | Chengdu Guoshengtianfeng Network Technology Co., Ltd. | Director | August 2020 | N | |
Xu Ximing | Hangzhou Confirmware Technology Co., Ltd. | Director | August 2021 | N | |
Jin Duo | Zhejiang Haishi Huayue Digital Technology Co., Ltd | Legal representative &Chairman of the | January 2020 | 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 |
board | |||||
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 | |
Gong Hongjia | Furong Technology Ltd. | Director | October 1999 | N | |
Gong Hongjia | Funian Technology Ltd. | Chairman of the Board | April 2002 | N | |
Gong Hongjia | Guangzhou Funian Electronic Technology Co., Ltd. | Chairman | July 2002 | N | |
Gong Hongjia | Hangzhou FunVio Ltd. | Chairman | February 2004 | N | |
Gong Hongjia | Beijing Funian Technology Ltd. | Legal Representative | November 2011 | N | |
Gong Hongjia | Shanghai Fullhan Microelectronics Co., Ltd. | Director | April 2013 | N | |
Gong Hongjia | Shenzhen Innovation Valley Investment Management Ltd. | Director | July 2014 | N | |
Gong Hongjia | Shanghai Pukun Information Technology Ltd. | Director | September 2014 | July 2021 | N |
Gong Hongjia | FuCe Holdings Ltd. | Director | October 2014 | N | |
Gong Hongjia | Chuangjia Venture Capital Investment Ltd | Director | October 2014 | N | |
Gong Hongjia | Shenzhen Jiadao Valley Investment Management Ltd. | Legal Representative & CEO | October 2014 | Y | |
Gong Hongjia | Shenzhen Jiadao Gongcheng Equity Investment Fund (Limited Partnership) | Executive Partner Designated Representative | November 2014 | N | |
Gong Hongjia | JiuBaYi Health Technology Ltd. | Director | November 2014 | N | |
Gong Hongjia | Beijing JiaBoWen Biotechnology Ltd. | Director | March 2015 | N | |
Gong Hongjia | Wuhan YouXin Technology Co., Ltd. | Director | January 2016 | N | |
Gong Hongjia | QingKe Management | Director | February 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 |
Consulting Group Ltd. | |||||
Gong Hongjia | Shenzhen JiadaoFangzhi Education Industry Investment Enterprise (Limited Partnership) | Executive Partner Designated Representative | June 2017 | N | |
Gong Hongjia | Shenzhen Jiadao Successful Investment Enterprise (Limited Partnership) | Executive Partner Designated Representative | August 2017 | N | |
Gong Hongjia | Shanghai AoYuan Medical Supplies Ltd. | Chairman | September 2017 | N | |
Gong Hongjia | Sichuan JiaDao BoWen Ecological Technology Ltd. | Chairman | December 2017 | N | |
Gong Hongjia | Beijing JiaDaoGu Management Consulting Ltd. | Supervisor | April 2018 | N | |
Gong Hongjia | Shenzhen Zhongke Science and Technology Achievements Transformation Equity Investment Fund Management Ltd. | Director | December 2019 | N | |
Gong Hongjia | ZhongYuan Concord Cell Genetic Engineering Co., Ltd. | Chairman | December 2018 | December 2021 | N |
Gong Hongjia | Tianjin Deyuan Investment Development Ltd. | Director | July 2019 | N | |
Gong Hongjia | Sichuan Huiyang Life Engineering Co., Ltd. | Director | September 2019 | N | |
Gong Hongjia | Yong Tai Hong Kan Holding Group Ltd. | Vice Chairman | October 2019 | N | |
Gong Hongjia | Shenzhen CSMAR Data Technology Co., Ltd. | Director | February 2020 | N | |
Gong Hongjia | Beijing Nutshell Universe Education Technology Co., Ltd. | Director | February 2021 | N | |
Cheng Tianzong | Aurotek Corporation | Director | June 2014 | Y | |
Cheng Tianzong | Zuozhen Co., Ltd. | Director | January 2015 | 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 |
Cheng Tianzong | WT Microelectronics Co., Ltd. | Independent Director | June 2016 | Y | |
Wang Zhidong | Beijing Yilianyisheng Science and Technology Ltd. | Chairman and CEO | October 2013 | Y | |
Cheng Huifang | Zhejiang HuaCe Media Co., Ltd. | Independent Director | February 2016 | Y | |
Cheng Huifang | Zhejiang Commercial Bank Co., Ltd. | External Supervisor | June 2016 | Y | |
Cheng Huifang | Quzhou NanGaoFeng Chemical Co., Ltd. | Independent Director | March 2017 | December 2021 | Y |
Cheng Huifang | Ningbo Fujia Industrial Co., Ltd. | Independent Director | April 2020 | Y | |
Cheng Huifang | Zhejiang Youyi Medical Equipment Co., Ltd. | Independent Director | September 2020 | Y | |
Cheng Huifang | Zhejiang China Textile City Group Co., Ltd | Independent Director | November 2020 | Y | |
Fu Baijun | Shenzhen Hikvision Urban Service Operation Co., Ltd. | Chairman | July 2020 | N | |
Description of the status of employment in other units | 1) Gong Hongjia resigned as a director of the Company at the end of his tenure on March 5th 2021, and resigned as vice Chairman of the Company at the end of his tenure on March 12th 2021; 2) Cheng Tianzong and Wang zhidong resigned as independent directors of the Company at the end of their tenure on March 5th 2021; 3) Cheng Huifang resigned as a supervisor of the Company at the end of her tenure on March 5th 2021; 4) Fu Baijun resigned as a senior management of the Company at the end of his tenure on March 12th 2021; |
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 | 57 | Incumbent | 0.00 | Y |
Qu Liyang | Director | M | 58 | Incumbent | 0.00 | Y |
Wang Qiuchao | Director | M | 71 | Incumbent | 28.33 | N |
Hu Yangzhong | Director, CEO | M | 57 | Incumbent | 312.73 | N |
Wu Weiqi | Director, Standing Deputy General Manager | M | 58 | Incumbent | 310.97 | N |
Wu Xiaobo | Independent Director | M | 62 | Incumbent | 25.00 | N |
Hu Ruimin | Independent Director | M | 58 | Incumbent | 25.00 | N |
Li Shuhua | Independent Director | M | 51 | Incumbent | 25.00 | N |
Guan Qingyou | Independent Director | M | 45 | Incumbent | 25.00 | N |
Hong Tianfeng | Supervisor Chairman | M | 56 | Incumbent | 21.67 | N |
Lu Jianzhong | Supervisor | M | 68 | Incumbent | 21.67 | N |
Xu Lirong | Supervisor | M | 59 | Incumbent | 162.09 | N |
He Hongli | Senior Deputy General Manager | F | 49 | Incumbent | 290.77 | N |
Cai Changyang | Senior Deputy General Manager | M | 51 | Incumbent | 262.27 | N |
Xu Ximing | Senior Deputy General Manager | M | 49 | Incumbent | 420.88 | N |
Bi Huijuan | Senior Deputy General Manager | F | 51 | Incumbent | 410.20 | N |
Pu Shiliang | Senior Deputy General Manager | M | 45 | Incumbent | 291.99 | N |
Jin duo | Senior Deputy General Manager | M | 57 | Incumbent | 287.14 | N |
Jin Yan | Senior Deputy General Manager, person in charge of finance and accounting | F | 43 | Incumbent | 259.81 | N |
Huang Fanghong | Senior Deputy General Manager Board Secretary | F | 40 | Incumbent | 259.52 | N |
Chen Junke | Senior Deputy General Manager | M | 51 | Incumbent | 259.68 | N |
Xu Peng | Senior Deputy General Manager | M | 46 | Incumbent | 239.97 | N |
Name | Title | Gender | Age | Tenure status | Total remuneration from the Company (RMB'0,000) | Remuneration from related parties (Y/N) | |
Guo Xudong | Senior Deputy General Manager | M | 50 | Incumbent | 196.49 | N | |
Gong Hongjia | Vice Chairman | M | 57 | Resigned | 0.00 | Y | |
Cheng Tianzong | Independent Director | M | 70 | Resigned | 5.00 | N | |
Wang Zhidong | Independent Director | M | 55 | Resigned | 5.00 | N | |
Cheng Huifang | Supervisor Chairman | F | 69 | Resigned | 3.33 | N | |
Fu Baijun | Senior Deputy General Manager | M | 50 | Resigned | 28.21 | N | |
Jiang Yufeng | Senior Deputy General Manager | M | 51 | Resigned | 29.23 | N | |
Total | -- | -- | -- | -- | 4,206.95 | -- | |
Other information on positions and incumbency | 1) On March 5th 2021, Gong Hongjia left as a director of the Company, Cheng Tianzong and Wang Zhidong left as independent directors of the Company, and Cheng Huifang left as a supervisor of the Company at the end of thier tenure. Wang Qiuchao was elected as a director of the Company's 5th session of the Board of Directors, and Hong Tianfeng and Lu Jianzhong were elected as supervisors of the Company's 5th session of the Board of Supervisors. 2) On March 12th 2021, Gong Hongjia, Fu Baijun and Jiang Yufeng left their senior management positions after expires of their tenures, Xu Peng and Guo Xudong were appointed as senior management personnel of the Company. |
Note: During the reporting period, the remuneration of newcomers and directors, supervisors and seniormanagement with adjusted positions are 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 21st meeting of the 4th session of the Board | January 8th 2021 | January 9th 2021 | 11 proposals were considered and approved at the meeting, including the Proposal on Adjusting and Splitting the Board for Domestic Listing of the Subsidiary, Hangzhou EZVIZ Network Co., Ltd. For details, please refer to the Company’s announcement: No. 2021-001. |
The 22nd meeting of the 4th | February 5th 2021 | February 6th 2021 | 3 proposals were considered and approved at the meeting, including the Proposal on Nominating |
Meeting Session | Convening Date | Disclosure Date | Meeting Resolutions |
session of the Board | Candidates of Directors for the 5th session of the Board. For details, please refer to the Company’s announcement: No. 2021-006. | ||
The 1st meeting of the 5th session of the Board | March 12th 2021 | March 13th 2021 | 8 proposals were considered and approved at the meeting, including the Proposal on Electing the Chairman of 5th session of the Board. For details, please refer to the Company’s announcement: No. 2021-021. |
The 2nd meeting of the 5th session of the Board | April 15th 2021 | April 17th 2021 | 35 proposals were considered and approved at the meeting, including the 2020 Annual Report and Its Summary. For details, please refer to the Company’s announcement: No. 2021-026. |
The 3rd meeting of the 5th session of the Board | July 23rd 2021 | July 24th 2021 | 3 proposals were considered and approved at the meeting, including the 2021 Half Year Report and Its Summary. For details, please refer to the Company’s announcement: No. 2021-044. |
The 4th meeting of the 5th session of the Board | August 10th 2021 | August 11th 2021 | 13 proposals were considered and approved at the meeting, including the Proposal on the Spin-off of the Company’s Subsidiary, Hangzhou EZVIZ Network Co., Ltd. to be Listed on the STAR Market, in Compliance with Relevant Laws and Regulations. For details, please refer to the Company’s announcement: No. 2021-049. |
The 5th meeting of the 5th session of the Board | September 30th 2021 | October 8th 2021 | 3 proposals were considered and approved at the meeting, including the 2021 Restricted Share Scheme (Draft) and Its Summary. For details, please refer to the Company’s announcement: No. 2021-059. |
The 6th meeting of the 5th session of the Board | October 22nd 20201 | October 23rd 2021 | 2 proposals were considered and approved at the meeting, including the 2021 Q3 Report. For details, please refer to the Company’s announcement: No. 2021-061. |
The 7th meeting of the 5th session of the Board | December 30th 2021 | December 31st 2021 | 6 proposals were considered and approved at the meeting, including the 2021 Restricted Share Scheme (Revised Draft) and Its Summary. For details, please refer to the Company’s announcement: No. 2021-072. |
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 | 9 | 1 | 8 | 0 | 0 | N | 0 |
Qu Liyang | 9 | 1 | 8 | 0 | 0 | N | 1 |
Wang Qiuchao | 7 | 1 | 6 | 0 | 0 | N | 2 |
Hu Yangzhong | 9 | 1 | 8 | 0 | 0 | N | 3 |
Wu Weiqi | 9 | 1 | 8 | 0 | 0 | N | 2 |
Wu Xiaobo | 7 | 1 | 6 | 0 | 0 | N | 2 |
Hu Ruimin | 7 | 1 | 6 | 0 | 0 | N | 2 |
Li Shuhua | 7 | 1 | 6 | 0 | 0 | N | 1 |
Guan Qingyou | 7 | 1 | 6 | 0 | 0 | N | 1 |
Gong Hongjia | 2 | 0 | 2 | 0 | 0 | N | 1 |
Cheng Tianzong | 2 | 0 | 2 | 0 | 0 | N | 0 |
Lu Jianzhong | 2 | 0 | 2 | 0 | 0 | N | 2 |
Wang Zhidong | 2 | 0 | 2 | 0 | 0 | N | 1 |
Hong Tianfeng | 2 | 0 | 2 | 0 | 0 | N | 0 |
Other Information | 1) The Company held the first extraordinary general meeting of shareholders in 2021 on March 5th 2021 to complete the election of the Board of Directors. Gong Hongjia resigned as a director of the Company; Cheng Tianzong and Wang Zhidong resigned as independent directors of the Company; Wang Qiuchao was elected as a director of the 5th session of the Board of Directors of the Company; Hong Tianfeng and Lu Jianzhong were elected as supervisors of the 5th session of the Board of Supervisors of the Company. 2) During the reporting period, the 4th session of the Board of Directors of the Company held 2 board meetings, and the 5th session of the Board of Directors held 7 board meetings. |
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. They carried out their dutiesindependently and imparted considerable professional advice on improving the Company’s systems, dailyoperations and decision making. They provided fair advice during the reporting period and played an effective rolein improving the Company supervisory systems and protecting the legal rights of the Company, the shareholders,especially public shareholders as a whole. For details, please refer to Independent Directors’ 2021 Debriefingsdisclosed 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 4th seesion of the Board of Directors | Chen Zongnian (convener), Gong Hongjia, Cheng Tianzong, Hong Tianfeng | 3 | January 7th 2021 to February 26th 2021 | Reviewed and approved 3 proposals including the Proposal on the Overall Change of the Holding Subsidiary Hangzhou EZVIZ Network Co., Ltd. to a incorporated company | All expressed concurring opinions |
Nomination Committee of the 4th | Wang Zhidong (convener), Hong | 1 | February 5th 2021 | Reviewed and approved 1 proposal of Nomination of | All expressed concurring |
Committee Name | Members | Number of meetings held | Convening Date | Meeting Content | Important comments and suggestions |
session of the Board of Directors | Tianfeng, Qu Liyang | Candidates for Directors of the 5th Board of Directors of the Company | opinions | ||
Remuneration and Appraisal Committee of the 4th session of the Board of Directors | Hong Tianfeng (convener), Lu Jianzhong, Wu Weiqi | 1 | February 5th 2021 | Reviewed and approved 1 proposal of Independent Director Allowance of the 5th Board of Directors | All expressed concurring opinions |
Strategy Committee of the 5th session of the Board of Directors | Chen Zongnian (convener), Wu Xiaobo, Hu Ruimin | 6 | April 15th 2021 to December 28th 2021 | Reviewed and approved 8 proposals including the 2020 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 | 4 | March 12th 2021 to April 15th 2021 | Reviewed and approved 10 proposals including Nomination of Person in Charge of Internal Audit | All expressed concurring opinions |
Nomination Committee of the 5th session of the Board of Directors | Hu Ruimin (convener), Qu Liyang, Li Shuhua | 1 | March 12th 2021 | Reviewed and approved 3 proposals including the Proposal on the Appointment of General Managers | All expressed concurring opinions |
Remuneration and Appraisal Committee of the 5th session of the Board of Directors | Guan Qingyou (convener), Wu Xiaobo, Wu Weiqi | 5 | March 26th 2021 to December 30th 2021 | Reviewed and approved 12 proposals including the 2021 Restricted Stock Scheme (Draft) and Summary | All expressed concurring opinions |
Other Information | The Company held the first extraordinary general meeting of shareholders in 2021 on March 5th 2021 to complete the election of the Board of Directors. On March 12th 2021, the 1st meeting of the 5th session of the Board of Directors reviewed and approved the Proposal on Appointing Members of Special Committees of the 5th session of the Board of Directors. |
VIII. Performance of Duties by the Supervisory Committee
Were 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 | 20,527 | |
Number of incumbent employees in major subsidiaries at the end of the reporting period | 32,225 | |
Number of incumbent employees at the end of the reporting period | 52,752 | |
Number of employees receiving salaries in current period | 52,752 | |
Number of retired employees requiring the parent Company and its subsidiaries to bear costs | 0 | |
Professional structure | ||
Tier | Number of employees | |
Managerial personnel | 806 | |
Production staff | 15,513 | |
Sales staff | 9,296 | |
Technical staff | 25,352 | |
Financial staff | 382 | |
Administrative Staff | 1,403 | |
Total | 52,752 | |
Educational background | ||
Education background | Number of employees | |
Master and/or doctor/or above | 9,222 | |
Bachelor | 26,834 | |
Junior College (professional training) | 4,245 | |
Other | 12,451 | |
Total | 52,752 |
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.
Because of the epidemic in early 2020, the Company's original training programs have been strongly impacted,and offline training is at risk of being cancelled at any time. Faced with such a dilemma, the Company's trainingprograms have achieved rapid reconstruction and transformation, and accelerated the transformation from an onlinelearning platform to a digital talent development platform to meet training demands from a multi-dimensionalperspective. At the same time, the Company focused on several key positions for the implementation of the annualstrategy, and carried out targeted ability improvement projects to help the talent pool and improve the ability ofstrategic transformation and key battles of business development.
In 2021, in the macro context of living with the COVID-19 Epidemic, businesses becoming more complex andthe rise of a new breed of employees, the Company had to adapt itself to the higher requirements on learningmanagement and operations. Therefore, the Company remained committed to the twin strategies of "systemconstruction" and "resource construction". In order to adapt to the diversity of internal learning needs, the Companygradually strengthened the traction and design of talent training projects through deep online and offline integration,and promoted organizational experience accumulation and replication in a more orderly manner, with the aim ofachieving online full-process operation and management of internal trainers and courses, and further improving theefficiency of resource management.
At the same time, the human resources department goes deep into the front line of the business, working withthe business experts to jointly learn from the organization’s experience and to complete the design andimplementation of large-scale projects combining training and practice. Through empowering the businessdepartments with training and operation capabilities, the daily organization of business training can becomeembedded in the business departments, which will better support the upgrade of skills at key positions duringbusiness transformation, thus enabling talent development “on demand and in a timely manner”.In 2022, in addition to continuing to strengthen the construction of talent development systems, the Company
will further strengthen the development of digital talent platform. Through shaping the branding of learning projects,sharing learning resources, extending promotion of platforms to lower levels and implementing closed loops ontraining data, the Company seeks to address the challenges posed by changeable training landscape and rapidknowledge iteration under VUCA, and better facilitate talent supply.
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 2nd
meeting of the 5
thsession of the Board of Directors of the Company reviewed and approved the 2020Annual Profit Distribution Proposal, and was reviewed and approved by the Company's 2020 annual generalmeeting: based on the Company’s current total share capital of 9,343,417,190 shares, the Company proposed todistribute cash dividend of RMB 8 (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 27
th 2021, the ex-rights/ex-dividend date is May 28
th
2021, and the total cash dividends (tax included) is RMB 7,474,733,752.00.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 mediuminvestors, and the independent directors have expressed their agreement.
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) | 9.00 |
Additional shares converted from capital reserves for 10 shares (share) | 0 |
Total capital shares as the basis for the distribution proposal (share) | 9,433,208,719 |
Total cash dividend (RMB) (tax inclusive) | 8,489,887,847.10 |
Amount of cash dividends in other methods (such as share repurchase) (RMB) | 0 |
Total cash dividends (including other methods) (RMB) | 8,489,887,847.10 |
Distributable profits (RMB) | 37,958,561,319.89 |
Percentage of cash dividends in the total distributed profit (%) | 22.37% |
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 2021, the parent company of the Company realized net profit of RMB 14,088,727,668.02, the statutory surplus reserve is nil, adding the undistributed profit of the parent company at the beginning of the year of RMB 31,327,891,058.77 deducting the cash dividends of RMB 7,474,733,752.00 in 2020, adding back RMB 16,676,345.10 of the unpaid dividends for the repurchased restricted shares, as of December 31st 2021, the profits distributable to shareholders of the parent company amounted to RMB 37,958,561,319.89. As of December 31st 2021, the profits distributable to shareholders in the consolidated statement were RMB 45,148,877,451.52 (consolidated). To sum up, according to the principle of “whichever is lower”, the profits distributable to shareholders this year was RMB 37,958,561,319.89. Based on the Company’s current total share capital of 9,433,208,719 shares, the Company proposed to distribute cash dividend of RMB 9 (tax inclusive) per each 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil. The above scheme will distribute a total cash dividend of RMB 8,489,887,847.10, and the remaining undistributed profits will be transferred to the next year. |
XI. The Implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or otherIncentive Plans
√Applicable □Inapplicable
During the reporting period, the Company has completed the third vesting, repurchase and cancellation of the2016 Restricted Share Incentive Scheme and the first vesting, repurchase and cancellation of the 2018 RestrictedShare Incentive Scheme.On December 25
th
2020, the Proposal on Vesting Conditional Achievements for the Third Vesting Period of the2016 Restricted Share Incentive Scheme, Proposal on the Third Repurchase and Cancellation of the Granted butUnvested Restricted Shares under the Restricted Share Incentive Scheme of 2016, Proposal on Vesting ConditionalAchievements for the First Vesting Period of the 2018 Restricted Share Incentive Scheme, and the Proposal on theFirst Repurchase and Cancellation of Granted but Unvested Restricted Shares under the Restricted Share IncentiveScheme of 2018 were deliberated and adopted by the 20
th
Meeting of the 4
th
session of the Board of Directors andthe 17
th
Meeting of the 4
thsession of the Board of Supervisors of the Company. According to the authorization ofthe 2nd Extraordinary General Meeting of 2016 and the 2
ndExtraordinary General Meeting of 2018 of the Company,The Company handled the vesting of a total of 66,796,439 restricted shares for 5,937 incentive grantees. Therestricted shares were listed for circulation on January 20
th2021; at the same time, 7,611,076 granted but unvestedshares that did not meet the incentive conditions were repurchased and cancelled, and the repurchase andcancellation procedures were completed as of June 30
th
2021.For details, please refer to the Indicative Announcement on Vesting, Listing and Circulation of Shares in theThird Vesting Period of the 2016 Restricted Share Incentive Scheme (No.: 2021-004), Indicative Announcement onVesting, Listing and Circulation of Shares in the First Vesting Period of the 2018 Restricted Share Incentive Scheme(No. 2021-005), and Announcement on the Completion of the Third Repurchase and Cancellation of the Grantedbut Unvested Restricted Shares under the 2016 Restricted Share Incentive Scheme and the First Repurchase andCancellation of the Granted but Unvested Restricted Shares under the 2018 Restricted Share Incentive Scheme (No.:
2021-042) issued by the Company on January 18
th
2021 ad July 2
nd2021, respectively.As of the end of the current reporting period, the Company has a total of 68,762,683 granted but unvestedshares, accounting for 0.74% of the Company's total share capital.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 related
accounting standards. The cost of the shares granted by the 2018 Restricted Share Incentive Scheme is amortizedduring the vesting period.During the reporting period, the amortization cost of the Company's 2018 Restricted Share Incentive Schemehad no significant impact on the Company's financial status and operating results. For details, please refer toFinancial 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 | 48,150 | 48,150 | - | - | 0 |
Wu Weiqi | Director, Standing Deputy General Manager | 44,550 | 44,550 | - | - | 0 |
He Hongli | Senior Deputy General Manager | 41,400 | 41,400 | - | - | 0 |
Xu Lirong | Supervisor | 32,850 | 32,850 | - | - | 0 |
Jin Duo | Senior Deputy General Manager | 32,850 | 32,850 | - | - | 0 |
Jin Yan | Senior Deputy General Manager, person in charge of finance | 162,200 | 96,200 | - | - | 66,000 |
Cai Changyang | Senior Deputy General Manager | 32,850 | 32,850 | - | - | 0 |
Bi Huijuan | Senior Deputy General Manager | 168,000 | 94,200 | - | - | 73,800 |
Pu Shiliang | Senior Deputy General Manager | 144,820 | 84,820 | - | - | 60,000 |
Huang Fanghong | Senior Deputy General Manager, Secretary of the Board | 110,000 | 44,000 | - | - | 66,000 |
Xu Ximing | Senior Deputy General Manager | 197,000 | 78,800 | - | - | 118,200 |
Xu Peng | Senior Deputy General Manager | 128,740 | 51,496 | - | - | 77,244 |
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 |
Guo Xudong | Senior Deputy General Manager | 73,800 | 29,520 | - | - | 44,280 |
Fu Baijun | Senior Deputy General Manager (resigned) | 163,950 | 100,950 | 63,000 | ||
Jiang Yufeng | Senior Deputy General Manager(resigned) | 36,900 | 36,900 | 0 | ||
Total | -- | 1,418,060 | 849,536 | - | 568,524 |
Note:
(1) This personnel listed above is the Company’s senior executives who were included in 2016 restricted shares
incentive plan and 2018 restricted shares incentive plan.
(2) Fu Baijun and Jiang Yufeng left their positions at expires of their tenures on March 12
th
2021.
Assessment and incentive mechanism for the senior management
The 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 2021, senior management personnelcarried out their duties diligently with good performance, and fairly completed their objectives and missions set outat the beginning of the year.
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 thefinancial center and internal audit department, and puts forward relevant requirements on the internal controlcompliance of the Company. The Company has set up an internal audit department under the Audit Committee ofthe 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 2021 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 establishment of new subsidiaries, and exercises management powers over major matters of the subsidiaries inaccordance with the requirements regarding assets control over the subsidiaries and the standard operations of theCompany. At the same time, subsidiaries shall provide timely, complete and accurate information to the Company
such as operating results, financial position and operating prospects, so that the Company can conduct scientificdecision-making, supervision and coordination.During the reporting period, the Company established one new wholly-owned subsidiary and four subsidiarieswith a controlling stake. Also the Company acquired two subsidiaries, had one additional subsidiary due to changesin voting rights, and liquidated and cancelled the registration of four subsidiaries. The Company lost one subsidiarydue to the termination of management trust agreement. All of this result in changes in the scope of its consolidatedfinancial statement. For details, please refer to changes in the consolidation scope in Note (6) to the financialstatements.
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 16th 2022 | |
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 | 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; |
true and fair financial statements. Normal deficiency: Not significant and not important deficiency. | ||
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 2021 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 16th 2022 |
Disclosure index of full text of internal control audit report | www.cninfo.com.cn 2021 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
XV. Special Rectification Actions for Self-inspected Problems of Listed Companies
□Applicable √Inapplicable
Section V Environmental and Social ResponsibilityI. Significant Environmental Issues
Whether the Company or any of its subsidiaries should be categorized as a critical pollutant enterprises publishedby environmental protection department
□Yes √No.
II. Social Responsibilities
For details, please refer to the Company’s 2021 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 Hikvsion: (1) Haikang Group will not make use of the controlling power to offer more favorable conditions to Hikvision than those to any independent third party in any fair market transactions in the cooperation with Hikvision. (2) Haikang Group will not make use of the controlling power to obtain the prior right to complete the transaction with Hikvision. (3) Haikang Group will not deal with Hikvsion in not fair terms comparing to the market prices to prejudice the Company’s interests. For unavoidable related transactions, the Company will observe the principles of justice and fairness to 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 29th 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 Hikvsion according to the Securities Acts and relevant laws and rules, 4.1 Currently the Company has no plan to change or make significant adjustments for principal business in the next 12 months; 4.2 Currently the Company has no plan to sell, merge or operate with another Company for the assets and business of the listed Company or its subsidiaries in the next 12 months. 4.3 Currently the Company has no plan to alter the Board of the Directors and senior management and no agreement with other shareholders about the appointment and removal of the directors or senior management. The team of Board of Directors and senior management will remain unchanged for the foreseeable future. 4.4 Currently the Company has no plan to make significant changes to the Articles of Association for the listed Company. 4.5 Currently the Company has no plan to make significant changes to the existing employee recruitment for the listed Company. 4.6 Currently the Company has no plan to make significant changes for the dividend distribution plan for the listed Company. 4.7 Currently the Company has no plan to make significant changes for business and organizational structure for the listed Company. | ||||||
Commitments in Initial Public | Hangzhou Weixun Investment Management | During Hu Yangzhong, Wu Weiqi, Jiang Haiqing, Zhou Zhiping, Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang, | May 17th 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 Xinjiang Weixun Investment Management Limited Partnership) | Share restriction commitment | 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 Xinjiang Pukang Investment 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 17th 2010 | Long term | Strict performance | |
The Company's directors, supervisors and executive: HuYangzhong, Wu Weiqi, Jiang Haiqing, Zhou Zhiping,Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen Junke | 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 17th 2010 | Long term | Strict performance | |
Directors, executive officers of the Company: Hu Yangzhong, Wu Weiqi | Share restriction commitment | During their tenure of the Company’s Board of Directors, supervisors and senior management personnel, the annual shares transfer should not exceed 25% of total number of shares held under Kangpu; within 6 months after their demission, they should not transfer their shares held under Kangpu. | May 17th 2010 | Long term | Strict performance | |
The Company’s director Gong Hongjia’s spouse, | During Gong Hongjia’s tenure of the Company’s Board of Directors, supervisors and senior management personnel, Chen’s annual shares transfer | May 17th | Long-term | Strict performance |
Commitments | Giver of commitments | Commitment type | Details of commitments | Date of commitments | Term of commitments | Performance |
Chen Chunmei | Share restriction commitment | 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 18th 2008 | Long term | Strict performance | |
Gong Hongjia; Hangzhou Weixun Investment Management Limited Partnership(later renamed as Xinjiang Weixun Investment Management Limited Partnership); Hangzhou Kangpu Investment Limited Partnership(later renamed as Xinjiang Pukang Investment Limited Partnership);ZheJiang Orient Holdings Co., Ltd. | Commitment to avoid horizontal competition | To avoid any loss of the Company and other shareholders arising from any competing business, Gong Hongjia, Hangzhou WeiXun Investment Management Limited Partnership, ZheJiang Orient Holdings Co., Ltd. and Hangzhou KangPu Investment Management Limited Partnership, the promoters of the Company, issued Commitment Letters of non-competition in the same industry on 10 July, 2008. | July 10th 2008 | Long term | Strict performance | |
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
Since January 1
st
2021 (the “First Adoption Date”), the Company has implemented the Accounting Standardsfor Business Enterprises No. 21 – Leases revised by the Ministry of Finance in 2018 (hereinafter referred to as the
“New Lease Standards,” and the Lease Standards before the revision referred to as the “Original Lease Standards”).The New Lease Standards refine the definition of a lease, and add content on the identification, splitting and mergerof leases; eliminate the classification of leases by lessees as an operating lease or financing lease, and require therecognition of right-to-use assets and lease liabilities of all leases on the starting date of the lease term (excludingshort-term leases and leases of low-value assets), with depreciation and interest expenses recognized separately;and improve the subsequent measurement of leases by lessees, add an accounting method in the instance of optionrevaluation and lease modification, and increase related disclosure requirements. In addition, they also widen thescope of disclosure of lessors. Please refer to Note (III) 30 for the revised accounting policies of the Company onthe recognition and measurement of leases as lessee and lessor. For contracts that existed prior to the First AdoptionDate, the Company has elected not to reassess whether they were a lease or contained a lease as of the First AdoptionDate. The Group adjusted the amount of retained earnings and other related items in the financial statements as atthe First Adoption Date based on the cumulative impact of the first adoption of the New Lease Standards, withoutadjusting data for the comparative period. For operating leases other than low-value leases existing prior to the FirstAdoption Date, the Group has elected to apply one or more simplifications based on each lease option.
Since January 1
st2021 (the “First Adoption Date”), the Company implemented the Interpretation No. 14 of theAccounting Standards for Business Enterprises (hereinafter referred to as “Interpretation No. 14”) promulgated bythe Ministry of Finance on February 2
nd2021. Interpretation No. 14 standardizes the accounting treatment forPublic-Private Partnership (PPP) projects by private capital parties. According to Interpretation No. 14,the Groupwill handle the accounting of new PPP projects from January 1
st2021 to the promulgation date in accordance withthe provisions of Interpretation No. 14. The Group made retrospective adjustments to the relevant PPP projectcontracts implemented prior to December 31
st2020 that were yet to be completed as of the promulgation date ofInterpretation No. 14. The Group adjusted the amount of retained earnings and other related items in the financialstatements as of January 1
st2021 based on the cumulative impact, without adjusting data for the comparative period.The New Lease Standards and Interpretation No. 14 did not have a significant impact on the accountingrecognition of the Company’s various businesses. Please see Note (III), 32 for details on the impact of adoption ofthe New Lease Standards and Interpretation No. 14 by the Group on January 1
st
2021.
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 has newly set up one wholly-owned subsidiaries and four holdingsubsidiaries, acquired two subsidiaries, added a new subsidiary due to the change in voting rights, liquidated andcancelled four subsidiaries, reduced one subsidiary due to the cancellation of the entrusted management agreement,which have caused the change in consolidation scope. For more details, please refer to Financial Report Note (VI)“Changes in consolidation scope” of the financial statement.
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 | 6 |
Name of the certified public accountants from the domestic CPA firm | Tang Lianjiong, Gao Sunchao |
Consecutive years of the audit service provided by the certified public accountants from the domestic CPA firm | Tang Lianjiong has provided audit service for 3 consecutive years; Gao Sunchao 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 financial consulting 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 on price | 199,600.06 | 4.03% | 270,000 | No | Payment on delivery | August 11th 2021 | Added Announcement on the forecast of daily related-party transactions in 2021 (No. 2021-053) |
Shanghai Fullhan Micro Co., Ltd. and its subsidiaries | The Company’s shareholder who holds more than 5% of the Company’s shares, Gong Hongjia, former director of the Company, is the director of the related party | Procurement | 107,344.71 | 2.17% | 150,000 | No | Payment on delivery | ||||
Wuhu Sensor Technology Co., Ltd. and its subsidiaries | An associated company held by the Company, Wu Weiqi, director of the Company, served as director of this company | Procurement | 12,015.40 | 0.24% | 15,000 | No | Payment on delivery | March 13th 2021 | Announcement on the forecast of daily related-party transactions in 2021 (No. 2021-024) |
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 |
Shenzhen Hikvision Urban Service Operation Co., Ltd.and its subsidiaries | A joint venture company held by the Company | Procurement | 3.10 | 0.00% | 500 | No | Payment on delivery | ||||
Zhiguang Hailian Big Data Technology Co., Ltd. and its subsidiaries | An associated company held by the Company | Procurement | - | 0.00% | 500 | No | Payment on delivery | ||||
Zhejiang Haishi Huayue Digital Technology Co., Ltd. | A joint venture company held by the Company; The Company’s senior management is appointed as this company’s Chairman | Procurement | - | 0.00% | 500 | No | Payment on delivery | ||||
Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries | An associated company held by the Company, Wu Weiqi, director of the Company, served as director of this company | Procurement | 25,917.10 | 0.52% | 27,000 | No | Payment on delivery | ||||
Aurotek Corporation. and its subsidiaries | Cheng Tianzong, the former independent director of the Company, | Procurement | 327.79 | 0.01% | 500 | No | Payment on delivery |
Related party | Relationship | Type of related transaction | Content of related transaction | Pricing principles for related party transactions | Trading Amount (0’000 RMB) | Proportion to the amount of similar transactions. | Approved trading quota (0’000 RMB) | Whether exceed the approved quota | Settlement method | Disclosure date | Disclosure reference |
served as a director of this company. Cheng Tianzong resigned as an independent director on March 5th 2021. Within 12 months after his resignation, Aurotek Corporation is still recognized as a related party of the Company. | |||||||||||
Yunnan Yinghai Parking Service Co., Ltd. | A joint venture company held by the Company | Procurement | 9.43 | 0.00% | 50 | No | Payment on delivery | ||||
Chengdu Guoshengtianfeng Network Technology Co., Ltd. and its subsidiaries | Senior management of the Company is appointed as directors of this company | Procurement | 7.47 | 0.00% | 100 | No | Payment on delivery | ||||
Ruihua Innovation Management Research Institute (Hangzhou) Co., Ltd. | Wu Xiaobo, an independent director of the Company, serves as a director of this company | Procurement | 0.36 | 0.00% | 50 | No | Payment on delivery |
Related party | Relationship | Type of related transaction | Content of related transaction | Pricing principles for related party transactions | Trading Amount (0’000 RMB) | Proportion to the amount of similar transactions. | Approved trading quota (0’000 RMB) | Whether exceed the approved quota | Settlement method | Disclosure date | Disclosure reference |
Zhejiang City Digital Technology Co., Ltd. | A joint venture company held by the Company | Procurement | 0.18 | 0.00% | 50 | No | Payment on delivery | ||||
Subsidiaries or research institutes of CETC | Under the common control of the Company’s actual controller. | Sales | Providing services, selling products, commercial goods | Reference market price; Agreed on price | 43,471.00 | 0.53% | 70,000 | No | Payment on delivery | March 13th 2021 | Announcement on the forecast of daily related-party transactions in 2021 (No. 2021-024) |
Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. | An associated company held by the Company | Sales | 5,322.96 | 0.07% | 7,000 | No | Payment on delivery | ||||
Zhejiang City Digital Technology Co., Ltd. | A joint venture company held by the Company | Sales | 2,275.20 | 0.03% | 6,000 | No | Payment on delivery | ||||
Shenzhen Hikvision Urban Service Operation Co., Ltd. and its subsidiaries | A joint venture company held by the Company | Sales | 2,097.52 | 0.03% | 6,000 | No | Payment on delivery | ||||
Daishan Hailai Yunzhi Technology Co., Ltd. | From January to June 2021, it is still a joint venture held by the Company | Sales | 1,685.88 | 0.02% | 5,000 | No | Payment on delivery |
Related party | Relationship | Type of related transaction | Content of related transaction | Pricing principles for related party transactions | Trading Amount (0’000 RMB) | Proportion to the amount of similar transactions. | Approved trading quota (0’000 RMB) | Whether exceed the approved quota | Settlement method | Disclosure date | Disclosure reference |
Guangxi Haishi Urban Operation Management Co., Ltd. and its subsidiaries | A joint venture company held by the Company | Sales | 1,149.40 | 0.01% | 2,000 | No | Payment on delivery | ||||
Zhejiang Haishi Huayue Digital Technology Co., Ltd. | A joint venture company held by the Company; The Company’s senior management is appointed as this company’s Chairman | Sales | 1,097.64 | 0.01% | 5,000 | No | Payment on delivery | ||||
Wuhu Sensor Technology Co., Ltd. and its subsidiaries | An associated company held by the Company, Wu Weiqi, director of the Company, served as director of this company | Sales | 84.13 | 0.00% | 1,000 | No | Payment on delivery | ||||
Qinghai Qingtang Big Data Co., Ltd. | An associated company held by the Company | Sales | 54.02 | 0.00% | 1,000 | No | Payment on delivery | ||||
Xuzhou Kangbo Urban Operation Management Service Co., Ltd. | A joint venture company held by the Company | Sales | 16.58 | 0.00% | 1,000 | No | Payment on delivery | ||||
Maxio Technology (Hangzhou) Co., | An associated company held by the Company, Wu | Sales | 11.83 | 0.00% | 1,000 | No | Payment on delivery |
Related party | Relationship | Type of related transaction | Content of related transaction | Pricing principles for related party transactions | Trading Amount (0’000 RMB) | Proportion to the amount of similar transactions. | Approved trading quota (0’000 RMB) | Whether exceed the approved quota | Settlement method | Disclosure date | Disclosure reference |
Ltd. and its subsidiaries | Weiqi, director of the Company, served as director of this company | ||||||||||
Sanmenxia Xiaoyun Vision Technology Co., Ltd. | An associated company held by the Company | Sales | 0.57 | 0.00% | 1,000 | No | Payment on delivery | ||||
Yunnan Yinghai Parking Service Co., Ltd. | A joint venture company held by the Company | Sales | - | 0.00% | 4,000 | No | Payment on delivery | ||||
Shenzhen Wanyu Security Service Technology Co., Ltd. and its subsidiaries | The Company’s senior management is appointed as directors of this company | Sales | - | 0.00% | 500 | No | Payment on delivery | ||||
Zhiguang Hailian Big Data Technology Co., Ltd. and its subsidiaries | An associated company held by the Company | Sales | 3,412.21 | 0.04% | 15,000 | No | Payment on delivery | August 11th 2021 | Added Announcement on the forecast of daily related-party transactions in 2021 (No. 2021-053) |
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 |
INESA (Group) Co., Ltd. and its subsidiaries | The Company’s Supervisor is appointed as directors of the Company | Sales | 831.52 | 0.01% | 1,500 | No | Payment on delivery | ||||
Chengdu Guoshengtianfeng Network Technology Co., Ltd. and its subsidiaries | Senior management of the Company is appointed as directors of this company | Sales | 700.61 | 0.01% | 1,500 | No | Payment on delivery | ||||
Hangzhou Confirmware Technology Co., Ltd. and its subsidiaries | Senior management of the Company is appointed as directors of this company | Sales | 121.74 | 0.00% | 300 | No | Payment on delivery | ||||
Zhejiang Fast Line data fusion Information Technology Co.,Ltd. and its subsidiaries | Senior management of the Company is appointed as directors of this company | Sales | 29.32 | 0.00% | 100 | No | Payment on delivery | ||||
Total | 407,587.73 | 593,150 | - | - | - | - | |||||
Details on significant sales return | None |
Related party | Relationship | Type of related transaction | Content of related transaction | Pricing principles for related party transactions | Trading Amount (0’000 RMB) | Proportion to the amount of similar transactions. | Approved trading quota (0’000 RMB) | Whether exceed the approved quota | Settlement method | Disclosure date | Disclosure reference |
Total amount of related transactions projected based on different categories, and the actual performance during the current reporting period (if any) | The related transaction of procurement with Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries, Aurotek Corporationand its subsidiaries, Yunnan Yinghai Parking Service Co., Ltd., Chengdu Guoshengtianfeng Network Technology Co., Ltd. and its subsidiaries, Ruihua Innovation Management Research Institute (Hangzhou) Co., Ltd. and Zhejiang City Digital Technology Co., Ltd., and the related transaction of sales with INESA (Group) Co., Ltd. and its subsidiaries, Chengdu Guoshengtianfeng Network Technology Co., Ltd. and its subsidiaries, Hangzhou Confirmware Technology Co., Ltd. and its subsidiaries, Zhejiang Fast Line data fusion Information Technology Co.,Ltd. and its subsidiaries were approved by the Chairman of the Company according to the Company’s Related Transaction Management System. | ||||||||||
Reasons on significant difference between trading price and market referencing price (if applicable) | Not applicable |
2. Related-party Transactions regarding Purchase and Disposal of Assets or Equity
□Applicable √Inapplicable
No such case in the reporting period.
3. Significant Related-party Transactions Arising from Joint Investments on External Parties
□Applicable √Inapplicable
No such case in the reporting period.
4. Related Credit and Debt Transactions
□ Applicable √Inapplicable
No related-parties’ creditor’s rights or debts during the reporting period.
5. 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% | 400,000.00 | 450,000.67 | 400,000.00 | 450,000.67 |
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 | 0 |
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 April 18
th2019, the Proposal on Entering into the Entrusted Management Agreement and Related-PartyTransaction with the Controlling Shareholder was deliberated and adopted by the 10
th
Meeting of the fourth sessionof the Board of Directors of the Company. On April 19
th2019, the Company entered into the Entrusted ManagementAgreement with CETHIK and Hangzhou EZVIZ Technology Co., Ltd. (hereinafter referred to as "EZVIZTechnology"), agreeing that CETHIK shall entrust EZVIZ Network to enforce the actual operation and managementrights over its wholly-owned subsidiary EZVIZ Technology. On March 27
th
2021, to further optimize the businessprocess of EZVIZ Network, based on the actual production and operation needs of EZVIZ Network, and uponconsensus of the three parties through amicable and full negotiation, EZVIZ Network signed the TerminationAgreement of the Entrusted Management Agreement with CETHIK and EZVIZ Technology. EZVIZ Network willno longer exercise the actual operation and management rights over EZVIZ Technology or be responsible for theproduction, operation and management of EZVIZ Technology.
On October 22
nd
2021, the 6
th
meeting of the 5
thsession of the Board of Directors of the Company reviewedand approved the Proposal on Investing in the Establishment of Entrepreneurship Investment Partnerships andRelated Transactions, agreeing that the Company, CETHIK Group Co., Ltd., Hangzhou High-tech Venture CapitalManagement Co., Ltd. and CETHIK (Hangzhou) Equity Investment Management Co., Ltd. jointly invested andestablished Hangzhou Haina Yuzhi Entrepreneurship Investment Partnership Co,. Ltd. (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. During the reporting period,Haina Yuzhi Fund completed the industrial and commercial registration procedures and fundraising work, raised atotal of RMB 600 million of funds.Disclosure website for provisional reports on significant related-party transactions:
Title of provisional reports | Disclosure date | Disclosure website |
Announcement on the Signing of the "Entrusted Management Agreement" and Related Party Transactions with the Controlling Shareholders | April 20th 2019 | www.cninfo.com.cn |
Title of provisional reports | Disclosure date | Disclosure website |
(Announcement No. 2019-026) | ||
Announcement on the Signing of the "Entrusted Management Agreement" Termination Agreement and Related Party Transactions Progress (Announcement No. 2021-025) | March 30th 2021 | www.cninfo.com.cn |
Announcement on Investing in the Establishment of Entrepreneurship Investment Partnerships and Related Transactions (Announcement No. 2021-064) | October 23rd 2021 | www.cninfo.com.cn |
Announcement on the Completion of the Industrial and Commercial Registration of the Entrepreneurship Investment Partnership Enterprise Co-established by the Company (Announcement No. 2021-067) | December 10th 2021 | www.cninfo.com.cn |
Announcement on the Completion of the Fundraising of the Entrepreneurship Investment Partnership Enterprise Co-established by the Company (Announcement No. 2021-077) | December 31st 2021 | 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
On December 3
rd
2018, the Proposal on Carrying out Financial Leasing Related Party Transactions betweenthe Holding Innovative Business Subsidiary and China Electronics Technology Leasing Co. Ltd. was approved atthe 7th meeting of the 4
th
Board of Directors of the Company. In 2019, the Company's holding subsidiary HangzhouHikmicro Sensing Technology Co., Ltd. and China Electronics Technology Leasing Co. Ltd. signed the FinancialLeasing Contract, where HikMicro used some of its own equipment to start leaseback business with ChinaElectronics Technology Leasing Co. Ltd.; the financing amount was RMB 70 million, term of lease 48 months andannual lease rate 3.80%. For details, please refer to Note (X) 5, (4) other related party transactions to the financialstatements.
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 Co., Ltd. | April 17th 2021 | 1,010,000 | December 1st 2019 | 409,072.80 | Joint guarantee | 2019.12.01-2025.09.25 | No | Yes |
Chongqing Hikvision Technology Co., Ltd. | April 17th 2021 | 82,250 | March 23rd 2020 | 1,275.00 | Joint guarantee | 2020.03.23-2022.03 22 | No | Yes |
Hikvision Singapore Pte. Ltd. | April 17th 2021 | 78,900 | July 15th 2021 | 44,777.21 | Joint guarantee | 2021.07.15-2029.01.07 | No | Yes |
Hangzhou Hikvision System Technology Co., Ltd. | April 17th 2021 | 46,000 | March 23rd 2021 | 13,086.36 | Joint guarantee | 2021.03.23-2023.12.31 | No | Yes |
Urumqi HaiShi Xin’An Electronic Technology Co., Ltd. | April 17th 2021 | 40,000 | March 29th2019 | 24,550.43 | Joint guarantee | 2019.03.26-2028.06.20 | No | Yes |
Pi Shan HaiShi Yong An Electronic Technology Co., Ltd. | April 17th 2021 | 30,000 | March 26th 2019 | 21,578.00 | Joint guarantee | 2019.03.26-2040.06.26 | No | Yes |
Luo Pu HaiShi Ding Xin Electronic Technology Co., Ltd. | April 17th 2021 | 30,000 | March 26th 2019 | 22,160.00 | Joint guarantee | 2019.03.26-2035.06.26 | No | Yes |
Yu Tian HaiShi Mei Tian Electronic Technology Co., Ltd. | April 17th 2021 | 30,000 | March 26th 2019 | 9,560.00 | Joint guarantee | 2019.03.26-2034.03.26 | No | Yes |
Hangzhou Hikvision Electronics Co., Ltd. | April 17th 2021 | 25,000 | March 6th 2021 | 403.63 | Joint guarantee | 2021.03.06-2022.03.05 | No | Yes |
Mo Yu HaiShi Electronic Technology Co., Ltd. | April 17th 2021 | 25,000 | March 26th 2019 | 17,680.00 | Joint guarantee | 2019.03.26-2035.03.26 | No | Yes |
Hikvision Europe B.V. | April 17th 2021 | 2,000 | August 9th 2021 | 2,000.00 | Joint guarantee | 2021.08.09-2022.03.31 | No | Yes |
Hikvision International Co., Ltd. | April 17th 2021 | 33,000 | Not happened during the reporting period | |||||
Xi’an Hikvision Digital Technology Co., Ltd. | April 17th 2021 | 20,000 | Not happened during the reporting period | |||||
Chengdu Hikvision Digital Technology Co., Ltd. | April 17th 2021 | 20,000 | Not happened during the reporting period | |||||
Shijiazhuang Hikvision Technology Co., Ltd. | April 17th 2021 | 20,000 | Not happened during the reporting period | |||||
Wuhan Hikvision Technology Co., Ltd. | April 17th 2021 | 20,000 | Not happened during the reporting period | |||||
Shanghe Smart City Technology Co., Ltd. | April 17th 2021 | 20,000 | Not happened during the reporting period | |||||
Zhenping Haikang Juxin Digital Technology Co., Ltd. | April 17th 2021 | 18,000 | Not happened during the reporting period | |||||
Chongqing Hikvision System Technology Co., Ltd. | April 17th 2021 | 10,000 | Not happened during the reporting period | |||||
Nanjing Hikvision Digital Technology Co., Ltd. | April 17th 2021 | 10,000 | Not happened during the reporting period | |||||
Nanchang Hikvision Digital Technology Co., Ltd. | April 17th 2021 | 10,000 | Not happened during the reporting period | |||||
Zhengzhou Hikvision Digital Technology Co., Ltd. | April 17th 2021 | 10,000 | Not happened during the reporting period | |||||
Hefei Hikvision Digital Technology Co., Ltd | April 17th 2021 | 10,000 | Not happened during the reporting period | |||||
.Prama Hikvision India Private | April 17th 2021 | 6,000 | Not happened during the reporting period |
Limited | ||||||||
Hikvision USA Inc. | April 17th 2021 | 2,100 | Not happened during the reporting period | |||||
PT. Hikvision Technology Indonesia | April 17th 2021 | 1,400 | Not happened during the reporting period | |||||
Hikvision Turkey Technology And Security Systems Commerce JSC | April 17th 2021 | 350 | Not happened during the reporting period | |||||
Total guarantee cap for subsidiaries approved during the reporting period(B1) | 1,610,000.00 | Total actual guarantee amount for subsidiaries during the reporting period(B2) | 630,940.81 | |||||
Total approved guarantee cap for subsidiaries at the end of the reporting period(B3) | 1,610,000.00 | Total actual guarantee balance for subsidiaries at the end of the reporting period(B4) | 566,143.43 | |||||
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 party or not |
Hangzhou Haikang Intelligent Technology Co., Ltd. | April 17th 2021 | 50,000 | June 25th 2021 | 934.60 | Joint guarantee | 2021.06.25-2023.06.24 | No | Yes |
Hangzhou Hikmicro Intelligent Technology Co., Ltd. | April 17th 2021 | 30,000 | June 15th 2021 | 878.40 | Joint guarantee | 2021.06.15-2023.06.13 | No | Yes |
Hangzhou Hikstorage Technology Co., Ltd. | April 17th 2021 | 10,000 | Not happened during the reporting period | |||||
Total guarantee cap for subsidiaries approved during the reporting period (C1) | 90,000.00 | Total actual guarantee amount for subsidiaries during the reporting period (C2) | 1,836.76 | |||||
Total approved guarantee cap for subsidiaries at the end of the reporting period(C3) | 90,000.00 | Total actual guarantee balance for subsidiaries at the end of the | 1,813.00 |
reporting period(C4) | |||
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) | 1,700,000.00 | Total actual guarantee amount during the reporting period(A2+B2+C2) | 632,777.57 |
Total approved guarantee cap at the end of reporting period(A3+B3+C3) | 1,700,000.00 | Total actual guarantee balance at the end of the reporting period(A4+B4+C4) | 567,956.43 |
Portion of the total actual guarantee (A4+B4+C4) amount in net assets of the Company | 8.95% | ||
Of which: | |||
The balance of guarantee for shareholders, actual controllers and their affiliates. (D) | 0 | ||
Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset ratio over 70% (E) | 544,906.44 | ||
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) | 544,906.44 |
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
On January 8
th2021, the Proposal on Adjustment of Domestic Listing Board for the Spin-off of the Company’s Subsidiary Hangzhou EZVIZ Network Co., Ltd.,the Proposal on the Spin-off of the Subsidiary Hangzhou EZVIZ Network Co., Ltd. to be Listed on the Science and Technology Innovation Board and other relatedproposals were deliberated and adopted by the 21
st Meeting of the fourth session of the
Board of Directors and the 18
thMeeting of the fourth session of the Board ofSupervisors of the Company, agreeing the initial public offering of ordinary shares (A shares) in RMB of EZVIZ Network after the shareholding reform and listing ofEZVIZ Network on the science and technology innovation board of Shanghai Stock Exchange. For details, please refer to the Proposal of Hangzhou Hikvision DigitalTechnology Co., Ltd. on the Spin-off of its Subsidiary Hangzhou EZVIZ Network Co., Ltd. to be Listed on the Science and Technology Innovation Board issued by theCompany on January 9
th 2021. On August 10
th 2021, the 4
th
meeting of the fifth session of the Board of Directors and the 4
thmeeting of the fifth session of the Boardof Supervisors of the Company deliberated on and approved relevant proposals including the Proposal for Deliberation on the Proposal of Hangzhou Hikvision DigitalTechnology Co., Ltd. to Split Off and List Subsidiary Hangzhou EZVIZ Network Co., Ltd. on the Science and Technology Innovation Board (Revised). Please see the
Proposal of Hangzhou Hikvision Digital Technology Co., Ltd. to Split Off and List Subsidiary Hangzhou EZVIZ Network Co., Ltd. on the Science and TechnologyInnovation Board (Revised) published by the Company on August 11
th 2021 for details. On September 27
th2021, the second extraordinary general meeting of theCompany in 2021 deliberated on and approved the proposal to spin off and list Hangzhou EZVIZ Network Co., Ltd. on the Science and Technology Innovation Board.Please see the Announcement on Resolutions of the Second Extraordinary General Meeting of 2021 (Announcement No.: 2021-058) published by the Company onSeptember 28
th2021 for details.On December 30
th
2021, the 7
thmeeting of the fifth session 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 Co., Ltd., which authorizedthe management of the Company to begin preparatory work for the Split-off and domestic listing of subsidiary Hangzhou Hikrobot Technology Co., Ltd. (hereinafterreferred to as “HikRobot”). After the completion of the Split-off and listing, the Company will maintain control over HikRobot. Please see the Announcement onAuthorizing Company Management to Begin Preparatory Work for the Split-off and Domestic Listing of Subsidiary Hangzhou Hikrobot Technology Co., Ltd.(Announcement No.: 2021-074) published by the Company on December 31
st2021 for details.
XVII. Significant Events of the Company’s Subsidiaries
√ Applicable □Inapplicable
During the reporting period, the Company steadily promoted the spin-off of EZVIZ Network to be listed on the Science and Technology Innovation Board ofShanghai Stock Exchange. On January 8
th2021, the Proposal on the Spin-off of the Company’s Subsidiary Hangzhou EZVIZ Network Co., Ltd. to be Listed on theScience and Technology Innovation Board was deliberated and adopted by the 21
st
Meeting of the fourth session of the Board of Directors and the 18
thMeeting of thefourth session of the Board of Supervisors of the Company. On June 23
rd2021, the Proposal on the Overall Restructuring of the the Company’s Holding SubsidiaryHangzhou EZVIZ Network Co., Ltd. as Limited Liability Company by Shares was deliberated and adopted by the 3
rd
Meeting of the Strategy Committee in 2021 of the
fifth session of the
Board of Directors of the Company. On June 24
th2021, EZVIZ Network as a whole was restructured and changed to a limited liability company byshares. On July 2
nd2021, Zhejiang Securities Regulatory Bureau of China Securities Regulatory Commission accepted the application filed by EZVIZ Network forinitial public offering of A shares and pre-listing counseling for listing on the Science and Technology Innovation Board. On August 10
th 2021, the 4
thmeeting of the
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 Proposal on the Initial Public ShareOffering and Listing on the STAR Market of the Shanghai Stock Exchange of the Subsidiary, Hangzhou EZVIZ Network Co., Ltd. (revised draft). On September 27
th
2021, the Company's second extraordinary general meeting in 2021 reviewed and approved the proposal to spin-off EZVIZ Network to be listed on the Science andTechnology Innovation Board. On December 13
th2021, EZVIZ Network submitted the application materials for the initial public shares offering and listing on theSTAR Market of the Shanghai Stock Exchange. On January 11
th
2022, the Shanghai Stock Exchange issue the Inquiry Letter on Review of Application Documents forInitial Public Share Offering and Listing on the Science and Technology Innovation Board (Shang Zheng Ke Shen (Review) [2022] No. 11), decided to accept theapplication and review it in accordance with the law. EZVIZ Network has submitted the Reply to the Inquiry Letter on the Review of Hangzhou EZVIZ Network Co.,Ltd.'s Application Documents for Initial Public Share Offering and Listing on the Science and Technology Innovation Board on March 15
th2022, and is currentlyupdating the 2021 financial statements. The above spin-off matters are subject to (including but not limited to) the approval of the Shanghai Stock Exchange and theimplementation of the issuance registration procedures of the China Securities Regulatory Commission.
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) | 1,248,025,260 | 13.36% | -1,032,710,690 | -1,032,710,690 | 215,314,570 | 2.31% | |||
1)State holdings | |||||||||
2)Shares held by State-owned corporate | |||||||||
3) Other domestic shares | 306,488,295 | 3.28% | -91,288,265 | -91,288,265 | 215,200,030 | 2.31% | |||
Including: held by domestic corporates | |||||||||
held by domestic natural person | 306,488,295 | 3.28% | -91,288,265 | -91,288,265 | 215,200,030 | 2.31% | |||
4) Foreign shares | 941,536,965 | 10.08% | -941,422,425 | -941,422,425 | 114,540 | 0.00% |
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 | |
Including: held by overseas corporates | |||||||||
held by overseas natural person | 941,536,965 | 10.08% | -941,422,425 | -941,422,425 | 114,540 | 0.00% | |||
2. Shares without restriction | 8,095,391,930 | 86.64% | 1,025,099,614 | 1,025,099,614 | 9,120,491,544 | 97.69% | |||
1) RMB ordinary shares | 8,095,391,930 | 86.64% | 1,025,099,614 | 1,025,099,614 | 9,120,491,544 | 97.69% | |||
2) Domestically listed foreign shares | |||||||||
3) Foreign shares listed overseas | |||||||||
4) Others | |||||||||
3. Total | 9,343,417,190 | 100.00% | -7,611,076 | -7,611,076 | 9,335,806,114 | 100.00% |
Reason for the changes in share capital
√Applicable □Inapplicable
Partial Repurchase and Cancellation of the Restricted Share SchemeOn December 25
th
2020, the Proposal on the Third Repurchase and Cancellation of the Granted but Unvested Restricted Shares under the Restricted ShareIncentive Scheme of 2016 and the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under the Restricted Share
Incentive Scheme of 2018 were deliberated and adopted by the 20
th Meeting of the fourth session of the Board of Directors and the 17
th
Meeting of the fourth sessionof the Board of Supervisors of the Company. According to the authorization of the 2
nd
Extraordinary General Meeting of 2016 and the 2
nd
Extraordinary GeneralMeeting of 2018 of the Company, the Board of Directors agreed to repurchase and cancel some of the granted but unvested restricted share that did not meet theconditions for share incentive. On March 5
th2021, the Proposal on the Third Repurchase and Cancellation of Granted but Unvested Restricted Shares under theRestricted Share Incentive Scheme of 2016 and the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under theRestricted Share Incentive Scheme of 2018 were deliberated and adopted by the 1
st
Extraordinary General Meeting in 2021. On June 30
th2021, the Company hascompleted the repurchase and cancellation procedures for the above 7,611,076 restricted shares. The total share capital of the Company was reduced by 7,611,076shares from 9,343,417,190 shares to 9,335,806,114 shares.Approval for changes in share capital
√Applicable □Inapplicable
On December 25
th2020, the Proposal on the Third Repurchase and Cancellation of Granted but Unvested Restricted Shares under the Restricted ShareIncentive Scheme of 2016 and the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under the Restricted ShareIncentive Scheme of 2018 were deliberated and adopted by the 20
th
Meeting of the fourth session of the Board of Directors and the 17
thMeeting of the fourth sessionof the Board of Supervisors of the Company. According to the authorization of the 2
nd Extraordinary General Meeting of 2016 and the 2
nd
Extraordinary GeneralMeeting of 2018 of the Company, the Board of Directors agreed to repurchase and cancel 7,611,076 shares of the granted but unvested restricted shares that did notmeet the conditions for share incentive. On March 5
th
2021, the Proposal on the Third Repurchase and Cancellation of Granted but Unvested Restricted Shares underthe Restricted Share Incentive Scheme of 2016 and the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under theRestricted Share Incentive Scheme of 2018 were deliberated and adopted by the 1
stExtraordinary General Meeting in 2021.Transfer for changes in share capital
√Applicable □Inapplicable
On June 30
th
2021, the third repurchase and cancellation under the Restricted Share Incentive Scheme of 2016 and the first repurchase and cancellation under theRestricted Share Incentive Scheme of 2018 were completed, and the total share capital of the Company was reduced by 7,611,076 shares from 9,343,417,190 shares to9,335,806,114 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 | Date of unlocking |
Hu Yangzhong | 136,591,708 | 48,150 | 0 | 136,639,858 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | According to the relevant regulations on the management of executive shares |
Grantees of restricted share incentive plan | 143,170,198 | 66,796,439 | 68,762,683 | Equity Incentive Restricted Shares | January 20th 2021 |
Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
(consolidated) | ||||||
Wu Weiqi | 8,483,992 | 44,550 | 0 | 8,528,542 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | According to the relevant regulations on the management of executive shares |
Huang Fanghong | 191,875 | 44,000 | 0 | 235,875 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Xu Lirong | 194,400 | 32,850 | 0 | 227,250 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
He Hongli | 207,225 | 41,400 | 0 | 248,625 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Pu Shiliang | 77,105 | 84,820 | 0 | 161,925 | Restricted shares for senior |
Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | ||||||
Jin Yan | 50,800 | 96,200 | 0 | 147,000 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Bi Huijuan | 36,750 | 94,200 | 0 | 130,950 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Jin Duo | 49,275 | 32,850 | 0 | 82,125 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Cai Changyang | 49,275 | 32,850 | 0 | 82,125 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted |
Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
shares for senior executives | ||||||
Xu Ximing | 0 | 29,550 | 0 | 29,550 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Wang Qiuchao | 26,250 | 0 | 0 | 26,250 | Restricted shares for senior executives | |
Qu Liyang | 11,812 | 0 | 0 | 11,812 | Restricted shares for senior executives | |
Gong Hongjia | 762,461,110 | 200,043,704 | 962,504,814 | 0 | Restricted shares for senior executives | September 7th 2021 |
Jiang Haiqing | 7,718,761 | 36,900 | 7,755,661 | 0 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | September 22nd 2021 |
Jia Yonghua | 3,303,858 | 32,850 | 3,336,708 | 0 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives |
Name of shareholder | Opening restricted shares | Increased in current period | Vested in current period | Closing restricted shares | Note for restricted shares | Date of unlocking |
Li Pan | 3,184,688 | 32,850 | 3,217,538 | 0 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Fu Baijun | 266,250 | 165,750 | 432,000 | 0 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Jiang Yufeng | 207,225 | 118,275 | 325,500 | 0 | Restricted shares for senior executives + partial of the unlocked restricted shares turning into restricted shares for senior executives | |
Total | 1,066,282,557 | 201,011,749 | 1,044,368,660 | 215,314,570 | -- | -- |
Note:
1. Executives who are grantees under incentive restricted shares scheme, his/her holding incentive restricted shares are counted within the total incentive restrictedshares (consolidated statistics) on the second row.
2. The difference of 7,611,076 shares between ending balance of restricted shares of total incentive restricted shares (consolidated) for grantees and the calculatedbalance (opening balance + increased restricted shares - unlocked shares) was due to repurchasing and cancelling of 7,611,076 shares on June 30
th
2021.
3. The three executives Jiang Haiqing, Jia Yonghua and Li Pan have left office on October 25
th 2019. The original term of office expires on March 21
st
2021, and theshares held by them were released from restriction in accordance with the relevant regulations.
4. Gong Hongjia left the position as a director of the Company on March 5
th2021 as his term of office expires, and Fu Baijun and Jiang Yufeng left the position assenior executives of the Company on March 12
th2021 as their terms of office expires. The shares held by them were released from restriction in accordance withrelevant regulations.II. Issuance and Listing of Securities
1. Securities (exclude Preferred Share) Issued during the Reporting Period
□Applicable √Inapplicable
2. Explanation on Changes in Share Capital & the Structure of Shareholders, the Structure of Assets and Liabilities
√ Applicable □ Inapplicable
On June 30
th
2021, the Company completed the third repurchasing and cancelling shares for 2016 Restricted Share Incentive Scheme and the first repurchasingand cancelling shares for 2018 Restricted Share Incentive Scheme, a total of 7,611,076 shares. The total capital shares were decreased by 7,611,076 shares from9,343,417,190 shares to 9,335,806,114 shares. The shareholder structure, assets and liabilities of the Company did not change significantly after completing the abovementioned items.
3. Existent Shares Held by Internal Staff of the Company
□ Applicable √ Inapplicable
III. Particulars about the Shareholders and Actual Controller
1. Total Number of Shareholders and Their Shareholdings
Unit: Share
Total number of common shareholders at the end of the reporting period | 276,009 | The total number of ordinary shareholders at the end of the previous month before the disclosure date of the annual report | 308,098 |
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 common 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. | State-owned corporation | 36.46% | 3, 403,879,509 | 229,017,747 | 0 | 3, 403,879,509 | Pledged | 50,000,000 |
Gong Hongjia | Overseas individual | 10.31% | 962,504,814 | -54,110,000 | 0 | 962,504,814 | Pledged | 117,220,000 |
Xinjiang Weixun Investment Management Limited Partnership | Domestic non-state-owned corporation | 4.83% | 450,795,176 | 0 | 0 | 450,795,176 | Pledged | 17,810,000 |
CETC Investment Holdings Co., Ltd. | State-owned corporation | 2.49% | 232,307,903 | 225,210,747 | 0 | 232,307,903 | - | - |
Shanghai Gaoyi Asset Management Partnership (Limited Partnership) - Gaoyi Adjacent Mountain 1 Yuanwang Fund | Other | 2.18% | 203,800,000 | -46,200,000 | 0 | 203,800,000 | - | - |
Xinjiang Pukang Investment Limited Partnership | Domestic non-state-owned corporation | 1.95% | 182,510,174 | 0 | 0 | 182,510,174 | Pledged | 75,880,000 |
The 52nd Research Institute at China Electronics Technology Group Corporation | State-owned corporation | 1.94% | 180,775,044 | 0 | 0 | 180,775,044 | - | - |
Hu Yangzhong | Domestic Individual | 1.66% | 155,246,477 | -26,940,000 | 136,639,858 | 18,606,619 | - | - |
Bank of China Co., Ltd. - Efunds Blue Chip Select | Other | 1.36% | 127,000,036 | 57,000,011 | 0 | 127,000,036 | - | - |
Hybrid Securities Investment Fund | |||||||||||
CITIC Securities Co., Ltd. | State-owned corporation | 0.97% | 90,242,182 | -13,400,429 | 0 | 90,242,182 | - | - | |||
Explanation on associated relationship or concerted actions among the above-mentioned shareholders: | 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. | ||||||||||
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 common shares | 3, 403,879,509 | ||||||||
Gong Hongjia | 962,504,814 | RMB common shares | 962,504,814 | ||||||||
Xinjiang Weixun Investment Management Limited Partnership | 450,795,176 | RMB common shares | 450,795,176 | ||||||||
CETC Investment Holdings Co., Ltd. | 232,307,903 | RMB common shares | 232,307,903 | ||||||||
Shanghai Gaoyi Asset Management Partnership (Limited Partnership) - Gaoyi Adjacent Mountain 1 Yuanwang Fund | 203,800,000 | RMB common shares | 203,800,000 | ||||||||
Xinjiang Pukang Investment Limited Partnership | 182,510,174 | RMB common shares | 182,510,174 | ||||||||
The 52nd Research Institute at China Electronics Technology Group Co. Ltd. | 180,775,044 | RMB common shares | 180,775,044 | ||||||||
Bank of China Co., Ltd. - Efunds Blue Chip Select Hybrid Securities Investment Fund | 127,000,036 | RMB common shares | 127,000,036 | ||||||||
CITIC Securities Company Limited | 90,242,182 | RMB common shares | 90,242,182 | ||||||||
Hong Kong Securities Clearing Company Ltd.(HKSCC) | 86,131,607 | RMB common shares | 86,131,607 |
Explanation on associated relationship and concerted actions among top ten shareholders holding shares without trading restrictions, and among top ten shareholders and top ten 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. |
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 29th 2002 | 9133000014306073XD | Industrial investment; R&D of environmental protection products, network products, intelligent products and electronic products; technology transfer, technical services, manufacturing and sales; business consulting services, rental services of self-owned real estate; import and export businesses. |
Shares held by the controlling shareholder in other listed companies through controlling or holding during the reporting period | Indirect control of domestic listed company Phoenix Optical Co. Ltd., |
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 Parties
Nature 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 25th 2002 | 91110000710929498G | The Company is responsible for the development and manufacturing of military electronic equipment and systems integration, electronic equipment for weapon platform, military software and electronic basic products; and the construction of national defense electronic information infrastructure and safeguard conditions; construction of national major electronic information system; the research, development, production and sales of civil electronic information software, materials, components, equipment and system integration and related common technology; self-operated and agent import and export business of various commodities and technologies (except for goods and technologies that are restricted or restricted by the state-limited company); operating feed processing and "three comes one supplement" business; operating counter trade and entrepot trade; Industrial investment; asset management; engaged in e-commerce information services; organization of enterprises in the industry to go abroad, participate in exhibitions. (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 fourteen domestic listed companies including Sun Create Electronic Co., Ltd, CETC Digital Technology Co., Ltd, Chengdu Westone Information Industry Co., Ltd., GCI Science & Technology Co., Ltd., Tai’ji Computer Corporation Limited, GLARUN Technology Co., Ltd. , Phoenix Optics Co., Ltd., Chengdu Tianao Electronic Co., Ltd., 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. and Chengdu Putian Telecommunications Cable Company Limited and etc. |
Whether there are shareholders with a shareholding proportion of more than 10% at the final control level of theCompany
□ Yes √ No
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 √ Not applicable
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 √ Not applicable
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
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 14th 2022 |
Audit Institution Name | Deloitte Touche Tohmatsu Certified Public Accountants LLP |
Audit Report Number | Deloitte Auditors’ Report (Audit) No. 22- P02724 |
Certified Public Accounts Name | Tang Lianjiong, Gao Sunchao |
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
st
2021, consolidated and parent company's income statement, cash flow statement and statement of changesin owners’ equity of 2021 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
st2021 and consolidated and parent company’s financial performance and cashflows of 2021.
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 2021 in the consolidated financial statements of the Group forthe year ended December 31
st2021 is RMB 81,420,053,539.27. The product sales revenue, a key performance indicator,reaches RMB 75,532,012,528.94, accounting for 92.77% of the operating revenue, which is a significant indicator andhas a 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, andimproper determination of the timing of completion of performance obligations may result in a material misstatement ofrevenue recognition. Therefore, we regard the occurrence of sales revenue as a key audit matter.
Audit Measures:
Main audit procedures that we perform for the aforesaid key audit matters include:
(1) Understanding and evaluating design and implementation of key internal control in relation to revenue recognition,
and testing the effectiveness of its operation;
(2) For revenues under different sales models, selecting a sample to check 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
st2021, the balanceof accounts receivable amounted to RMB 28,201,432,058.17, and the balance of provision for credit losses of accountsreceivable amounted to RMB 2,026,658,957.75. 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 by using impairmentmatrix is determined based on the Group’s historical overdue ratio and default and with reference to the forward-lookinginformation of the industry. In measuring expected credit loss, the Group is required to classify the customers with similarcredit risk characteristics into a same portfolio, and classify them by appropriate overdue stage and comparable expectedcredit loss rate. The accounting estimates above are subject to a high level of uncertainties. Therefore, we identify therecognition of credit loss provision 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 lossprovision for accounts receivable by the Group’s management, 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, wemainly performed the following procedures;-Assessing the rationality of measurement method by using impairment matrix model, and the rationality of the keyparameters 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 ofaccounts 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 maintenance
of 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 as
well as relevant precautionary measures (as applicable).
We determine which of the matters we communicated with the governance are of the greatest importance to the auditof financial statements of the current period so as to make them key matters. We describe the matters in the audit report.We decide not to communicate on such matters in the audit report unless the laws and regulations forbid the publicdisclosure of such matters, or, in rare circumstances, if the negative consequence of communication of matters in the auditreport is reasonably expected to exceed the benefit of the public interest.
On December 31
st2021
Consolidated Balance Sheet
Unit: RMB
Item | Notes | On December 31st 2021 | On December 31st 2020 |
Current Assets: | |||
Cash and bank balances | (V)1 | 34,721,870,931.36 | 35,459,729,108.27 |
Held-for-trading financial assets | (V)2 | 34,320,010.83 | 22,679,846.77 |
Notes receivable | (V)3 | 1,522,760,905.30 | 1,303,252,705.19 |
Accounts receivable | (V)4 | 26,174,773,100.42 | 21,979,380,716.86 |
Receivables for financing | (V)5 | 1,316,035,122.06 | 1,959,601,195.25 |
Prepayments | (V)6 | 505,798,253.35 | 296,334,689.86 |
Other receivables | (V)7 | 359,620,445.88 | 519,143,350.82 |
Inventories | (V)8 | 17,974,112,407.60 | 11,477,906,040.70 |
Contract assets | (V)9 | 1,411,372,624.91 | 245,754,510.98 |
Non-current assets due within one year | (V)10 | 975,960,437.14 | 1,001,208,813.83 |
Other current assets | (V)11 | 1,022,600,377.78 | 497,914,506.64 |
Total Current Assets | 86,019,224,616.63 | 74,762,905,485.17 | |
Non-current Assets: | |||
Long-term receivables | (V)12 | 613,067,944.97 | 2,105,570,004.53 |
Long-term equity investment | (V)13 | 982,165,546.45 | 864,026,710.23 |
Other non-current financial assets | (V)14 | 438,724,172.22 | 491,939,067.27 |
Fixed assets | (V)15 | 6,695,590,671.27 | 5,876,007,536.60 |
Construction in progress | (V)16 | 2,323,336,098.68 | 1,425,235,193.72 |
Right-of-use assets | (V)17 | 566,393,672.75 | - |
Intangible assets | (V)18 | 1,304,247,415.07 | 1,251,317,923.69 |
Goodwill | (V)19 | 202,381,895.37 | 274,203,665.20 |
Long-term deferred expenses | (V)20 | 158,007,174.90 | 108,584,686.85 |
Deferred tax assets | (V)21 | 1,210,877,575.24 | 820,380,954.86 |
Other non-current assets | (V)22 | 3,350,526,411.63 | 721,511,156.08 |
Total Non-current Assets | 17,845,318,578.55 | 13,938,776,899.03 | |
Total Assets | 103,864,543,195.18 | 88,701,682,384.20 |
On December 31
st2021
Consolidated Balance Sheet-continued
Unit: RMB
Item | Notes | On December 31st 2021 | On December 31st 2020 |
Current Liabilities: | |||
Short-term borrowings | (V)23 | 4,074,962,469.97 | 3,999,246,634.59 |
Held-for-trading financial liabilities | (V)24 | 4,062,317.57 | 7,405,771.15 |
Notes payable | (V)25 | 1,339,998,383.34 | 1,036,920,229.85 |
Accounts payable | (V)26 | 15,889,694,981.12 | 13,593,884,790.19 |
Contract liabilities | (V)27 | 2,580,894,226.59 | 2,161,166,671.26 |
Payroll payable | (V)28 | 4,595,552,073.12 | 2,877,786,430.71 |
Taxes payable | (V)29 | 1,461,470,029.69 | 1,770,057,908.62 |
Other payables | (V)30 | 1,830,626,583.03 | 1,525,053,355.95 |
Non-current liabilities due within one year | (V)31 | 596,915,360.58 | 3,507,680,339.78 |
Other current liabilities | (V)32 | 917,479,922.61 | 745,711,579.57 |
Total Current Liabilities | 33,291,656,347.62 | 31,224,913,711.67 | |
Non-current Liabilities: | |||
Long-term borrowings | (V)33 | 3,284,371,642.52 | 1,961,167,761.30 |
Lease liabilities | (V)34 | 317,951,879.21 | - |
Long-term payables | (V)35 | 9,009,331.50 | 39,595,459.35 |
Provisions | (V)36 | 200,675,950.96 | 151,443,871.02 |
Deferred income | (V)37 | 738,586,458.05 | 190,878,987.69 |
Deferred tax liabilities | (V)21 | 93,315,151.17 | 92,979,823.89 |
Other non-current liabilities | (V)38 | 534,334,158.27 | 560,959,368.74 |
Total non-current liabilities | 5,178,244,571.68 | 2,997,025,271.99 | |
Total liabilities | 38,469,900,919.30 | 34,221,938,983.66 | |
Owners’ Equity | |||
Share capital | (V)39 | 9,335,806,114.00 | 9,343,417,190.00 |
Capital reserves | (V)40 | 5,404,070,600.07 | 5,178,777,462.09 |
Less: Treasury shares | (V)41 | 1,023,188,723.04 | 1,121,918,737.47 |
Other comprehensive income | (V)42 | (77,184,125.29) | (84,993,926.94) |
Surplus reserves | (V)43 | 4,672,505,348.00 | 4,672,505,348.00 |
Retained earnings | (V)44 | 45,148,877,451.52 | 35,806,523,826.37 |
Total owners' equity attributable to owner of the Company | 63,460,886,665.26 | 53,794,311,162.05 | |
Minority equity | 1,933,755,610.62 | 685,432,238.49 | |
Total owners' equity | 65,394,642,275.88 | 54,479,743,400.54 | |
Total liabilities and owners' equity | 103,864,543,195.18 | 88,701,682,384.20 |
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
st2021
Balance Sheet of the Parent Company
Unit: RMB
Item | Notes | On December 31st 2021 | On December 31st 2020 |
Current Assets: | |||
Cash and bank balances | 26,656,489,813.38 | 23,476,606,330.08 | |
Held-for-trading financial assets | 4,489,098.88 | - | |
Notes receivable | 254,830,140.51 | 107,411,912.35 | |
Accounts receivable | (XV)1 | 23,878,118,071.42 | 24,193,392,179.36 |
Receivables for financing | 3,116,794.78 | 12,216,215.65 | |
Prepayments | 116,908,227.97 | 62,946,087.75 | |
Other receivables | (XV)2 | 1,514,142,364.05 | 726,703,133.65 |
Inventories | 346,835,446.94 | 204,216,250.73 | |
Contract assets | 2,627,800.33 | 3,311,250.08 | |
Non-current assets due within one year | 123,112,934.70 | 71,208,685.76 | |
Other current assets | 46,183,195.94 | 10,110,869.86 | |
Total Current Assets | 52,946,853,888.90 | 48,868,122,915.27 | |
Non-current Assets: | |||
Long-term accounts receivable | 237,682,275.59 | 47,762,348.01 | |
Long-term equity investment | (XV)3 | 7,785,916,631.88 | 6,727,373,453.97 |
Other non-current financial assets | 435,839,952.22 | 489,054,847.27 | |
Fixed assets | 2,834,983,102.39 | 2,762,700,997.83 | |
Construction in progress | 450,957,191.99 | 388,903,828.81 | |
Right-of-use assets | 67,592,195.40 | - | |
Intangible assets | 134,626,963.77 | 158,917,438.86 | |
Long-term deferred expenses | 61,162,816.25 | 43,264,691.73 | |
Deferred tax assets | 281,893,463.93 | 110,066,596.99 | |
Other non-current assets | 21,042,856.65 | 2,740,576.47 | |
Total Non-current Assets | 12,311,697,450.07 | 10,730,784,779.94 | |
Total Assets | 65,258,551,338.97 | 59,598,907,695.21 |
On December 31
st
2021
Balance Sheet of the Parent Company - continued
Unit: RMB
Item | Notes | On December 31st 2021 | On December 31st 2020 |
Current Liabilities: | |||
Short-term borrowings | 361,117,361.14 | 1,431,233,375.00 | |
Accounts payable | 713,263,324.12 | 540,664,512.60 | |
Contract liabilities | 368,945,242.08 | 240,629,015.92 | |
Payroll payable | 2,838,109,439.40 | 1,618,357,135.99 | |
Taxes payable | 861,102,872.06 | 1,539,095,196.97 | |
Other payables | 1,334,246,256.62 | 659,214,959.62 | |
Non-current liabilities due within one year | 66,524,298.83 | 3,219,794,958.37 | |
Other current liabilities | 561,225,504.26 | 589,167,743.26 | |
Total Current Liabilities | 7,104,534,298.51 | 9,838,156,897.73 | |
Non-current Liabilities: | |||
Long-term borrowings | 1,254,076,200.00 | - | |
Lease liabilities | 27,440,248.49 | - | |
Provisions | 113,998,912.05 | 85,230,299.84 | |
Deferred Income | 365,699,705.71 | 122,455,935.44 | |
Other non-current liabilities | 511,594,361.52 | 560,959,368.74 | |
Total non-current liabilities | 2,272,809,427.77 | 768,645,604.02 | |
Total liabilities | 9,377,343,726.28 | 10,606,802,501.75 | |
Owners’ Equity | |||
Share capital | 9,335,806,114.00 | 9,343,417,190.00 | |
Capital reserves | 4,937,523,553.84 | 4,770,210,334.16 | |
Less: Treasury shares | 1,023,188,723.04 | 1,121,918,737.47 | |
Surplus reserves | 4,672,505,348.00 | 4,672,505,348.00 | |
Retained earnings | 37,958,561,319.89 | 31,327,891,058.77 | |
Total owners' equity | 55,881,207,612.69 | 48,992,105,193.46 | |
Total liabilities and owners' equity | 65,258,551,338.97 | 59,598,907,695.21 |
For the reporting period from January 1
st
2021 to December 31
st2021
Consolidated Income Statement
Unit: RMB
Item | Notes | Amount for the current period | Amount for the prior period |
I. Total operating income | (V)45 | 81,420,053,539.27 | 63,503,450,891.78 |
Less:Total operating costs | (V)45 | 45,329,400,332.65 | 33,957,697,857.73 |
Business taxes and surcharges | (V)46 | 560,980,007.52 | 416,263,349.55 |
Selling expenses | (V)47 | 8,586,443,668.02 | 7,377,790,744.58 |
Administrative expenses | (V)48 | 2,132,250,463.96 | 1,790,013,088.76 |
Research and Development (R&D) expenses | (V)49 | 8,251,645,101.39 | 6,378,651,762.42 |
Financial expenses | (V)50 | (133,343,257.84) | 396,254,772.56 |
Including:Interest expenses | 229,950,217.93 | 202,415,502.10 | |
Interest income | 885,545,988.62 | 719,662,082.74 | |
Add: Other Income | (V)51 | 2,628,560,820.46 | 2,303,581,705.81 |
Investment income | (V)52 | 174,205,547.82 | 169,277,048.95 |
Including: Investment gains in associated enterprise and joint-venture enterprise | 114,137,281.18 | 6,361,388.74 | |
Gains (losses) from changes in fair values | (V)53 | (38,200,024.47) | 85,458,209.54 |
Credit impairment losses | (V)54 | (569,758,165.50) | (185,940,325.74) |
Impairment losses of assets | (V)55 | (447,689,406.60) | (363,109,513.99) |
Asset disposal income | 34,225,603.81 | 628,505.02 | |
II. Operating profit | 18,474,021,599.09 | 15,196,674,945.77 | |
Add: Non-operating income | (V)56 | 75,744,369.29 | 99,273,303.50 |
Less: Non-operating expenses | (V)57 | 81,554,105.75 | 22,976,971.41 |
III. Total profit | 18,468,211,862.63 | 15,272,971,277.86 | |
Less: Income tax expenses | (V)58 | 957,490,652.16 | 1,594,651,805.69 |
IV. Net profit | 17,510,721,210.47 | 13,678,319,472.17 | |
4.1 Classification by continuous operation | |||
(a) Net profit on continuous operation | 17,510,721,210.47 | 13,678,319,472.17 | |
(b) Net loss on terminated operation | - | - | |
4.2 Classification by attribution of ownership | - | - | |
(a) Profit or loss attributable to minority shareholders | 710,310,178.42 | 292,792,758.02 | |
(b) Net profit attributable to owners of parent company | 16,800,411,032.05 | 13,385,526,714.15 | |
V. Other comprehensive income, net of income tax | (V)42 | 4,631,122.68 | (34,145,243.17) |
Other comprehensive income attributable to owners of the Company, net of tax | 7,809,801.65 | (31,452,779.95) | |
(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 | 7,809,801.65 | (31,452,779.95) | |
1. Exchange differences arising on conversion of financial statements denominated in foreign currencies | 7,809,801.65 | (31,452,779.95) | |
Other comprehensive income attributable to minority interests, net of tax | (3,178,678.97) | (2,692,463.22) | |
VI. Total comprehensive income | 17,515,352,333.15 | 13,644,174,229.00 |
Item | Notes | Amount for the current period | Amount for the prior period |
Total comprehensive income attributable to owners of the parent company | 16,808,220,833.70 | 13,354,073,934.20 | |
Total comprehensive income attributable to minority shareholders | 707,131,499.45 | 290,100,294.80 | |
VII. Earnings per share | |||
(I) Basic earnings per share | (XVI)2 | 1.810 | 1.445 |
(II) Diluted earnings per share | (XVI)2 | 1.806 | 1.444 |
For the reporting period from January 1
st
2021 to December 31
st
2021
Income Statement of the Parent Company
Unit: RMB
Item | Notes | Amount for the current period | Amount for the prior period |
I. Total operating income | (XV)4 | 28,072,593,261.87 | 26,311,987,347.40 |
Less: Total operating Cost | (XV)4 | 5,240,788,874.32 | 7,177,407,215.45 |
Business taxes and surcharges | 327,853,515.36 | 293,578,888.80 | |
Selling expenses | 3,578,887,952.72 | 2,854,822,255.21 | |
Administrative expenses | 767,812,041.04 | 783,395,117.26 | |
Research and Development (R&D) expenses | 6,049,343,480.30 | 4,554,003,406.39 | |
Financial expenses | (740,196,978.65) | (278,380,172.69) | |
Including : Interest expenses | 104,266,342.46 | 85,828,434.69 | |
Interest income | 701,176,190.67 | 527,732,109.92 | |
Add: Other income | 1,889,775,429.25 | 1,847,575,953.90 | |
Investment income | (XV)5 | 237,198,739.71 | 1,095,486,482.55 |
Including: Investment gains in associated enterprise and joint-venture enterprise | 109,087,538.20 | 13,424,897.92 | |
Gains (losses) from changes in fair values | (48,725,796.17) | 69,478,784.83 | |
Credit impairment losses | (119,440,900.17) | (35,765,705.73) | |
Gains (losses) on asset impairment | (2,669,913.88) | 2,397,952.77 | |
Asset disposal income | 30,917,301.16 | 16,966.03 | |
II. Operating profit | 14,835,159,236.68 | 13,906,351,071.33 | |
Add: Non-operating income | 9,542,292.17 | 18,924,477.37 | |
Less: Non-operating expenses | 61,845,120.19 | 4,678,775.95 | |
III. Total profit | 14,782,856,408.66 | 13,920,596,772.75 | |
Less: Income tax expenses | 694,128,740.64 | 1,249,208,332.25 | |
IV. Net profit | 14,088,727,668.02 | 12,671,388,440.50 | |
V. Other comprehensive income, net of income tax | - | - | |
VI. Total comprehensive income | 14,088,727,668.02 | 12,671,388,440.50 |
For the reporting period from January 1
st
2021 to December 31
st2021
Consolidated Cash Flow Statement
Unit: RMB
Item | Notes | Amount for the current period | Amount for the prior period |
I. Cash flows from operating activities: | |||
Cash received from sale of goods or rendering of services | 83,503,340,788.69 | 68,169,017,614.45 | |
Receipts of tax refunds | 4,683,092,023.52 | 3,274,552,890.75 | |
Other cash receipts relating to operating activities | (V)59(1) | 2,798,426,938.05 | 1,427,590,353.65 |
Sub-total of cash inflows from operating activities | 90,984,859,750.26 | 72,871,160,858.85 | |
Cash payments for goods purchased and services received | 53,662,747,197.88 | 37,257,220,824.09 | |
Cash paid to and on behalf of employees | 12,868,949,235.34 | 10,247,824,582.96 | |
Payments of various types of taxes | 6,447,300,353.27 | 4,901,863,280.18 | |
Other cash payments relating to operating activities | (V)59(2) | 5,297,338,276.78 | 4,376,095,604.95 |
Sub-total of cash outflows from operating activities | 78,276,335,063.27 | 56,783,004,292.18 | |
Net Cash flows from Operating Activities | (V)60(1) | 12,708,524,686.99 | 16,088,156,566.67 |
II. Cash flows from Investing Activities: | |||
Cash receipts from recovery of investments | 6,189,975,412.80 | 1,693,378,691.26 | |
Cash receipts from investment income | 115,644,801.97 | 150,000,000.00 | |
Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 64,430,953.56 | 14,793,178.49 | |
Other cash receipts relating to investing activities | (V)59(3) | - | 46,196,873.80 |
Sub-total of cash inflows from investing activities | 6,370,051,168.33 | 1,904,368,743.55 | |
Net cash paid for obtaining subsidiaries and other business units | (V)60(2) | 323,604,530.74 | 48,918,168.58 |
Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 3,098,310,855.39 | 2,003,628,270.01 | |
Cash paid to acquire investments | 6,094,268,306.70 | 2,405,456,262.23 | |
Other cash payments relating to investment activities | (V)59(4) | 10,196,658.79 | 1,000,000.00 |
Sub-total of cash outflows from investing activities | 9,526,380,351.62 | 4,459,002,700.82 | |
Net cash flows from Investing Activities | (3,156,329,183.29) | (2,554,633,957.27) | |
III. Cash flows from financing activities: | |||
Cash receipts from capital contributions | 207,702,900.00 | 173,897,986.67 | |
Including: cash receipts from capital contributions from minority owners of subsidiaries | 207,702,900.00 | 173,897,986.67 | |
Cash receipts from borrowings | 5,915,784,932.52 | 5,883,973,583.25 | |
Cash receipts from issuance of bonds and SCP | - | 999,500,000.00 | |
Sub-total of cash inflows from financing activities | 6,123,487,832.52 | 7,057,371,569.92 | |
Cash repayments of borrowings | 7,758,027,348.85 | 4,834,813,277.12 | |
Cash payments for distribution of dividends or profits or settlement of interest expenses | 7,844,017,257.76 | 6,704,954,160.69 | |
Including : Dividends and profits paid by subsidiaries to minority shareholders | 4,704,000.00 | 40,000,000.00 | |
Other cash payments relating to financing activities | (V)59(5) | 312,940,867.51 | 77,707,417.35 |
Sub-total of cash outflows from financing activities | 15,914,985,474.12 | 11,617,474,855.16 | |
Net cash flows from Financing Activities | (9,791,497,641.60) | (4,560,103,285.24) | |
IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | (181,591,311.21) | (464,249,454.25) | |
V. Net Increase (decrease) in Cash and Cash Equivalents | (V)60(1) | (420,893,449.11) | 8,509,169,869.91 |
Add: Opening balance of Cash and Cash Equivalents | (V)60(1) | 35,024,837,878.31 | 26,515,668,008.40 |
VI. Closing Balance of Cash and Cash Equivalents | (V)60(3) | 34,603,944,429.20 | 35,024,837,878.31 |
For the reporting period from January 1
st
2021 to December 31
st
2021
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 | 34,148,655,237.57 | 30,589,118,989.08 | |
Receipts of tax refunds | 1,726,725,329.46 | 1,609,506,273.14 | |
Other cash receipts relating to operating activities | 976,326,567.89 | 728,754,897.93 | |
Sub-total of cash inflows from operating activities | 36,851,707,134.92 | 32,927,380,160.15 | |
Cash payments for goods acquired and services received | 8,696,110,952.82 | 8,265,995,701.20 | |
Cash payments to and on behalf of employees | 6,188,349,496.37 | 5,227,053,043.52 | |
Payments of various types of taxes | 4,406,691,364.91 | 3,096,614,910.29 | |
Other cash payments relating to operating activities | 1,765,753,448.19 | 1,827,804,822.26 | |
Sub-total of cash outflows from operating activities | 21,056,905,262.29 | 18,417,468,477.27 | |
Net Cash flows from Operating Activities | (XV)8(1) | 15,794,801,872.63 | 14,509,911,682.88 |
II. Cash flows from Investing Activities: | |||
Cash receipts from recovery of investments | 33,398,189.82 | 6,450,064.33 | |
Cash receipts from investment income | 131,960,801.97 | 210,000,000.00 | |
Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets | 84,321,638.76 | 22,605,893.13 | |
Cash receipts from disposals of subsidiaries and other business units | - | 848,151,116.16 | |
Other cash receipts relating to investing activities | 82,668,322,959.43 | 44,165,378,335.06 | |
Sub-total of cash inflows from investing activities | 82,918,003,589.98 | 45,252,585,408.68 | |
Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets | 650,844,109.04 | 446,640,144.49 | |
Cash payments to acquire investments | 942,402,941.96 | 1,572,003,054.15 | |
Other cash payments relating to investing activities | 83,113,418,266.33 | 43,940,319,202.39 | |
Sub-total of cash outflows from investing activities | 84,706,665,317.33 | 45,958,962,401.03 | |
Net Cash flows from Investing Activities | (1,788,661,727.35) | (706,376,992.35) | |
III. Cash flows from Financing Activities | |||
Cash receipts from borrowings | 1,644,388,055.69 | 2,480,000,000.00 | |
Cash receipts from issuance of bonds and SCP | - | 999,500,000.00 | |
Other cash receipts relating to financing activities | 15,606,213,712.04 | 6,971,777,752.17 | |
Sub-total of cash inflows from financing activities | 17,250,601,767.73 | 10,451,277,752.17 | |
Cash repayments of borrowings | 4,572,909,918.72 | 4,049,244,293.61 | |
Cash payments for distribution of dividends or profits or settlement of interest expenses | 7,516,599,420.29 | 6,547,520,501.67 | |
Other cash payments relating to financing activities | 15,775,258,476.27 | 6,910,848,212.28 | |
Sub-total of cash outflows from financing activities | 27,864,767,815.28 | 17,507,613,007.56 | |
Net Cash flows from Financing Activities | (10,614,166,047.55) | (7,056,335,255.39) | |
IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents | (17,084,979.94) | (138,534,267.16) | |
V. Net increase in cash and cash equivalents | (XV)8(1) | 3,374,889,117.79 | 6,608,665,167.98 |
Add: Opening balance of cash and cash equivalents | (XV)8(1) | 23,264,693,578.70 | 16,656,028,410.72 |
VI. Closing Balance of Cash and Cash Equivalents | (XV)8(2) | 26,639,582,696.49 | 23,264,693,578.70 |
For the reporting period from January 1
st
2021 to December 31
st2021
Consolidated Statement of Changes in Owners' Equity
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
st
2020 to December 31
st
2020
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
Items | 2020 | |||||||
Owner’s equity attributable to the parent company | Minority interests | Total owners' equity | ||||||
Share capital | Capital reserves | Less: Treasury share | Other comprehensive income | Surplus reserve | Retained profits | |||
I. Opening balance of the current period | 9,345,010,696.00 | 4,126,943,698.96 | 2,148,273,864.36 | (53,541,146.99) | 4,672,505,348.00 | 28,961,389,145.22 | 568,825,008.31 | 45,472,858,885.14 |
II. Increase or decrease in the current period | (1,593,506.00) | 1,051,833,763.13 | (1,026,355,126.89) | (31,452,779.95) | - | 6,845,134,681.15 | 116,607,230.18 | 9,006,884,515.40 |
(I) Total comprehensive income | - | - | - | (31,452,779.95) | - | 13,385,526,714.15 | 290,100,294.80 | 13,644,174,229.00 |
(II) Owners’ contributions and reduction in capital | (1,593,506.00) | 1,051,833,763.13 | (925,020,534.09) | - | - | - | (135,943,064.62) | 1,839,317,726.60 |
1. Capital contribution from shareholders | - | - | - | - | - | - | 173,897,986.67 | 173,897,986.67 |
2. Share-based payment recognized in owners’ equity | - | 752,504,023.39 | - | - | - | - | 65,602,599.80 | 818,106,623.19 |
3.Others | (1,593,506.00) | 299,329,739.74 | (925,020,534.09) | - | - | - | (375,443,651.09) | 847,313,116.74 |
(III) Profit distribution | - | - | (101,334,592.80) | - | - | (6,540,392,033.00) | (37,550,000.00) | (6,476,607,440.20) |
1. Transfer to surplus reserves | - | - | - | - | - | - | - | - |
2. Distributions to shareholders | - | - | (101,334,592.80) | - | - | (6,540,392,033.00) | (37,550,000.00) | (6,476,607,440.20) |
III. Closing balance of the current period | 9,343,417,190.00 | 5,178,777,462.09 | 1,121,918,737.47 | (84,993,926.94) | 4,672,505,348.00 | 35,806,523,826.37 | 685,432,238.49 | 54,479,743,400.54 |
For the reporting period from January 1
st 2021 to December 31
st2021
Statement of Changes in Owners' Equity of the Parent Company
Unit: RMB
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 |
Item | 2020 | |||||
Share capital | Capital reserves | Less: Treasury share | Surplus reserve | Retained profits | Total owners' equity | |
I. Closing balance of the prior year | 9,345,010,696.00 | 4,064,833,739.52 | 2,148,273,864.36 | 4,672,505,348.00 | 25,196,894,651.27 | 41,130,970,570.43 |
II. Increase or decrease in the current period | (1,593,506.00) | 705,376,594.64 | (1,026,355,126.89) | - | 6,130,996,407.50 | 7,861,134,623.03 |
(I) Total comprehensive income | - | - | - | - | 12,671,388,440.50 | 12,671,388,440.50 |
(II) Owners’ contributions and reduction in capital | (1,593,506.00) | 705,376,594.64 | (925,020,534.09) | - | - | 1,628,803,622.73 |
1. Share-based payment recognized in owners’ equity | - | 717,200,505.99 | - | - | - | 717,200,505.99 |
2. Others | (1,593,506.00) | (11,823,911.35) | (925,020,534.09) | - | - | 911,603,116.74 |
(III) Profit distribution | - | - | (101,334,592.80) | - | (6,540,392,033.00) | (6,439,057,440.20) |
1.Distributions to shareholders | - | - | (101,334,592.80) | - | (6,540,392,033.00) | (6,439,057,440.20) |
III. Closing balance of the current period | 9,343,417,190.00 | 4,770,210,334.16 | 1,121,918,737.47 | 4,672,505,348.00 | 31,327,891,058.77 | 48,992,105,193.46 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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
th2001 in Hangzhou upon the approval letter of Hangzhou High-tech No. 604 [2001]issued by Hangzhou High-tech Industrial Development Zone Management Committee. On June 25th 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
th2010, the Company was listed on theShenzhen Stock Exchange.On December 17
th2020, authorized by the Company’s second Extraordinary General Meeting in 2016, the Companycompleted procedures of repurchase and cancellation of some of the 1,593,506 restricted stocks that did not meet theincentive conditions, and the total share capital of the Company was adjusted to 9,343,417,190 shares.On July 2
nd2021, authorized by the Company’s second Extraordinary General Meeting in 2016 and the secondExtraordinary General Meeting in 2018, the Company completed procedures of repurchase and cancellation of some ofthe 7,611,076 restricted stocks that did not meet the incentive conditions, and the total share capital of the Company wasadjusted to 9,335,806,114 shares. For details of the share capital, please refer to Note (V) 39.As of December 31
st2021, the Company’s total registered capital is RMB 9,335,806,114, with total capital shares of9,335,806,114 shares (face value RMB 1 per share), of which restricted A-shares were 1,192,886,791 shares, A-shareswithout restriction are 8,142,919,323 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 equipments and its ancillary equipments, multimedia equipments, transmissionand display equipments), fire protection and control products, big data and IoT software and hardware products, aerialvehicles, robots, intelligent equipments and intelligent systems, real-time communication systems, auto parts andaccessories, electrical signal equipments for vehicle, servers and supporting hardware and software products; sales of self-manufactured products; technical service, electronic technology consulting service, training service (excluding classtraining), electronic equipment installation, design, construction and maintenance of electronic engineering and intelligentsystem engineering. 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 9
th
meeting of the 5
thsession of theBoard of Directors of the Company on April 14
th2022.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).
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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
st2021, and there isno factor that may cast significant doubt on the entity's ability to continue as a going concern. Therefore, the financialstatements have been prepared on a going concern basis.
Bookkeeping base and valuation principlesThe Group measures the accounting elements in accordance with the accrual accounting basis. Except certain financialinstruments are measured by fair value, these financial statements are prepared in accordance with the measurements basisof historical costs. If the asset decreases in value, the provision for impairment of assets should be made according torelevant regulations.
According to the historical cost measurement, the assets shall be measured as per the amount of cash or cash equivalentpaid at the time of purchase, or the fair value of consideration paid for the purchase of such assets. The liabilities shall bemeasured in accordance with the amount of funds or assets actually received when undertaking current obligations, or thecontract amount when undertaking the current obligations, or the amount of cash or cash equivalents required for payingback the debts in daily activities.
The fair value is a price received by the market participants from selling asset or transferring liability during orderlytransaction at the measurement date. No matter the fair value is observable or estimated by using valuation technique, themeasured and disclosed fair value in the financial statement shall be determined on this basis.
When measuring non-financial assets at fair value, the assets shall be measured considering the ability of marketparticipants to use the assets for optimal use to generate economic benefits, or to sell the assets to other market participantsto use the assets for optimal use to generate economic benefits.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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
st2021; and the Company's consolidated results ofoperations, the Company’s and consolidated changes in shareholders' equity, and the Company’s and consolidated cashflows for 2021.
2. Accounting Period
The Group has adopted the calendar year as its accounting year from January 1
st
to December 31
steach year.
3. Business Cycle
The business cycle refers to the period from purchase of assets used for processing to realization of cash or cash equivalents.The Group business cycle is usually 12 months.
4. Functional Currency
Renminbi (“RMB”) is the currency in the primary economic environments in which the Company and its domesticsubsidiaries are operated. The Company and its domestic subsidiaries take RMB as their functional currency. Overseassubsidiaries of the Company determine their functional currency on the basis of the primary economic environment inwhich it operates. For functional currency of overseas subsidiaries of the Company, see Note (V) 62. The Group adoptsRMB to prepare its financial statements.
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 goodwillA business combination not involving enterprises under common control is a business combination in which all of thecombining enterprises are not ultimately controlled by the same party or parties before and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurredor assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. If a business combinationnot under the common control is realized step by step through multiple transactions, the cost of the combination is the sumof the consideration paid on the purchase date and the fair value of the equity of the 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.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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.
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 ultimate
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
controlling party. Their operating results and cash flows from the beginning of the earliest reporting period are includedin the consolidated income statement and consolidated statement of cash flows, as appropriate.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on theuniform accounting policies and accounting periods set out by the Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests and presented as"minority equity" in the consolidated balance sheet. The portion of net profits or losses of subsidiaries for the periodattributable to minority interests is presented as "minority interests" in the consolidated income statement below the "netprofit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minorityshareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount are still allocatedagainst minority interests.
Acquisition of minority interests or disposal of interest in a subsidiary that does not result in the loss of control over thesubsidiary is accounted for as equity transactions. The carrying amounts of the total owners' equity attributable to ownerof the Company and minority equity are adjusted to reflect the changes in their relative interests in the subsidiary. Thedifference between the amount by which the minority interests are adjusted and the fair value of the consideration paid orreceived is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference,the excess is adjusted against retained earnings.
In the case that the equity of the acquiree is obtained through multiple deals step by step to finally form the businesscombination not under the common control, the business combination shall be handled differently based on whether it is"package deal": where it is package deal, the Company accounts each deal as a deal to obtain the control. If the deal is nota "package deal", a deal where the control is obtained on the acquisition date will be subject to accounting. The acquiree'sequity held before the acquisition date will be remeasured based on the fair value of the equity on the acquisition date andthe difference between the fair value and book value will be included in the profit or loss in the current period. If theacquiree's equity held before the acquisition date involves any changes in the other comprehensive income or in any otherowner's equity accounted by the equity method, such equity changes will be converted into the profit or loss in the currentperiod on the acquisition date.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 forthe period, except for exchange differences related to a specific-purpose borrowing denominated in foreign currency thatqualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 onconversion of financial statements of this foreign operation attributable to the owners' equity of the Company and presentedunder shareholders' equity, to profit or loss in the period in which the disposal occurs.
In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, but only adecrease in proportion of overseas business interests, the proportionate share of accumulated exchange differences arising
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
on 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.
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
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
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.? 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:
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
? 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 incomeThe 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, the
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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accumulated profit or loss charged to other comprehensive income will be reversed from other comprehensive income andcharged to retained earnings. During the period when such investment in equity instruments for non-trading purpose areheld by the Group, the right to receive dividends by the Group has been established, and economic benefits related todividends are likely to flow into the Group, and if the amount of dividends may be measured reliably, the dividend incomeis recognized and accounted in the profit and loss of the current period.
10.1.3 Financial asset at fair value through profit and loss
For financial asset at fair value through profit and loss, subsequent measurement will be calculated at fair value, the profitor loss arising from changes in fair value and the dividend and interest income relating to such financial asset will beaccounted in the profit and loss of the current period.
10.2 Impairment of Financial Assets
For financial assets measured at amortized cost, financial assets that are classified as financial asset at fair value throughother comprehensive income, contract assets, lease receivables, and financial guarantee contracts that do not meet theconditions for termination of recognition due to the transfer of financial assets or continue to be involved in financialliabilities formed by the transferred financial assets, the Group will handle impairment on the basis of expected credit lossand recognize loss provision.
The Group’s consideration of contract assets, notes receivable and accounts receivable that are generated by transactionsregulated by revenue standards and do not contain significant financing components or that do not consider financingcomponents in contracts that are not more than one year old, as well as those operating lease receivables formed fromtransactions that are defined by the Accounting Standards for Business Enterprises No. 21-Leasing, the loss reserve shallbe measured based on the amount of the expected credit loss during the entire duration.For other financial instruments, other than acquired or generated financial assets which have incurred credit impairmentalready, the Group will assess on each balance sheet date the changes in credit risk of the relevant financial instrumentssince initial recognition. If the credit risk of such financial asset has significantly increased after initial recognition, theGroup will calculate its loss provision based on the amount equivalent to the expected credit loss for the entire subsistingperiod. If the credit risk of such financial asset since initial recognition has not increased significantly, the Group willcalculate its loss provision according to the expected credit loss amount of such financial asset for the next 12 months.The amount of increase or reversal in the provision for credit loss, apart from financial assets classified as financial assetat fair value through other comprehensive income, is accounted in the profit and loss of the current period. For financialasset classified as measured at fair value through other comprehensive income, the Group will recognize its credit lossprovision in other comprehensive income and charged the impairment loss or gain to the profit and loss of the currentperiod, and will not decrease the book value of such financial asset presented in the balance sheet.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 according
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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to an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provision reversal amountwill be counted as impairment gain and booked into the profit and loss of the current period.
10.2.1 Significant increase in credit risk
The Group uses available and reasonable forward-looking information with justification, by comparing the default risk ofthe financial instrument at the balance sheet date with the default risk on the initial recognition date, to confirm whetherthe credit risk of the financial instrument has significantly increased after initial recognition. When using the financialinstrument impairment rules for loan commitment and financial guarantee contracts, the date when the Group becomes aparty of an irrevocable commitment is deemed as the initial recognition date.
The Group considers the following factors when assessing whether the credit risk has significantly increased:
(1) Whether a significant change has been caused to the internal price indicator due to changes in credit risk.
(2) Whether the external credit rating of financial instrument has actual or expected significant changes.
(3) Whether the actual or expected internal credit rating of the debtor has been downgraded.
(4) Whether adverse changes have occurred in the business, finance or economic conditions which are expected to causesignificant changes in the capability of the debtor to perform debt repayment obligations.
(5) Whether actual or expected significant changes have occurred in the operating results of the debtor.
(6) Whether significant adverse changes have occurred in the supervision, economic or technical environment in whichthe debtor operates.
(7) Whether significant changes have occurred in the value of security pledged for the debt or the quality of guarantee
or credit enhancement provided by third parties. Such changes are expected to reduce the debtor’s economicmotivation of repayment according to contractual term or influence the probability of default.
(8) Whether significant changes have occurred in the economic motivation which will lower the expectation of
repayment by the borrower according to the contractual term.
(9) Whether significant changes have occurred in the expected performance and repayment behavior of the debtor.
Whether or not the credit risks increase significantly after the foregoing assessments, if any contractual payment for anyfinancial instrument that overdue for over (including) 30 days, it indicates the credit risks of that financial instrument haveincreased significantly.
On the balance sheet date, if the Group determines that the financial instrument only carries low credit risks, then it assumesthat the credit risks of the financial instrument have not increased significantly since the initial recognition. If the risk ofdefault on financial instruments is low, the borrower is highly able to perform its contractual cash flow obligations in theshort term, and even if the economic situation and operating environment are adversely changed over a long period of timebut not necessarily reducing the borrower’s performance of its contractual cash obligations, the financial instrument isconsidered as having a lower credit risk.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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10.2.2 Financial assets which have incurred credit impairment alreadyWhen 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, other receivables, contract assets, lease receivables and long-term receivables, that areindividually significant and the debtor has serious financial difficulties, are determined on the basis of individual for itscredit loss. For the remaining accounts receivable, other receivables, contract assets, lease receivables and long-termreceivables, an impairment matrix is used to determine the credit losses of relevant financial instruments on a portfoliobasis. The Group determines credit losses by assessing the probability of breach and loss given default based on the creditratings on a portfolio basis of notes receivable and receivables. On the basis of common risk characteristics, the Groupplaces financial instruments in different groups. The common credit risk characteristics adopted by the Group include:
financial instrument type, credit risk rating, initial recognition date, remaining contract period, industry of debtor,geographic location of debtor, and etc.
The Group confirms the expected credit loss of the relevant financial instrument according to the following method:
? In respect of a financial asset, the credit loss is the present value of the difference between the contractual cashflow that the group should receive and the cash flow that it expects to receive.? In respect of lease receivables, the credit loss is the present value of the difference between the contractual cash
flow that the group should receive and the cash flow that it expects to receive.? In respect of a financial guarantee 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 thecompensation made to the contract holder due to the occurrence of credit loss and the amount expected to bereceived by the Group from such contract holder, debtor or any other parties.? In respect of financial assets with credit impairment on the balance sheet date but they are not acquired or
generated financial assets with credit impairment, the credit loss represents the difference between the balance
of the book value of such financial asset and the present value of the estimated future cash flows discounted by
Notes to Financial StatementsFor the reporting period from January 1
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the original effective interest rate.
The factors reflected by the method used for calculating expected credit loss of financial instruments by the Group include:
an unbiased weighted average amount determined by assessing a series of probable outcomes; time value of currency;reasonable and justifiable information relating to past events, prevailing conditions and forecast of future economicconditions obtained on the balance sheet date without incurring unnecessary additional cost or effort.
10.2.4 Write-off on financial asset
When the Group ceases to have reasonable expectation on the possible collection of all or part of the contractual cashflows from the financial asset, the balance of book value of such financial asset will be written off directly. Such a write-off constitutes a de-recognition of the relevant financial asset.
10.3 Transfer of financial asset
A financial asset that fulfills one of the following conditions will be de-recognized: (1) termination of contractual rightsto receive cash flows from the financial asset; (2) upon transfer of such financial asset and transfer of substantially all therisks and rewards in respect of the ownership of such financial asset to the transferee; (3) upon transfer of such financialasset, though the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownershipof such financial asset, yet it has not retained the control over such financial asset.
If the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownership of suchfinancial asset, and has retained the control over such financial asset, then such transferred financial asset will continue tobe recognized, and the relevant liabilities will continue to be recognized, according to the level of the Group’s continuousinvolvement in such transferred financial asset. The relevant liabilities will be measured by the Group according to thefollowing method:
? If the transferred financial asset is measured by amortized cost, the book value of the relevant liabilities is equivalentto the book value of the transferred asset of continuous involvement less the amortized cost of the rights retained by theGroup (if the Group has retained the relevant rights due to transfer of the financial asset) and plus the amortized cost ofthe obligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of thefinancial asset), and the relevant liabilities are not designated as financial liabilities at fair value through profit and loss ofthe current period.? If the transferred financial asset is measured by fair value, the book value of the relevant liabilities is equivalent tothe book value of the transferred asset of continuous involvement less the fair value of the rights retained by the Group (ifthe Group has retained the relevant rights due to transfer of the financial asset) and plus the fair value of the obligationsundertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of the financial asset), andthe fair value of the rights and obligations shall be measured at the fair value on a separate basis.For full transfer, which satisfies the conditions of derecognition, of the financial assets, the difference between the sum ofthe book value of the transferred financial assets as at the date of derecognition and the consideration received from such
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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transfer 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 instrumentsPursuant 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 periodFinancial 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.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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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 guarantee
contract and derivatives designated as effective hedging instruments.
Financial liabilities can be designated, upon initial recognition, by the Group as financial liabilities at fair value throughprofit and loss of the current period, provided that they have satisfied one of the following conditions: (1) such designationcan eliminate or substantially reduce accounting mismatches; (2) managing and evaluating the performance of portfoliosof financial liabilities, or portfolios of financial assets and financial liabilities, on fair value basis and reporting internallyto key personnel of the Group on this basis in accordance with the risk management or investment strategies specified informal written documents of the Group; (3) hybrid contracts, with embedded derivatives, have satisfied the conditions.Financial liabilities held for trading purpose use fair value for subsequent measurement, gains or losses arise from changesin fair value and the dividends or interest expenses relating to such financial liabilities are accounted in the profit and lossof the current period.
For financial liabilities designated at fair value through profit and loss of the current period, changes in fair value of suchfinancial liabilities caused by changes in the Group’s own credit risks shall be included in other comprehensive income,and other changes in fair value shall be included in the profit and loss of the current period. On derecognition of suchfinancial liabilities, the accumulated amount of changes in fair value as a result of changes in our own credit risk includedpreviously in other comprehensive income shall be transferred to retained earnings. Dividends or interest expenses relatingto such financial liabilities shall be included in the profit and loss of the current period. If handling the effect of changesin credit risk of such financial liabilities according to the aforesaid method would cause or magnify the accountingmismatches in profit and loss, the Group will include all gains or losses of those financial liabilities (including the amountaffected by changes in their own credit risk) in the profit and losses of the current period.
10.4.1.2 Other financial liabilities
Excluding transfer of financial assets not complying with derecognition conditions, or financial liabilities as a result 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 of
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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financial liabilities measured at amortized cost for subsequent measurement, but has caused changes in the contractualcash flows, then the Group should recalculate the book value of such financial liabilities, and the relevant gains or lossesshall be accounted in the profit and loss of the current period. The recalculated book value of such financial liabilities willbe determined by the Group by discounting the cash flows from the renegotiated or revised contract with the original effectinterest rate of the financial liabilities. All costs or expenses incurred in the revision or renegotiation of the contract willbe reflected in the adjusted book value of financial liabilities after such revision, and will be amortized during theremaining period of the revised financial liabilities.
10.4.1.2.1 Financial guarantee contract
Financial guarantee contract refers to a contract that requests the issuer to provide a specific amount of compensation tothe contract holder who suffers losses when a specific debtor fails to repay the debt on due date according to the initial orrevised terms of the debt instrument. In respect of financial liabilities which are not designated at fair value through profitand loss of the current period, or in respect of financial guarantee contract for financial liabilities arising from transfer offinancial assets not complying with derecognition conditions or continuous involvement in the transferred financial assets,the measurement after initial recognition will be based on the amount of provision for losses, or the balance of initialrecognized amount after deducting the accumulated amortized amount confirmed in accordance with the relevantprovisions of the Revenue Standard, whichever the higher.
10.4.2 Derecognition of financial liabilities
When the existing obligations of a financial liability have been wholly or partially discharged, such financial liability orsuch part of it will be derecognized. When the Group (as borrower) and the lender enter into an agreement to undertakenew financial liabilities for replacing the original financial liabilities, if substantive difference exists in the contractualterms between the new financial liabilities and the original financial liabilities, the Group should derecognize the originalfinancial liabilities while at the same time recognizes the new financial liabilities.When a financial liability is wholly or partially derecognized, the difference between the book value of the derecognizedportion and the consideration paid (including non-cash asset transferred out or new financial liabilities undertaken) willbe accounted in the profit and loss of the current period.
10.4.3 Equity instrument
Equity instrument refers to a contract which can prove the ownership of remainder interest in assets after deducting allliabilities of the Group. The Group issues (including refinances), repurchases, sells or cancels equity instruments fortreatment of changes in equity. The Group will not recognize changes in the fair value of equity instruments. Tradingexpenses relating to equity transactions will be deducted from equity.The Group’s distribution to holder of equity instrument is treated as profit distribution, the share dividends paid out willnot affect the total equity of shareholders.
Notes to Financial StatementsFor the reporting period from January 1
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2021 to December 31
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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.
(1) The economic characteristics and risks of the embedded derivative are not closely connected to the economic
characteristics and risks of the master contract.
(2) A separate instrument containing the same terms as the embedded derivative fits the definition of a derivative.
(3) The hybrid contract is not measured at fair value and changes in fair value are accounted through profit and loss ofthe current period.
If an embedded derivative is split from the hybrid contract, the accounting treatment adopted by the Group for 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 is
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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explained in Note (III), 10.1, 10.2 and 10.3.
12. Inventories
12.1 Categories of inventories
The Group's inventory mainly includes finished products, products in process and raw materials held in daily activities.Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and otherexpenditures incurred in bringing the inventories to their present location and condition.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the moving weighted average method.
12.3 Basis for determining net realizable value of inventories
The inventory is measured according to cost and net realizable value, whichever is lower, on the date of balance sheet.When the net realizable value is lower than cost, withdraw inventory impairment reserves.
The net realizable value refers to the amount derived by deducting the potential cost, estimated selling expense and relativetaxes to the completion date from the estimated sales price of inventory in daily activities. When determining net realizablevalue of inventories, take the obtained conclusive evidence as basis and consider the purposes of holding inventories andinfluence of events after the balance sheet date.
For the low-price stocks in large quantity, provision for the inventory price drops will be made based on the categories ofstocks; for the stocks that are related to the products manufactured and sold in the same region, that have identical orsimilar ultimate use or purpose and that are hard to separate from other items when being measured, they are consolidatedfor provision for the inventory price drops; for other stocks, the provision for the inventory price drops will be made basedon the cost of a single stock item in excess of the net realizable value.
After provision for inventory depreciation reserves is made, if the factors resulting in the write-down of inventoryimpairment have disappeared and causing the net realizable value higher than its book value, such inventory impairmentprovision are recovered and reversed, and the reversed amount recorded in profits and losses of the current period.
12.4 Inventory count system
The perpetual inventory system is maintained for stock system.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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12.5 Amortization method for low cost and short-lived consumable items and packaging materialsPackaging materials and low cost and short-lived consumable items are amortized using the immediate write-off method.
13. Contract Assets
13.1 Method and standard for determination of contract assets
Contract assets refer to the Group’s right to consideration in exchange for goods or services that the Group has transferredto a customer when that right is conditioned on something other than the passage of time. The Group’s unconditional (i.e.,depending on the passage of time only) right to receive consideration from the customer is separately presented asreceivables.
13.2 Methods for determining and accounting of expected credit loss of contract assetsFor 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.
Notes to Financial StatementsFor the reporting period from January 1
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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.
Long-term equity investment obtained by other means other than long-term equity investment formed by businesscombination shall be initially measured at cost.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
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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 theinvested unit to be distributed; For other changes in the owners' equity of the invested unit other than net profits and losses,other comprehensive incomes and the profit distribution, the book value of long-term equity investment shall be adjustedand be included into the capital reserves. The Group shall, on the ground of the fair value of all identifiable assets of theinvested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the investedentity after it adjusts the net profits of the invested entity. If the accounting policies and accounting periods adopted by theinvested unit are different from those adopted by the Group, the adjustment shall be made for the financial statements ofthe invested unit in accordance with the accounting policies and accounting periods of the Group to recognize theinvestment income and other comprehensive incomes. For the transaction incurred between the group and associated
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
enterprises 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.
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:
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Class | 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 |
Means of transportation | 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.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 borrowed
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
under 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 | - |
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.
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 expenditurein 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, intangible assets with a finite useful life and assets related to contract costs may be impaired.If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. Intangibleassets with indefinite useful life and intangible assets not yet available for use are tested for impairment annually,irrespective of whether there is 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.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
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 expectedto 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 relevant goods or services.
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.
Except for asset impairment losses related to contract costs, once the impairment loss of such assets is recognized, it cannotbe reversed in any subsequent period. After the provision for impairment for the asset related to contract costs is made, ifthe difference between the above two items is higher than the carrying amount of the asset due to changes in the factorsof impairment in previous periods, the original provision for impairment of the asset is reversed and included in the currentprofit or loss, but the carrying amount of the asset after the reversal shall not exceed the carrying amount of the asset onthe reversal date assuming no provision for impairment is made.
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.
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.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 oremployee lay-off suggestion; or 2)when the Group determines costs or expenses in relation with the restructuring of thepaid termination benefits.
24. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency such as products qualityassurance, etc. And it is probable that an outflow of economic benefits will be required to settle the obligation, and theamount of the obligation can be measured reliably.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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.
A share-based payment is a transaction which the Group grants equity instruments, or incurs liabilities for amounts thatare determined based on the price of equity instruments, in return for services rendered by employees. The Group's share-based payments are equity-settled share-based payments.
25.1 Equity-settled share-based payments
Grants to employees are equity-settled share-based payments.
Equity-settled share-based payments in exchange for services rendered by employees are measured at the fair value of theequity instruments granted to employees at the grant date. Such amount is recognized as related costs or expenses on astraight-line basis over the vesting period, with a corresponding increase in capital reserve.
At each balance sheet date during the vesting period, the Group makes the best estimate according to the subsequent latestinformation of change in the number of employees who are granted with options that may vest, etc. and revises the numberof equity instruments expected to vest. The effect of the above estimate is recognized as related costs or expenses, with acorresponding adjustment to capital reserve.
25.2. Accounting treatment related to implementation, modification and termination of share-based payment arrangementIn 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 terms
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
or 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 considerationto which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excludingamounts collected on behalf of third parties and amounts that the Group expects to refund to the customer.
Revenue is recognized over time by reference to the progress towards complete satisfaction of the relevant performanceobligation if one of the following criteria is met: (1) the customer simultaneously receives and consumes the benefitsprovided by the Group’s performance as the Group performs; (2) the Group’s performance creates or enhances an assetthat the customer controls as the Group performs; or (3) the Group’s performance does not create an asset with an
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.Otherwise, revenue is recognized at a point in time when the customer obtains control of the distinct good or service.
The Group adopts the output method to determine the progress of performance, that is, the progress of contractperformance is determined according to the value of the goods or services that have been transferred to the customer inthe view of the customer. When the performance progress cannot be reasonably determined, and the costs incurred can beexpected to be compensated, the Group recognizes revenue based on the amount of costs incurred until the performanceprogress can be reasonably determined.
If the contract contains two or more performance obligations, the Group allocates the transaction price to each singleperformance obligation on the contract start date in accordance with the relative proportion of the individual selling priceof the goods or services promised by each single performance obligation. However, if there is strong evidence that thecontract discount or variable consideration is only related to one or more (but not all) performance obligations in thecontract, the Group allocates the contract discount or variable consideration to the relevant one or more performancesobligation. Individual selling price refers to the price at which the Group sells goods or services to customers separately.Where the individual selling price cannot be directly observed, the Group comprehensively considers all relevantinformation that can be reasonably obtained, and uses the observable input value to the maximum to estimate the individualselling price.
If there is variable consideration in the contract, the Group determines the best estimate of variable consideration basedon the expected value or the most likely amount. The transaction price including variable consideration shall not exceedthe amount that is likely to cause no significant reversal of accumulated recognized revenue when the relevant 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 inaccordance with expected refund amounts due to sales returns. The remaining amount, subsequent to deduction of expectedcosts from collecting the goods (including the decrease in value of the returned goods), is recognized as an asset inaccordance with the carrying amount during the expected transfer of returned goods after deducting the costs of the abovenet assets carried forward.
For sales with quality assurance clauses, if the quality assurance provides a separate service beyond the assurance to thecustomer that the goods or services sold meet established standards, the quality assurance constitutes a single performanceobligation. Otherwise, the Group conducts accounting for quality assurance responsibilities in accordance with theAccounting Standards for Business Enterprises No. 13-Contingencies.
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
The additional purchase option of customers includes customer reward incentives. With respect to the additional purchaseoption with material rights provided to customers, the Group regards it as a single performance obligation, and recognizesrelevant revenue upon obtaining the control over relevant goods or services by the customers who exercise the purchaseoption in future or upon lapse of such option. If a stand-alone selling price of the additional purchase option of customersis not directly observable, the Group shall consider all relevant information including the difference in discount obtainedwith and without the exercise of such option by customers and the possibility of exercising such option by customersduring estimation.
If there is a significant financing component in the contract, the Group determines the transaction price based on theamount payable in cash when the customer assumes control of the goods or services. The difference between thetransaction price and the contract consideration is amortized using the effective interest rate method during the contractperiod. On the contract commencement date, the Group does not consider the significant financing components in thecontract if the interval between the customer obtaining control of the goods or services and the price being paid by thecustomer is not more than one year.
The Group judges whether the Group’s identity is the principal or agent when engaging in transactions based on whetherit has control over the goods or services before transferring the goods or services to customers. If the Group is able tocontrol the goods or services before transferring them to customers, the Group is the principal responsible person, andrevenue is recognized based on the total amount of consideration received or receivable; otherwise, the Group is an agentand recognizes revenue based on the amount of commissions or fees which the Group is expected to be entitled to charge.The amount of commissions or fees is determined based on the total amount of consideration received or receivable net ofthe amount payable to other parties.
When the Group collects amounts of sold goods or services in advance from the customer, the Group will firstly recognizethe amounts as a liability and then transfer to revenue until satisfying relevant performance obligations. When the advancesfrom customers is non-refundable and the customer may give up all or part of contract right, and the Group is expected tobe entitled to obtain amounts associated with contract rights given up by the customer, the above amounts shall beproportionally recognized as revenue in accordance with the model of exercising contract rights by the customer; otherwise,the Group will transfer the relevant balance of the above liability to revenue only when the probability is extremely lowfor the customer to satisfy remaining performance obligations.
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.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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.
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 assetsThe 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.
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
28.2 Judgment basis and accountant treatment of government subsidy related to incomeThe Group receives government subsidies including subsidies for Core-electronics, High-end-general-Chips, andInfrastructural-software projects, subsidies for Value-Added-Tax rebate (VAT rebate), subsidies for special projects, taxrefunds, and Value-Added-Tax deductions, etc. which are used to compensate the group-related costs or losses, andtherefore are categorized as government subsidy related to income.
For a government grant related to income, such as subsidies for Core-electronics, High-end-general-Chips, andInfrastructural-software projects, if the subsidy is a compensation for related expenses or losses to be incurred insubsequent periods, it is recognized as deferred income, and recognized in profit or loss over the periods in which therelated costs or losses are recognized; If the subsidy, such as VAT Rebate, is a compensation for related expenses or lossesalready incurred, it is recognized immediately in profit or loss for the period.
For government subsidies related to the Group’s daily operations shall be booked into other income; for those not relatedto the Group’s daily operations, shall be booked into non-operating income/expense.
For the policy-backed preferential subsidized loan, if the Ministry of Finance will appropriate the subsidy amount to thelending bank, who will grant the loan to the Group at the policy-backed preferential interest rate, the actually receivedloan amount will be the entry value of the loan and the loan-related expenses will be calculated based on the loan principaland policy-backed preferential interest rate.
29. Deferred Tax Assets / Deferred Tax Liabilities
The income tax expenses include current income tax and deferred income tax.
29.1. Current Income Tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at theamount expected to be paid (or recovered) according to the requirements of tax laws.
29.2 Deferred Tax Assets and Deferred Tax Liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between thenil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be determinedaccording to tax laws, deferred tax assets and liabilities are recognized through the balance sheet liability method.
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 thetemporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporarydifferences associated with such investments are only recognized to the extent that it is probable that there will be taxableprofits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeablefuture.
On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured at the applicabletax rates in the period in which the related assets are recovered or the related liabilities are recovered in accordance withthe tax laws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise fromtransactions or events that are directly recognized in other comprehensive income or in shareholders' equity, in which casethey are recognized in other comprehensive income or in shareholders' equity; and when they arise from businesscombinations, in which case they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probablethat sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Suchreduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.
29.3 Offset of Income Tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assetsand settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 whethera 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.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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.
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 remeasures
the 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 Groupremeasures 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;
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
? 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.
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.
30.2 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
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:
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
? 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:
? 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
30.2.4.1 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 of
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Accounting 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 buyer-lessor.
30.2.4.2 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 inventoriesExcept 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 the
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
impairment circumstances on defective, obsoleted or slow-moving inventory if any; in addition, the Group's managementwill regularly review the impairment circumstance of inventory with long storage time according to the inventory aginglist. The review procedure includes the comparison between book value of defective, obsoleted or slow-moving inventoriesand inventory with long storage time and its corresponding net realizable value in order to determine whether to withdrawprovisions on the defective, obsoleted or slow-moving inventory and inventory with long storage time. Based on the aboveprocedure, the Group's management deems that the full provision amounts have been withdrawn for inventory.
Impairment of accounts receivableExcept for accounts receivable whose credit losses are determined on the basis of individual basis, the Group adopts animpairment matrix to determine its expected credit loss provision. Based on the historical loss rate, the Group determinesthe proportion of corresponding loss reserves for various types of accounts receivable with similar risk characteristics. Theimpairment matrix is determined based on the historical overdue ratio and default of the Group, taking into accountreasonable and well-founded industry forward-looking information. As of December 31
st
2021, the Group has reassessedthe historically observable overdue ratio and considered changes in forward-looking information. The amount of theprovision for expected credit losses will change as the estimation of the Group. The details on the provision for expectedcredit losses of the accounts receivable of the Group are given in Note (V). 4.
Useful life and predicted net residual value of fixed assetThe Group's estimation of fixed assets useful life is based on the historical experience of actual usable term of fixed assetswith similar properties and functions, the estimation of predicted net residual value is the amount obtained currently bythe Group from the assets after deducting the anticipated disposal expense based on the anticipated status assuming theconditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. The Group shallconduct the review on the predicted service life and predicted net residual value of fixed assets at least annually. For thecurrent reporting period, the Group's management did not see signs either indicating a shortened or extended useful life ofthe Group’s fixed asset or indicating a change in predicted net residual value.
Accrued liabilities of product quality warrantyAccrued 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.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Deferred tax assets and deferred tax liabilitiesDeferred income tax assets and deferred income tax liabilities are measured at the applicable income tax rate during theperiod when the relevant asset is expected to be recovered or the relevant debt is expected to be paid off. The expectedapplicable income tax rate is determined according to the relevant current tax regulations and the actual situation of theGroup. If the estimated income tax rate is different from the original estimate, the management of the Group will adjust it.
The realization of deferred income tax assets mainly depends on the actual future profits and the effective tax rate oftemporary difference in the future applicable years. If the actual profit in the future is less than the estimation, or actualtax rate is lower than the estimation, then the confirmed deferred income tax assets will be reversed and confirmed in theincome statement during the corresponding period. If the actual profit in the future is more than the estimation, or actualtax rate is higher than the estimation, then the corresponding deferred income tax assets might be adjusted and confirmedin the income statement during the corresponding period.
Goodwill impairmentWhen performing impairment test on goodwill, the predicted present value of future cash flows of relevant asset group orasset group portfolio included the goodwill need to be calculated, the future cash flows of relevant asset group or assetgroup portfolio need to be estimated, and the proper pretax rate that fairly reflects the current market time value of moneyand specific asset risk need to be determined. When the future actual result is different from the original estimation, thegoodwill impairment loss will alter.
Fair value measurement and valuation processHeld-for-trading financial assets, receivables for financing, and other non-current financial assets of the Group aremeasured at fair value in the financial statement. When valuating the fair value of these assets, the Group preferably usesobtainable and observable market data. If no observable data is available, the Group will organize an internal evaluationpanel or hire qualified third-party valuers to conduct valuation. The Finance Department and evaluation panel of the Groupwill work closely with the hired valuers to determine appropriate valuation techniques and the input values of the valuationmodel. The valuation techniques and input values used for valuating the fair value of various assets are disclosed in Note(IX).
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
32. Significant Alternation in Accounting Policy and Accounting Estimations
32.1 Significant changes in accounting policies
Changes in accounting policies and reasons | Approval Procedures | Notes |
New Lease Standards Since January 1st 2021 (the “First Adoption Date”), the Company has implemented the Accounting Standards for Business Enterprises No. 21 – Leases revised by the Ministry of Finance in 2018 (hereinafter referred to as the “New Lease Standards,” and the Lease Standards before the revision referred to as the “Original Lease Standards”). The New Lease Standards refine the definition of a lease, and add content on the identification, splitting and merger of leases; eliminate the classification of leases by lessees as an operating lease or financing lease, and require the recognition of right-to-use assets and lease liabilities of all leases on the starting date of the lease term (excluding short-term leases and leases of low-value assets), with depreciation and interest expenses recognized separately; and improve the subsequent measurement of leases by lessees, add an accounting method in the instance of option revaluation and lease modification, and increase related disclosure requirements. In addition, they also widen the scope of disclosure of lessors. Please refer to Note (III) 30 for the revised accounting policies of the Company on the recognition and measurement of leases as lessee and lessor. For contracts existing before the date of initial application, the Group chose not to reassess whether it is a lease or contains a lease on the date of initial execution. The Group as the lessee The Group adjusts the amount of retained earnings and the amount of relevant items in the financial statements on the initial application date according to the cumulative impact of the initial application of the New Lease Standards, in which the information of the comparable is not be adjusted. For operating lease other than low-value lease prior to the date of initial adoption, the Group elects to apply one or more of the following simplified approach depending on each lease: ? Any lease that will be completed within 12 months of the date of initial execution shall be treated as short-term lease; ? The same discount rate shall be used for leases with similar characteristics when measuring the lease liability; ? The measurement of right-of-use assets does not include initial direct costs; ? In case of any extension option or termination option, the Group may determine the lease term according to the actual exercise of the option before the first adoption date and other latest conditions; ? If a lease is modified occurs before the date of initial adoption, the Group will account for it according to the final arrangement of the lease modification. On the date of initial adoption, the Group makes the following adjustments as a result of the implementation of the New Lease Standards: ? For finance lease prior to the date of initial adoption, the Group will respectively measure the right-of-use asset and lease liability based on the original carrying values of the finance lease assets and finance lease payables on the date of initial adoption. ? For operating lease prior to the date of initial adoption, the Group shall measure the lease liability on the date of initial adoption based on the current value of the remaining lease payments discounted according to the lessee's incremental | Such alternations in accounting policy were approved by the Group at board of director general meeting. | None |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
32.2 The impact of the implementation of the New Lease Standards on the relevant items in the consolidated balancesheet at the beginning of the period is shown below:
Unit: RMB
Item | December 31st 2020 | Reclassified (Note) | January 1st 2021 |
Current Assets: | |||
Prepayments | 296,334,689.86 | (2,952,118.77) | 293,382,571.09 |
Other receivables | 519,143,350.82 | (117,288.00) | 519,026,062.82 |
Other current assets | 497,914,506.64 | (477,453.85) | 497,437,052.79 |
Non-current Assets: | |||
Fixed assets | 5,876,007,536.60 | (45,330,337.75) | 5,830,677,198.85 |
Right-of-use assets | - | 392,997,553.30 | 392,997,553.30 |
Current Liabilities: | |||
Non-current liabilities due within one year | 3,507,680,339.78 | 137,118,074.50 | 3,644,798,414.28 |
Non-current Liabilities: | |||
Long-term payables | 39,595,459.35 | (23,052,993.27) | 16,542,466.08 |
Lease Liabilities | - | 230,055,273.70 | 230,055,273.70 |
Note: Due to the implementation of the New Lease Standards, the Group reclassifies prepaid rents totaling RMB3,546,860.62, which were previously included in prepayments, other receivables and other current assets to right-of-useassets; reclassifies financial lease assets of RMB 45,330,337.75 previously included in fixed assets to right-of-use assets;reclassifies finance lease payments of RMB 23,052,993.27 previously included in long-term payables and the finance leasepayments of RMB 19,302,613.39 previously included in non-current liabilities which due within one year to leaseliabilities (including those due within one year). For operating leases prior to the date of initial adoption, the Group adoptsthe new lease standard to recognize right-of-use assets of RMB 344,120,354.93 and lease liabilities (including those duewithin one year) of RMB 344,120,354.93. On January 1
st
2021, the Group recognized a total of RMB 230,055,273.70 oflease liabilities, RMB 156,420,687.89 of lease liabilities due within one year and RMB 392,997,553.30 of right-of-useassets.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
The impact of the implementation of the new lease standards on the relevant items of the parent company's balancesheet at the beginning of the period is set out below:
Unit: RMB
Item | December 31st 2020 | Reclassified (Note) | January 1st 2021 |
Non-current Assets: | |||
Right-of-use assets | - | 66,446,154.01 | 66,446,154.01 |
Current Liabilities: | |||
Non-current liabilities due within one year | 3,219,794,958.37 | 29,999,165.05 | 3,249,794,123.42 |
Non-current Liabilities: | |||
Lease Liabilities | - | 36,446,988.96 | 36,446,988.96 |
Note: Due to the implementation of the new lease standards, the Company recognizes right-of-use assets of RMB66,446,154.01 and lease liabilities (including those due within one year) of RMB 66,446,154.01.
Information on the difference between the Group's lease liability recognized as of January 1
st2021 and thesignificant operating lease commitments disclosed in the financial statements of the fiscal year of 2020 is as follows:
Unit: RMB
Item | January 1st 2021 |
I. Operating lease commitments as of December 31st 2020 | 408,812,072.84 |
Lease liabilities discounted at the incremental borrowing rate on the date of initial adoption | 377,897,839.67 |
Less: Recognition of exemptions - short-term leases and leases of low-value assets | 33,777,484.74 |
Lease liabilities recognized in connection with the original operating lease upon implementation of the new lease standards | 344,120,354.93 |
Add: Finance lease payables as of December 31st 2020 (including due within one year) | 42,355,606.66 |
II. Lease liabilities as of January 1st 2021 | 386,475,961.59 |
Including: Non-current liabilities due within one year | 156,420,687.89 |
Lease liabilities | 230,055,273.70 |
The components of the carrying value of right-of-use assets as of January 1
st
2021 are as follows:
Unit: RMB
Item | January 1st 2021 |
Right-of-use assets: | |
Right-of-use assets recognized under operating leases prior to the date of initial adoption | 344,120,354.93 |
Reclassified prepaid rent | 3,546,860.62 |
Finance leased assets recognized as fixed assets under the Original Lease Standards | 45,330,337.75 |
Total | 392,997,553.30 |
On January 1
st
2021, right-of-use assets are disclosed by category as follows:
Unit: RMB
Item | January 1st 2021 |
Building and construction | 333,243,923.96 |
General-purpose equipment (Note) | 135,811.98 |
Special-purpose equipment (Note) | 45,194,525.77 |
Transportation vehicles | 14,423,291.59 |
Total | 392,997,553.30 |
Note: The Group recognized the general-purpose equipment and special-purpose equipment that were classified as
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
financial leases under the original lease standards which were still leased on January 1
st2021 as right-of-use assets, withbook values of RMB 135,811.98 and RMB 45,194,525.77, respectively.
32.3 The impact of the implementation of Interpretation No. 14 on the relevant items in the consolidated balance sheet atthe beginning of the year is shown below:
Unit: RMB
Item | December 31st 2020 | Adjustments | January 1st 2021 |
Current Assets: | |||
Accounts receivable | 21,979,380,716.86 | 76,687,200.93 | 22,056,067,917.79 |
Contract assets | 245,754,510.98 | 73,650,033.12 | 319,404,544.10 |
Non-current assets due within one year | 1,001,208,813.83 | (150,337,234.05) | 850,871,579.78 |
Non-current Assets: | |||
Long-term receivables | 2,105,570,004.53 | (1,619,823,514.21) | 485,746,490.32 |
Intangible assets | 1,251,317,923.69 | 70,649,800.00 | 1,321,967,723.69 |
Other non-current assets | 721,511,156.08 | 1,549,173,714.21 | 2,270,684,870.29 |
Note: Due to the implementation of Interpretation No. 14, on January 1
st2021, the Group reclassifies RMB1,619,823,514.21 originally included in long-term receivables and RMB 150,337,234.05 originally included in non-current assets due within one year to accounts receivable of RMB 76,687,200.93, contract assets of RMB 73,650,033.12and other non-current assets of RMB 1,549,173,714.21. The difference between the amount of construction revenuerecognized for the relevant PPP project assets and the right to receive a determinable amount of cash is recognized asintangible assets of RMB 70,649,800.00.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 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
th
2020, the Company was identified as the high-tech enterprise with avalid term of 3 years, from 2020 to 2022.
In accordance with the Notice on Printing and Distributing the List of Key Software Enterprises and IC DesignEnterprises in the National Planning Layout for 2013-2014 (Fa Gai Gao Ji [2013] No. 2458), the Company wasrecognized as a national key software enterprise in 2013. According to the Announcement on the Enterprise IncomeTax Policies for Promoting the High-quality Development of Integrated Circuit Industry and Software Industry(Ministry of Finance, State Administration of Taxation, National Development and Reform Commission, Ministry ofIndustry and Information Technology Announcement [2020] No. 45), the Company was approved by the taxauthorities in May 2021 to pay the 2020 annual corporate income tax at the rate of 10%. As of the approval date ofthis report, the Company’s preferential income tax in 2021 has not been verified and approved. Therefore, theCompany’s enterprise income tax in 2021 is still calculated and paid at the rate of 15% (2020: 15%).
(2) In accordance with Finance and Taxation [2011] No. 58 Document of Ministry of Finance, State Administration of
Taxation and General Administration of Customs, the wholly-owned subsidiaries, Chongqing Hikvision TechnologyCo., 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), Chongqing Technology and Chongqing System will still enjoy thepreferential policies for the Western Development from 2021 to 2030. Therefore, the current enterprise income tax iscalculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2020:15%).
(3) In accordance with the Replies on Publishing the List of First Batch of identified High-tech Enterprises of Zhejiang
Province in 2018 (GuoKeHuoZi [2019] No. 70) issued by the Leading Group Office of Zhejiang High-tech EnterpriseIdentification Management Work on February 20
th2019, the Company’s joint venture subsidiary, Hangzhou FuyangBaotai Security Technology Service Co., Ltd. (hereinafter referred to as "Fuyang Baotai"), was recognized as a high-tech enterprise and was valid for 3 years from 2018 to 2020. According to the Recording List of the First Batch ofidentified 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 is still identified as a high-techenterprise, and the validity period of the identification is 3 years, from 2021 to 2023. Therefore, the enterprise incometax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2020:15%).
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
(4) In accordance with the Replies on Publishing identified High-tech Enterprises of Zhejiang Province in 2019(GuoKeHuoZi [2020] No. 32) issued by the leading group office of Zhejiang high-tech enterprise identificationmanagement work on January 20
th2020, the Company’s wholly-owned subsidiary, Hangzhou Hikvision SystemTechnology Co., Ltd. (hereinafter referred to as "Hangzhou System") and the Company’s joint venture subsidiaryHangzhou Kuangxin Technology Co., Ltd. (hereinafter referred to as "Hangzhou Kuangxin") , was recognized as ahigh-tech enterprise and was valid for 3 years from 2019 to 2021. Therefore, the enterprise income tax is calculatedand paid on the basis of a reduced tax rate of 15% in the current reporting period (2020:15%).
(5) In accordance with the Notice on Publishing the List of Third Batch of Proposed Identified High-tech Enterprises of
Shanghai in 2020 issued by Shanghai High-tech Enterprise Identification Office on November 20
th2020, theCompany’s wholly-owned subsidiary, Shanghai Goldway Intelligent Transportation System Co., Ltd. (hereinafterreferred to as "Shanghai Goldway") was identified as the high-tech enterprise with a valid term of 3 years, from 2020to 2022. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in thecurrent reporting period (2020:15%).
(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
th2020, the Company’s joint-venture subsidiary, Hangzhou HikrobotTechnology Co., Ltd. (hereinafter referred to as "Hangzhou Robotic Technology") were identified as the high-techenterprises with a valid term of 3 years, from 2020 to 2022. Therefore, the enterprise income tax is calculated and paidon the basis of a reduced tax rate of 15% in the current reporting period (2020:15%).
(7) 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. 32) issued by the Leading Group Office of National High-tech EnterpriseIdentification Management on January 20
th2020, the Company’s joint-venture subsidiary, Hangzhou HikmicroSensing Technology Co., Ltd. (hereinafter referred to as "Hangzhou Hikmicro Sensing") were identified as the high-tech enterprises with a valid term of 3 years, from 2019 to 2021.
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), Hangzhou Hikmicro Sensing is anintegrated circuit design enterprise established before December 31
st2017. The qualified enterprise will be exemptedfrom corporate income tax for the first year to the second year from the profitable year, and levied half of the corporateincome tax at a statutory tax rate of 25% from the third year to the fifth year. The year of 2021 is the first year ofHangzhou Hikmicro Sensing making profits and is exempt from enterprise income tax.
(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 joint venture subsidiaries, Hangzhou EZVIZ Software Co., Ltd. (hereinafter referred to as"EZVIZ Software") and Hangzhou Microimage Software Co., Ltd. (hereinafter referred to as "Hangzhou MicroimageSoftware"), are qualified software companies and are entitled to exemption from enterprise income tax in 2021 (2020:
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 242022, the Company’s joint venture subsidiaries Hangzhou Hikstorage Technology Co., Ltd. (hereinafter referred as
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
"Hangzhou Hikstorage") is identified as a high-tech enterprise with a validity period of 3 years, 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 (2020: 25%).
Note 2: In accordance with the requirements of the Notice on Software Product Value-added Tax Policy (Cai Shui [2011]No. 100) promulgated by the Ministry of Finance and the State Administration of Taxation, as for self-developed softwareproducts sales of the Company, Hangzhou System, the Company’s joint-venture subsidiaries such as Hangzhou HikrobotTechnology, Hangzhou Auto Software Co., Ltd., Hangzhou EZVIZ Software, Hangzhou Hikstorage, HangzhouHikimaging Technology, Hangzhou Hikfire Technology Co., Ltd. (hereinafter referred to as "HikFire"), Hangzhou RayinTechnology Co., Ltd. (hereinafter referred to as "Hangzhou Rayin Technology"), Hangzhou Microimage Software, HenanHaikang Hua’An BaoQuan Electronics Co., Ltd. (hereinafter referred to as "Hua’An BaoQuan Electronics") and HangzhouKuangxin, the VAT shall be calculated and paid with tax rate of 13% at first, then the portion with actual tax bearing excess3% shall be refunded after State Administration of Taxation reviews.
Note 3: In accordance with the Announcement on Relevant Policies for Deepening the Value-Added Tax Reform (JointAnnouncement [2019] No. 39) jointly issued by the Ministry of Finance, the State Administration of Taxation and theGeneral Administration of Customs, from April 1
st 2019 to December 31
st2021, taxpayers in the production and livingservices industry are allowed to deduct an additional 10% of the current deductible input tax to deduct the tax payable(“Additional Deduction Policy”), the Company’s wholly-owned subsidiaries, a part of Hangzhou Hikvision TechnologyCo., Ltd.’s subsidiaries , Hangzhou Hikvision Security Equipment Leasing Service Co., Ltd. (hereinafter referred to as"Hangzhou Leasing"), Anhui Hikvision Urban Operation Service Co., Ltd. (hereinafter referred to as "Anhui UrbanService"), and the Company’s joint venture subsidiaries, Hangzhou Kuangxin, Zhejiang Haikang City Service Co., Ltd.Luliang Branch, Henan Hua’An Bao Quan Intelligent Development Co., Ltd. Luoyang Branch, Henan Hua’an SecurityServices Co., Ltd. (hereinafter referred to as "Hua’an Security Services"), and Henan Haikang Hua’An BaoQuanElectronics Co., Ltd. Hangzhou Branch meet the industry requirements, and their sales accounted for more than 50% ofits total sales, are complying with the provisions of the Additional Deduction Policy and were entitled to additionaldeduction preferential tax policy of input tax since April 1
st2019.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
V. Notes to Items in the Consolidated Financial Statements
1. Cash and Bank Balances
Item | Closing Balance | Opening Balance | ||||
Foreign currency amount | Exchange rate for conversion | RMB amount | Foreign currency amount | Exchange rate for conversion | RMB amount | |
Cash: | ||||||
RMB | - | - | 16,909.86 | - | - | 17,959.62 |
EUR | 41,743.98 | 7.2197 | 301,379.03 | 71,638.34 | 8.0250 | 574,897.70 |
INR | 2,288,210.50 | 0.0857 | 196,099.64 | 2,504,019.19 | 0.0891 | 223,108.11 |
USD | 33,133.82 | 6.3757 | 211,251.31 | 32,776.72 | 6.5249 | 213,864.82 |
GBP | 2,343.11 | 8.6064 | 20,165.74 | 6,341.78 | 8.8903 | 56,380.33 |
Other currencies | - | - | 1,105,467.95 | - | - | 18,836.93 |
Bank balance: | ||||||
RMB | - | - | 31,577,521,085.40 | - | - | 27,789,108,210.05 |
USD | 272,857,839.86 | 6.3757 | 1,739,659,729.57 | 941,351,972.89 | 6.5249 | 6,142,227,487.92 |
EUR | 96,011,075.74 | 7.2197 | 693,171,163.55 | 52,026,066.91 | 8.0250 | 417,509,186.97 |
GBP | 17,199,784.69 | 8.6064 | 148,028,226.97 | 11,204,897.40 | 8.8903 | 99,614,899.38 |
INR | 1,092,845,025.79 | 0.0857 | 93,656,818.71 | 1,203,270,539.96 | 0.0891 | 107,211,405.11 |
RUB | 731,254,280.94 | 0.0855 | 62,522,241.02 | 1,742,132,380.50 | 0.0877 | 152,785,009.77 |
BRL | 36,644,426.85 | 1.1436 | 41,906,566.54 | 54,535,451.03 | 1.2551 | 68,447,444.59 |
CAD | 6,629,301.03 | 5.0046 | 33,176,999.93 | 5,383,485.44 | 5.1161 | 27,542,449.88 |
HKD | 31,824,133.26 | 0.8176 | 26,019,411.35 | 13,632,862.61 | 0.8416 | 11,473,417.17 |
MXN | 75,249,325.96 | 0.3116 | 23,447,689.97 | - | - | |
THB | 121,837,799.11 | 0.1912 | 23,295,387.19 | 14,687,508.85 | 0.2328 | 3,419,252.06 |
JPY | 392,086,869.13 | 0.0554 | 21,721,612.55 | 336,505,067.09 | 0.0632 | 21,267,120.24 |
PLN | 10,745,706.25 | 1.5717 | 16,889,026.51 | 12,359,893.85 | 1.7520 | 21,654,534.02 |
ZAR | 39,232,629.30 | 0.4004 | 15,708,744.77 | 14,765,683.20 | 0.4458 | 6,582,541.57 |
KRW | 2,683,059,127.78 | 0.0054 | 14,488,519.29 | 855,655,685.00 | 0.0060 | 5,133,934.11 |
AED | 5,055,058.19 | 1.7361 | 8,776,086.53 | 36,263,518.29 | 1.7761 | 64,407,634.83 |
AUD | 1,886,989.36 | 4.6220 | 8,721,664.84 | 2,279,274.45 | 5.0163 | 11,433,524.41 |
Other currencies | - | - | 25,075,802.57 | - | - | 18,195,337.35 |
Other currency funds: | ||||||
RMB | - | - | 112,293,072.17 | - | - | 463,887,119.07 |
USD | 3,595,184.37 | 6.3757 | 22,921,816.99 | 3,101,420.39 | 6.5249 | 20,236,457.90 |
EUR | 580,030.78 | 7.2197 | 4,187,648.22 | 465,821.33 | 8.0250 | 3,738,216.17 |
Other currencies | - | - | 6,830,343.19 | - | - | 2,748,878.19 |
Total | 34,721,870,931.36 | 35,459,729,108.27 | ||||
Including: deposited in overseas banks | 737,750,220.06 | 782,389,029.81 |
Details of other currency funds:
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
2. Held-for-trading Financial Assets
Unit: RMB
Item | Closing Balance | Opening Balance |
Financial assets measured at fair value through current gain and loss | 34,320,010.83 | 22,679,846.77 |
Including: derivative financial assets | 34,320,010.83 | 22,679,846.77 |
Total | 34,320,010.83 | 22,679,846.77 |
On December 31
st
2021, derivative financial assets included forward foreign exchange contracts, foreign exchange optioncontracts and interest rate swap contracts. The notional amount of forward foreign exchange contracts is RMB982,803,001.81 (2020: RMB 1,875,987,806.80), the notional amount of foreign exchange option contracts is RMB127,514,000.00 (2020: RMB 326,245,000.00) and the notional amount of interest rate swap contracts is RMB389,142,481.68 (2020: Nil). The above forward foreign exchange contracts, foreign exchange option contracts and interestrate swap contracts are not designated as hedging instruments, and the gains or losses arising from changes in their fairvalues are directly included in the current profit and loss.
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 | - | - | 35,387,135.77 | - | - | 8,484.61 |
Deposits for letter of guarantee | - | - | 51,980,170.28 | - | - | 44,417,713.65 |
Other security deposits | - | - | 4,679,097.53 | 60,000.00 | 4.7050 | 282,300.00 |
Deposits for letter of Credit in BRL | - | - | - | 283,313.18 | 1.2551 | 355,586.37 |
Tax Operation Margin for India | - | - | - | 120,305.95 | 0.0891 | 10,719.26 |
Other capitals with limitations | - | - | 25,880,098.58 | - | - | 389,816,426.07 |
Subtotal | 117,926,502.16 | 434,891,229.96 | ||||
Capitals without limitations: | ||||||
Deposit in Alipay, Tenpay, etc. | - | - | 27,469,681.96 | - | - | 25,263,562.38 |
Other currency funds in USD | 119,611.52 | 6.3757 | 762,607.17 | 4,662,441.59 | 6.5249 | 30,421,965.14 |
Other currency funds in EUR | 10,262.10 | 7.2197 | 74,089.28 | 3,965.11 | 8.0250 | 31,820.01 |
Other currency funds in ZAR | - | - | - | 23,875.03 | 0.0877 | 2,093.84 |
Subtotal | 28,306,378.41 | 55,719,441.37 | ||||
Total | 146,232,880.57 | 490,610,671.33 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
3. Notes Receivable
1) Categories of notes receivable
Unit:RMB
Category | Closing Balance | Opening Balance |
Bank acceptance bill | 1,228,046,849.95 | 1,003,388,157.28 |
Commercial acceptance bill | 294,714,055.35 | 299,864,547.91 |
Total | 1,522,760,905.30 | 1,303,252,705.19 |
2) As of December 31
st2021, the pledged notes receivable by the Group is nil.
3) At the end of the current reporting period, notes receivable endorsed by the Group but not yet due at the balance
sheet day
Unit:RMB
Category | Derecognized amount as of December 31st 2021 | Amount not derecognized as of December 31st 2021 |
Bank acceptance bill Note (V) 30.3 | - | 711,238,103.83 |
Total | - | 711,238,103.83 |
Note: Transfer of financial assets
As of December 31
st
2021, the Group gave RMB 711,238,103.83 (2020: RMB 482,454,604.99) undue bank acceptancebills to suppliers for endorsement. Since the Group has not transferred almost all the risks and rewards of ownership offinancial assets, the Group has not terminated its confirmation. For details, please refer to Note (V) 30.3.
4) As of December 31
st2021, the Group transferred the defaulted notes receivable into accounts receivable.
Unit:RMB
Category | Amounts transferred into accounts receivable as of December 31st 2021 |
Commercial Acceptance Bill | 104,372,882.41 |
Total | 104,372,882.41 |
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 and will not cause major losses due to the counterparty’s default. Therefore, no lossprovision is made.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
4. Accounts Receivable
1) Disclosure by aging
Unit: RMB
Item | Closing Balance | ||
Accounts receivable | Credit loss provision | Proportion (%) | |
Within credit period | 16,624,872,547.82 | 177,834,756.44 | 1.07 |
Within 1 year after exceeding credit period | 8,356,240,264.84 | 372,160,503.23 | 4.45 |
1-2 years after exceeding credit period | 1,507,966,937.94 | 333,458,412.68 | 22.11 |
2-3 years after exceeding credit period | 1,005,164,963.25 | 492,661,398.25 | 49.01 |
3-4 years after exceeding credit period | 392,162,927.88 | 335,519,470.71 | 85.56 |
Over 4 years after exceeding credit period | 315,024,416.44 | 315,024,416.44 | 100.00 |
Subtotal | 28,201,432,058.17 | 2,026,658,957.75 | 7.19 |
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 | 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 |
Category | Beginning Balance (Restated) | ||||
Carrying amount | Credit loss provision | Book Value | |||
Amount | Proportion (%) | Amount | Proportion (%) | Amount | |
Provision for credit loss on a single basis | - | - | - | - | - |
Provision for credit loss by portfolios | 23,573,877,737.66 | 100.00 | 1,517,809,819.87 | 6.44 | 22,056,067,917.79 |
Total | 23,573,877,737.66 | 100.00 | 1,517,809,819.87 | 6.44 | 22,056,067,917.79 |
Provision for credit loss by portfolios for accounts receivable
Unit: RMB
Customer | Closing balance | ||
Carrying amount | Credit loss provision | Proportion (%) | |
Portfolio A | 3,806,501,754.60 | 92,528,632.14 | 2.43 |
Portfolio B | 18,681,447,755.29 | 1,765,923,934.20 | 9.45 |
Portfolio C | 5,713,482,548.28 | 168,206,391.41 | 2.94 |
Total | 28,201,432,058.17 | 2,026,658,957.75 | 7.19 |
Description of credit loss provision by portfolios for accounts receivable
As part of the Group's credit risk management, the Group uses the ageing of accounts receivable to assess the expectedcredit losses of accounts receivable formed by domestic and overseas sales business, and divides the risk characteristicsinto portfolio A, portfolio B and portfolio C, according to the business area and object. These three portfolios involve alarge number of customers with the same risk characteristics. Aging information is able to reflect the solvency of thesethree types of customers when the accounts receivable are due.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
As of December 31
st 2021 and January 1
st2021, 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 | 0.04 | 3,095,392,524.62 | 1,291,742.49 | 3,094,100,782.13 | 0.02 | 2,971,260,488.09 | 604,959.50 | 2,970,655,528.59 |
Within 1 year after exceeding credit period | 1.70 | 594,470,571.01 | 10,117,916.29 | 584,352,654.72 | 2.02 | 640,220,646.55 | 12,955,798.75 | 627,264,847.80 |
1-2 years after exceeding credit period | 44.11 | 50,793,800.93 | 22,404,389.00 | 28,389,411.93 | 51.50 | 82,533,903.30 | 42,503,136.38 | 40,030,766.92 |
2-3 years after exceeding credit period | 83.73 | 43,832,222.47 | 36,701,948.79 | 7,130,273.68 | 90.10 | 40,717,280.97 | 36,686,603.66 | 4,030,677.31 |
3-4 years after exceeding credit period | 100.00 | 19,359,244.96 | 19,359,244.96 | - | 100.00 | 5,809,507.07 | 5,809,507.07 | - |
Over 4 years after exceeding credit period | 100.00 | 2,653,390.61 | 2,653,390.61 | - | 100.00 | 830,934.85 | 830,934.85 | - |
Total | 2.43 | 3,806,501,754.60 | 92,528,632.14 | 3,713,973,122.46 | 2.66 | 3,741,372,760.83 | 99,390,940.21 | 3,641,981,820.62 |
As of December 31
st 2021 and January 1
st
2021, the credit risk and expected credit losses of accounts receivable from portfolio B are as follows:
Unit: RMB
Age | Closing balance | Beginning balance (restated) | ||||||
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 | 1.99 | 8,575,278,759.81 | 170,679,301.15 | 8,404,599,458.66 | 0.76 | 6,294,425,956.16 | 48,017,503.05 | 6,246,408,453.11 |
Within 1 year after exceeding credit period | 4.63 | 7,167,632,732.53 | 331,869,605.70 | 6,835,763,126.83 | 3.78 | 5,799,607,133.14 | 219,408,150.28 | 5,580,198,982.86 |
1-2 years after exceeding credit period | 19.80 | 1,387,932,595.51 | 274,788,108.40 | 1,113,144,487.11 | 20.69 | 1,436,628,039.73 | 297,283,759.42 | 1,139,344,280.31 |
2-3 years after exceeding credit period | 44.75 | 914,771,713.21 | 409,398,421.89 | 505,373,291.32 | 57.51 | 665,262,321.85 | 382,616,768.44 | 282,645,553.41 |
3-4 years after exceeding credit period | 83.68 | 347,000,938.34 | 290,357,481.17 | 56,643,457.17 | 83.09 | 238,233,041.29 | 197,947,096.87 | 40,285,944.42 |
Over 4 years after exceeding credit period | 100.00 | 288,831,015.89 | 288,831,015.89 | - | 100.00 | 146,749,340.78 | 146,749,340.78 | - |
Total | 9.45 | 18,681,447,755.29 | 1,765,923,934.20 | 16,915,523,821.09 | 8.86 | 14,580,905,832.95 | 1,292,022,618.84 | 13,288,883,214.11 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
As of December 31
st 2021 and January 1
st
2021, 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 | 0.12 | 4,954,201,263.39 | 5,863,712.80 | 4,948,337,550.59 | 0.20 | 4,736,831,208.62 | 9,676,562.96 | 4,727,154,645.66 |
Within 1 year after exceeding credit period | 5.08 | 594,136,961.30 | 30,172,981.24 | 563,963,980.06 | 6.84 | 391,071,518.27 | 26,753,464.86 | 364,318,053.41 |
1-2 years after exceeding credit period | 52.38 | 69,240,541.50 | 36,265,915.28 | 32,974,626.22 | 51.18 | 69,085,009.97 | 35,354,825.98 | 33,730,183.99 |
2-3 years after exceeding credit period | 100.00 | 46,561,027.57 | 46,561,027.57 | - | 100.00 | 28,016,950.72 | 28,016,950.72 | - |
3-4 years after exceeding credit period | 100.00 | 25,802,744.58 | 25,802,744.58 | - | 100.00 | 11,470,715.01 | 11,470,715.01 | - |
Over 4 years after exceeding credit period | 100.00 | 23,540,009.94 | 23,540,009.94 | - | 100.00 | 15,123,741.29 | 15,123,741.29 | - |
Total | 2.94 | 5,713,482,548.28 | 168,206,391.41 | 5,545,276,156.87 | 2.41 | 5,251,599,143.88 | 126,396,260.82 | 5,125,202,883.06 |
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 1st 2021 (restated) | 1,517,809,819.87 |
Provision/(reverse) during the current reporting period | 566,389,266.23 |
Derecognition of financial assets (including direct write-downs) and transfer out | (54,561,920.83) |
Difference arised from foreign currency statement translation | (2,978,207.52) |
Balance on December 31st 2021 | 2,026,658,957.75 |
Actual write-off of accounts receivable during current reporting period:
In the current reporting period, the amount of actual accounts receivable write-off is RMB 55,152,653.63, and RMB 590,732.80 is recollected after writing-off.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
4) Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
Name of the Party | Relationship with the Company | Book value balance of accounts receivable | Closing balance for credit loss provision | Proportion (%) of the total balance of accounts receivable at the end of the current reporting period |
CETC’s subsidiary company A (Note) | Related Party | 373,842,942.92 | 129,057,296.16 | 1.33 |
Third Party A | Third party | 340,541,342.55 | 2,962,709.68 | 1.21 |
Third Party B | Third party | 213,520,031.59 | 1,857,624.27 | 0.76 |
Third Party C | Third party | 141,703,906.59 | 1,232,823.99 | 0.50 |
Third Party D | Third party | 139,825,164.14 | 1,931,817.02 | 0.50 |
Total | 1,209,433,387.79 | 137,042,271.12 | 4.30 |
Note: A subsidiary of CETC is a subsidiary of China Electronics Technology Group Co., Ltd., the Company's ultimatecontroller.
5) As of December 31
st
2021, there is no termination of accounts receivable booking due to transfer of a financialasset.
6) As of December 31
st
2021, 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 | 1,316,035,122.06 | 1,959,601,195.25 |
Total | 1,316,035,122.06 | 1,959,601,195.25 |
2) At the end of the reporting period, the Group’s pledged receivables for financing
Unit: RMB
Item | Amount pledged as of December 31st 2021 |
Bank acceptance bill | 4,337,929.69 |
Total | 4,337,929.69 |
3) At the end of the reporting period, receivables for financing endorsed or discounted by the Group that have not
yet expired on the balance sheet date.
Unit: RMB
Item | Derecognized amount as of December 31st 2021 | Amount not derecognized as of December 31st 2021 |
Bank acceptance bill | 2,800,863,150.72 | - |
Total | 2,800,863,150.72 | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 (Restated) | ||
Carrying amount | Proportion (%) | Carrying amount | Proportion (%) | |
Within 1 year | 472,051,582.19 | 93.33 | 261,740,350.78 | 89.22 |
1-2 years | 16,837,633.29 | 3.33 | 20,302,314.17 | 6.92 |
2-3 years | 12,180,525.79 | 2.41 | 9,021,070.25 | 3.07 |
Over 3 years | 4,728,512.08 | 0.93 | 2,318,835.89 | 0.79 |
Total | 505,798,253.35 | 100.00 | 293,382,571.09 | 100.00 |
2) Closing balances of top five prepayments parties
As of December 31
st
2021, the Group’s top five balances of prepayments amounted to RMB 165,956,536.73,accounting for 32.81% of total closing balance of prepayments.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
7. Other Receivables
1) Other receivables by aging
Unit: RMB
Item | Closing Balance | ||
Other receivables | Bad debt provision | Proportion (%) | |
Within contract period | 297,564,204.37 | 2,587,782.99 | 0.87 |
Within 1 year | 52,387,962.11 | 1,743,779.91 | 3.33 |
1-2 years | 7,248,182.48 | 1,343,438.08 | 18.53 |
2-3 years | 9,568,207.30 | 3,943,058.26 | 41.21 |
3-4 years | 5,983,084.56 | 4,120,660.15 | 68.87 |
Over 4 years | 12,437,987.22 | 11,830,462.77 | 95.12 |
Subtotal | 385,189,628.04 | 25,569,182.16 | 6.64 |
2) Other receivables by nature of the payment
Unit: RMB
Item | Closing Balance | Opening Balance (Restated) |
Temporary payments for receivables | 113,230,687.20 | 294,409,377.31 |
Guarantee deposits | 216,176,255.21 | 173,447,240.76 |
Tax rebates | 762,862.50 | 67,714,444.77 |
Investment intention fund | 4,000,000.00 | 1,000,000.00 |
Others | 51,019,823.13 | 33,758,132.77 |
Total | 385,189,628.04 | 570,329,195.61 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
3) Provision for credit loss
Unit: RMB
Category | Opening balance | Amount of changes in the current reporting period | Difference resulted from foreign currency statements Conversion | Closing balance | ||
Provision or reverse | Recollect | Resell or write off | ||||
Other receivables | 51,303,132.79 | 409,000.25 | (25,640,443.39) | - | (502,507.49) | 25,569,182.16 |
Total | 51,303,132.79 | 409,000.25 | (25,640,443.39) | - | (502,507.49) | 25,569,182.16 |
Changes in credit loss provisions for other receivables
Unit: RMB
bed debts allowance | Stage 1 | Stage 2 | Stage 3 | Total |
Expected credit losses in the next 12 months | Expected credit loss for the entire duration (credit impairment has not incurred) | Expected credit loss for the entire duration (credit impairment has occurred) | ||
Balance on January 1st 2021 | 3,092,760.15 | 9,818,044.78 | 38,392,327.86 | 51,303,132.79 |
The book balance of other receivables on January 1st 2021 in the current reporting period | ||||
--Transfer into stage 2 | (411,469.92) | 411,469.92 | - | - |
-- Transfer into stage 3 | - | (1,995,928.05) | 1,995,928.05 | - |
--provision/(reverse) in the current reporting period | 409,000.25 | (5,146,368.66) | (20,494,074.73) | (25,231,443.14) |
Other changes | (502,507.49) | - | - | (502,507.49) |
Balance on December 31st 2021 | 2,587,782.99 | 3,087,217.99 | 19,894,181.18 | 25,569,182.16 |
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 nil.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
5) Top five debtors based on corresponding closing balance of other receivables
Unit: RMB
Entities | Relationship with the Company | Nature | Closing balance | Aging | Proportion of total closing balance for other receivables (%) | Closing balance for credit loss provision |
Third party E | Third party | Guarantee deposits | 6,927,179.05 | Within 1 year | 1.80% | 293,019.67 |
Third party F | Third party | Guarantee deposits | 5,078,072.96 | Within the contract period | 1.32% | 44,179.23 |
Third party G | Third party | Guarantee deposits | 5,000,000.00 | Within the contract period | 1.30% | 43,500.00 |
Third party H | Third party | Guarantee deposits | 3,738,423.66 | Within 2-3 years | 0.97% | 1,540,604.39 |
Third party I | Third party | Guarantee deposits | 3,550,000.00 | Within the contract period | 0.92% | 30,885.00 |
Total | 24,293,675.67 | 6.31% | 1,952,188.29 |
6) As of December 31
st
2021, the Group does not have other receivables related to government subsidies.
7) As of December 31
st2021, there is no termination of other receivables booking due to transfer of a financial asset.
8) As of December 31
st
2021, 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 | 7,947,851,148.15 | 233,046,765.20 | 7,714,804,382.95 | 5,307,099,264.63 | 96,173,520.97 | 5,210,925,743.66 |
Work-in-progress | 437,963,160.90 | - | 437,963,160.90 | 364,831,525.62 | - | 364,831,525.62 |
Finished goods | 9,760,949,606.67 | 702,675,806.16 | 9,058,273,800.51 | 5,863,464,370.61 | 516,926,580.56 | 5,346,537,790.05 |
Contract performance cost | 763,071,063.24 | - | 763,071,063.24 | 555,610,981.37 | - | 555,610,981.37 |
Total | 18,909,834,978.96 | 935,722,571.36 | 17,974,112,407.60 | 12,091,006,142.23 | 613,100,101.53 | 11,477,906,040.70 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
2) Provision for decline in value of inventories
Unit: RMB
Category | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Effect on conversion of financial statements denominated in foreign currencies | Closing Balance | |
Reversals | Write-off | |||||
Raw materials | 96,173,520.97 | 137,440,277.81 | - | 567,033.58 | - | 233,046,765.20 |
Finished goods | 516,926,580.56 | 297,173,954.13 | - | 96,860,925.14 | (14,563,803.39) | 702,675,806.16 |
Subtotal | 613,100,101.53 | 434,614,231.94 | - | 97,427,958.72 | (14,563,803.39) | 935,722,571.36 |
The write-offs of provision for inventories in the current reporting period are due to use or sale of inventories.
For contract performance cost recognized as an asset, the Group recognizes it into current profit or loss on the same basis as the revenue from goods relating to such asset, and is recognizedat the point of time when the goods are delivered to and accepted by the counterparty; there was an amount of RMB 528,050,817.38 recognized during the current reporting period.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
9. Contract Assets
1) Details of contract assets:
Unit: RMB
Items | Closing Balance | Opening Balance (Restated) | ||||
Carrying amount | Provisions for impairment | Book value | Carrying amount | Provisions for impairment | Book value | |
Constructions | 1,274,476,664.40 | 9,873,249.73 | 1,264,603,414.67 | 253,042,589.28 | 2,242,831.31 | 250,799,757.97 |
Maintenance services | 148,057,308.84 | 1,288,098.60 | 146,769,210.24 | 69,123,440.48 | 518,654.35 | 68,604,786.13 |
Total | 1,422,533,973.24 | 11,161,348.33 | 1,411,372,624.91 | 322,166,029.76 | 2,761,485.66 | 319,404,544.10 |
2) The classification and disclosure of the method of provision for impairment of contract assets during the current
reporting 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 | 1,422,533,973.24 | 100.00 | 11,161,348.33 | 0.78 | 1,411,372,624.91 |
Total | 1,422,533,973.24 | 100.00 | 11,161,348.33 | 0.78 | 1,411,372,624.91 |
Provision, re-collection, or reverse in the current reporting period:
Unit: RMB
Credit loss provision | Expected credit loss during the whole duration (No credit impairment occurred) | Expected credit loss during the whole duration (Credit impairment occurred) | Total |
Balance on January 1st 2021 (restated) | 2,761,485.66 | - | 2,761,485.66 |
Provision/reverse during the current reporting period | 8,399,862.67 | - | 8,399,862.67 |
Balance on December 31st 2021 | 11,161,348.33 | - | 11,161,348.33 |
Impairment provision for the current reporting period amounted to RMB 8,399,862.67, with no reversal, write-off orrecovery of impairment provision during the current reporting period.
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.
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
10. Non-current Assets Due within One Year
Unit: RMB
Item | Closing Balance | Opening Balance (Restated) |
Long-term receivables due within one year (Note (V) 12) | 975,960,437.14 | 850,871,579.78 |
Total | 975,960,437.14 | 850,871,579.78 |
11. Other Current Assets
Unit: RMB
Item | Closing balance | Opening balance (restated) |
Deductible VAT input | 671,022,973.90 | 391,898,131.26 |
Prepaid corporate income tax | 146,600,985.54 | 41,520,799.46 |
Prepaid tariff | 113,756,173.22 | 22,446,422.69 |
Others | 91,220,245.12 | 41,571,699.38 |
Total | 1,022,600,377.78 | 497,437,052.79 |
Hikvision 2021 Annual ReportNotes to Financial Statements arFor the reporting period from January 1
st 2021 to December 31
st2021
12. Long-term Receivables
1) Details of long-term receivables
Unit: RMB
Item | Closing balance | Opening balance (restated) | Range of discount rate | ||||
Carrying amount | Provision for credit loss | Book value | Carrying amount | Provision for credit loss | Book value | ||
Financial leases receivables | 338,676,520.11 | 32,408,674.53 | 306,267,845.58 | 332,860,621.51 | 21,387,061.50 | 311,473,560.01 | 0.54%-6.05% |
Including: Unrealized income from financing | 15,579,721.55 | - | 15,579,721.55 | 20,751,939.07 | - | 20,751,939.07 | - |
Installments for selling goods | 881,821,037.32 | 87,043,902.28 | 794,777,135.04 | 1,094,609,682.99 | 69,465,172.90 | 1,025,144,510.09 | 4.24%-6.45% |
Including: Unrealized income from financing | 26,548,778.33 | - | 26,548,778.33 | 40,238,738.24 | - | 40,238,738.24 | - |
Employee housing loan | 487,983,401.49 | - | 487,983,401.49 | - | - | - | 4.95% |
Including: Unrealized income from financing | 59,389,998.51 | - | 59,389,998.51 | - | - | - | - |
Less: Non-current assets due within one year (Note (V) 10) | 1,093,138,859.09 | 117,178,421.95 | 975,960,437.14 | 935,714,181.41 | 84,842,601.63 | 850,871,579.78 | - |
Total | 615,342,099.83 | 2,274,154.86 | 613,067,944.97 | 491,756,123.09 | 6,009,632.77 | 485,746,490.32 | - |
2) Credit loss provision
As part of the Group's credit risk management, in addition to employee housing loans, the Group uses the aging of long-term receivables to assess the expected credit losses of long-termreceivables formed by financial leasing and installment collection business. The customers involved in financial leasing and installment collection business are mainly governmentdepartment and state-owned enterprises and institutions. There are a large number of customers with the same risk characteristics. The aging information is able to reflect the repaymentcapability of these customers when the long-term receivables are due.
As of December 31
st
2021, the credit risk and expected credit losses of long-term receivables of these customers are as follows:
Unit: RMB
Age | Closing balance | ||
Amounts | Credit loss provision | Estimated average loss rate (%) | |
Within credit period | 646,311,250.51 | 5,623,293.18 | 0.87 |
Within 1 year after exceeding credit period | 263,839,586.40 | 11,158,541.08 | 4.23 |
Hikvision 2021 Annual ReportNotes to Financial Statements arFor the reporting period from January 1
st
2021 to December 31
st2021
Age | Closing balance | ||
Amounts | Credit loss provision | Estimated average loss rate (%) | |
1-2 years after exceeding credit period | 181,691,364.31 | 33,921,777.72 | 18.67 |
2-3 years after exceeding credit period | 87,750,268.44 | 36,161,885.63 | 41.21 |
3-4 years after exceeding credit period | 26,997,755.81 | 18,679,747.24 | 69.19 |
Over 4 years after exceeding credit period | 13,907,331.96 | 13,907,331.96 | 100.00 |
Total | 1,220,497,557.43 | 119,452,576.81 | 9.79 |
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 1st 2021 (restated) | 11,371,156.80 | 37,954,013.24 | 41,527,064.36 | 90,852,234.40 |
On January 1st 2021, the book balance of long-term receivables in the current reporting period | ||||
Transfer into stage 2 | (3,113,307.12) | 3,113,307.12 | - | - |
Transfer into stage 3 | - | (18,717,132.26) | 18,717,132.26 | - |
Provision/(reverse) during the current reporting period | (2,634,556.50) | 22,730,130.70 | 8,504,768.21 | 28,600,342.41 |
Balance on December 31st 2021 | 5,623,293.18 | 45,080,318.80 | 68,748,964.83 | 119,452,576.81 |
3) As of December 31
st
2021, there is no termination of long-term receivables booking due to transfer of a financial asset.
4) As of December 31
st2021, the Group has no assets/liabilities booked due to any transferred long-term receivables that the Group continue to be involved in.
Hikvision 2021 Annual ReportNotes to Financial Statements arFor the reporting period from January 1
st 2021 to December 31
st2021
13. Long-term Equity Investment
Unit: RMB
The invested entity | Opening Balance | Increase/Decrease in the current reporting period | Closing Balance | Closing balance for impairment provision | |||||||
Additional Investments | Investment reduction | Investment Profit (Loss) recognized under the equity Method | Adjustment: Other comprehensive income | Other Changes in equity | Declaration of cash dividends or profit distribution | Impairment provision | others | ||||
1. Joint venture companies | |||||||||||
Hangzhou Haikang Intelligent Industrial Equity Investment Fund Partnership (L.P.) | 612,479,371.62 | - | - | 89,889,968.33 | - | - | - | - | - | 702,369,339.95 | - |
Daishan Hailai Yunzhi Technology Co., Ltd. (“Daishan Hailai”)(Note 1) | 15,253,091.76 | - | - | 645,353.20 | - | - | (999,000.00) | - | (14,899,444.96) | - | - |
Zhejiang City Digital Technology Co., Ltd. | 11,864,018.37 | - | - | 350,301.92 | - | - | - | - | - | 12,214,320.29 | - |
Zhejiang Haishi Huayue Digital Technology Co., Ltd. | 9,985,577.32 | - | - | 1,944,935.34 | - | - | - | - | - | 11,930,512.66 | - |
Shenzhen Hikvision Urban Service Operation Co., Ltd. | 6,029,569.69 | - | - | (4,764,911.31) | - | - | - | - | - | 1,264,658.38 | - |
Guangxi Haishi Urban Operation Management Co., Ltd. (Note2) | 5,296,695.36 | 3,000,000.00 | - | (3,664,494.77) | - | - | - | - | - | 4,632,200.59 | - |
Yunnan Yinghai Parking Service Co., Ltd. | 4,841,060.76 | - | - | (282,179.67) | - | - | - | - | - | 4,558,881.09 | - |
Xuzhou Kangbo Urban Operation Management Service Co., Ltd. (Note2) | 4,631,286.58 | 4,900,000.00 | - | (298,084.91) | - | - | - | - | - | 9,233,201.67 | - |
Subtotal | 670,380,671.46 | 7,900,000.00 | - | 83,820,888.13 | - | - | (999,000.00) | - | (14,899,444.96) | 746,203,114.63 | - |
Hikvision 2021 Annual ReportNotes to Financial Statements arFor the reporting period from January 1
st 2021 to December 31
st2021
The invested entity | Opening Balance | Increase/Decrease in the current reporting period | Closing Balance | Closing balance for impairment provision | |||||||
Additional Investments | Investment reduction | Investment Profit (Loss) recognized under the equity Method | Adjustment: Other comprehensive income | Other Changes in equity | Declaration of cash dividends or profit distribution | Impairment provision | others | ||||
2. Associated Companies | |||||||||||
Wuhu Sensor Technology Co., Ltd. | 58,491,264.42 | - | - | 16,975,212.42 | - | - | - | - | - | 75,466,476.84 | - |
Maxio Technology (Hangzhou) Co., Ltd. | 91,955,638.61 | - | - | 12,581,889.69 | - | - | - | - | - | 104,537,528.30 | - |
Zhiguang Hailian Big Data Technology Co., Ltd. | 21,253,058.87 | - | - | 32,784.40 | - | - | - | - | - | 21,285,843.27 | - |
Sanmenxia Xiaoyun Vision Technology Co., Ltd. | 3,671,496.93 | - | - | (602,110.90) | - | - | - | - | - | 3,069,386.03 | - |
Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. (Note2) | 8,479,131.27 | 12,000,000.00 | - | 1,175,611.18 | - | - | - | - | - | 21,654,742.45 | - |
Qinghai Qingtang Big Data Co., Ltd. | 9,795,448.67 | - | - | 153,006.26 | - | - | - | - | - | 9,948,454.93 | - |
Subtotal | 193,646,038.77 | 12,000,000.00 | - | 30,316,393.05 | - | - | - | - | - | 235,962,431.82 | - |
Total | 864,026,710.23 | 19,900,000.00 | - | 114,137,281.18 | - | - | (999,000.00) | - | (14,899,444.96) | 982,165,546.45 | - |
Note 1:The Group includes Daishan Hailai in the scope of consolidated financial statements in 2021, and it is no longer accounted for as a joint venture. Please refer to Note (VI) 1 fordetails.Note 2: The Group made additional investment in the investee this year, and the proportion of equity held in the investee remained unchanged.
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
14. Other Non-current Financial Assets
Unit: RMB
Invested Entity (Note 1) | Shareholding % | Opening balance | Additional investment during the current reporting period | Investment recovery during the current reporting period | Changes in fair value during the current reporting period | Closing balance |
CETC Finance Co., Ltd. (Note 2) | 3.83% | 423,435,737.20 | - | - | (45,714,936.94) | 377,720,800.26 |
Hangzhou Confirmware Technology Co., Ltd. | 9.52% | 31,092,032.62 | - | - | (4,277,193.66) | 26,814,838.96 |
Zhejiang Tuxun Technology Co.,Ltd. (Zhejiang Tuxun) | 8.13% | 32,222,764.45 | - | - | (3,222,764.45) | 29,000,000.00 |
Zhengzhou Guokong Smart City Technology Co., Ltd. | 7.00% | 700,000.00 | - | - | - | 700,000.00 |
Guangxi Jilian Haibao Technical Service Co., Ltd. | 10.00% | 2,884,220.00 | - | - | - | 2,884,220.00 |
Shenzhen Wanyu Security Service Technology Co., Ltd. | 5.00% | 1,000,000.00 | - | - | - | 1,000,000.00 |
Nanwang Information Industry Group Co., Ltd. | 0.25% | 604,313.00 | - | - | - | 604,313.00 |
Total | 491,939,067.27 | - | - | (53,214,895.05) | 438,724,172.22 |
Note 1: It refers to the Group’s equity investments of private companies. The Group has no control, joint control orsignificant influence over the invested company.
Note 2: It is an enterprise controlled by CETC, the ultimate controlling party of the Group. During the current reportingperiod, the Company received a cash dividend of RMB 115,644,801.97 from China Electronic Technology Finance Co.,Ltd. (2020: RMB 150,000,000.00) and recognized it as current profit and loss. Please refer to Note (V) 52 for details.
15. Fixed Assets
1) Details of fixed assets
Unit: RMB
Items | Building and construction | General-purpose equipment | Special-purpose equipment | Transportation vehicles | Total |
I. Total original carrying amount | |||||
1. Opening balance (restated) | 5,100,087,402.39 | 941,827,698.48 | 2,045,911,036.97 | 96,077,396.86 | 8,183,903,534.70 |
2. Increase in the current reporting period | 793,892,828.70 | 451,748,264.69 | 341,197,135.46 | 12,948,583.65 | 1,599,786,812.50 |
1) purchase | 3,463,469.47 | 399,945,494.69 | 317,277,749.81 | 6,628,378.05 | 727,315,092.02 |
2) transferred from construction in progress | 725,317,455.23 | 12,600,791.51 | 23,919,385.65 | - | 761,837,632.39 |
3) Increase due to business combination not under common control | 65,111,904.00 | 39,201,978.49 | - | 6,320,205.60 | 110,634,088.09 |
3.Decrease in the current reporting period | 47,120,425.71 | 18,746,909.37 | 64,738,596.94 | 9,697,070.45 | 140,303,002.47 |
1) disposal or write-off | 47,120,425.71 | 18,746,909.37 | 64,738,596.94 | 9,697,070.45 | 140,303,002.47 |
4. Effect on conversion of | (6,279,079.76) | (8,704,926.28) | (3,560,443.31) | (480,620.81) | (19,025,070.16) |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Items | Building and construction | General-purpose equipment | Special-purpose equipment | Transportation vehicles | Total |
financial statements denominated in foreign currencies | |||||
5.Closing 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 |
II. Accumulated depreciation | |||||
1. Opening balance (restated) | 992,312,042.71 | 368,072,360.10 | 937,821,068.08 | 55,020,864.96 | 2,353,226,335.85 |
2. Increase in the current reporting period | 249,655,037.63 | 168,558,608.03 | 254,911,458.17 | 11,904,100.45 | 685,029,204.28 |
(1) accrual | 249,655,037.63 | 168,558,608.03 | 254,911,458.17 | 11,904,100.45 | 685,029,204.28 |
3.Decrease in the current reporting period | 25,823,526.69 | 15,847,515.29 | 53,025,757.14 | 7,417,628.76 | 102,114,427.88 |
(1) disposal or write- off | 25,823,526.69 | 15,847,515.29 | 53,025,757.14 | 7,417,628.76 | 102,114,427.88 |
4. Effect on conversion of financial statements denominated in foreign currencies | (759,626.03) | (4,651,337.25) | (1,746,499.39) | (212,046.28) | (7,369,508.95) |
5.Closing balance | 1,215,383,927.62 | 516,132,115.59 | 1,137,960,269.72 | 59,295,290.37 | 2,928,771,603.30 |
III. Total book value | |||||
Closing 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 |
Opening balance on book value (restated) | 4,107,775,359.68 | 573,755,338.38 | 1,108,089,968.89 | 41,056,531.90 | 5,830,677,198.85 |
2) As of December 31
st2021, the Group did not have any significant idle fixed assets.
3) As of December 31
st
2021, the Group had not rent out any fixed asset through operating leasing.
4) Fixed assets of which certificates of title have not been granted as of December 31st 2021:
Unit: RMB
Item | Carrying amount | Reason for certificates of title not granted |
Office building for branches | 13,451,117.83 | In the process of obtaining the real estate certificates |
Fuzhou High-tech Zone Innovation Park | 94,622,498.88 | In the process of obtaining the real estate certificates after transferred to fixed assets |
Chongqing Science and Technology Park Phase II Project | 415,416,636.80 | In the process of obtaining the real estate certificates after transferred to fixed assets |
Total | 523,490,253.51 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 | 896,287,490.09 | - | 896,287,490.09 | 521,626,793.33 | - | 521,626,793.33 |
Hangzhou Innovation Industry Park | 393,310,782.16 | - | 393,310,782.16 | 337,821,702.49 | - | 337,821,702.49 |
Security Industrial Base (Tonglu) Phase II Continued Construction Project | 390,702,241.74 | - | 390,702,241.74 | 74,726,929.65 | - | 74,726,929.65 |
Xi’an Science and Technology Park Project | 181,009,327.21 | - | 181,009,327.21 | 12,679,174.93 | - | 12,679,174.93 |
Shijiazhuang Science and Technology Park Project | 100,184,640.21 | - | 100,184,640.21 | 2,060,553.46 | - | 2,060,553.46 |
EZVIZ Smart Home Products’ Industrial Base Project (Infrastructure Part) | 95,322,172.33 | - | 95,322,172.33 | 2,332,067.08 | - | 2,332,067.08 |
Chongqing Science and Technology Park Phase II Project | - | - | - | 249,810,250.79 | - | 249,810,250.79 |
Others | 266,519,444.94 | 266,519,444.94 | 224,177,721.99 | - | 224,177,721.99 | |
Total | 2,323,336,098.68 | - | 2,323,336,098.68 | 1,425,235,193.72 | - | 1,425,235,193.72 |
2) Changes in significant construction in progress during the current reporting period
Unit: RMB
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 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 | 521,626,793.33 | 374,660,696.76 | - | - | - | 896,287,490.09 | 45.52% | 45.52% | - | - | - | Self- financing |
Hangzhou Innovation Industry Park | 102,600.00 | 337,821,702.49 | 55,489,079.67 | - | - | - | 393,310,782.16 | 38.33% | 38.33% | (70,963,330.44) | (124,649,345.63) | 0.85% | Special loan |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 |
Security Industrial Base (Tonglu) Phase II Continued Construction Project | 85,100.00 | 74,726,929.65 | 315,975,312.09 | - | - | - | 390,702,241.74 | 45.91% | 45.91% | - | - | - | Self- financing |
Xi’an Science and Technology Park project | 227,800.00 | 12,679,174.93 | 168,330,152.28 | - | - | - | 181,009,327.21 | 7.95% | 7.95% | - | - | - | Self- financing |
Shijiazhuang Science and Technology Park Project | 89,800.00 | 2,060,553.46 | 98,124,086.75 | - | - | - | 100,184,640.21 | 11.16% | 11.16% | - | - | - | Self- financing |
EZVIZ Smart Home Products Industrial Base Project (Infrastructure Part) | 75,257.00 | 2,332,067.08 | 92,990,105.25 | - | - | - | 95,322,172.33 | 12.67% | 12.67% | - | - | - | Self- financing |
Security Industrial Base (Tonglu) Phase III | 77,000.00 | 659,304.24 | 48,109,601.71 | - | - | - | 48,768,905.95 | 6.33% | 6.33% | Self- financing | |||
Zhengzhou Science and Technology Park Project | 48,500.00 | 13,529,409.53 | 28,500,043.29 | - | - | - | 42,029,452.82 | 8.67% | 8.67% | - | - | - | Self- financing |
Wuhan Intelligence Industrial Park | 238,700.00 | 2,370,546.89 | 19,234,593.60 | - | - | - | 21,605,140.49 | 0.91% | 0.91% | Self- financing | |||
Chongqing Science and Technology Park project- phase 2 | 43,000.00 | 249,810,250.79 | 175,974,725.06 | (425,784,975.85) | - | - | - | 100.00% | 100.00% | - | - | - | Self- financing |
Others | 207,618,461.33 | 286,993,506.34 | (336,052,656.54) | (1,576,075.70) | (2,867,289.75) | 154,115,945.68 | - | - | - | - | - | Self- financing | |
Total | 1,184,657.00 | 1,425,235,193.72 | 1,664,381,902.80 | (761,837,632.39) | (1,576,075.70) | (2,867,289.75) | 2,323,336,098.68 | - | - | (70,963,330.44) | (124,649,345.63) |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
Note 1: Other reductions during the 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
st2021, the Group did not have any sign of impairment of projects under construction; therefore, no provision for impairment loss was booked.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 (restated) | 333,243,923.96 | 230,374.45 | 91,934,144.20 | 14,423,291.59 | 439,831,734.20 |
2. Increased | 381,865,373.66 | - | - | 10,480,492.36 | 392,345,866.02 |
(1)New Lease | 360,641,319.67 | - | - | 10,480,492.36 | 371,121,812.03 |
(2) Increase due to business combination not under common control | 21,224,053.99 | - | - | - | 21,224,053.99 |
3. Decreased | 13,645,883.01 | - | - | 55,450.93 | 13,701,333.94 |
(1) The lease contract expires or terminates early | 13,645,883.01 | - | - | 55,450.93 | 13,701,333.94 |
4. Effect on conversion of financial statements denominated in foreign currencies | (13,925,949.47) | - | - | (1,953,346.06) | (15,879,295.53) |
5. Closing balance | 687,537,465.14 | 230,374.45 | 91,934,144.20 | 22,894,986.96 | 802,596,970.75 |
II. Accumulated depreciation | |||||
1. Opening balance (restated) | - | 94,562.47 | 46,739,618.43 | - | 46,834,180.90 |
2. Increased | 169,004,407.93 | 50,014.45 | 21,357,177.93 | 7,950,776.09 | 198,362,376.40 |
(1) Provisions | 169,004,407.93 | 50,014.45 | 21,357,177.93 | 7,950,776.09 | 198,362,376.40 |
3. Decreased | 6,370,832.58 | - | - | 55,450.93 | 6,426,283.51 |
(1) The lease contract expires or terminates early | 6,370,832.58 | - | - | 55,450.93 | 6,426,283.51 |
4. Effect on conversion of financial statements denominated in foreign currencies | (2,145,437.09) | - | - | (421,538.70) | (2,566,975.79) |
5. Closing balance | 160,488,138.26 | 144,576.92 | 68,096,796.36 | 7,473,786.46 | 236,203,298.00 |
III. Total book value | |||||
1. Closing balance on book value | 527,049,326.88 | 85,797.53 | 23,837,347.84 | 15,421,200.50 | 566,393,672.75 |
2. Opening balance on book value (restated) | 333,243,923.96 | 135,811.98 | 45,194,525.77 | 14,423,291.59 | 392,997,553.30 |
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.
In the current reporting period, the short-term lease expenses and low-value asset lease expenses that the Group includedin the current profit and loss with simplified processing were RMB 82,001,765.42.
The profit and loss arising from the sale-leaseback transaction of the Group this year was RMB 21,407,192.38 for thedepreciation of the right-of-use asset. Please refer to Note (X) 5 for details.
The total cash outflow related to leases for the year was RMB 272,298,575.65.
As of December 31
st2021, 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
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Item
Item | Land use right | Intellectual property right | Application Software | Franchise | Total |
I. Total original carrying amount | |||||
1. Opening balance (restated) | 1,224,893,932.49 | 70,044,034.88 | 298,812,867.42 | 83,741,415.51 | 1,677,492,250.30 |
2. Increased | 34,319,532.77 | - | 80,770,503.27 | 8,195,011.94 | 123,285,047.98 |
(1) Purchase | 34,319,532.77 | - | 80,770,503.27 | 8,195,011.94 | 123,285,047.98 |
3. Decreased | - | - | 1,589,705.68 | - | 1,589,705.68 |
(1)Disposal or write-off | - | - | 1,589,705.68 | - | 1,589,705.68 |
4. Effect on conversion of financial statements denominated in foreign currencies | - | (77,601.00) | (3,011,514.19) | (2,909.84) | (3,092,025.03) |
5. Closing balance | 1,259,213,465.26 | 69,966,433.88 | 374,982,150.82 | 91,933,517.61 | 1,796,095,567.57 |
II. Total accumulated amortization | |||||
1.Opening balance (restated) | 76,612,562.29 | 60,718,480.10 | 217,067,323.75 | 1,126,160.47 | 355,524,526.61 |
2. Increased | 26,980,428.75 | 4,345,702.67 | 98,918,896.79 | 10,463,080.36 | 140,708,108.57 |
(1)Accrual | 26,980,428.75 | 4,345,702.67 | 98,918,896.79 | 10,463,080.36 | 140,708,108.57 |
3. Decreased | - | - | 1,416,795.89 | - | 1,416,795.89 |
(1)Disposal or write-off | - | - | 1,416,795.89 | - | 1,416,795.89 |
4. Effect on conversion of financial statements denominated in foreign currencies | - | (61,588.49) | (2,905,511.37) | (586.93) | (2,967,686.79) |
5. Closing balance | 103,592,991.04 | 65,002,594.28 | 311,663,913.28 | 11,588,653.90 | 491,848,152.50 |
III. Total book value | |||||
1. Closing 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. Opening balance on book value (restated) | 1,148,281,370.20 | 9,325,554.78 | 81,745,543.67 | 82,615,255.04 | 1,321,967,723.69 |
2) At the end of the current reporting period, the intangible asset of the Group that has not completed the title
certificate 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 | ||||
Secure Holdings Limited (Note 1) | 130,320,174.19 | - | 130,320,174.19 | - | - |
HuaAn Baoquan Intelligence and its subsidiaries | 61,322,871.63 | - | - | - | 61,322,871.63 |
Hangzhou Kuangxin Technology Co., Ltd. | 59,060,454.06 | - | - | - | 59,060,454.06 |
Hundure Technology (Shanghai) Co., Ltd. (Note 1) | 13,774,405.88 | - | 13,774,405.88 | - | - |
BK EESTI AKTSIASELTS | 4,826,266.94 | - | - | (484,310.63) | 4,341,956.31 |
SIA “BK Latvia” | 4,819,569.44 | - | - | (483,638.54) | 4,335,930.90 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 | ||||
Hikvision Joint-Stock Company (original name: ZAO Hikvision) (Note 1) | 67,349.64 | - | 67,349.64 | - | - |
Hangzhou Haikang Zhicheng Investment and Development Co., Ltd. | 12,573.42 | - | - | - | 12,573.42 |
SISTEMAS Y SERVICIOS DE COMUNICACI?N, S.A. DE C.V. (“Syscom MX”) (Note 2) | - | 74,385,546.76 | - | (1,077,437.71) | 73,308,109.05 |
Total | 274,203,665.20 | 74,385,546.76 | 144,161,929.71 | (2,045,386.88) | 202,381,895.37 |
Note 1: Secure Holdings Limited, Hundure Technology (Shanghai) Co., Ltd. and Hikvision Joint-Stock Company werecancelled in 2021, the goodwill decreased by RMB 144,161,929.71 this year.
Note 2: The Group acquired Syscom MX in September 2021, resulting in a goodwill of RMB 74,385,546.76, see Note(VI) 1.
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 2022 to 2026 approved by management, with a certain discount rate. Cash flow over 5 years is calculated onthe basis of 0-2% growth rate. This growth rate is determined based on the relevant industry's growth forecast and doesnot exceed the long-term average growth rate for that industry. Estimates of future cash flows are based on pastperformance and expectations of market development, and are based on the estimated sales, cost of sales, and operatingexpenses during the 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 | Difference of foreign currency translation | Closing balance |
Improvement expenditure for leased fixed asset | 108,584,686.85 | 49,373,074.47 | 57,732,233.15 | (1,608,351.67) | 98,617,176.50 |
Employee housing loan deferred interest | - | 68,159,986.92 | 8,769,988.52 | - | 59,389,998.40 |
Total | 108,584,686.85 | 117,533,061.39 | 66,502,221.67 | (1,608,351.67) | 158,007,174.90 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
21. Deferred Tax Assets/Deferred Tax Liabilities
1) Deferred tax assets that are not presented on net off basis
Unit: RMB
Item | Closing balance | Opening balance | ||
Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
Provision for impairment losses of assets | 746,689,777.87 | 203,337,661.26 | 439,119,363.43 | 118,145,320.66 |
Provision for credit loss | 2,019,377,828.80 | 414,456,930.82 | 1,539,163,635.55 | 317,826,951.61 |
Payroll payables | 1,021,696,707.76 | 156,929,402.30 | 340,995,206.97 | 67,364,166.74 |
Share-based payment | 546,398,398.17 | 92,168,164.61 | 395,569,612.03 | 63,817,274.43 |
Provisions | 124,817,084.93 | 18,515,337.61 | 125,721,860.51 | 20,746,514.91 |
Expenditure without invoice | 224,525,193.17 | 49,859,840.33 | 343,485,705.59 | 79,499,747.08 |
Unrealized profit from inter-group transactions | 2,025,608,612.07 | 303,841,291.79 | 1,332,036,632.93 | 203,654,079.47 |
Changes in the fair value of derivative financial instruments | 3,795,920.86 | 948,980.22 | 4,862,446.50 | 1,215,611.63 |
Deferred income | 400,764,044.74 | 61,186,781.23 | 175,339,879.57 | 28,307,816.27 |
Total | 7,113,673,568.37 | 1,301,244,390.17 | 4,696,294,343.08 | 900,577,482.80 |
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 | 926,803,951.40 | 170,262,256.00 | 792,868,727.84 | 155,188,912.37 |
Difference in amortization of intangible assets | 2,769,106.64 | 415,366.00 | 2,077,910.40 | 311,686.57 |
Changes in the fair value of derivative financial instruments | 29,037,242.51 | 7,259,310.63 | 18,487,400.00 | 4,621,850.00 |
Changes in fair value of other non-current financial assets | 38,300,223.10 | 5,745,033.47 | 87,026,019.27 | 13,053,902.89 |
Total | 996,910,523.65 | 183,681,966.10 | 900,460,057.51 | 173,176,351.83 |
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 | 90,366,814.93 | 1,210,877,575.24 | 80,196,527.94 | 820,380,954.86 |
Deferred tax liabilities | 90,366,814.93 | 93,315,151.17 | 80,196,527.94 | 92,979,823.89 |
4) Details of unrecognized deferred tax assets
Unit: RMB
Item | Closing balance | Opening balance |
Deductible temporary differences | 687,848,166.51 | 788,077,425.69 |
Deductible loss | 2,841,919,737.84 | 2,881,025,358.37 |
Total | 3,529,767,904.35 | 3,669,102,784.06 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
5) Deductible losses for unrecognized deferred tax assets will expire in the following years
Unit: RMB
Year | Closing balance | Opening balance |
2021 | - | 9,821,670.35 |
2022 | 9,759,663.51 | 53,969,583.10 |
2023 | 33,125,518.27 | 61,192,370.12 |
2024 | 34,945,616.34 | 91,527,082.27 |
2025 | 148,742,047.53 | 151,932,560.93 |
2026 and beyond | 2,615,346,892.19 | 2,512,582,091.60 |
Total | 2,841,919,737.84 | 2,881,025,358.37 |
22. Other Non-current Assets
Unit: RMB
Item | Closing balance | Opening balance (restated) | ||||
Carrying amount | Provision | Book value | Carrying amount | Provision | Book value | |
Contract assets | 2,672,243,740.12 | 24,017,466.88 | 2,648,226,273.24 | 2,168,908,350.12 | 19,342,154.89 | 2,149,566,195.23 |
Prepayments for acquisition of land | 278,398,706.94 | - | 278,398,706.94 | 79,046,571.00 | - | 79,046,571.00 |
Prepayments for real estate | 269,600,676.00 | - | 269,600,676.00 | - | - | - |
Prepayments for equipment | 140,577,165.61 | - | 140,577,165.61 | 26,838,623.06 | - | 26,838,623.06 |
Prepayments for infrastructure | 4,679,432.89 | - | 4,679,432.89 | 15,233,481.00 | - | 15,233,481.00 |
Others | 9,044,156.95 | - | 9,044,156.95 | - | - | - |
Total | 3,374,543,878.51 | 24,017,466.88 | 3,350,526,411.63 | 2,290,027,025.18 | 19,342,154.89 | 2,270,684,870.29 |
23. Short-term Borrowings
1) Categories of short-term borrowings
Unit: RMB
Item | Closing balance | Opening balance |
Fiduciary loan | 4,074,962,469.97 | 3,999,246,634.59 |
Total | 4,074,962,469.97 | 3,999,246,634.59 |
2) As of December 31
st
2021, the Group did not have any overdue short-term loans that were failed to repay.
24. Held-for-trading Financial Liabilities
Unit: RMB
Item | Closing balance | Opening balance |
Financial liabilities measured at fair value through current profits and losses | 4,062,317.57 | 7,405,771.15 |
Including: derivative financial liabilities | 4,062,317.57 | 7,405,771.15 |
total | 4,062,317.57 | 7,405,771.15 |
As of December 31
st
2021, the notional amount of the Group's outstanding forward foreign exchange contracts wasRMB 550,853,892.55 (December 31
st
2020: RMB 498,858,533.76). The above forward foreign exchange contracts are
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
not designated as hedging instruments, and the gains or losses arising from changes in their fair values are directlyincluded in the current profit and loss.
25. Notes Payable
Unit: RMB
Item | Closing balance | Opening balance |
Bank acceptance Bill | 1,339,998,383.34 | 1,036,920,229.85 |
Total | 1,339,998,383.34 | 1,036,920,229.85 |
As of December 31
st
2021, 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 | 15,585,975,750.26 | 13,461,766,461.74 |
Payables on equipment | 303,719,230.86 | 132,118,328.45 |
Total | 15,889,694,981.12 | 13,593,884,790.19 |
2) As of December 31
st
2021, 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 | 2,181,573,144.68 | 1,605,290,145.88 |
Advanced receipts for construction settlement payment | 185,782,167.92 | 401,866,195.59 |
Advanced receipts from services | 236,278,710.74 | 154,010,329.79 |
Subtotal | 2,603,634,023.34 | 2,161,166,671.26 |
Less:Contract liabilities included in other non-current liabilities (Note (V), 38) | 22,739,796.75 | - |
Total | 2,580,894,226.59 | 2,161,166,671.26 |
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 ordelivered to the customers. Sales rebates to distributors of the Group may be accumulated when they purchase productsfrom the Group, and are deductible for payments for goods to be purchased in the future. Such sales rebates enabledistributors to enjoy discounts in their future purchase of goods, which are not available to the same type of customers.Therefore, the commitment to offer such discounts to distributors on their future purchase prices is a separate performanceobligation. Such commitment is recognized as a contract liability based on the transaction price allocated on the basis of
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
the 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
st
2021, the book value of contract liabilities amounted to RMB 2,161,166,671.26 has beenrecognized as revenue in 2021, including contract liabilities of RMB 1,605,290,145.88 arising from advancereceipt of product sales payment, the contract liabilities of RMB 401,866,195.59 arising from advance receiptof project settlement payment and contract liabilities of RMB 154,010,329.79 arising from the advance receiptof cloud service payment. As at December 31
st2021, the contract liabilities of RMB 2,580,894,226.59 areexpected to be recognized 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 | 2,858,597,482.49 | 13,698,139,075.95 | 12,035,934,098.52 | 4,520,802,459.92 |
2. Termination benefits – defined contribution scheme | 19,188,948.22 | 888,575,801.80 | 833,015,136.82 | 74,749,613.20 |
Total | 2,877,786,430.71 | 14,586,714,877.75 | 12,868,949,235.34 | 4,595,552,073.12 |
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 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
1.Wages or salaries,
bonuses, allowances andsubsidies
1.Wages or salaries, bonuses, allowances and subsidies | 2,671,062,392.28 | 12,247,906,540.03 | 10,620,585,395.08 | 4,298,383,537.23 |
2.Staff welfare | 14,300.82 | 238,692,657.07 | 238,695,313.35 | 11,644.54 |
3.Social insurance contributions | 11,227,541.93 | 515,588,996.17 | 486,468,951.39 | 40,347,586.71 |
Including: Medical insurance | 10,852,343.07 | 494,018,231.61 | 466,368,463.01 | 38,502,111.67 |
Injury insurance | 330,255.63 | 15,101,602.15 | 14,065,793.64 | 1,366,064.14 |
Maternity insurance | 44,943.23 | 6,469,162.41 | 6,034,694.74 | 479,410.90 |
4.Housing funds | 146,194.01 | 557,598,474.59 | 557,744,668.60 | - |
5.Labor union and education fund | 176,147,053.45 | 138,352,408.09 | 132,439,770.10 | 182,059,691.44 |
Subtotal | 2,858,597,482.49 | 13,698,139,075.95 | 12,035,934,098.52 | 4,520,802,459.92 |
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 | 18,665,404.09 | 859,688,761.68 | 805,812,222.99 | 72,541,942.78 |
2.Unemployment insurance | 523,544.13 | 28,887,040.12 | 27,202,913.83 | 2,207,670.42 |
Subtotal | 19,188,948.22 | 888,575,801.80 | 833,015,136.82 | 74,749,613.20 |
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 2021, the Group shall pay RMB 859,688,761.68 and RMB 28,887,040.12 to the pension insurance plan andunemployment insurance plan respectively (2020: RMB 448,873,230.48 and RMB 15,530,813.51). As of December 31
st
2021, the Group had fees payables of RMB 72,541,942.78 and RMB 2,207,670.42 (December 31
st2020: RMB18,665,404.09 and RMB 523,544.13), 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 | 927,703,038.55 | 1,403,744,369.98 |
Value-added tax | 426,720,008.08 | 294,728,811.39 |
City construction and maintenance tax | 21,622,541.71 | 17,924,699.09 |
Education surcharges | 9,380,789.66 | 7,547,297.38 |
Local education surcharges | 6,529,587.16 | 5,437,435.12 |
Others | 69,514,064.53 | 40,675,295.66 |
Total | 1,461,470,029.69 | 1,770,057,908.62 |
30. Other Payables
1) Categories
Unit: RMB
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Item
Item | Closing balance | Opening balance |
Dividend payable | 247,382,205.37 | 205,898,523.84 |
Other payables | 1,583,244,377.66 | 1,319,154,832.11 |
Total | 1,830,626,583.03 | 1,525,053,355.95 |
2) Dividends payable
Unit: RMB
Item | Closing balance | Opening balance |
Dividends of incentive restricted shares | 144,401,634.74 | 205,898,523.84 |
Dividends of common stock | 102,980,570.63 | - |
Total | 247,382,205.37 | 205,898,523.84 |
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) | 711,238,103.83 | 482,454,604.99 |
Accrued expenses | 144,958,993.62 | 337,678,697.37 |
Guarantee and deposit fees | 341,371,587.01 | 298,869,865.03 |
Collection and payment on behalf | 261,710,850.19 | 157,485,875.39 |
Other expense payable | 123,964,843.01 | 42,665,789.33 |
Total | 1,583,244,377.66 | 1,319,154,832.11 |
(2) As of December 31
st2021, 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 (restated) |
Long-term borrowings due within one year (Note (V) 33) | 347,587,089.91 | 3,486,243,087.91 |
Lease liabilities due within one year (Note (V), 34) | 248,027,043.35 | 156,420,687.89 |
Long-term payables due within one year (Note (V) 35) | 1,301,227.32 | 2,134,638.48 |
Total | 596,915,360.58 | 3,644,798,414.28 |
32. Other Current Liabilities
Unit: RMB
Item | Closing balance | Opening balance |
Subscription payment of restricted shares | 511,594,361.52 | 560,959,368.73 |
Output VAT to be transferred | 405,885,561.09 | 184,752,210.84 |
Total | 917,479,922.61 | 745,711,579.57 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
33. Long-term Borrowings
Unit: RMB
Item | Closing balance | Opening balance |
Pledged loan (Note 1) | 1,455,221,540.20 | 1,556,927,316.08 |
Fiduciary loan (Note 2) | 1,611,886,043.22 | 3,700,483,533.13 |
Guaranteed loan (Note 3) | 387,851,149.01 | - |
Other borrowing (Note 4) | 177,000,000.00 | 190,000,000.00 |
Less:Long-term loans due within one year (Note (V) 31) | 347,587,089.91 | 3,486,243,087.91 |
Total | 3,284,371,642.52 | 1,961,167,761.30 |
Note 1: As of December 31
st2021, RMB 245,504,285.70 of the pledged loan was obtained by the Group with all the rightsand benefits pledged under the Urumqi High-tech Zone (New Urban Area) Safe City & Surveillance system for SocialComprehensive Management -- PPP Project Agreement; the maturity date is June 20
th2028, among them, the annualinterest rate of RMB 227,937,142.84 of the loan is 4.41% and the annual interest rate of RMB 17,567,142.86 of the loanis 4.31%.
RMB 176,800,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under theMoYu Security Protection and Prevention Control System-- PPP Project Agreement; the maturity date is March 26
th2035,among them, the annual interest rate of RMB 138,200,000.00 of the loan is 4.445%, and the annual interest rate of RMB38,600,000.00 of the loan is 4.345%.
RMB 215,780,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under thePiShan Security Protection and Prevention Control System-- PPP Project Agreement; the maturity date is March 26
th2040.Among them, the annual interest rate of RMB 164,800,000.00 of the loan is 4.445%, and the annual interest rate of RMB50,980,000.00 of the loan is 4.345%.
RMB 221,600,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under theLuoPu Security Protection and Prevention Control System-- PPP Project Agreement; the maturity date is March 26
th2035,among them, the annual interest rate of RMB 134,400,000.00 of the loan is 4.445%, the annual interest rate of RMB87,200,000.00 of the loan is 4.245%.
RMB 95,600,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under theYuTian Safe City-- PPP Project Agreement; the maturity date is March 26
th2034, the annual interest rate is 4.245%.
RMB 498,000,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under theXi'an Public Security Video Surveillance Construction Network Application Construction--Public-Private Partnership(PPP) Project Agreement; the maturity date is November 5
th2031, among them, the annual interest rate of RMB295,000,000.00 of the loan is 4.445%, and the annual interest rate of RMB 203,000,000.00 of the loan is 4.345%.
Note 2: As of December 31
st
2021, the fiduciary loan with a book value of RMB 1,082,955,000.00 was 150 million eurosin credit loans, which is mainly used for the Company to repay the investment and construction of the Hangzhou InnovationIndustrial Park project and Xi'an Science and Technology Park project, the maturity date is November 29
th2024, and theinterest rate is 0.80%.
The fiduciary loans with a book value of RMB 200,000,000.00, which is mainly used for the Company to repay theinvestment and construction of the Hangzhou Innovation Industrial Park project and the Xi'an Science and TechnologyPark project. The maturity date is December 2
nd2026, and the annual interest rate is 3.00%.
The fiduciary loans with a book value of RMB 328,000,000.00, which is mainly used for the acquisition of the thermalimaging division asset group by Hangzhou Hikmicro Sensing, a subsidiary of the Group, and the maturity dates areSeptember 28
th
2022 and September 27
th2023, respectively, and the annual interest rate is 3.20%.
Note 3: At the end of the reporting period, the guaranteed loans with a book value of RMB 387,290,538.98 is theguaranteed loan of USD 61,035,256.00, which was mainly used for the acquisition of 51% of the shares of Syscom MX
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
and Equipos Profesionales de Comunicacion. S.A. de C.V. (“Epcom MX”). The maturity date is August 30
th
2024, andthe annual interest rate is 1.621%.
Note 4: During 2016, the Group entered into an agreement with CDB Development Fund Ltd. (CDBDF) to jointly injectcapital into Hikvision Electronics Co., Ltd. ("Hangzhou Electronics"), a subsidiary of the Group. Pursuant to the capitalinjection agreement, CDBDF would not participate in senior management personnel such as directors, and it would eithertake part in decision-making or make significant influence on Hangzhou Electronics. The Group shall pay a 1.2%annualized return to CDBDF through dividends or interest payments, and the Group is required to redeem the CDBDF'sequity investment in the current reporting period by installments each year from 2021 to 2024. Therefore, the capitalinjection by CDBDF is treated as a long-term loan. The Group paid RMB 13 million to redeem the 2% equity of HangzhouElectronics Company held by CDBDF during the reporting period. As of December 31
st2021, the balance of the loan is177 million (December 31
st2020: RMB 190 million).
34. Lease Liabilities
Unit: RMB
Item | Closing balance | Opening balance(restated) |
Lease liabilities | 565,978,922.56 | 386,475,961.59 |
Less :Lease liabilities due within one year (Note (V), 31) | 248,027,043.35 | 156,420,687.89 |
Total | 317,951,879.21 | 230,055,273.70 |
35. Long-term Payables
Unit: RMB
Item | Closing balance | Opening balance (restated) |
Purchase goods in installments | 10,310,558.82 | 10,677,104.56 |
Borrowing | - | 8,000,000.00 |
Less: Long-term payables due within one year (Note (V), 31) | 1,301,227.32 | 2,134,638.48 |
Total | 9,009,331.50 | 16,542,466.08 |
36. Provisions
Unit: RMB
Item | Closing balance | Opening balance |
Product quality warranty | 200,675,950.96 | 151,443,871.02 |
Total | 200,675,950.96 | 151,443,871.02 |
37. Deferred Income
Unit: RMB
Item | Opening balance | Increase in current reporting period | Decrease in current reporting period | Closing balance | Details |
Government Subsidies | 190,878,987.69 | 652,192,764.28 | 104,485,293.92 | 738,586,458.05 | Note |
Total | 190,878,987.69 | 652,192,764.28 | 104,485,293.92 | 738,586,458.05 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
As of December 31
st
2021, 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 | 76,835,135.44 | - | 36,117,454.10 | - | 40,717,681.34 | Related to assets |
Other special subsidies | 93,995,937.25 | 483,985,764.28 | 38,851,173.16 | - | 539,130,528.37 | Related to assets |
Other special subsidies | 20,047,915.00 | 168,207,000.00 | 29,516,666.66 | - | 158,738,248.34 | Related to incomes |
Subtotal | 190,878,987.69 | 652,192,764.28 | 104,485,293.92 | - | 738,586,458.05 |
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.
38. Other Non-current Liabilities
Unit: RMB
Item | Closing balance | Opening balance |
Subscription for restricted stocks | 511,594,361.52 | 560,959,368.74 |
Contract liabilities | 22,739,796.75 | - |
Total | 534,334,158.27 | 560,959,368.74 |
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 (Note) | Subtotal | |||
2021 | |||||||
Total shares | 9,343,417,190.00 | - | - | -- | (7,611,076.00) | (7,611,076.00) | 9,335,806,114.00 |
2020 | |||||||
Total shares | 9,345,010,696.00 | - | - | - | (1,593,506.00) | (1,593,506.00) | 9,343,417,190.00 |
Note: On December 25
th
2020, in accordance with the authorization of the Company’s 2018 second extraordinary generalmeeting and the resolutions of the 20
thmeeting of the fourth Board of Directors and the revised articles of association, theCompany repurchased and cancelled the granted 7,611,076 restricted RMB treasury shares that have not been unlocked,reducing the share capital by RMB 7,611,076 and the capital reserve by RMB 115,032,981.28. The Company hadcompleted the repurchase cancellation registration on July 2
nd2021.
On December 24
th
2019, according to the authorization of the Company's second extraordinary general meeting ofshareholders in 2016, the resolution of the 14
th meeting of the 4
th
session of the Board of Directors and the revised articlesof association, the Company repurchased and cancelled 1,593,506 restricted treasury shares that are granted but not yetunlocked. The share capital was reduced by RMB 1,593,506.00, and the capital reserve was reduced by RMB11,823,911.35. The Company went through the repurchase cancellation registration on December 17
th2020.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
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 |
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 |
2020 | ||||
Share premium | 3,834,418,853.06 | 985,668,869.46 | 72,278,815.14 | 4,747,808,907.38 |
Other capital reserves | 292,524,845.90 | 782,471,622.99 | 644,027,914.18 | 430,968,554.71 |
Total | 4,126,943,698.96 | 1,768,140,492.45 | 716,306,729.32 | 5,178,777,462.09 |
Note 1: The increase of RMB 175,364,843.03 in the share premium in the current fiscal year was due to the exercise ofequity-settled share-based payments, and other capital reserves were transferred to the share premium.
The increase of RMB 347,727,048.45 in other capital reserves in the current fiscal year was calculated with equity-settledshare-based payments which were included in the capital reserve. Please refer to Note (XI) for details.
The increase of RMB 644,027,914.18 in share premium during the prior year was due to the exercise of equity-settledshare-based payments, and other capital reserves were transferred to share premium; The increase of RMB 341,640,955.28was due to the business integration of the thermal imaging business and intelligent fire protection and control of the Groupthrough transferring the asset groups of the thermal imaging business department to the holding subsidiary HangzhouHikmicro Sensing by the Company, and transferring the asset groups of the intelligent fire protection and control businessdepartment, 100% equity interests in Wuhan Hiksafety Technology Co., Ltd. and Zhejiang Hiksafety Technology Co., Ltd.to its holding subsidiary Hangzhou Hikfire Technology by the Company, the difference between the collected transferconsideration and the transferred net assets is formed, the shareholding ratio in the two companies was changed from directholding of 100% to indirect holding of 60%.
The increase of RMB 782,471,622.99 in other capital reserves during the prior year was due to equity-settled share-basedpayments which were included in the capital reserve.
Note 2: The decrease of RMB 115,032,981.28 in share premium during the current reporting period was due to theCompany’s repurchase of 7,611,076 granted but unlocked RMB treasury shares by cash, please refer to Note (V) 39; Thedecrease of RMB 7,400,929.19 in share premium during the current reporting period was due to share distributions byequity settlements to minority shareholders.
Among the decrease in share premium during the prior year, a decrease of RMB 11,823,911.35 was due to the Company’srepurchase of 1,593,506 granted but unlocked RMB treasury shares by cash ; a decrease of RMB 29,967,599.60 was dueto share distributions by equity settlements to minority shareholders; a decrease of RMB 30,487,304.19 was due to thedifference between the payment of the consideration and the share of identifiable net assets calculated based on the newlyincreased shareholding ratio as a result of acquisition of 42.86% minority interest in each of the holding subsidiariesHua’An Baoquan Intelligence and Hua’An Bao Quan Electronics
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
41. Treasury Shares
Unit: RMB
Item | Opening Balance | Increase in the current reporting period | Decrease in the current reporting period (Note 1) | Closing balance |
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 |
2020 | ||||
Restricted shares incentive scheme | 2,148,273,864.36 | - | 1,026,355,126.89 | 1,121,918,737.47 |
Total | 2,148,273,864.36 | - | 1,026,355,126.89 | 1,121,918,737.47 |
Note 1: During the current reporting period, the decreased amount of RMB 98,730,014.43 in treasury shares was due tothe provision of cash dividend allocated to restricted shares and the repurchase and cancellation of 7,611,076 restrictedshares of 2016 and 2018 Restricted Share Incentive Scheme.
During the prior year, the decreased amount of RMB 1,026,355,126.89 in treasury shares was due to the provision of cashdividend allocated to restricted shares, the repurchase and cancellation of 1,593,506 restricted shares of the Company’s2016 Restricted Share Incentive Scheme, the unlocking of 21,204,645 shares for the expiry of the 3
rd
unlocking period ofthe Company’s 2016 Restricted Share Incentive Scheme, the unlocking of 45,591,794 shares for the expiry of the 1
st
unlocking period of the Company’s 2018 Restricted Share Incentive Scheme.
.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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) | |||
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) |
2020 | |||||||
Other incomes that may be reclassified subsequently to profit or loss | (53,541,146.99) | (34,145,243.17) | - | - | (31,452,779.95) | (2,692,463.22) | (84,993,926.94) |
Included: Effect on conversion of financial statements denominated in foreign currencies | (53,541,146.99) | (34,145,243.17) | - | - | (31,452,779.95) | (2,692,463.22) | (84,993,926.94) |
Other comprehensive income | (53,541,146.99) | (34,145,243.17) | - | - | (31,452,779.95) | (2,692,463.22) | (84,993,926.94) |
43. Surplus Reserves
Unit: RMB
Item | Opening balance | Increase in the current reporting period | Decrease in the current reporting period | Closing balance |
2021 and 2020 | ||||
Statutory surplus reserves (Note) | 4,672,505,348.00 | - | - | 4,672,505,348.00 |
Total | 4,672,505,348.00 | - | - | 4,672,505,348.00 |
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, and when the accumulatedamount of the statutory surplus reserve fund reaches more than 50% of the registered capital, it may not be withdrew. The
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Company has withdrawn a statutory surplus reserve of RMB 4,672,505,348.00, which has reached 50% of the Company'sshare capital, so no subsequent statutory surplus reserve will be accrued in the current fiscal year.
The statutory surplus reserve can be used to make up for losses or increase the share capital after approval.
44. Retained Earnings
Unit: RMB
Item | 2021 | 2020 |
Retained Earnings at the close of the prior reporting period | 35,806,523,826.37 | 28,961,389,145.22 |
Add: Net profit attributable to the parent company for the current reporting period | 16,800,411,032.05 | 13,385,526,714.15 |
Less: Dividends payable on common shares (Note) | 7,458,057,406.90 | 6,540,392,033.00 |
Retained earnings at the end of the current reporting period | 45,148,877,451.52 | 35,806,523,826.37 |
Note:According to the resolution of 2020 Annual General Meeting dated on May 14
th2021, based upon the total capitalshare of the Company on the equity distribution date, for each 10 ordinary shares, the Company distributed cash dividendsof RMB 8 (tax inclusive), the rest of retained earnings were all carried forward for future distributions.
45. Operating Income/Operating Cost
45.1 Operating income and operating cost
Unit: RMB
Item | 2021 | 2020 | ||
Revenue | Cost | Revenue | Cost | |
Operating income | 80,803,165,490.40 | 44,894,713,863.87 | 62,879,112,889.36 | 33,607,174,664.31 |
Other operating income | 616,888,048.87 | 434,686,468.78 | 624,338,002.42 | 350,523,193.42 |
Total | 81,420,053,539.27 | 45,329,400,332.65 | 63,503,450,891.78 | 33,957,697,857.73 |
45.2 Operating business (by business type)
Unit: RMB
Item | 2021 | |
Revenue | Cost | |
Product sales | 75,532,012,528.94 | 41,361,920,302.85 |
Construction contract | 4,003,746,727.88 | 3,084,364,818.86 |
Provide services | 1,267,406,233.58 | 448,428,742.16 |
Total | 80,803,165,490.40 | 44,894,713,863.87 |
45.3 Operating business (by the time of revenue recognition)
Unit: RMB
Item | 2021 | |
Revenue | Cost | |
Satisfied at a point in time | 75,532,012,528.94 | 41,361,920,302.85 |
Satisfied over time | 5,271,152,961.46 | 3,532,793,561.02 |
Total | 80,803,165,490.40 | 44,894,713,863.87 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
45.4 Operating business (By product or business type)
Unit: RMB
Item | 2021 | |
Revenue | Cost | |
Products and services for main business | 64,528,795,025.87 | 34,509,451,081.26 |
Constructions | 4,003,746,727.88 | 3,084,364,818.86 |
Innovative businesses | 12,270,623,736.65 | 7,300,897,963.75 |
Total | 80,803,165,490.40 | 44,894,713,863.87 |
Note: The main business is other parts other than innovative businesses.
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 certainperiod. 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 received
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
or 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.
Descriptions of allocation to the remaining performance obligations:
As of December 31
st2021, all the remaining performance obligations are part of the contracts with original expectedcontract term not exceeding one year. The Group expects to recognize all of them as revenue within the next year.
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
46. Business Taxes and Surcharges
Unit: RMB
Items | 2021 | 2020 |
City construction and maintenance tax | 271,005,144.60 | 189,386,771.55 |
Education surcharges | 118,219,501.03 | 82,442,008.19 |
Local education surcharges | 78,812,578.90 | 54,915,581.40 |
Stamp duty | 48,719,842.95 | 30,560,972.35 |
Real estate tax | 38,218,345.28 | 20,330,766.80 |
Tax on use of land | 5,747,583.10 | 3,992,258.37 |
Vehicle and vessel tax | 156,562.97 | 151,291.55 |
Others | 100,448.69 | 34,483,699.34 |
Total | 560,980,007.52 | 416,263,349.55 |
47. Selling Expenses
Unit: RMB
Items | 2021 | 2020 |
Payroll | 5,548,436,481.61 | 4,322,277,210.83 |
Marketing Expenses | 1,351,499,107.82 | 1,156,331,130.68 |
Shipping, transportation, and vehicle expense | 300,539,153.45 | 711,448,510.07 |
Travelling expenses | 272,916,031.74 | 216,729,012.52 |
Office expenses | 206,708,742.81 | 201,748,056.17 |
Business hospitality expenses | 251,571,190.72 | 183,005,835.09 |
Rental expenses | 66,296,932.66 | 193,697,802.86 |
Professional Intermediary expenses | 192,080,083.00 | 158,620,553.03 |
Depreciation and amortization expenses | 208,955,480.02 | 89,216,922.78 |
Others | 187,440,464.19 | 144,715,710.55 |
Total | 8,586,443,668.02 | 7,377,790,744.58 |
48. Administrative Expenses
Unit: RMB
Items | 2021 | 2020 |
Payroll | 1,320,787,327.54 | 1,155,570,756.22 |
Office expenses | 228,196,179.10 | 180,626,249.71 |
Depreciation and amortization expenses | 194,491,716.47 | 164,558,720.85 |
Professional Intermediary expenses | 95,361,861.47 | 74,792,204.76 |
Travelling expenses | 39,132,306.65 | 37,760,312.22 |
Shipping, transportation, utility expense | 48,723,035.15 | 41,419,386.33 |
Rental expenses | 10,375,238.03 | 6,827,268.39 |
Business hospitality expenses | 11,296,053.97 | 9,193,300.21 |
Others | 183,886,745.58 | 119,264,890.07 |
Total | 2,132,250,463.96 | 1,790,013,088.76 |
49. R&D Expenses
Unit: RMB
Items | 2021 | 2020 |
Payroll | 6,809,382,000.63 | 5,154,824,934.62 |
Consumables and service fees | 556,631,898.14 | 533,761,090.55 |
Depreciation and amortization expenses | 299,364,107.17 | 218,167,957.47 |
Office expenses | 167,582,498.45 | 190,693,619.45 |
Intermediate testing fees | 144,910,134.48 | 145,698,114.33 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
Travelling expenses
Travelling expenses | 108,265,517.40 | 68,264,094.55 |
New product design fees | 106,964,625.53 | 20,416,472.49 |
Rental expenses | 5,329,594.73 | 10,791,884.40 |
Others | 53,214,724.86 | 36,033,594.56 |
Total | 8,251,645,101.39 | 6,378,651,762.42 |
50. Financial Expenses
Unit: RMB
Items | 2021 | 2020 |
Interest expenses | 231,787,858.92 | 223,386,660.79 |
Interest expense on lease liabilities | 17,607,723.12 | - |
Less:Interest income | 885,545,988.62 | 722,845,909.92 |
Foreign exchange losses | 354,146,744.37 | 927,956,362.97 |
Less﹕Capitalized specific loan interests and foreign exchange differences on specific loan | (124,649,345.63) | 58,884,747.25 |
Others | 24,011,058.74 | 26,642,405.97 |
Total | (133,343,257.84) | 396,254,772.56 |
51. Other Income
Unit: RMB
Items | 2021 | 2020 |
VAT Rebates | 2,054,594,872.37 | 1,739,193,206.86 |
Special subsidies | 558,717,940.38 | 530,334,411.76 |
Tax reduction | 14,829,396.58 | 32,596,557.71 |
Value-added tax deduction | 418,611.13 | 1,457,529.48 |
Total | 2,628,560,820.46 | 2,303,581,705.81 |
52. Investment Income
Unit: RMB
Items | 2021 | 2020 |
Long-term equity investment gains based on equity method | 114,137,281.18 | 6,361,388.74 |
Investment income from other non-current financial assets during the holding period | 115,644,801.97 | 150,000,000.00 |
Investment income from disposal of held-for-trading financial assets | 113,608,106.10 | 12,915,660.21 |
Investment losses from disposal of subsidiaries and other business units | (169,184,641.43) | - |
Total | 174,205,547.82 | 169,277,048.95 |
53. Gains(Losses) from Changes in Fair Values
Unit: RMB
Sources of gains (losses) from changes in fair values | 2021 | 2020 |
Held-for-trading financial assets | 11,711,591.07 | 22,814,664.19 |
Including: gains on the changes in fair value of derivative financial instruments | 11,711,591.07 | 22,814,664.19 |
Gains(Losses) from changes in fair value of other non-current financial assets | (53,214,895.05) | 69,478,784.83 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
Held-for-trading financial liabilities
Held-for-trading financial liabilities | 3,303,279.51 | (6,835,239.48) |
Including: gains (losses) on the changes in fair value of derivative financial instruments | 3,303,279.51 | (6,835,239.48) |
Total | (38,200,024.47) | 85,458,209.54 |
54. Credit Impairment Loss
Unit: RMB
Items | 2021 | 2020 |
Credit impairment losses of accounts receivable | (566,389,266.23) | (106,051,544.54) |
Credit impairment reverses (losses) of other receivables | 25,231,443.14 | (27,043,173.31) |
Credit impairment losses of long-term receivables | (28,600,342.41) | (52,845,607.89) |
Total | (569,758,165.50) | (185,940,325.74) |
55. Impairment Losses of Assets
Unit: RMB
Items | 2021 | 2020 |
Losses on inventory devaluation | (434,614,231.94) | (361,227,476.20) |
Contract assets impairment loss | (13,075,174.66) | (1,882,037.79) |
Total | (447,689,406.60) | (363,109,513.99) |
56. Non-operating Income
Unit: RMB
Items | 2021 | 2020 | The amount booked into current period non-recurring profits and looses |
Fines and confiscations | 59,586,645.03 | 66,127,109.32 | 59,586,645.03 |
Government subsidies | 2,653,472.98 | 8,472,687.83 | 2,653,472.98 |
Income from business combination of enterprises not under the same control (Note) | 1,163,932.96 | 281,193.50 | 1,163,932.96 |
Others | 12,340,318.32 | 24,392,312.85 | 12,340,318.32 |
Total | 75,744,369.29 | 99,273,303.50 | 75,744,369.29 |
Government subsidies included in current profit and loss:
Unit: RMB
Item | 2021 | 2020 | Related to assets/Related to incomes |
Tax reduction | 341,525.58 | 138,798.93 | Related to incomes |
Other subsidies | 2,311,947.40 | 8,333,888.90 | Related to incomes |
Total | 2,653,472.98 | 8,472,687.83 |
Note: On September 23
rd
2021, the Group acquired Epcom MX. The fair value of the identifiable net assetsobtained in the acquisition less than the combination cost is included in the current profit and loss, which isequivalent to RMB 1,163,932.96. See Note (VI) 1 for details.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
57. Non-operating Expenses
Unit: RMB
Items | 2021 | 2020 | The amount booked into current period non-recurring profits and looses |
Losses on disposal of non-current assets | 8,156,134.63 | 6,465,180.38 | 8,156,134.63 |
Local water conservancy construction fund | 1,347,569.92 | 1,672,431.96 | 1,347,569.92 |
Donation expenses | 51,489,848.19 | 1,887,772.40 | 51,489,848.19 |
Others | 20,560,553.01 | 12,951,586.67 | 20,560,553.01 |
Total | 81,554,105.75 | 22,976,971.41 | 81,554,105.75 |
58. Income Tax Expenses
58.1 Details of Income tax expenses
Unit: RMB
Items | 2021 | 2020 |
Income tax for the current reporting period | 1,912,421,635.04 | 2,140,449,306.26 |
Deferred income tax expenses | (385,068,762.95) | (89,684,430.19) |
Differences in filing and payment of income tax in previous reporting years | (569,862,219.93) | (456,113,070.38) |
Total | 957,490,652.16 | 1,594,651,805.69 |
58.2 Reconciliation of income tax expenses to the accounting profit
Unit: RMB
Item | 2021 | 2020 |
Total profit | 18,468,211,862.63 | 15,272,971,277.86 |
Income tax expenses calculated at applicable tax rates of 15% | 2,770,231,779.39 | 2,290,945,691.68 |
Impact of non-deductible costs, expenses and losses | 13,462,549.85 | 30,860,096.48 |
Tax effect of non-taxable income | (20,994,120.30) | (3,054,060.62) |
Impact of deductible temporary differences or deductible losses for which no deferred income tax assets is recognized for the current period | 126,889,022.94 | 160,270,373.80 |
Impact of using deductible temporary differences or deductible losses for which no deferred income tax assets was recognized for the prior periods | (124,304,097.81) | (27,124,409.54) |
Differences of income tax annual filing (Note) | (569,862,219.93) | (456,113,070.38) |
Impact by different tax rates applicable to different subsidiaries | 117,262,283.11 | 65,427,121.90 |
Impact of additional deduction of R&D expenses | (853,993,809.22) | (498,716,838.03) |
Others | (501,200,735.87) | 32,156,900.40 |
Income tax expenses | 957,490,652.16 | 1,594,651,805.69 |
Note: Pursuant to the Notice on Printing the List of Key Software Enterprises and Integrated Circuit Design Enterprisesunder the National Planning Layout between 2013 and 2014 (Fa Gai Gao Ji [2013] No. 2458) , the Company was identifiedas a national key software enterprise in December 2013. Pursuant to the Notice on Relevant Issues Concerning thePreferential Policies for Enterprise Income Tax on Software and Integrated Circuit Industry (Finance and Taxation [2016]No. 49), the Company was approved by the tax authorities in May 2021 to apply enterprise income tax of 10% for 2020,therefore, the enterprise’s 2020 income tax expenses was reduced by RMB 569, 111,492.62 (2020: RMB 456,113,070.38).
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
59. Notes to Consolidated Cash Flow Statement Items
59.1 Other cash receipts relating to operating activities
Unit: RMB
Items | 2021 | 2020 |
Interest income | 747,643,940.57 | 639,105,287.46 |
Government subsidies | 1,108,737,358.14 | 503,207,004.05 |
Withdrawal of restricted currency funds | 870,118,675.99 | 183,586,082.31 |
Others | 71,926,963.35 | 101,691,979.83 |
Total | 2,798,426,938.05 | 1,427,590,353.65 |
59.2 Other cash payments relating to operating activities
Unit: RMB
Item | 2021 | 2020 |
Advertising and Selling services | 1,209,668,231.40 | 1,106,345,645.08 |
Office expenses and business expenses | 1,244,593,584.01 | 997,386,647.41 |
Shipping and transportation expense | 380,408,948.15 | 778,093,845.68 |
R&D expense | 702,435,895.72 | 561,674,056.35 |
Travelling expense | 420,313,855.79 | 322,753,419.29 |
Outsourcing service fees, fees for hiring intermediaries, etc. | 406,476,311.46 | 301,671,589.85 |
Rental expense | 82,001,765.42 | 211,316,955.65 |
Deposits to restricted monetary funds | 553,153,948.19 | 62,196,400.89 |
Others | 298,285,736.64 | 34,657,044.75 |
Total | 5,297,338,276.78 | 4,376,095,604.95 |
59.3 Other cash receipts relating to investing activities
Unit: RMB
Item | 2021 | 2020 |
Receipts of financing lease payments | - | 46,196,873.80 |
Total | - | 46,196,873.80 |
59.4 Other cash payments related to investing activities
Unit: RMB
Item | 2021 | 2020 |
Cash payments for investment intention funds | 4,000,000.00 | 1,000,000.00 |
Net cash payment for disposal of subsidiaries and other business units | 6,196,658.79 | - |
Total | 10,196,658.79 | 1,000,000.00 |
59.5 Other cash payments relating to financing activities
Unit: RMB
Item | 2021 | 2020 |
The consideration paid for the acquisition of minority shareholders' equity | - | 64,290,000.00 |
Repurchase of restricted shares | 122,644,057.28 | 13,417,417.35 |
Repayment of lease liabilities | 190,296,810.23 | - |
Total | 312,940,867.51 | 77,707,417.35 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
60. Supplementary Information about Cash Flow Statement
60.1 Supplementary information about cash flow statement
Unit: RMB
Supplementary information | 2021 | 2020 |
1. Reconciliation of net profit to cash flows from operating activities: | ||
Net profit | 17,510,721,210.47 | 13,678,319,472.17 |
Add: Impairment of assets | 447,689,406.60 | 363,109,513.99 |
Provision for credit losses | 569,758,165.50 | 185,940,325.74 |
Fixed assets depreciation | 685,029,204.28 | 713,633,074.93 |
Amortization of intangible assets | 140,708,108.57 | 87,014,571.01 |
Long-term deferred expenses amortization | 66,502,221.67 | 44,742,828.97 |
Right-of-use assets depreciation | 198,362,376.40 | - |
Gains on disposal of fixed assets, intangible assets and other long-term assets | (34,225,603.81) | (628,505.02) |
Fixed asset scrapping losses | 8,156,134.63 | 6,465,180.38 |
Losses (gains) from changes in fair value | 38,200,024.47 | (85,458,209.54) |
Financial expenses | 302,351,912.74 | 598,966,581.29 |
Investment income | (174,205,547.82) | (169,277,048.95) |
Share-based payment based on equity settlement | 369,329,250.11 | 818,106,623.19 |
Decrease of restricted funds | 316,964,727.80 | 121,389,681.42 |
Increase in deferred income tax assets | (390,473,424.46) | (131,576,150.12) |
Increase in deferred income tax liabilities | 335,327.28 | 41,891,719.93 |
Increase in inventories | (5,936,053,632.80) | (496,228,965.62) |
Decrease (increase) of operating other non-current assets | (497,739,824.36) | 151,065,258.42 |
Increase in operating receivables | (5,478,863,810.65) | (2,794,429,636.26) |
Increase in operating payables | 4,019,434,922.97 | 3,098,102,287.85 |
Increase (decrease) in deferred income | 547,707,470.36 | (142,710,843.61) |
Others | (1,163,932.96) | (281,193.50) |
Net cash flows from operating activities | 12,708,524,686.99 | 16,088,156,566.67 |
2. Significant investing and financing activities not involving cash receipts and payments: | ||
3. Net changes in cash and cash equivalents: | ||
Closing balance of cash | 34,603,944,429.20 | 35,024,837,878.31 |
Less: Opening balance of cash | 35,024,837,878.31 | 26,515,668,008.40 |
Add: Closing balance of cash equivalents | - | - |
Less: Opening balance of cash equivalents | - | - |
Net Increase (decrease) in cash and cash equivalents | (420,893,449.11) | 8,509,169,869.91 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
60.2 Net cash paid for obtaining subsidiaries and other business units during the current year
Unit: RMB
Amounts | |
Cash or cash equivalents paid for the business combination in this year | 395,838,055.75 |
Including: Daishan Hailai | - |
Syscom MX | 378,698,267.92 |
Epcom MX | 17,139,787.83 |
Less: Cash and cash equivalents held by the Company on the acquisition date | 72,233,525.01 |
Including: Daishan Hailai | 44,354,803.41 |
Syscom MX | 26,037,489.00 |
Epcom MX | 1,841,232.60 |
Net cash paid for obtaining the subsidiary | 323,604,530.74 |
60.3 Constituents of cash and cash equivalents
Unit: RMB
Item | Closing balance | Opening balance |
Cash | 34,603,944,429.20 | 35,024,837,878.31 |
Including: Cash on hand | 1,851,273.53 | 1,105,047.51 |
Bank deposit for payment at any time | 34,573,786,777.26 | 34,968,013,389.43 |
Other monetary capital for payment at any time | 28,306,378.41 | 55,719,441.37 |
Cash equivalents | - | - |
Closing balance of cash and cash equivalents | 34,603,944,429.20 | 35,024,837,878.31 |
Among the total balance of RMB 146,232,880.57 of the other monetary fund(s) at the end of the reporting period(December 31
st2020: RMB 490,610,671.33), RMB 117,926,502.16 are various guarantee deposits and other restrictedfunds, etc. (December 31
st2020: RMB 434,891,229.96), 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 | 117,926,502.16 | Various guarantee deposits and other restricted funds |
Notes receivable | 711,238,103.83 | Endorsed to suppliers |
Receivables for financing | 4,337,929.69 | Pledged for issuing bank acceptance bills |
Accounts receivable | 197,358,387.51 | Pledged for long-term borrowings |
Contract assets | 104,842,914.69 | Pledged for long-term borrowings |
Intangible assets | 62,497,900.00 | Pledged for long-term borrowings |
Other non-current assets | 1,667,721,944.32 | Pledged for long-term borrowings |
Right-of-use assets | 23,923,145.37 | Fixed assets leased through financial lease |
Total | 2,889,846,827.57 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
62. Monetary Items of Foreign Currencies
62.1 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 | 266,706,479.65 | 6.3757 | 1,700,440,502.30 |
EUR | 85,252,747.73 | 7.2197 | 615,499,262.76 |
GBP | 9,516,440.69 | 8.6064 | 81,902,295.18 |
RUB | 317,813,616.47 | 0.0855 | 27,163,529.80 |
HKD | 31,242,355.45 | 0.8176 | 25,543,749.82 |
JPY | 345,648,715.88 | 0.0554 | 19,148,938.86 |
PLN | 11,277,337.50 | 1.5717 | 17,724,929.67 |
KRW | 2,491,866,911.68 | 0.0054 | 13,356,905.02 |
AED | 4,973,251.64 | 1.7361 | 8,634,062.17 |
AUD | 709,775.17 | 4.6220 | 3,280,580.85 |
SGD | 1,628,647.85 | 4.7179 | 7,683,797.69 |
NZD | 421,332.56 | 4.3553 | 1,835,029.69 |
ZAR | 8,460.22 | 0.4004 | 3,387.05 |
TRY | 359.24 | 0.4822 | 173.24 |
INR | 1,699.58 | 0.0857 | 145.62 |
Accounts receivable | |||
Including: EUR | 262,479,326.37 | 7.2197 | 1,895,021,992.59 |
USD | 95,689,448.83 | 6.3757 | 610,087,218.91 |
HKD | 42,720,682.35 | 0.8176 | 34,928,429.89 |
Short-term borrowings | |||
Including: EUR | 58,208,782.93 | 7.2197 | 420,249,950.14 |
USD | 14,347,704.66 | 6.3757 | 91,476,660.61 |
Accounts payable | |||
Including: USD | 237,414,662.32 | 6.3757 | 1,513,684,662.55 |
HKD | 1,460,345,721.20 | 0.8176 | 1,193,978,661.65 |
EUR | 2,531,035.74 | 7.2197 | 18,273,318.73 |
Long-term borrowings | |||
Including: EUR | 146,000,000.00 | 7.2197 | 1,054,076,200.00 |
USD | 60,744,787.08 | 6.3757 | 387,290,538.98 |
Non-current liabilities due within one year - Long-term borrowings | |||
Including: EUR | 4,036,666.67 | 7.2197 | 29,143,522.36 |
USD | 87,929.17 | 6.3757 | 560,610.03 |
62.2 Details of Overseas Operational Entities
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Name of overseas subsidiaries
Name of overseas subsidiaries | Main overseas operational office | Recording Currency | Basis of selection |
HDT International Ltd. | Hongkong China | HKD | Selection based on local economic environment |
Hikvision Europe B.V. | Netherlands | USD | Selection based on local economic environment |
Prama Hikvision Indian Private Limited | India | INR | Selection based on local economic environment |
Hikvision UK Limited | UK | GBP | Selection based on local economic environment |
Hikvision Italy (S.R.L.) | Italy | EUR | Selection based on local economic environment |
Hikvision International Co., Limited | Hongkong China | USD | Selection based on local economic environment |
Hikvision Australia PTY Ltd. | Australia | AUD | Selection based on local economic environment |
Hikvision Spain, S.L. | Spain | EUR | Selection based on local economic environment |
Hikvision France SAS | France | EUR | Selection based on local economic environment |
Hikvision Singapore Pte. Ltd. | Singapore | SGD | Selection based on local economic environment |
Hikvision South Africa (Pty) Ltd. | South Africa | ZAR | Selection based on local economic environment |
Hikvision FZE | UAE | USD | Selection based on local economic environment |
Hikvision Poland Spolka Z Ograniczona Odpowiedzialnoscia. | Poland | PLN | Selection based on local economic environment |
Hikivision do Brasil Comercio de Equipamentos de Seguran?a Ltda. | Brazil | BRL | Selection based on local economic environment |
Hikvision LLC | Russia | RUB | Selection based on local economic environment |
Ezviz Inc. | USA | USD | Selection based on local economic environment |
Cooperative Hikvision Europe U.A. | Netherlands | USD | Selection based on local economic environment |
Hikvision Korea Limited | Korea | KRW | Selection based on local economic environment |
Hikvision Colombia SAS | Columbia | COP | Selection based on local economic environment |
Hikvision Kazakhstan Limited Liability Partnership | Kazakhstan | KZT | Selection based on local economic environment |
Pyronix Ltd. | UK | GBP | Selection based on local economic environment |
Microwave Solutions Limited | UK | GBP | Selection based on local economic environment |
Hikvision Turkey Technology And Security Systems Commerce Corporation | Turkey | TRY | Selection based on local economic environment |
Syscom MX | Mexico | MXN | Selection based on local economic environment |
Epcom MX | Mexico | MXN | Selection based on local economic environment |
Hikvision Chile SpA | Chile | CLP | Selection based on local economic environment |
Hikvision Hungary Limited | Hungary | HUF | Selection based on local economic environment |
Hikvision New Zealand Limited | New Zealand | NZD | Selection based on local economic environment |
Hikvision Czech S.R.O. | Czech | CZK | Selection based on local economic environment |
Hikvision Deutschland GmbH | Germany | EUR | Selection based on local economic environment |
Hikvision Kenya (Pty) Ltd. | Kenya | KES | Selection based on local economic environment |
LLC Hikvision Tashkent | Uzbekistan | UZS | Selection based on local economic environment |
Hikvision (Malaysia) Sdn. Bhd. | Malaysia | MYR | Selection based on local economic environment |
Hikvision USA,Inc. | USA | USD | Selection based on local economic environment |
Hikvision Canada INC. | Canada | CAD | Selection based on local economic environment |
Hikvision Mexico S.A.de C.V. | Mexico | MXN | Selection based on local economic environment |
Hikvision Panama Commercial S.A. | Panama | USD | Selection based on local economic environment |
Hikvision Pakistan (SMC-Private) Limited | Pakistan | PKR | Selection based on local economic environment |
Hikvision Peru Closed Stock Company | Peru | PEN | Selection based on local economic environment |
Hikvision Central America S.A. | Panama | USD | Selection based on local economic environment |
Hikvision Technology Egypt JSC | Egypt | EGP | Selection based on local economic environment |
PT. Hikvision Technology Indonesia | Indonesia | IDR | Selection based on local economic environment |
Hikvision Technologies S.R.L., | Romania | RON | Selection based on local economic environment |
Hikvision IOT (Thailand) Co.,Ltd. | Thailand | THB | Selection based on local economic environment |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Name of overseas subsidiaries
Name of overseas subsidiaries | Main overseas operational office | Recording Currency | Basis of selection |
Hikvision West Africa Limited | Nigeria | NGN | Selection based on local economic environment |
EZVIZ International Limited | Hongkong China | HKD | Selection based on local economic environment |
Hikvision Azerbaijan Limited Liability | Azerbaijan | AZN | Selection based on local economic environment |
Hikvision Japan K.K. | Japan | JPY | Selection based on local economic environment |
Hikvision Argentina S.R.L. | Argentina | ARS | Selection based on local economic environment |
HIKVISION Morocco LLC | Morocco | MAD | Selection based on local economic environment |
Hikvision Technology Israel Ltd | Israel | ILS | Selection based on local economic environment |
EZVIZ Europe B.V. | Netherlands | EUR | Selection based on local economic environment |
BK Grup? UAB | Lithuania | EUR | Selection based on local economic environment |
BK EESTI AKTSIASELTS | Estonia | EUR | Selection based on local economic environment |
SIA "BK Latvia" | Latvia | EUR | Selection based on local economic environment |
63. Government Subsidies
63.1 Categories
Unit: RMB
Category | Amount | Financial Report Items | Amount booked in current profit and loss |
VAT Rebates | 2,054,594,872.37 | Other Income | 2,054,594,872.37 |
Special subsidies | 1,299,616,345.83 | ||
Including: other special subsidies | 1,222,781,210.39 | Deferred income / Other income/ Non-operating income | 524,912,433.68 |
Chongqing Manufacturing Base construction subsidies | 76,835,135.44 | Deferred income / Other income | 36,117,454.10 |
Tax Refund/Reduction | 15,589,533.29 | Other income/ Non-operating income | 15,589,533.29 |
Total | 3,369,800,751.49 | 2,631,214,293.44 |
63.2 There was no refund of government subsidies during the current reporting period.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th
2021
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
Daishan Hailai
In June 2021, the Company's joint venture -Daishan Hailai’s original shareholders Zhoushan Islands New District Penglai State-owned Assets Investment Group Co., Ltd. (hereinafterreferred to as "Penglai SAI") and an independent third-party company, Daishan Haina Shuzhi Co., Ltd. (hereinafter referred to as “Haina Shuzhi”) signed an equity transfer agreement,and Penglai SAI transferred its 33.4% stake in Daishan Hailai to Haina Shuzhi. After the completion of the equity transfer, the Company holds 66.6% equity of Daishan Hailai, and HainaShuzhi holds 33.4% equity of Daishan Hailai. On June 30
th2021, the Company and Haina Shuzhi formed a common unanimous resolution to approve the Articles of Association ofDaishan Hailai. Major matters involving the decision of the Company's development strategy and long-term planning must be approved by shareholders representing more than 2/3 of thevoting rights, changed to shareholders representing more than 1/2 of the voting rights. Daishan Hailai has a total of 5 board members, 3 from Hikvision and 2 from Haina Shuzhi. Mattersinvolving major financial and operating decisions must be approved by more than 2/3 of the Board of Directors,changed to be approved by more than 1/2 of the Board of Directors.Therefore, the Group can control the financial and operating decisions of Daishan Hailai, and has substantial control over it, so Daishan Hailai is included in the scope of the consolidatedfinancial statements.
Syscom MX and Epcom MX (hereinafter collectively referred to as the "Subject Companies")
Hikvision Singapore Pte. Ltd., a wholly-owned subsidiary of the Company, and the original shareholders of the Subject Companies jointly signed the STOCK PURCHASE AGREEMENTon January 30
th
2021, and signed three supplementary agreements between June and September 2021 (the above agreement and the supplementary agreements are collectively referred toas the "Acquisition Agreements"), agreeing to acquire 51% of the equity in the Subject Companies held by two independent third parties at USD 61,035,256; from November 2020 toMay 2021, the above acquisition arrangements were field or approved by the Board of Directors of CETHIK Group Co., Ltd. (hereinafter referred to as “CETHIK”), the Ministry ofCommerce of the People's Republic of China, the National Development and Reform Commission of the People’s Republic of China and the State Administration of Foreign Exchangeof the People’s Republic of China (Branch of Zhejiang Province). The equity delivery of Syscom MX and Epcom MX have been completed on September 23
rd
2021. Therefore, the Grouptook September 23
rd 2021 as the acquisition date, and the Group incorporated the Subject Companies into consolidation scope from the acquisition date. As of December 31
st
2021, theCompany has completed the equity transfer payment of USD 61,035,256, which is equivalent to approximately RMB 395,838,055.75 exchanged at spot foreign exchange rate. As of theannouncement date of the financial statements, the closing audit of the financial statements of the Subject Company on the acquisition date is in progress.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th2021
Name of the acquiree
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 |
Daishan Hailai | June 2021 | 14,899,444.96 | 66.60% | Change in voting rights | June 30th 2021 | Date for obtaining actual control of the purchased party | 45,774,840.61 | 6,480,312.77 |
Syscom MX | September 2021 | 378,698,267.92 | 51.00% | Cash Payments | September 23rd 2021 | Equity delivery date for obtaining control of the purchased party | 774,040,976.53 | 82,010,831.97 |
Epcom MX | September 2021 | 17,139,787.83 | 51.00% | Cash Payments | September 23rd 2021 | Equity delivery date for obtaining control of the purchased party | 18,125,454.54 | 2,057,929.50 |
1.2 Cost of business combination and goodwill
Cost of business combination | Daishan Hailai | Syscom MX | Epcom MX |
-Cash | - | 378,698,267.92 | 17,139,787.83 |
- The acquisition-date fair value of the acquirer’s previously held equity interest | 14,899,444.96 | - | - |
Total cost of business combination | 14,899,444.96 | 378,698,267.92 | 17,139,787.83 |
Less: The fair value share of identifiable net assets obtained | 14,899,444.96 | 304,312,721.16 | 18,303,720.79 |
Goodwill/The amount that the combination cost is less than the amount of the fair value share of the identifiable net assets acquired | - | 74,385,546.76 | (1,163,932.96) |
1.3 Acquiree’s book value of assets and liabilities at the date of acquisition
Daishan Hailai | Syscom MX | Epcom MX | ||||
Book value on the date of acquisition | Fair value on the date of acquisition | Book value on the date of acquisition | Fair value on the date of acquisition | Book value on the date of acquisition | Fair value on the date of acquisition | |
Assets: | ||||||
Cash and bank balances | 44,354,803.41 | 44,354,803.41 | 26,037,489.00 | 26,037,489.00 | 1,841,232.60 | 1,841,232.60 |
Accounts receivable | 5,950,728.47 | 5,950,728.47 | 49,173,526.80 | 49,173,526.80 | 5,369,076.00 | 5,369,076.00 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th2021
Daishan Hailai | Syscom MX | Epcom MX | ||||
Book value on the date of acquisition | Fair value on the date of acquisition | Book value on the date of acquisition | Fair value on the date of acquisition | Book value on the date of acquisition | Fair value on the date of acquisition | |
Prepayments | 71,115.98 | 71,115.98 | 114,085,276.20 | 114,085,276.20 | 130,906.80 | 130,906.80 |
Other current assets | 1,300,073.30 | 1,300,073.30 | 66,759,306.00 | 66,759,306.00 | 5,302,041.60 | 5,302,041.60 |
Inventories | 2,339,888.20 | 2,339,888.20 | 928,380,591.00 | 928,380,591.00 | 7,321,927.20 | 7,321,927.20 |
Fixed assets | 203,135.29 | 203,135.29 | 69,780,913.20 | 69,780,913.20 | 40,650,039.60 | 40,650,039.60 |
Right–of-use assets | 18,417.19 | 18,417.19 | 21,205,636.80 | 21,205,636.80 | - | - |
Other assets | 25,438,535.65 | 25,438,535.65 | 29,698,768.80 | 29,698,768.80 | 2,431,894.20 | 2,431,894.20 |
Liabilities: | ||||||
Notes payable | - | - | 237,410,548.80 | 237,410,548.80 | 22,158,347.40 | 22,158,347.40 |
Accounts payable | 55,313,400.79 | 55,313,400.79 | 182,758,540.80 | 182,758,540.80 | 80,314.80 | 80,314.80 |
Tax payable | (31,062.40) | (31,062.40) | 11,272,213.80 | 11,272,213.80 | 2,962,161.60 | 2,962,161.60 |
Payroll payable | 316,509.08 | 316,509.08 | 29,792,680.20 | 29,792,680.20 | - | - |
Dividend payable | - | - | 168,383,380.27 | 168,383,380.27 | - | - |
Other payables | 43.88 | 43.88 | 46,989,849.60 | 46,989,849.60 | 959,350.80 | 959,350.80 |
Lease liabilities | 5,929.50 | 5,929.50 | 24,015,073.80 | 24,015,073.80 | - | - |
Other liabilities | 1,700,337.66 | 1,700,337.66 | 7,807,610.41 | 7,807,610.41 | 997,294.80 | 997,294.80 |
Net assets acquired | 22,371,538.98 | 22,371,538.98 | 596,691,610.12 | 596,691,610.12 | 35,889,648.60 | 35,889,648.60 |
1.4 The Group uses the market method and the income method to evaluate the fair value, and finally confirms the evaluation value on the basis of comparing the two evaluation methods.
1.5 The Group has no contingent liabilities of the purchased party that need to be assumed in this merger.
2. Disposal of a Subsidiary
2.1 Loss of control of a subsidiary due to a single disposal of investment in the subsidiary
In March 2021, The Group, CETHIK and EZVIZ Technology signed the Entrusted Management Agreement Termination Agreement, agreed that the Entrusted Management Agreementwill be terminated on March 27
th
2021. After the termination of the Entrusted Management Agreement, the Group no longer controls the business of EZVIZ Technology, no longerresponsible for the production, operation and management of EZVIZ Technology, and no longer enjoy other rights to EZVIZ Technology as stipulated in the Entrusted ManagementAgreement", so the business of EZVIZ Technology is no longer be included in the consolidation scope of the consolidated financial statements.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
th
2021
Unit: RMB
Amount | |
Name of the subsidiary | EZVIZ Technology |
Consideration of equity disposal | 8,000,000.00 |
Ratio of equity disposal | 100% |
Method of equity disposal | Clear debt |
Date of loss of control | March 27th 2021 |
Determination basis for the date of loss of control | Effective date of the Entrusted Management Agreement Termination Agreement |
Disposal of net assets | 8,945,308.50 |
The difference between the disposal consideration and the share that corresponding to the disposal of the subsidiary's net assets at the consolidated financial statement level | (945,308.50) |
3. Changes of Consolidation Scope due to Other Causes
The subsidiaries newly established and incorporated in the consolidation scope during the current reporting period as follows:
Company Name | Time of establishment | Registered capital | Amount of contribution of the Group | Ratio of contribution (%) |
Shanghe Smart City Technology Co., Ltd. ("Shanghe Smart City") (Note 1) | April 2021 | RMB 44.0571 million | RMB 41.8542 million | 95.00 |
Chongqing EZVIZ Electronics Co., Ltd. ("Chongqing EZVIZ) (Note 2) | June 2021 | RMB 100 million | RMB 60 million | 60.00 |
Hangzhou Hikrobot Automation Co., Ltd. ("Robotic Automation") (Note 3) | December 2021 | RMB 300 million | RMB 180 million | 60.00 |
Hikvision Chile SpA (Note 3) | December 2021 | USD 300 thousand | USD 300 thousand | 100.00 |
Hangzhou Haina Yuzhi Entrepreneurship Investment Partnership Co., Ltd. ("Haina Yuzhi Fund") (Note 4) | December 2021 | RMB 600 million | RMB 400 million | 66.67 |
Note 1: At the end of the current reporting period, Shanghe Smart City’s paid-in capital was RMB 44,057,100.00, of which RMB 41,854,200.00 was paid up by the Group and RMB2,202,900.00 was contributed by the minority shareholder, Shanghe Urban-Rural Integration Construction Co., Ltd.
Note 2: At the end of the current reporting period, the paid in capital of Chongqing EZVIZ was RMB 100,000,000.00, which was fully contributed by Hangzhou EZVIZ Network Co.,
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
th2021
Ltd., a subsidiary of the Group.
Note 3: At the end of the current reporting period, Robotic Automation and Hikvision Chile SpA have not yet completed the paid-in capital, so there is no paid-in capital.
Note 4: After the Proposal on Investing in the Establishment of Entrepreneurship Investment Partnerships and Related Party Transactions considered and approved at the 6
thmeeting ofthe 5th session of the Board of Directors held on October 22
nd2021, the Group, CETHIK, Hangzhou Hi-tech Entrepreneurship Investment Management Co., Ltd. and CETHIK (Hangzhou)Equity Investment Management Co., Ltd. jointly invested and established Haina Yuzhi Fund Company. Haina Yuzhi Fund Company is in the form of a limited partnership. It completedthe industrial and commercial registration procedures on December 8
th2021, and obtained the Business License issued by the Hangzhou High-tech Industrial Development Zone (Binjiang)Market Supervision Administration. As of December 31
st
2021, Haina Yuzhi Fund Company has completed the fundraising, with a total of RMB 600 million, of which CETHIK (Hangzhou)Equity Investment Management Co., Ltd. acts as the fund manager and general partner. contributed RMB 1 million and held 0.1667% of the shares; the Group, Hangzhou Hi-Tech VentureCapital Management Co., Ltd. and CETHIK, as limited partners, contributed RMB 400 million, RMB 120 million and RMB 79 million in currency, holding 66.6666%, 20.0000% and
13.1667% of the shares respectively. According to the partnership agreement of Haina Yuzhi Fund, the resolution of the partners meeting shall be approved by the partners who hold morethan 2/3 (including this amount) of the total paid-in capital of the partnership; in addition, the Investment Committee is composed of 5 members, all investment matters must be approvedby more than 1/2 of the representatives, and the Group has assigned more than half of the representatives to the Haina Yuzhi Fund’s Investment Committee. Therefore, the Group includedHaina Yuzhi Fund into the scope of consolidation.
The subsidiaries cancelled in the current reporting period and no longer included in the scope of consolidation are as follows:
Company Name | Date of equity disposition | Proportion of shareholding (%) |
Hundure Technology (Shanghai) Co., Ltd. | April 2021 | 100.00 |
Secure Holding Limited | October 2021 | 100.00 |
Guangzhou Hikvision Technology Co., Ltd. | November 2021 | 100.00 |
Hikvision Joint-Stock Company | December 2021 | 100.00 |
VII. Interest in Other Entities
1. Equity in Subsidiaries
(1) Composition of the corporate group
Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
Direct | Indirect | |||||
Hangzhou Hikvision System Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | System integration, Technology development | 100.00 | - | Establishment |
Hangzhou Hikvision Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | manufacture | 100.00 | - | Establishment |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th2021
Name
Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
Direct | Indirect | |||||
Hangzhou Hikvision Security Equipment Leasing Services Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Finance lease | 100.00 | - | Establishment |
Chongqing Hikvision System Technology Co., Ltd. | Chongqing | Chongqing | System integration | 100.00 | - | Establishment |
Hikvision USA, Inc. | USA | Los Angeles | Sales | 100.00 | - | Establishment |
HDT International Ltd. | Hong Kong China | Hong Kong China | Sales | 95.00 | 5.00 | Establishment |
Prama Hikvision Indian Private Limited | India | Mumbai | Sales | 58.00 | - | Business combination of enterprises not under the same control |
Hikvision Europe B.V. | Europe | Amsterdam | Sales | - | 100.00 | Establishment |
Hikvision FZE | Dubai | Dubai | Sales | 100.00 | - | Establishment |
Hikvision Singapore Pte. Ltd. | Singapore | Singapore | Sales | 100.00 | - | Establishment |
Chongqing Hikvision Technology Co., Ltd. | Chongqing | Chongqing | Manufacture | 100.00 | - | Establishment |
Hangzhou Fuyang Hik Baotai Security Technology Services Co., Ltd. (Note 1) | Hangzhou | Hangzhou, Zhejiang | Construction | - | 51.00 | Establishment |
Hikvision South Africa (Pty) Co., Ltd. | South Africa | South Africa | Sales | 100.00 | - | Establishment |
Hikvision Italy S.R.L. | Italy | Milan | Sales | - | 100.00 | Establishment |
Hikvision do Brasil Comercio de Equipamentos de Seguran?a Ltda. | Brazil | Brazil | Sales | 95.00 | 5.00 | Establishment |
Hikvision Australia PTY Co., Ltd. | Australia | Australia | Sales | 100.00 | - | Establishment |
Hikvision International Co., Limited | Hong Kong China | Hong Kong China | Sales | 100.00 | - | Establishment |
Hikvision France SAS | France | France | Sales | - | 100.00 | Establishment |
Hikvision Spain,S.L. | Spain | Spain | Sales | - | 100.00 | Establishment |
Shanghai Goldway Intelligent Transportation System Co., Ltd. | Shanghai | Shanghai | Manufacture | 100.00 | - | Business combination not involving enterprises under common control |
Hikvision Joint-Stock Company (Note 2) | Russia | St. Peterburg | Sales | - | 100.00 | Business combination not involving enterprises under common control |
Henan Hua’an Baoquan Intelligent Development Co., Ltd. | Zhengzhou | Zhengzhou Henan | Construction | 93.86 | - | Business combination not involving enterprises under common control |
Henan Hua’an Security Services Co., Ltd. | Zhengzhou | Zhengzhou Henan | Services | - | 84.47 | Business combination not involving enterprises under common control |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th2021
Name
Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
Direct | Indirect | |||||
Hundure Technology (Shanghai) Co., Ltd. (Note 2) | Shanghai | Shanghai | Manufacture | 100.00 | - | Business combination not involving enterprises under common control |
Hikvision UK Limited | UK | UK | Sales | - | 100.00 | Establishment |
Hikvision Poland Spolka Z Ograniczona Odpowiedzialnoscia | Poland | Poland | Sales | - | 100.00 | Establishment |
Hangzhou Electronics(Note 3) | Hangzhou | Hangzhou Zhejiang | Manufacture | 73.30 | - | Establishment |
Cooperative Hikvision Europe U.A. | Netherlands | Netherlands | Sales | 99.00 | 1.00 | Establishment |
Hikvision Canada Inc. | Canada | Canada | Sales | 100.00 | - | Establishment |
Hikvision LLC | Moscow | Moscow | Sales | 100.00 | - | Establishment |
Hikvision Korea Limited | Korea | Korea | Sales | 100.00 | - | Establishment |
Hangzhou EZVIZ Network Co., Ltd. (Note 4) | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
Ezviz Inc. | USA | Los Angeles | Sales | - | 60.00 | Establishment |
Hangzhou Haikang Zhicheng Investment Development Ltd | Hangzhou | Hangzhou Zhejiang | System integration | 80.00 | - | Business combination not involving enterprises under common control |
Hangzhou Hikrobot Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
Hangzhou Hikauto Technology Co., Ltd. (“Hangzhou Auto Technology”) | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
Hangzhou Hikvision Communication Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 70.00 | - | Establishment |
Hangzhou Microimage Sensing | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
Hikvision Turkey Technology And Security Systems Commerce Corporation | Turkey | Istanbul | Sales | 100.00 | - | Establishment |
Hikvision Colombia SAS | Columbia | Santa Fe Bogota | Sales | 100.00 | - | Establishment |
Hikvision Kazakhstan limited liability partnership | Kazakhstan | Astana | Sales | 100.00 | - | Establishment |
Secure Holding Limited (Note 2) | British | Sheffield | Manufacture | - | 100.00 | Business combination not involving enterprises under common control |
Pyronix Limited | British | Sheffield | Manufacture | - | 100.00 | Business combination not involving enterprises under common control |
Microwave Solutions Limited | British | Sheffield | Manufacture | - | 100.00 | Business combination not involving enterprises |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
th2021
Name
Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
Direct | Indirect | |||||
under common control | ||||||
Hikvision Hungary Limited | Hungary | Hungary | Sales | - | 100.00 | Establishment |
Hikvision New Zealand Limited | New Zealand | Auckland | Sales | - | 100.00 | Establishment |
Urumqi HaiShi Xin’An Electronic Technology Co., Ltd. | Urumqi | Urumqi, Xinjiang | Construction | - | 90.00 | Establishment |
Hangzhou Ximu Intelligent Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Manufacture | - | 60.00 | Business combination involving enterprises under common control |
LLC Hikvision Tashkent | Uzbekistan | Tashkent | Sales | 100.00 | - | Establishment |
Hikvision Kenya (Pty) Ltd. | Kenya | Kenya | Sales | - | 100.00 | Establishment |
Hangzhou Auto Software | Hangzhou | Hangzhou, Zhejiang | Technology Development | - | 60.00 | Establishment |
Hangzhou Haikang Intelligent Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology Development | - | 60.00 | Establishment |
Wuhan Hikstorage Technology Co., Ltd.(“Wuhan Hikstorage”) | Wuhan | Wuhan Hubei | Technology development | 60.00 | - | Establishment |
Chengdu Hikvision Digital Technology Co., Ltd. | Chengdu | Chengdu Sichuan | Technology development | 100.00 | - | Establishment |
MoYuHaiShi Electronic Technology Co., Ltd. | Hetian | Hetian Xinjiang | Construction | - | 85.00 | Establishment |
Hangzhou EZVIZ Software Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | - | 60.00 | Establishment |
PiShan HaiShi YongAn Electronic Technology Co., Ltd. | Hetian | Hetian Xinjiang | System integration | - | 90.00 | Establishment |
Henan Haikang Hua’an BaoQuan Electronics Co., Ltd. | Zhengzhou | Zhengzhou Henan | Construction | 93.86 | - | Establishment |
Hikvision Czech S.R.O. | Czech | Czech | Sales | - | 100.00 | Establishment |
Hikvision (Malaysia) SDN. BHD | Malaysia | Malaysia | Sales | - | 100.00 | Establishment |
Hikvision Deutschland GmbH | Germany | Germany | Sales | - | 100.00 | Establishment |
Hikvision Xi’an Xueliang Construction Project Management Co., Ltd. | Xi’an | Xi’an Shanxi | Construction | - | 99.00 | Establishment |
Luo Pu District HaiShi Ding Xin Electronic Technology Co., Ltd. | Hetian | Hetian Xinjiang | System integration | - | 90.00 | Establishment |
Yu Tian HaiShi Mei Tian Electronic Technology Co., Ltd. | Hetian | Hetian | System integration | - | 98.00 | Establishment |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th2021
Name
Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
Direct | Indirect | |||||
Xinjiang | ||||||
Xi’An Hikvision Digital Technology Co., Ltd. | Xi’An | Xi’an Shanxi | Technology development | 100.00 | - | Establishment |
Wuhan Hikvision Technology Co., Ltd. | Wuhan | Wuhan Hubei | Technology development | 100.00 | - | Establishment |
Wuhan Hikvision Science and Technology Co., Ltd. | Wuhan | Wuhan Hubei | Sales | 100.00 | - | Establishment |
Wuhan Hiksafety Technology Co., Ltd. | Wuhan | Wuhan Hubei | Sales | - | 60.00 | Establishment |
Hangzhou Hikimaging Technology Co., Ltd. | Hangzhou | Hangzhou, Zhejiang | Technology development | 60.00 | - | Establishment |
Hikvision Mexico S.A.de C.V. | Mexico | Mexico | Sales | - | 100.00 | Establishment |
Guizhou Hikvision Transportation Big Data Co., Ltd. | Guiyang | Guiyang, Guizhou | Technology development | 55.00 | - | Establishment |
Xinjiang CET Yihai Information Technology Co., Ltd. | Urumqi | Urumqi, Xinjiang | System integration | 60.00 | - | Establishment |
Hikvision Panama Commercial S.A | Panama | Panama | Sales | - | 100.00 | Establishment |
Hikvision Pakistan (SMC-Private) Limited | Pakistan | Pakistan | Sales | - | 100.00 | Establishment |
Hikvision Peru Closed Stock Company | Peru | Peru | Sales | 95.00 | 5.00 | Establishment |
Hikvision Technology Israel Co., Ltd. | Israel | Israel | Sales | - | 100.00 | Establishment |
Nanjing Hikvision Digital Technology Co., Ltd. | Nanjing | Nanjing, Jiangsu | Sales | 100.00 | - | Establishment |
Shijiazhuang Hikvision Technology Co., Ltd. | Shijiazhuang | Shijiazhuang Hebei | Technology development | 100.00 | - | Establishment |
Zhengzhou Hikvision Digital Technology Co., Ltd. | Zhengzhou | Zhengzhou Henan | Sales | 100.00 | - | Establishment |
Hikvision Central America S.A. | Panama | Panama | Sales | - | 100.00 | Establishment |
Hikvision West Africa Limited | Nigeria | Nigeria | Sales | 94.00 | 6.00 | Establishment |
Hikvision Technology Egypt JSC | Egypt | Egypt | Sales | - | 100.00 | Establishment |
EZVIZ Technology (Note 5) | Hangzhou | Hangzhou Zhejiang | Sales | - | 60.00 | Business combination of enterprises under the same control |
Hangzhou Kuangxin Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 80.00 | - | Business combination of enterprises not under the same control |
Hikvision Digital Technology (Shanghai) Co., Ltd. | Shanghai | Shanghai | Technology development, sales | 100.00 | - | Establishment |
Nanchang Hikvision Digital Technology Co., Ltd. | Nanchang | Nanchang Jiangxi | Technology development | 100.00 | - | Establishment |
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th2021
Name
Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
Direct | Indirect | |||||
Zhejiang Hiksafety Technology Co., Ltd. | Jiangshan | Jiangshan Zhejiang | Technology development | - | 60.00 | Establishment |
Zhenping County Haikang Juxin Digital Technology Co., Ltd. | Zhenping | Zhenping Henan | System integration | - | 90.00 | Establishment |
Hefei Hikvision Digital Technology Co., Ltd. | Hefei | Hefei Anhui | Technology development | 100.00 | - | Establishment |
Tianjin Hikvision Information Technology Co., Ltd. | Tianjin | Tianjin | Technology development | 100.00 | - | Establishment |
Fuzhou Hikvision Digital Technology Co., Ltd. | Fuzhou | Fuzhou Fujian | System integration | 100.00 | - | Establishment |
Anhui Hikvision Urban Operation Service Co., Ltd. | Xuancheng | Xuancheng Anhui | System integration | - | 100.00 | Establishment |
Zhejiang Haikang Urban Service Co., Ltd. (Note 4) | Ningbo | Ningbo Zhejiang | Technology development | 70.00 | - | Establishment |
Guangzhou Hikvision Technology Co., Ltd. (Note 2) | Guangzhou | Guangzhou Guangdong | Technology development | 100.00 | - | Establishment |
Hangzhou Hikfire Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
PT. Hikvision Technology Indonesia | Indonesia | Indonesia | Sales | - | 100.00 | Establishment |
EZVIZ International Limited | Hongkong | Hongkong China | Sales | - | 60.00 | Establishment |
Hikvision Technologies S.R.L., | Romania | Romania | Sales | - | 100.00 | Establishment |
Hikvision Azerbaijan Limited Liability | Azerbaijan | Azerbaijan | Sales | - | 100.00 | Establishment |
Hikvision IOT (Thailand) CO.,LTD. | Thailand | Thailand | Sales | - | 100.00 | Establishment |
Hikvision Japan K.K. | Japan | Japan | Sales | - | 100.00 | Establishment |
Hikvision Argentina S.R.L. | Argentina | Argentina | Sales | 95.00 | 5.00 | Establishment |
Hangzhou Hikstorage | Hangzhou | Hangzhou Zhejiang | Technology development | - | 60.00 | Establishment |
Hangzhou Rayin Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | 60.00 | - | Establishment |
Kunming Hikvision Digital Technology Co., Ltd. | Kunming | Kunming Yunnan | Sales | 100.00 | - | Establishment |
Hangzhou Microimage Software | Hangzhou | Hangzhou Zhejiang | Technology development | - | 60.00 | Establishment |
Hangzhou Microimage Intelligent Technology Co., Ltd. | Hangzhou | Hangzhou Zhejiang | Technology development | - | 60.00 | Establishment |
Jinan Hikvision Digital Technology Co., Ltd. | Jinan | Jinan Shandong | Sales | 100.00 | - | Establishment |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th2021
Name
Name | Location of operation | Place of registration | Nature of business | Shareholding ratio (%) | Acquisition Method | |
Direct | Indirect | |||||
Hikvision Morocco LLC | Morocco | Morocco | Sales | - | 100.00 | Establishment |
EZVIZ Europe B.V. | Netherland | Netherland | Sales | - | 60.00 | Establishment |
BK Grup? UAB | Lithuania | Lithuania | Sales | - | 100.00 | Business combination of enterprises not under the same control |
BK EESTI AKTSIASELTS | Estonia | Estonia | Sales | - | 100.00 | Business combination of enterprises not under the same control |
SIA “BK Latvia” | Latvia | Latvia | Sales | - | 100.00 | Business combination of enterprises not under the same control |
Shanghe Smart City | Ji’nan | Ji’nan | System integration | - | 95.00 | Establishment |
Chongqing EZVIZ | Chongqing | Chongqing | Manufacture | - | 60.00 | Establishment |
Robotic Automation | Hangzhou | Hangzhou Zhejiang | Manufacture | - | 60.00 | Establishment |
Hikvision Chile SpA | Chile | San Diego | Sales | 100.00 | - | Establishment |
Haina Yuzhi Fund | Hangzhou | Hangzhou Zhejiang | Sales | 66.67 | - | Establishment |
Daishan Hailai (Note 6) | Zhoushan | Zhoushan Zhejiang | Technology development and sales | 66.60 | - | Business combination of enterprises not under the same control |
Syscom MX (Note 7) | Mexico | Mexico | Sales | - | 51.00 | Business combination of enterprises not under the same control |
Epcom MX (Note 7) | Mexico | Mexico | Sales | - | 51.00 | Business combination of enterprises not under the same control |
Note 1: Fuyang Baotai is a subsidiary controlled by Hangzhou System, who holds 51.00% equity interests. According to the Company's Articles of Association, Hangzhou SystemCompany can control the major financial and operating decision-making matters of Fuyang Baotai, and the dividend ratio in this company is 50.00%.
Note 2: The business licenses of Hikvision Joint-Stock Company, Hundure Technology (Shanghai) Co., Ltd., Secure Holding Limited and Guangzhou Hikvision Technology Co., Ltd.have been cancelledin 2021.
Note 3: In August 2021, the Group redeemed 2% of the Company's shares held by China Development Bank Fund in Hangzhou Electronics. After the equity transfer was completed, theGroup's shareholding in Hangzhou Electronics was changed to 73.30%, and China Development Bank Fund held 26.70% of the shares. Please refer to Note (V) 33 for details.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
th2021
Note 4:Hangzhou EZVIZ Network Ltd. was renamed Hangzhou EZVIZ Network Co., Ltd. in 2021 due to the completion of shareholding reform; Ningbo Haikang Parking SystemOperation Co., Ltd. was renamed Zhejiang Haikang Urban Service Co., Ltd. in 2021.
Note 5: The Group controlled EZVIZ Technology through the entrusted management agreement from April 2019 to March 2021, and terminated the entrusted management agreement onMarch 27
th 2021, and no longer exercised the actual management right of EZVIZ Technology. From March 27
th2021, the Group no longer controlled EZVIZ Technology. Please refer toNote (VI) 2 for details.
Note 6: The Group included "Daishan Hailai" in the scope of the consolidated financial statements during the reporting period. Please refer to Note (VI) 1 for details.
Note 7: Hikvision Singapore Pte. Ltd., a wholly-owned subsidiary of the Group, acquired 51.00% equity in Syscom MX and Epcom MX through cash in 2021. Please refer to Note (VI)1 for details.
2. During the current reporting period, the Group did not have any changes in the share of owners' equity in subsidiaries and still controls the transactions of subsidiaries.
3. Equity in Joint Ventures or Associates
(1) Aggregated financial information of insignificant joint-ventures and associates
Unit:RMB
Closing balance / Amount for 2021 | Opening balance / Amount for 2020 | |
Associates: | ||
The aggregate carrying amount of investments in associates | 235,962,431.82 | 193,646,038.77 |
The aggregate amount of the following items calculated based on the Company’s equity share percentage of the associates | ||
- Net income (loss) | 30,316,393.05 | (5,199,282.72) |
- Other comprehensive income | - | - |
--Net income (loss) and total comprehensive income (loss) | 30,316,393.05 | (5,199,282.72) |
Joint Ventures: | ||
Total investment book value | 746,203,114.63 | 670,380,671.46 |
The sum of the following items calculated according to the shareholding ratio | ||
- Net income | 83,820,888.13 | 11,560,671.46 |
- Other comprehensive income | - | - |
- Net income (loss) and total comprehensive income | 83,820,888.13 | 11,560,671.46 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
th2021
The Group uses the equity method to account for the aforementioned associates and joint ventures.
(2) Unrecognized commitments related to investment in joint ventures
Unit:000 RMB
Joint Venture | Capital Commitment (Note) |
Zhejiang City Digital Technology Co., Ltd. | 11,500.00 |
Shenzhen Hikvision Urban Service Operation Co., Ltd. | 12,000.00 |
Guangxi Haishi Urban Operation Management Co., Ltd. | 11,000.00 |
Note: The above capital commitments are the capital amounts that the Group has subscribed but not paid in to the above joint ventures.
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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, borrowings, notespayable, accounts payable, other payables, part of the other current liabilities, lease liabilities, long-term payables, othernon-current liabilities(except for contract liabilities), derivative financial instruments, etc. Details of these financialinstruments are set out in Note (V). Below are the risks associated with such financial instruments and the risk managementpolicies adopted by the Group to mitigate such risks. The management of the Group manages and monitors such riskexposures to ensure 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 (restated) |
Financial assets: | ||
Measured at fair value through current profit and loss | ||
Held –for-trading financial assets | 34,320,010.83 | 22,679,846.77 |
Other non-current financial assets | 438,724,172.22 | 491,939,067.27 |
Measured at fair value through other comprehensive income | ||
Receivables for financing | 1,316,035,122.06 | 1,959,601,195.25 |
Measured at amortized cost | ||
Cash and bank balances | 34,721,870,931.36 | 35,459,729,108.27 |
Notes receivable | 1,522,760,905.30 | 1,303,252,705.19 |
Accounts receivable | 26,174,773,100.42 | 22,056,067,917.79 |
Other receivables | 359,620,445.88 | 519,026,062.82 |
Long-term receivables | 613,067,944.97 | 485,746,490.32 |
Non-current assets due within one year | 975,960,437.14 | 850,871,579.78 |
Items | Closing balance of the current reporting period | Opening balance of the current year (restated) |
Financial liabilities | ||
Measured at fair value through current profit and loss | ||
Held-for-trading financial liabilities | 4,062,317.57 | 7,405,771.15 |
Measured at amortized cost | ||
Short-term borrowings | 4,074,962,469.97 | 3,999,246,634.59 |
Notes payable | 1,339,998,383.34 | 1,036,920,229.85 |
Accounts payable | 15,889,694,981.12 | 13,593,884,790.19 |
Other payables | 1,830,626,583.03 | 1,525,053,355.95 |
Non-current liabilities due within one year | 596,915,360.58 | 3,644,798,414.28 |
Other current liabilities | 511,611,642.53 | 560,959,368.73 |
Long-term borrowings | 3,284,371,642.52 | 1,961,167,761.30 |
Lease liabilities | 317,951,879.21 | 230,055,273.70 |
Long-term payables | 9,009,331.50 | 16,542,466.08 |
Other non-current liabilities(excluding contract liabilities) | 511,594,361.52 | 560,959,368.74 |
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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
st2021, 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 | 2,310,527,721.21 | 7,122,984,916.82 | 1,993,012,472.17 | 1,886,490,280.88 |
EUR | 2,510,521,255.35 | 1,480,297,345.67 | 1,521,742,991.23 | 3,284,414,031.21 |
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, foreignexchange options contracts, interest rate swap contracts and etc., to mitigate the foreign exchange risk exposure.
Sensitivity analysis on exchange rate risk
With other variables unchanged, the exchange rate might float within a reasonable range, and has the following before-tax effect on profit or loss and shareholders’ equity for the current period:
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Unit: RMB
Change in foreign exchange rates | 2021 | 2020 | ||
Effect on profit | Effect on shareholders’ equity | Effect on profit | Effect on shareholders’ equity | |
5% appreciation of USD against functional currency | 15,875,762.45 | 15,875,762.45 | 261,824,731.80 | 261,824,731.80 |
5% depreciation of USD against functional currency | (15,875,762.45) | (15,875,762.45) | (261,824,731.80) | (261,824,731.80) |
5% appreciation of EUR against functional currency | 49,438,913.21 | 49,438,913.21 | (90,205,834.28) | (90,205,834.28) |
5% depreciation of EUR against functional currency | (49,438,913.21) | (49,438,913.21) | 90,205,834.28 | 90,205,834.28 |
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 and bank deposits bearing floating interest rate.
At the end of the current reporting period, the amount of borrowings of the Group bearing floating interest rate is notsignificant, and the risk of changes in cash flow of financial instruments due to changes in interest rates is expected to beinsignificant.
The Group expects that the risk exposure of cash flow generated from bank deposits bearing floating interest rate isinsignificant.
The Group determines the relative proportion of fixed interest rate contracts and floating interest rate contracts based onthe prevailing market environment. The Group’s interest-bearing debts bearing floating interest rates were mainly RMB-denominated PPP pledged long-term borrowing contracts with an amount of RMB 1,455,221,540.20 (Note (V) 33)(December 31
st2020: RMB-denominated PPP pledged long-term borrowings with an amount of RMB 1,556,927,316.08(Note (V) 33)).
The headquarter finance department of the Group continuously monitors the level of interest rate of the Group. Risinginterest rates will increase the cost of newly incurred interest-bearing debts and the Group’s interest expenses onoutstanding interest-bearing debts with floating interest rates, and have a significant adverse impact on the financialperformance of the Group. The management team would make adjustments on a timely basis based on the latest marketconditions, including arrangements for interest rate swaps to reduce interest rate risk. As at December 31
st2021, the interestrate swap arrangements of the Group are detailed in Note (V) 2.
2.1.3. Other price risks
The Group’s price risk mainly arises from investments in held-for-trading equity instruments and derivative financialinstruments. Held-for-trading equity instrument investments are all investments in unlisted held-for-trading equityinstruments.
The Group is exposed to price risk due to the holding of financial assets measured at fair value. The fair value of certainfinancial instruments is determined by the general pricing model based on discounted future cash flow method or othervaluation techniques, while the valuation techniques are based on certain valuation assumptions. Therefore, the valuationresults are highly sensitive to valuation assumptions. However, at the end of the current reporting period, the amount ofinvestment in held-for-trading equity instruments and derivative financial instruments is not significant, and the riskexposure due to changes in price of financial instruments as a result of change in valuation assumptions is low, accordingly,no sensitivity analysis is conducted.
2.2 Credit Risk
As of December 31
st2021, 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 for
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
financing (Note (V) 5), other receivables (Note (V) 7), non-current assets due within one year (Note (V) 10), long-termreceivables (Note (V) 12), etc., and derivative financial assets that are not included in the scope of impairment assessmentand are measured at fair value through current profit or loss (Note (V) 2). As of the balance sheet date, the book value ofthe 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 provisionsare made for relevant financial assets. Therefore, the management of the Group believes that the credit risk exposure ofthe Group has been reduced significantly.
The credit risk on cash and bank balances of the Group is low as they are deposited with banks with high credit ratings.
For accounts receivable, contract assets and long-term receivables, the Group has put in place relevant policies to controlcredit risk exposure. The Group assesses credit quality of customers and sets corresponding credit period based on thecustomer’s financial status, the possibility of obtaining guarantees from third parties, credit history and other factors suchas current market conditions. The Group will regularly monitor the credit history of its customers. For customers withpoor credit history, the Group takes various measures, such as written payment reminders, shorten or cancel the creditperiod, to ensure that the overall credit risk of the Group is maintained in a controllable range. For accounts receivableand contract assets, the Group uses a simplified method, that is, to measure the loss provision based on the amountequivalent to the expected credit loss for the entire duration. For details of the relevant expected credit loss measurement,see (Note (V) 4 & Note (V) 9). For long-term receivables, the Group calculates the expected credit losses based on theexpected credit loss rate in the next 12 months or the entire duration based on the default risk exposure. For details of therelated expected credit loss measurement, see (Note (V) 12).
The Group’s notes receivable and receivables for financing are mainly bank acceptance notes and commercial acceptancenotes with high credit ratings of the counterparties, which the Group does not consider to be subject to significant creditrisk and will not incur any material loss due to default by the counterparties.
For other receivables, 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.
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
According to the term to maturity of non-discounted and remaining contract obligations, the financial liabilities held bythe Group are analyzed as below:
Unit:RMB
December 31st 2021 | ||||
Within one year | 1-5 years | More than 5 years | Total | |
Non-derivative financial liabilities | ||||
Short-term borrowings | 4,144,481,304.54 | - | - | 4,144,481,304.54 |
Notes payable | 1,339,998,383.34 | - | - | 1,339,998,383.34 |
Accounts payable | 15,889,694,981.12 | - | - | 15,889,694,981.12 |
Other payables | 1,830,626,583.03 | - | - | 1,830,626,583.03 |
Other current liabilities | 511,611,642.53 | - | - | 511,611,642.53 |
Other non-current liabilities | - | 511,594,361.52 | - | 511,594,361.52 |
Long-term borrowings (including those due within one year) | 439,797,310.64 | 2,585,483,339.61 | 1,123,671,498.12 | 4,148,952,148.37 |
Lease liabilities (including those due within one year) | 267,240,140.55 | 287,604,669.92 | 47,977,039.33 | 602,821,849.80 |
Long-term payables (including those due within one year) | 1,994,152.05 | 10,205,847.95 | - | 12,200,000.00 |
Derivative financial instruments | ||||
Forward foreign exchange contracts, foreign exchange option contracts and interest rate swap contracts- settled in the gross amount | ||||
- Cash inflow | 1,570,626,151.48 | 16,216,056.49 | - | 1,586,842,207.97 |
- Cash outflow | 1,544,987,718.59 | 11,441,895.59 | - | 1,556,429,614.18 |
- Net cash inflow | 25,638,432.89 | 4,774,160.90 | - | 30,412,593.79 |
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 | - | 1,346,292,815.32 | 438,724,172.22 | 1,785,016,987.54 |
(I) Financial assets measured at fair value through profit and loss | 34,320,010.83 | 438,724,172.22 | 473,044,183.05 | |
1. Held-for-trading Financial Assets | - | 34,320,010.83 | - | 34,320,010.83 |
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Items
Items | Closing fair value | |||
Level 1 | Level 2 | Level 3 | Total | |
- Derivative financial assets | - | 34,320,010.83 | - | 34,320,010.83 |
2. Other non-current financial assets | - | - | 438,724,172.22 | 438,724,172.22 |
(II) Receivables for financing | - | 1,316,035,122.06 | - | 1,316,035,122.06 |
Total assets measured continuously at fair value | - | 1,350,355,132.89 | 438,724,172.22 | 1,789,079,305.11 |
(III) Financial liabilities measured at fair value through profit and loss | 4,062,317.57 | - | 4,062,317.57 | |
1. Held-for-trading Financial Liabilities | - | 4,062,317.57 | - | 4,062,317.57 |
- Derivative financial liabilities | - | 4,062,317.57 | - | 4,062,317.57 |
Total liabilities measured continuously at fair value | - | 4,062,317.57 | - | 4,062,317.57 |
2. Information on the Estimation Technique and Important Parameters Adopted as for Continuous Level 2 Fair
Value Measurement Items
Unit: RMB
Fair value at December 31st 2021 | Estimation technique | Inputs | |
Forward Foreign Exchange Contracts, Foreign Exchange Options Contracts and Interest Rate Swap Contracts (Assets) | 34,320,010.83 | Discounted cash flow approach | Exchange rate or interest rate Discounted rate that reflects the credit risk of counterparty |
Forward Foreign Exchange Contracts (Liabilities) | (4,062,317.57) | Discounted cash flow approach | Forward exchange rate Discounted rate that reflects the credit risk of counterparty |
Receivables for financing | 1,316,035,122.06 | 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 31st 2021 | Valuation techniques | Inputs |
Other non-current financial assets-- Investment in equity instruments of private companies | 438,724,172.22 | 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 Closing
Book Value
Unit: RMB
Other non-current financial assets | Amount |
Book value on January 1st 2021 | 491,939,067.27 |
Increase in the current reporting period | - |
Decrease in the current reporting period | - |
Changes in fair value booked into profit and loss during the current reporting period | (53,214,895.05) |
Book value on December 31st 2021 | 438,724,172.22 |
The total amount included in profit or loss in 2021 includes unrealized losses of RMB 53,214,895.05 (2020: RMB69,478,784.83) related to financial assets measured at fair value at the end of the current reporting period, and such gainsor losses are included in the gains or losses from changes in fair value; the realized gains of financial assets measured atfair value at the end of the current reporting period which were included in investment income was RMB 115,644,801.97(2020: RMB 150,000,000.00).
Hikvision 2021Annual Report
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
5. Items easured 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, other currentliabilities (other than Output VAT to-be-transferred), non-current liabilities due within one year, long-term borrowings,long-term payables and other non-current liabilities, etc., carrying value of which approximates to its fair value.
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 | 36.46 | 36.46 |
The ultimate controlling party of the Company is China Electronics Technology Group Co., Ltd. ("CETC").
2. Information on the Subsidiaries of the Company
For details of the 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 Sensor Technology Co., Ltd. (Wuhu Sensor Tech) and its subsidiaries | Associated company |
Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries (Maxio Technology) and its subsidiaries | Associated company |
Zhiguang Hailian Big Data Technology Co., Ltd. (Zhiguang Hailian) and its subsidiaries | Associated company |
Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. (Haishi JiaAn) | Associated company |
Qinghai Qingtang Big Data Co., Ltd. (Qingtang Big Data) | Associated company |
Sanmenxia Xiaoyun Vision Technology Co., Ltd. (Xiaoyun Vision Technology) | Associated company |
Daishan Hailai | (Note) |
Guangxi Haishi City Operation Management Co., Ltd. (Guangxi Haishi) and its subsidiaries | Joint venture |
Shenzhen Hikvision Urban Service Operation Co., Ltd. (Shenzhen Urban Service) and its subsidiaries | Joint venture |
Xuzhou Kangbo City Operation Management Service Co., Ltd. (Xuzhou Kangbo) | Joint venture |
Yunnan Yinghai Parking Service Co., Ltd. (Yunnan Yinghai) | Joint venture |
Zhejiang City Digital Technology Co., Ltd. (Zhejiang City Digital Technology) | Joint venture |
Zhejiang Haishi Huayue Digital Technology Co., Ltd. (Haishi Huayue) | Joint venture |
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Note: During the period from January 1
st 2021 to June 30
th
2021, Daishan Hailai waswas a joint venture of the Company.On June 30
th2021, the Company included Daishan Hailai in the scope of the consolidated financial statements, see Note(VI) 1 for details.
4. Information on Other Related Parties
Name | Relationship |
Gong Hongjia | Major shareholder and director of the Company that holds more than 5% of the share of the Company |
Shanghai Fullhan Microelectronics Co., Ltd. (Shanghai Fullhan Micro) and its subsidiaries | Gong Hongjia or his relative(s) serve(s) as the director(s) |
Shenzhen Wanyu Security Service Technology Co., Ltd. (Shenzhen Wanyu Security Service) and its subsidiaries | The Group’s senior management serve(s) as director(s) of this company |
Confirmware Technology(Hangzhou) Co., Ltd. (Hangzhou Confirmware) | The Group’s senior management serve(s) as director(s) of this company |
Zhejiang Fast Line data fusion Information Technology Co.,Ltd.. (Zhejiang Fast Line data fusion) and its subsidiaries | The Group’s senior management serve(s) as director(s) of this company |
Chengdu Guoshengtianfeng Network Technology Co., Ltd. (Chengdu Guoshengtianfeng) and its subsidiaries | The Group’s senior management serve(s) as director(s) of this company |
Ruihua Innovation Management Research Institute (Hangzhou) Co., Ltd. (Ruihua Innovation) | The Group’s independent director(s) serve(s) as director(s) of this company |
INESA (Group) Co., Ltd. (INESA) and its subsidiaries | The Group’s supervisor(s) serve(s) as director(s) of this company |
Aurotek Corporation. (Aurotek) and its subsidiaries | The Group’s former independent director(s) serve(s) as director(s) of this company (Note 1) |
Subsidiaries of CETC (Note 2) | Under common control of the ultimate controlling party of the Company |
Note 1: Due to the departure of the independent director of the Group in 2021, 2021 is the first year of him/her departure,therefore, Aurotek Corporation was still recognized as a related party of the Group in 2021.
Note 2: 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 2021 | Amount occurred in 2020 |
Subsidiaries of CETC | Purchase of materials and receiving of services | 1,996,000,573.93 | 826,842,233.14 |
Shanghai Fullhan Micro and its subsidiaries | Purchase of materials and receiving of services | 1,073,447,072.07 | 243,902,272.09 |
Maxio Technology and its subsidiaries | Purchase of materials and receiving of services | 259,171,002.11 | 20,353,951.20 |
Wuhu Sensor Tech | Purchase of materials and receiving of services | 120,154,019.26 | 61,712,356.51 |
Aurotek Corporation and its subsidiaries | Purchase of materials and receiving of services | 3,277,839.15 | - |
Yunnan Yinghai | Purchase of materials and receiving of services | 94,339.62 | - |
Chengdu Guoshengtianfeng and its subsidiaries | Purchase of materials and receiving of services | 74,716.98 | - |
Shenzhen Urban Service and its subsidiaries | Purchase of materials and receiving of services | 31,026.60 | 357,000.00 |
Ruihua Innovation | Purchase of materials and receiving of services | 3,564.36 | - |
Zhejiang City Digital Technology | Purchase of materials and receiving of services | 1,811.32 | - |
Haishi Huayue | Purchase of materials and receiving of services | - | 1,743,775.22 |
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Related party
Related party | Transaction type | Amount occurred in 2021 | Amount occurred in 2020 |
Zhiguang Hailian and its subsidiaries | Purchase of materials and receiving of services | - | 135,782.26 |
Total | 3,452,255,965.40 | 1,155,047,370.42 |
Sales of commodities / rendering of services:
Unit: RMB
Related party | Transaction content | Amount occurred in 2021 | Amount occurred in 2020 |
Subsidiaries of CETC | Sales of products and rendering of services | 434,709,999.06 | 350,558,721.59 |
Haishi JiaAn | Sales of products and rendering of services | 53,229,545.96 | 38,199,938.50 |
Zhiguang Hailian and its subsidiaries | Sales of products and rendering of services | 34,122,127.77 | 14,374,052.45 |
Zhejiang City Digital Technology | Sales of products and rendering of services | 22,752,048.23 | 13,760,843.37 |
Shenzhen Urban Service and its subsidiaries | Sales of products and rendering of services | 20,975,222.90 | 46,006.90 |
Daishan Hailai | Sales of products and rendering of services | 16,858,777.71 | 29,854,444.59 |
Guangxi Haishi and its subsidiaries | Sales of products and rendering of services | 11,494,038.20 | 1,769,911.50 |
Haishi Huayue | Sales of products and rendering of services | 10,976,412.61 | 3,685,281.81 |
INESA and its subsidiaries | Sales of products and rendering of services | 8,315,234.00 | - |
Chengdu Guoshengtianfeng and its subsidiaries | Sales of products and rendering of services | 7,006,078.70 | - |
Hangzhou Confirmware | Sales of products and rendering of services | 1,217,367.24 | 589,159.33 |
Wuhu Sensor Tech and its subsidiaries | Sales of products and rendering of services | 841,349.20 | 1,906,811.54 |
Qingtang Big Data | Sales of products and rendering of services | 540,138.06 | 1,492,966.38 |
Zhejiang Fast Line data fusion and its subsidiaries | Sales of products and rendering of services | 293,172.58 | - |
Xuzhou Kangbo | Sales of products and rendering of services | 165,779.30 | 3,150,603.57 |
Maxio Technology and its subsidiaries | Sales of products and rendering of services | 118,306.02 | 153,465.93 |
Xiaoyun Vision Technology | Sales of products and rendering of services | 5,663.71 | 3,748,314.02 |
Wanyu Security and its subsidiaries | Sales of products and rendering of services | - | 198,230.06 |
Yunnan Yinghai | Sales of products and rendering of services | - | 18,259,614.17 |
Total | 623,621,261.25 | 481,748,365.71 |
Statement of capital deposits:
Unit: RMB
Related Party | Content of related party transaction | Amount occurred in 2021 | Balance at the end of the current reporting period | Amount occurred in 2020 | Opening Balance |
Subsidiaries of CETC | Deposit into current deposits | 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 |
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Related Party
Related Party | Content of related party transaction | Amount occurred in 2021 | Balance at the end of the current reporting period | Amount occurred in 2020 | Opening Balance |
Total | 500,006,734.20 | 4,500,006,734.20 | - | 4,000,000,000.00 |
Note: For the deposit deposited by the Group with China Electronics Technology Finance Co., Ltd., the deposit interest
income was RMB 80,001,932.23.
The above transactions are executed at market prices.
(2) Guaranteed by the related party
As required by the project owner, China Electronics Technology Group Co., Ltd. has provided a joint guarantee toresponsibility and duties of construction projects of “Safe Chongqing, Emergency Control System Digital ConstructionProject”, including 41 districts and counties, signed by the Group’s subsidiary Chongqing Hikvision System TechnologyLtd. (Chongqing System) Meanwhile, the Company, Hikvision, provides a counter guarantee to China ElectronicsTechnology Group Co., Ltd.
(3) Compensation for key managers
Unit: RMB
Item | Amount occurred in 2021 | Amount occurred in 2020 |
Compensation for key managers | 40,571,163.91 | 38,952,000.00 |
(4) Other related party transactions
Sale-leaseback
Pursuant to resolution of the Company’s 7
th
meeting of the fourth session of the Board of Directors held on December 3
rd
2018, the Group’s subsidiary Hangzhou Microimage Sensing signed a financial leasing contract with a subordinatecompany of CETC, Hangzhou Microimage Sensing will carry out sale- leaseback business of part of its self-ownedequipment with the CETC’s subordinate company. The new financing amount in 2019 was RMB 70 million, with leaseterm of 48 months, and the annual lease rate is 3.8%. On December 31
st
2021, Hangzhou Microimage Sensing confirmedright-of-use assets of RMB 23,923,145.37 and lease liabilities of RMB 22,591,498.84. In 2021, the interest on leaseliabilities is RMB 2,087,283.49.
Entrusted management of the interest expenditure of borrowed funds
On April 19
th2019, CETHIK signed an entrusted management agreement with the holding subsidiary of the Company,Hangzhou EZVIZ Network Ltd. (“EZVIZ Network”) to entrust EZVIZ Network to exercise the actual operatingmanagement right over Hangzhou EZVIZ Technology Ltd. (“EZVIZ Technology”), and be fully responsible for theproduction, operation and management of EZVIZ Technology, and EZVIZ Network shall not charge fixed entrustedmanagement fees from CETHIK while EZVIZ Network is entitled to the 100% distributable profits generated by EZVIZTechnology prior to or after the entrusted management. At the same time, EZVIZ Network shall make a payment toCETHIK as occupying fund fees at the basis of paid-in capital of EZVIZ Technology of RMB 8,000,000.00 and at aninterest rate up by 1% for loans over five years in the Central Bank. In 2021, EZVIZ Network intends to terminate theentrusted management of EZVIZ Technology. In March 2021, EZVIZ Network signed the Termination Agreement of theEntrusted Management Agreement with CETHK and EZVIZ Technology, agreeing that the Entrusted ManagementAgreement shall be terminated on March 27
th
2021. After the termination of the Entrusted Management Agreement, EZVIZNetwork will no longer exercise the actual operation and management rights over EZVIZ Technology, or be responsiblefor the production, operation and management of EZVIZ Technology, or enjoy other rights over EZVIZ Technology asagreed in the Entrusted Management Agreement. The Group ceased to control EZVIZ Technology since March 27
th2021and therefore ceased to include the operations of EZVIZ Technology in the scope of consolidation of the consolidatedfinancial statements. The interest expenses on the above-mentioned capital possession incurred in the current reportingperiod amounts to RMB 131,659.87.
6. Receivables from Related Parties and Payables to Related Parties
Hikvision 2021Annual Report
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
(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 | 756,888,051.10 | 209,305,306.47 | 694,163,118.90 | 108,859,842.53 |
Accounts receivable | Haishi JiaAn | 64,817,786.83 | 1,830,797.36 | 29,762,113.04 | 975,776.51 |
Accounts receivable | Zhiguang Hailian and its subsidiaries | 11,797,104.73 | 310,298.49 | 9,436,662.00 | 111,434.71 |
Accounts receivable | Xiaoyun Vision Technology | 9,326,361.72 | 1,319,097.41 | 10,929,211.22 | 412,855.37 |
Accounts receivable | Zhejiang City Digital Technology | 9,022,181.94 | 102,459.57 | 12,427,421.59 | 561,604.39 |
Accounts receivable | Shenzhen Urban Service and its subsidiaries | 5,850,573.44 | 287,926.66 | - | - |
Accounts receivable | Chengdu Guoshengtianfeng and its subsidiaries | 2,504,232.29 | 23,633.21 | - | - |
Accounts receivable | Haishi Huayue | 2,403,342.00 | 39,213.42 | 2,112,591.44 | 42,509.22 |
Accounts receivable | Guangxi Haishi and its subsidiaries | 2,068,681.99 | 101,978.52 | - | - |
Accounts receivable | INESA and its subsidiaries | 1,503,248.00 | 51,765.16 | - | - |
Accounts receivable | Wuhu Sensor Tech and its subsidiaries | 821,865.40 | 153,442.27 | 823,165.40 | 37,207.08 |
Accounts receivable | Xuzhou Kangbo | 517,419.71 | 60,722.44 | 786,702.90 | 35,558.97 |
Accounts receivable | Qingtang Big Data | 330,000.00 | 13,959.00 | 660,000.00 | 29,832.00 |
Accounts receivable | Zhejiang Fast Line data fusion and its subsidiaries | 231,399.50 | 2,013.17 | - | - |
Accounts receivable | Hangzhou Confirmware | 113,381.69 | 3,535.91 | 83,150.00 | 981.17 |
Accounts receivable | Maxio Technology and its subsidiaries | - | - | 45,667.50 | 538.88 |
Accounts receivable | Daishan Hailai | Not applicable | Not applicable | 16,387,257.40 | 194,920.07 |
Total | 868,195,630.34 | 213,606,149.06 | 777,617,061.39 | 111,263,060.90 |
Unit: RMB
Item | Related Party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Notes receivable | Subsidiaries of CETC | 78,858,666.10 | - | 78,876,284.35 | - |
Notes receivable | Haishi JiaAn | 5,000,000.00 | - | 9,147,466.00 | - |
Notes receivable | Zhejiang City Digital Technology | 1,444,385.00 | - | - | - |
Notes receivable | Zhiguang Hailian and its subsidiaries | - | - | 1,120,000.00 | - |
Total | 85,303,051.10 | - | 89,143,750.35 | - |
Note: The RMB 17,267,512.00 (2020: RMB 4,000,000.00) notes receivable are the acceptance bills of which the draweris the related party, and the former endorsers are unrelated third parties.
Unit: RMB
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Item
Item | Related Party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Other receivables | Subsidiaries of CETC | 645,000.00 | 99,483.50 | 132,459.00 | 1,563.02 |
Other receivables | Shenzhen Urban Service and its subsidiaries | 140,000.00 | 1,218.00 | 140,000.00 | 1,652.00 |
Other receivables | Haishi Huayue | 104,182.74 | 906.39 | 279,452.11 | 3,297.53 |
Other receivables | Wuhu Sensor Tech and its subsidiaries | 10,485.27 | 91.22 | - | - |
Total | 899,668.01 | 101,699.11 | 551,911.11 | 6,512.55 |
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 | 38,579,578.71 | 2,451,642.33 | 73,512,305.64 | 2,015,923.07 |
Long-term receivables (including those due within one year) | Yunnan Yinghai | 16,992,563.72 | 147,251.94 | 21,444,096.16 | 253,040.33 |
Long-term receivables (including those due within one year) | Shenzhen Urban Service and its subsidiaries | 16,408,408.03 | 223,709.40 | - | - |
Long-term receivables (including those due within one year) | Guangxi Haishi and its subsidiaries | 3,818,141.12 | 42,188.14 | - | - |
Long-term receivables (including those due within one year) | Xuzhou Kangbo | 441,719.03 | 18,684.71 | 1,581,135.63 | 29,277.25 |
Long-term receivables | Xiaoyun Vision Technology | - | - | 2,295.00 | 103.73 |
Total | 76,240,410.61 | 2,883,476.52 | 96,539,832.43 | 2,298,344.38 |
Unit: RMB
Item | Related Party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Prepayments | Maxio Technology and its subsidiaries | 49,300,000.00 | - | - | - |
Prepayments | Subsidiaries of CETC | 2,705,210.05 | - | 4,339,675.60 | - |
Total | 52,005,210.05 | - | 4,339,675.60 | - |
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
(2) Payables to related parties
Unit: RMB
Unit: RMB
Item | Related Party | Closing balance | Opening balance |
Notes Payable | Subsidiaries of CETC | 40,579,368.55 | 17,301,547.82 |
Notes Payable | Shanghai Fullhan Micro and its subsidiaries | 24,314,184.13 | 3,648,820.00 |
Total | 64,893,552.68 | 20,950,367.82 |
Unit: RMB
Item | Related Party | Closing balance | Opening balance |
Contract liabilities | Subsidiaries of CETC | 3,446,311.89 | 10,507,934.92 |
Contract liabilities | Hangzhou Confirmware | 960,682.66 | - |
Contract liabilities | Zhiguang Hailian and its subsidiaries | 195,416.40 | 57,630.00 |
Contract liabilities | INESA and its subsidiaries | 687.00 | - |
Contract liabilities | Xuzhou kangbo | - | 201,887.56 |
Contract liabilities | Daishan Hailai | Not applicable | 688.00 |
Total | 4,603,097.95 | 10,768,140.48 |
Unit: RMB
Item | Related Party | Closing balance | Opening balance |
Other payables | Subsidiaries of CETC | 56,252,811.73 | 47,056,334.07 |
Other payables | Qingtang Big Data | 9,310,000.00 | - |
Other payables | Shanghai Fullhan Micro and its subsidiaries | 200,000.00 | 100,000.00 |
Other payables | Wuhu Sensor Tech and its subsidiaries | 52,040.00 | - |
Other payables | Chengdu Guoshengtianfeng and its subsidiaries | 50,000.00 | - |
Other payables | Haishi JiaAn | 33,110.00 | - |
Other payables | Zhejiang City Digital Technology | 10,000.00 | - |
Other payables | Zhiguang Hailian and its subsidiaries | 2,000.00 | - |
Total | 65,909,961.73 | 47,156,334.07 |
Unit: RMB
Item | Related Party | Closing balance | Opening balance |
Accounts payable | Subsidiaries of CETC | 570,856,498.41 | 360,026,227.41 |
Accounts payable | Shanghai Fullhan Micro and its subsidiaries | 407,876,541.15 | 117,676,674.67 |
Accounts payable | Maxio Technology and its subsidiaries | 72,307,405.55 | 545,124.36 |
Accounts payable | Wuhu Sensor Tech and its subsidiaries | 4,968,239.42 | 6,286,164.42 |
Accounts payable | Aurotek Corporation and its subsidiaries | 1,434,619.91 | - |
Accounts payable | Chengdu Guoshengtianfeng and its subsidiaries | 22,641.51 | - |
Total | 1,057,465,945.95 | 484,534,190.86 |
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
Item
Item | Related Party | Closing balance | Opening balance (restated) |
Long-term payables (including those due within one year) | Subsidiaries of CETC | - | 8,000,000.00 |
Total | - | 8,000,000.00 |
Unit: RMB
Item | Related Party | Closing balance | Opening balance (restated) |
Lease liabilities (including those due within one year) | Subsidiaries of CETC | 22,591,498.84 | 41,213,376.81 |
Lease liabilities (including those due within one year) | Shenzhen Urban Service and its subsidiaries | 1,074,683.57 | - |
Total | 23,666,182.41 | 41,213,376.81 |
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. (关于杭州海康威视数字技术股份有限公司实施限制性股票激励计划的批复) (Guo Zi Fen Pei[2012] No. 426) issued by the State-owned Assets Supervision and Administration Commission of the State Council andthe Opinion the Restrictive Share Incentive Scheme of Hangzhou Hikvision Digital Technology Co., Ltd. (关于杭州海康威视数字技术股份有限公司限制性股票激励计划的意见) (Shang Shi Bu Han [2012] No. 353) issued by ChinaSecurities Regulatory Commission, the Company convened the ninth meeting of the second session of the Board ofDirectors on July 25
th
2012 and the first extraordinary general meeting for 2012 on August 13
th
2012, whereat the ProposalRelating to the Restrictive Share Scheme (Amendments to the Draft) of the Company and Highlights was reviewed andpassed. The purpose of the Share Incentive Scheme is to: further improve the Company’s governance structure to establisha good and balanced value allocation system; establish a profit-sharing and restriction mechanism among shareholders,the Company and its employees, so as to provide shareholders with sustainable return; fully mobilize the positivity of coreemployees to support the Company in realizing its strategies and long-term sustainable development; attract and retaincore employees to ensure the Company’s long-term development.
The Scheme shall be effective for a term of 10 years commencing from the date of approval by general meeting of theCompany, during which the Company may grant restricted shares to grantees under the Scheme. In principle, each grantshould be at an interval of two years. After the expiry of the Scheme, no restricted shares could be granted to granteesunder the Scheme. However, all the provisions of the Scheme remain valid to the restricted shares granted under theScheme.
Each batch of restricted shares shall not be unlocked unless fulfilling, each time, by the Company its unlock performancecriteria (including net asset yield and operating income growth rate), and by grantees’ individual performance criteriasimultaneously. Where, during the unlocking period, any one or more unlock criteria for the Company or individuals is orare not fulfilled, such portion of subject shares shall be cancelled. The cancelled restricted shares will be repurchased bythe Company based on the grant price.
On December 23
rd2016, after consideration and approval by the general meeting, the Company granted 52,326,858restricted shares to grantees at a grant price of RMB 12.63 per share (“2016 Share Incentive Scheme”). The Lock-upPeriod of the Subject Shares shall last for a period of 24 months commencing on the grant date, during which the SubjectShares granted to grantees under the scheme shall be subject to lock-up and shall not be transferable. The Unlocking Periodshall be the 24 to 60 months following the grant of restricted shares (including Lock-up Period), during which granteesmay, subject to unlocking conditions stipulated by the scheme being satisfied, apply for unlocking in 3 tranches: the firstunlocking period shall be the 24 to 36 months following the grant date and the number of shares to be unlocked shall be40% of the aggregate number of the Subject Shares granted; the second unlocking period shall be the 36 to 48 monthsfollowing the grant date and the number of shares to be unlocked shall be 30% of the aggregate number of the SubjectShares granted; the third unlocking period shall be the 48 to 60 months following the grant date and the number of shares
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
to be unlocked shall be 30% of the aggregate number of the Subject Shares granted. As of December 31
st
2020, all restrictedshares awarded in 2016 have been closed.
On December 20
th 2018, authorized by the 2
ndextraordinary general meeting of 2018 and reviewed by the Board ofDirectors, the Company granted 121,195,458 restricted shares to grantees at a grant price of RMB 16.98 per share (“2018Share Incentive Scheme”). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing onthe grant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up and arenot transferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares (includingLock-up Period), during which grantees may, subject to unlocking conditions stipulated by the scheme being satisfied,apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months following the grant date and thenumber of shares to be unlocked shall be 40% of the aggregate number of the Subject Shares granted; the second unlockingperiod shall be the 36 to 48 months following the grant date and the number of shares to be unlocked shall be 30% of theaggregate number of the Subject Shares granted; the third unlocking period shall be the 48 to 60 months following thegrant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted.The Company has completed the equity registration work in January 2019.
Unit: share
2016 Share Incentive Scheme | 2021 | 2020 |
Total of equity instruments outstanding at the beginning of the reporting period | - | 21,974,740 |
Total of equity instruments granted during the current reporting period | - | - |
Total of equity instruments vested during the current reporting period | - | 21,204,645 |
Total of equity instruments forfeited during the current reporting period (Note) | - | 770,095 |
Total of equity instruments outstanding at the end of the reporting period | - | - |
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 | - | - |
Note: On December 25
th 2020, pursuant to the revised Articles of Association and resolution of the 20
th
geneal meeting of
th
session of the Board, and approved by the second extraordinary general meeting of 2018, the Company repurchasedand cancelled 770,095 granted and unvested restricted RMB treasury shares in cash. The Company has completed theregistration procedures of equity changes as of July 2
nd2021.
Unit: share
2018 Share Incentive Scheme | 2021 | 2020 |
Total of equity instruments outstanding at the beginning of the reporting period | 68,762,683 | 121,195,458 |
Total of equity instruments granted (share dividend) during the current reporting period | - | - |
Total of equity instruments vested during the current reporting period | - | 45,591,794 |
Total of equity instruments forfeited during the current reporting period (Note) | - | 6,840,981 |
Total of equity instruments outstanding at the end of the reporting period | 68,762,683 | 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 | RMB 16.98/share & 24 months | RMB 16.98/share & 36 months |
Note: On December 25
th
2020, authorized by the Company's second extraordinary shareholders' meeting in 2018 andaccording to the resolutions and the revised Articles of Association of the 20
th
meeting of the 4
th
session of the Board ofDirectors, the Company repurchased and cancelled the granted and unvested 6,840,981 restricted RMB treasury shares incash. The Company has completed the registration procedures of equity changes as of July 2
nd
2021.
Hikvision 2021Annual Report
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
On October 22
nd2015, Hikvision considered and approved Management Measures for Core Staff Co-Investment inInnovative Businesses (Draft) (hereafter referred to as “Management Measures”) at the 2
ndextraordinary general meeting.On March 7
th
2016, representative congress of labor union of Hikvision passed Implementation Provisions forManagement Measures for Core Staff Investment in Innovative Businesses (hereafter referred to as “Provisions”), to initiateand implement 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, its wholly-ownedsubsidiaries, and innovative business subsidiaries, and are able to invest in all innovative businesses. Grantees of plan Bare comprised of core and full-time staff from innovative business subsidiaries, and could participate in investment oninnovative business subsidiaries where they serve. The Co-Investment Platform will increase capitals annually, thecorresponding increased equity of which will be distributed to core staff who meets investment conditions pursuant toparticular rules. The lock-up period shall be five years after equity of Co-Investment Platform is held by the staff, whichwill be unlocked in one-off manner when due. Within the lock-up period, if the labor relationship between the granteesand the Company or its subsidiaries is released or terminated, equity of Co-Investment Platform held by the grantees shallbe 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. During the current reporting period, the Group recognized share-basedpayment expenses of RMB 221,463,007.99 in aggregate based on the fair value of services obtained by the Group.
2. Information of the Share-based Payment through Equity Settlements
Restrictive Share Incentive Scheme
Unit: RMB
2016 Share Incentive Scheme | 2018 Share Incentive Scheme | |
Method of determine the fair value of equity instruments at the grant date | Determined based on stock price at the grant date and the costs of restricted shares during Lock-up Period | Determined based on stock price at the grant date and the costs of restricted shares during Lock-up Period |
Recognition basis of the number of the equity instruments qualified for vesting | Determined based on the results estimation of each vesting period | Determined based on the results estimation of each vesting period |
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 | 345,213,163.42 | 1,000,614,626.81 |
Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period | - | 147,866,242.12 |
Hikvision 2021Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 | 316,479,067.19 |
Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period | 221,463,007.99 |
Among total amount of the expenses recognized according to share-based payment through equity settlement during thecurrent reporting period, amount of RMB 21,602,201.66 was due to share distributions to minority shareholders; As ofDecember 31
st
2021, accumulative amount of share-based payment through equity settlement of RMB 57,237,201.85 wasincluded in the equity of 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.
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 | 11,659,026 | 9,573,577 |
- Commitment on external investments | 34,500 | 42,400 |
Total | 11,693,526 | 9,615,977 |
2. Contingencies
The Group has no significant contingencies to be disclosed.
XIII. Events after the Balance Sheet Date
1. Significant Unadjusted Events
Restricted Share Incentive SchemeOn January 18
th
2022, according to the first extraordinary general meeting of shareholders in 2022, after consideration andapproval by the Board of Directors, the Company granted 99,417,229 restricted shares to grantees at a grant price of RMB
29.71 per share. The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing on the grantdate, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up and shall not betransferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares (including Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by 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 period
Hikvision 2021Annual Report
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
shall 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 Companycompleted the equity registration in February 2022.
2. Profit Distribution
Pursuant to the proposal of the 9
th meeting of the 5
th session of the Board of Directors on April 14
th2022, the Companyproposed to distribute cash dividend of RMB 9 (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 | 2021 | 2020 |
External revenue generated in domestic area | 59,434,989,705.17 | 45,806,567,913.73 |
External revenue generated in overseas area | 21,985,063,834.10 | 17,696,882,978.05 |
Total | 81,420,053,539.27 | 63,503,450,891.78 |
Unit: RMB
Item (Note) | On December 31st 2021 | On January 1st 2021 |
Non-current assets in domestic area | 13,823,326,864.88 | 9,202,175,652.66 |
Non-current assets in overseas area | 777,156,474.79 | 454,684,509.48 |
Total | 14,600,483,339.67 | 9,656,860,162.14 |
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 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to June 30
th2021
XV. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts Receivable
1.1 Disclosure by age
Unit: RMB
Aging | Closing Balance | ||
Accounts receivable | Credit loss provision | Proportion (%) | |
Within credit period | 8,936,084,715.17 | 25,327,231.42 | 0.28 |
Within 1 year after exceeding credit period | 14,489,234,463.94 | 92,968,853.56 | 0.64 |
1-2 years after exceeding credit period | 514,871,132.91 | 102,072,248.63 | 19.82 |
2-3 years after exceeding credit period | 225,519,710.96 | 95,892,762.79 | 42.52 |
3-4 years after exceeding credit period | 93,895,841.82 | 65,226,696.98 | 69.47 |
Over 4 years after exceeding credit period | 107,141,106.30 | 107,141,106.30 | 100.00 |
Subtotal | 24,366,746,971.10 | 488,628,899.68 | 2.01 |
1.2 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 | 24,366,746,971.10 | 100.00 | 488,628,899.68 | 2.01 | 23,878,118,071.42 | 24,550,291,739.99 | 100.00 | 356,899,560.63 | 1.45 | 24,193,392,179.36 |
Total | 24,366,746,971.10 | 100.00 | 488,628,899.68 | 2.01 | 23,878,118,071.42 | 24,550,291,739.99 | 100.00 | 356,899,560.63 | 1.45 | 24,193,392,179.36 |
Accounts receivable provision for credit loss by portfolios
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to June 30
th2021
Unit: RMB
Customer | Closing balance | ||
Carrying balance | Credit loss provision | Proportion (%) | |
Subsidiaries’ customers | 20,638,547,619.01 | - | - |
Portfolio A | 669,111.20 | 183,382.38 | 27.41 |
Portfolio B | 3,727,329,323.46 | 488,244,599.87 | 13.10 |
Portfolio C | 200,917.43 | 200,917.43 | 100.00 |
Total | 24,366,746,971.10 | 488,628,899.68 | 2.01 |
Description of accounts receivable for credit loss provision by portfolios
As part of the Company's credit risk management, the Company uses the ageing of accounts receivable to assess the expected credit losses of accounts receivable formed by domestic andoverseas 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 accounts receivablegenerated 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 believes that thecredit 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 are due.
1.3 Credit loss provision
The provision for credit loss in the current reporting period is RMB 141,724,671.73.
The actual write-off of accounts receivable for the current reporting period is RMB 11,090,513.58, and RMB 1,095,180.90 is recovered after write-off..
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
1.4 Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
Name of the Party | Relationship with the Company | Book value balance of accounts receivable | Closing balance for credit loss provision | Proportion (%) of the total balance of accounts receivable at the end of the current reporting period |
Subsidiary A | Subsidiary | 20,569,980,734.09 | - | 84.42 |
CETC’s subsidiary company A | Related party | 116,346,635.88 | 24,526,386.65 | 0.48 |
Third party J | Third party | 103,678,553.16 | 4,384,276.62 | 0.43 |
Third party K | Third party | 47,227,654.27 | 1,172,554.78 | 0.19 |
Third party L | Third party | 45,281,235.64 | 3,970,652.08 | 0.19 |
Total | 20,882,514,813.04 | 34,053,870.13 | 85.71 |
1.5 As of December 31
st
2021, there is no termination of accounts receivable booking due to transfer of a financial asset.
1.6 As of December 31
st
2021, 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 | 22,910,404.14 | 22,910,404.14 |
Other receivables | 1,491,231,959.91 | 703,792,729.51 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
Category
Category | Closing balance | Opening Balance |
Total | 1,514,142,364.05 | 726,703,133.65 |
2.2 Dividends receivable
Unit:RMB
Investees | Closing balance | Opening Balance |
Subsidiaries of Hikvision | 22,910,404.14 | 22,910,404.14 |
Total | 22,910,404.14 | 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 | 1,480,835,960.26 | 1,000,125.48 | 0.07 |
Within 1 year | 10,346,083.28 | 437,322.07 | 4.23 |
1-2 years | 955,013.17 | 173,633.46 | 18.18 |
2-3 years | 1,186,026.50 | 488,761.52 | 41.21 |
3-4 years | 28,300.00 | 19,580.77 | 69.19 |
Over 4 years | 1,135,465.04 | 1,135,465.04 | 100.00 |
Subtotal | 1,494,486,848.25 | 3,254,888.34 | 0.22 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
(2) Other receivables by nature of the payment
Unit: RMB
Nature | Closing balance | Opening balance |
Payments by related parties within the Group | 1,365,117,094.96 | 454,474,087.76 |
Temporary payments for receivables | 61,128,645.72 | 219,103,746.42 |
Guarantee deposit | 60,966,840.82 | 47,835,041.47 |
Others | 7,274,266.75 | 3,797,396.93 |
Total | 1,494,486,848.25 | 725,210,272.58 |
(3) Provision for credit losses
The amount of credit loss provision recovered in the current period was RMB 18,162,654.73.
(4) The actual write-off of other receivables in the current reporting period was nil.
(5) Top 5 debtors of other receivables in terms of closing balance
Unit:RMB
The name of entity | Relationship with the Company | Nature | Closing balance | Aging | Percentage to total other receivables (%) | Closing balance for credit loss provision |
Subsidiary B | Subsidiary | Internal Payment | 607,297,582.50 | Within contract period | 40.64 | - |
Subsidiary C | Subsidiary | Internal Payment | 149,859,672.76 | Within contract period | 10.03 | - |
Subsidiary D | Subsidiary | Internal Payment | 134,839,322.43 | Within contract period | 9.02 | - |
Subsidiary E | Subsidiary | Internal Payment | 67,617,485.89 | Within contract period | 4.52 | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
The name of entity
The name of entity | Relationship with the Company | Nature | Closing balance | Aging | Percentage to total other receivables (%) | Closing balance for credit loss provision |
Subsidiary F | Subsidiary | Internal Payment | 54,423,585.97 | Within contract period | 3.64 | - |
Total | 1,014,037,649.55 | 67.85 | - |
(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 | 6,870,285,292.68 | - | 6,870,285,292.68 | 5,912,831,208.01 | - | 5,912,831,208.01 |
Investments in associated enterprises and joint ventures | 915,631,339.20 | - | 915,631,339.20 | 814,542,245.96 | - | 814,542,245.96 |
Total | 7,785,916,631.88 | - | 7,785,916,631.88 | 6,727,373,453.97 | - | 6,727,373,453.97 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
3.1 Investment in 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 Co., Ltd. | 848,272,492.62 | 12,239,987.55 | - | 860,512,480.17 | - | - |
Hangzhou Hikvision Security Equipment Leasing Services Co., Ltd. | 200,000,000.00 | - | - | 200,000,000.00 | - | - |
Shanghai Goldway Intelligent Transportation System Co., Ltd. | 23,000,000.00 | - | - | 23,000,000.00 | - | - |
Chongqing Hikvision System Technology Co., Ltd. | 700,000,000.00 | 167,518.60 | - | 700,167,518.60 | - | - |
Hundure Technology (Shanghai) Co., Ltd. | 37,247,790.28 | - | 37,247,790.28 | - | - | - |
Hangzhou EZVIZ Network Co., Ltd. | 61,742,747.98 | 1,500,903.88 | - | 63,243,651.86 | - | - |
Hangzhou Haikang Zhicheng Investment and Development Co., Ltd. | 24,000,000.00 | - | - | 24,000,000.00 | - | - |
Hangzhou Hikrobot Technology Co., Ltd. | 138,957,632.99 | 3,434,654.51 | - | 142,392,287.50 | - | - |
Hangzhou Auto Technology | 186,488,555.60 | 782,202.37 | - | 187,270,757.97 | - | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 Communication Technology Co., Ltd. | 7,000,000.00 | - | - | 7,000,000.00 | - | - |
Hangzhou Microimage Sensing | 182,201,437.54 | 417,723.87 | - | 182,619,161.41 | - | - |
HDT INTERNATIONAL LIMITED | 87,786.14 | - | - | 87,786.14 | - | - |
Prama Hikvision India PVT | 1,585,696.80 | - | - | 1,585,696.80 | - | - |
Hikvision International Co., Limited | 79,423.52 | - | - | 79,423.52 | - | - |
Hikvision Australia | 2,866,850.00 | - | - | 2,866,850.00 | - | - |
Hikvision Singapore | 1,900,590.00 | - | - | 1,900,590.00 | - | - |
Hikvision South Africa | 1,578,650.00 | - | - | 1,578,650.00 | - | - |
Hikvision FZE | 1,870,351.40 | - | - | 1,870,351.40 | - | - |
HIKVISION DO BRASIL | 4,579,750.50 | - | - | 4,579,750.50 | - | - |
LIMITED LIABILITY COMPANY | 647,249.19 | - | - | 647,249.19 | - | - |
Hikvision Coop. | 65,485.53 | - | - | 65,485.53 | - | - |
Hikvision Korea Limited | 1,535,850.00 | - | - | 1,535,850.00 | - | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 |
Hikvision Colombia SAS | 1,337,440.00 | - | - | 1,337,440.00 | - | - |
HIKVISION KAZAKHSTAN LIMI | 4,758.69 | - | - | 4,758.69 | - | - |
HIKVISION TURKEY TECHNOLO | 1,148,115.83 | - | - | 1,148,115.83 | - | - |
Chongqing Hikvision Technology Co., Ltd. | 102,318,598.74 | 437,957.57 | - | 102,756,556.31 | - | - |
HIKVISION USA INC. | 1,546,160.00 | - | - | 1,546,160.00 | - | - |
Hikvision Canada Inc | 994,442.54 | - | - | 994,442.54 | - | - |
Henan Hua’An Bao Quan Intelligent Development Co., Ltd. | 98,334,200.00 | - | - | 98,334,200.00 | - | - |
Henan Haikang Hua’An Bao Quan Electronics Co., Ltd. | 33,940,800.00 | - | - | 33,940,800.00 | - | - |
Hangzhou Hikvision Technology Co., Ltd. | 1,066,917,232.70 | 7,129,722.90 | - | 1,074,046,955.60 | - | - |
Hangzhou Hikvision Electronics Co., Ltd. | 411,410,425.15 | 15,280,878.75 | - | 426,691,303.90 | - | - |
Wuhan Hikstorage | 60,869,464.15 | - | - | 60,869,464.15 | - | - |
Chengdu Hikvision Digital Technology Co., | 540,086,104.32 | 194,989.56 | - | 540,281,093.88 | - | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 |
Ltd. | ||||||
Hangzhou Auto Software | 14,536,174.60 | 2,038,154.06 | - | 16,574,328.66 | - | - |
Hangzhou Haikang Intelligent Technology Co., Ltd. | 8,689,143.96 | 1,510,998.55 | - | 10,200,142.51 | - | - |
Hangzhou EZVIZ Software Co., Ltd. | 35,084,155.82 | 5,020,897.29 | - | 40,105,053.11 | - | - |
Hangzhou Hikstorage | 2,843,875.79 | 637,380.59 | - | 3,481,256.38 | - | - |
HIKVISION TASHKENT | 833,014.00 | - | - | 833,014.00 | - | - |
Xi’An Hikvision Digital Technology Co., Ltd. | 85,000,000.00 | 115,000,000.00 | - | 200,000,000.00 | - | - |
Wuhan Hikvision Technology Co., Ltd. | 12,600,000.00 | 187,400,000.00 | - | 200,000,000.00 | - | - |
Wuhan Hikvision Science and Technology Co., Ltd. | 150,250,000.00 | 33,002,487.50 | - | 183,252,487.50 | - | - |
Hangzhou Hikimaging Technology Co., Ltd. | 50,948,433.82 | 561,393.63 | - | 51,509,827.45 | - | - |
Guizhou Haikang Transportation Big Data Co., Ltd. | 22,000,000.00 | 22,000,000.00 | - | 44,000,000.00 | - | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 |
Xinjiang CET Yihai Information Technology Co., Ltd. | 24,000,000.00 | - | - | 24,000,000.00 | - | - |
Nanjing Hikvision Digital Technology Co., Ltd. | 80,000,000.00 | - | - | 80,000,000.00 | - | - |
Hangzhou Kuangxin Technology Co., Ltd. | 112,000,000.00 | - | - | 112,000,000.00 | - | - |
Zhengzhou Hikvision Digital Technology Co., Ltd. | 65,000,000.00 | 15,000,000.00 | - | 80,000,000.00 | - | - |
Nanchang Hikvision Digital Technology Co., Ltd. | 80,000,000.00 | - | - | 80,000,000.00 | - | - |
Hikvision Digital Technology (Shanghai) Co., Ltd. | 80,000,000.00 | - | - | 80,000,000.00 | - | - |
Hefei Hikvision Digital Technology Co., Ltd. | 35,000,000.00 | 45,000,000.00 | - | 80,000,000.00 | - | - |
Tianjin Hikvision Information Technology Co., Ltd. | 50,348,846.40 | 509,239.06 | - | 50,858,085.46 | - | - |
Zhejiang Hikvision City Service Co., Ltd. | 35,000,000.00 | - | - | 35,000,000.00 | - | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
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 |
Hikvision Peru Closed Stock Company | 1,598,042.50 | - | - | 1,598,042.50 | - | - |
Shijiazhuang Hikvision Technology Co., Ltd. | 45,000,000.00 | 5,897,589.14 | - | 50,897,589.14 | - | - |
Zhejiang Haikang Fire Protection and Control Co., Ltd. | 84,004.82 | 60,763.40 | - | 144,768.22 | - | - |
Hikvision Argentina S.R.L | 1,793,559.15 | - | - | 1,793,559.15 | - | - |
Fuzhou Hikvision Digital Technology Co., Ltd. | 50,814,676.49 | 329,895.30 | - | 51,144,571.79 | - | - |
Hangzhou Hikfire | 61,871,362.21 | 710,145.93 | - | 62,581,508.14 | - | - |
Hangzhou Rayin Technology | 60,702,536.80 | 349,581.59 | - | 61,052,118.39 | - | - |
Hangzhou Microimage Software | 2,090,633.38 | 1,425,368.56 | - | 3,516,001.94 | - | - |
Kunming Hikvision Digital Technology Co., Ltd. | 126,666.06 | 50,174,365.52 | - | 50,301,031.58 | - | - |
Jinan Hikvision Digital Technology Co., Ltd. | - | 51,433,533.78 | - | 51,433,533.78 | - | - |
Hanghou Hikmicro Intelligent Technology Co., Ltd. | - | 52,154.57 | - | 52,154.57 | - | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 |
HIKVISION WEST AFRICA LIMITED | - | 101,941.96 | - | 101,941.96 | - | - |
Daishan Hailai | 14,899,444.96 | 14,899,444.96 | - | - | ||
Haina Yuzhi Fund | - | 400,000,000.00 | - | 400,000,000.00 | - | - |
Total | 5,912,831,208.01 | 994,701,874.95 | 37,247,790.28 | 6,870,285,292.68 | - | - |
3.2 Investments in associated enterprises and joint ventures
Unit:RMB
Name of investee | Opening balance | Increase/Decrease during the current reporting period | 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 | Declared cash dividends or profit distribution | Provision for impairment | Others | ||||
1.Joint Ventures |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Name ofinvestee
Name of investee | Opening balance | Increase/Decrease during the current reporting period | 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 | Declared cash dividends or profit distribution | Provision for impairment | Others | ||||
Daishan Hailai | 15,253,091.76 | - | - | 645,353.20 | - | (999,000.00) | - | (14,899,444.96) | - | - |
Hangzhou Haikang Intelligent Industrial Equity Investment Fund Partnership (L.P.) | 612,479,371.62 | - | - | 89,889,968.33 | - | - | - | - | 702,369,339.95 | - |
Zhejiang Haishi Huayue Digital Technology Co., Ltd. | 9,985,577.32 | - | - | 1,944,935.34 | - | - | - | - | 11,930,512.66 | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st
2021
Name ofinvestee
Name of investee | Opening balance | Increase/Decrease during the current reporting period | 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 | Declared cash dividends or profit distribution | Provision for impairment | Others | ||||
Xuzhou Kangbo City Operation Management Service Co., Ltd. | 4,631,286.58 | 4,900,000.00 | - | (298,084.91) | - | - | - | - | 9,233,201.67 | - |
Shenzhen Hikvision Urban Service Operation Co., Ltd. | 6,029,569.69 | - | - | (4,764,911.31) | - | - | - | - | 1,264,658.38 | - |
Yunnan Yinghai Parking Service Co., Ltd. | 4,841,060.76 | - | - | (282,179.67) | - | - | - | - | 4,558,881.09 | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Name ofinvestee
Name of investee | Opening balance | Increase/Decrease during the current reporting period | 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 | Declared cash dividends or profit distribution | Provision for impairment | Others | ||||
Zhejiang City Digital Technology Co., Ltd. | 11,864,018.37 | - | - | 350,301.92 | - | - | - | - | 12,214,320.29 | - |
Guangxi Haishi City Operation Management Co., Ltd. | 5,296,695.36 | 3,000,000.00 | - | (3,664,494.77) | - | - | - | - | 4,632,200.59 | - |
Subtotal | 670,380,671.46 | 7,900,000.00 | - | 83,820,888.13 | - | (999,000.00) | (14,899,444.96) | 746,203,114.63 | - | |
2.Associated Enterprises | ||||||||||
Wuhu Sensor Tech | 58,491,264.42 | - | - | 16,975,212.42 | - | - | - | - | 75,466,476.84 | - |
Maxio Technology | 54,621,802.54 | - | - | 8,105,646.99 | - | - | - | - | 62,727,449.53 | - |
Zhiguang | 21,253,058.87 | - | - | 32,784.40 | - | - | - | - | 21,285,843.27 | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Name ofinvestee
Name of investee | Opening balance | Increase/Decrease during the current reporting period | 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 | Declared cash dividends or profit distribution | Provision for impairment | Others | ||||
Hailian | ||||||||||
Qingtang Big Data | 9,795,448.67 | - | - | 153,006.26 | - | - | - | - | 9,948,454.93 | - |
Subtotal | 144,161,574.50 | - | - | 25,266,650.07 | - | - | - | - | 169,428,224.57 | - |
Total | 814,542,245.96 | 7,900,000.00 | - | 109,087,538.20 | - | (999,000.00) | - | (14,899,444.96) | 915,631,339.20 | - |
Note: The original joint venture of the Company, Daishan Hailai, was converted from the equity method to the cost method for accounting. For details, please refer to NoteVI (1).
3.3 As of December 31
st2021, there were no restrictions on the capability of transferring fund to the Company from investees in which the Company held long-termequity investment.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
4. Operating Income and Operating Cost
Unit:RMB
Item | 2021 | 2020 | ||
Income | Cost | Income | Cost | |
Operating income | 24,756,059,967.30 | 5,102,605,625.81 | 24,051,359,607.67 | 7,010,347,837.77 |
Other operating income | 3,316,533,294.57 | 138,183,248.51 | 2,260,627,739.73 | 167,059,377.68 |
Total | 28,072,593,261.87 | 5,240,788,874.32 | 26,311,987,347.40 | 7,177,407,215.45 |
5. Investment Income
Unit:RMB
Item | 2021 | 2020 |
Long-term equity investment income (losses) calculated by cost method | 16,316,000.00 | 80,360,404.14 |
Long-term equity investment income measured by equity method | 109,087,538.20 | 13,424,897.92 |
Investment losses from disposal of long-term equity investments | (3,387,647.37) | (2,215.23) |
Investment income of other non-current financial assets during the holding period | 115,644,801.97 | 150,000,000.00 |
Investment income (losses) from disposal of held of trading financial assets | (461,953.09) | 3,552,279.56 |
Investment income from disposal of asset group | - | 848,151,116.16 |
Total | 237,198,739.71 | 1,095,486,482.55 |
6. Related Party Transactions
6.1 Sales and purchase of goods, provision of services and receiving services
Purchase of goods/receiving of services:
Unit:RMB
Related party | Transaction type | 2021 | 2020 |
Subsidiaries of Hikvision (Note) | Purchase of materials and receiving of services | 6,136,340,294.33 | 7,995,299,074.64 |
Subsidiaries of CETC | Purchase of materials and receiving of services | 23,888,681.71 | 11,773,724.55 |
Maxio Technology and its subsidiaries | Purchase of materials and receiving of services | 36,783,800.00 | 7,875,600.00 |
Aurotek Corporation and its subsidiaries | Purchase of materials and receiving of services | 1,787,764.68 | - |
Wuhu Sensor Tech and its subsidiaries | Purchase of materials and receiving of services | - | 1,000.00 |
Total | 6,198,800,540.72 | 8,014,949,399.19 |
Note: Subsidiaries of Hikvision are subsidiaries of the Company. See Note (VII) for details.
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Sales of goods/rendering of services:
Unit:RMB
Related party | Transaction type | 2021 | 2020 |
Subsidiaries of Hikvision | Sales of products and rendering of services | 22,294,952,493.31 | 18,507,772,746.27 |
Haishi JiaAn | Sales of products and rendering of services | 20,696,334.95 | - |
Subsidiaries of CETC | Sales of products and rendering of services | 20,263,330.33 | 71,968,472.76 |
Chengdu Guoshengtianfeng and its subsidiaries | Sales of products and rendering of services | 7,006,078.70 | - |
Shenzhen Urban Service and its subsidiaries | Sales of products and rendering of services | 905,309.73 | 13,868.14 |
Guangxi Haishi and its subsidiaries | Sales of products and rendering of services | 578,334.10 | 1,769,911.50 |
Haishi Huayue | Sales of products and rendering of services | 516,471.00 | 263,634.07 |
Wuhu Sensor Tech Service and its subsidiaries | Sales of products and rendering of services | 13,008.86 | 1,150.44 |
Zhiguang Hailian and its subsidiaries | Sales of products and rendering of services | - | 2,191,071.97 |
Xiaoyun Vision Technology | Sales of products and rendering of services | - | 2,629,911.49 |
Qingtang Big Data | Sales of products and rendering of services | - | 7,092.92 |
Total | 22,344,931,360.98 | 18,586,617,859.56 |
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 current deposits | 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 | 500,006,734.20 | 4,500,006,734.20 | - | 4,000,000,000.00 |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
Note: For the deposit that the Company deposited into China Electronics Technology Finance Co., Ltd., the depositinterest income was RMB 80,001,932.23.
Those transactions above were executed at market prices or at the prices agreed by both parties.
6.2 Guarantees with related parties
In the current reporting period, the Company has provided guarantees for its 27 wholly-owned and majority-ownedsubsidiaries in an amount not exceeding an equivalent of RMB 16.10 billion (2020:RMB 32.80 billion), includingthe joint liability guarantee for the payment obligations on purchase from suppliers in an amount not exceeding anequivalent of RMB 370 million (2020: RMB 3.125 billion), and the joint liability guarantee for the general creditlimit applied from commercial banks and other financial institutions or other financing methods through agreedmethods in an amount not exceeding an equivalent of RMB 15.73 billion (2020: RMB 29.67 billion).
For details of the Company's guarantees on Safety Chongqing project, please refer to Note X (5).
6.3 Funding from related parties
In April 2021, the Company proposes to provide amounts of no more than RMB 500 million, RMB 500 million,RMB 200 million, RMB 100 million and RMB 50 million to five innovative business holding subsidiaries, namelyWuhan Hikstorage, Hangzhou Auto Technology, Hangzhou Hikfire, Hangzhou Rayin Technology and HangzhouHikimaging Technology, respectively. It is used to supplement the operating capital needs of each innovativebusiness holding subsidiary. The actual amount of funds will be provided based on the actual business needs of eachinnovative business holding subsidiary. The period of financial funds will take effect during 3 years after the dateof approval by the general meeting of the Company (May 14
th
2021), during which the limit (balance) can be utilizedin circulation by batches. The annual borrowing rate of financial assistance shall be negotiated and determined byboth parties to the agreement without violating relevant laws and regulations. The interest rate is determinedaccording to the principle of marketization, and the specific contract shall prevail. The method of repayment is torepay the principal and interest in one lump sum upon maturity.
In July 2020, the Company provided financial assistance of no more than RMB 1,000 million to Hangzhou RoboticTechnology, an innovative business subsidiary. The specific assistance amount will be provided according to actualbusiness needs. The valid financial assistance period is 3 years from the date of deliberation and approval at the 18
th
meeting of the 4
th
session of the Board of Directors of the Company (July 24
th2020), during which the limit (balance)can be utilized in circulation by batches. The annual borrowing rate of financial assistance shall be negotiated anddetermined by both parties to the agreement without violating relevant laws and regulations. The interest rate isdetermined according to the principle of marketization, and the specific contract shall prevail. The method ofrepayment is to repay the principal and interest in one lump sum upon maturity.
In April 2020, the Company provided no more than RMB 300 million, RMB 50 million RMB 100 million and RMB
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
500 million to the four holding subsidiaries of Hangzhou Auto Technology, Hangzhou Hikstorage, HangzhouHikFire and Hangzhou Microimage Sensing respectively. The specific assistance amount will be provided accordingto actual business needs. The period of financial funds will take effect during 3 years after the date of approval bythe general meeting of the Company (May 15
th2020), during which the limit (balance) can be utilized in circulationby batches. The annual borrowing rate of financial assistance shall be negotiated and determined by both parties tothe agreement without violating relevant laws and regulations. The interest rate is determined according to theprinciple of marketization, and the specific contract shall prevail. The method of repayment is to repay the principaland interest in one lump sum upon maturity.
7. Receivables from Related Parties and Payables to Related Parties
7.1 Receivables from related parties
Unit:RMB
Item | Related party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Accounts receivable | Subsidiaries of Hikvision | 20,638,547,619.01 | - | 20,623,636,081.76 | - |
Accounts receivable | Subsidiaries of CETC | 232,683,754.63 | 59,533,322.73 | 224,340,023.89 | 28,804,106.29 |
Accounts receivable | Xiaoyun Vision Technology | 7,937,469.72 | 1,067,451.69 | 9,522,614.22 | 349,200.54 |
Accounts receivable | Chengdu Guoshengtianfeng and its subsidiaries | 2,504,232.29 | 23,633.21 | - | - |
Accounts receivable | Haishi JiaAn | 2,784,000.00 | 24,220.80 | - | - |
Accounts receivable | Zhiguang Hailian and its subsidiaries | - | - | 7,074.00 | 83.47 |
Accounts receivable | Wuhu Sensor Tech and its subsidiaries | - | - | 1,300.00 | 58.76 |
Total | 20,884,457,075.65 | 60,648,628.43 | 20,857,507,093.87 | 29,153,449.06 |
Item | Related party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Notes receivable | Subsidiaries of Hikvision | 37,441,937.40 | - | - | - |
Notes receivable | Subsidiaries of CETC | 12,417,231.80 | - | 15,740,985.15 | - |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
Item | Related party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Total | 49,859,169.20 | - | 15,740,985.15 | - |
Item | Related party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Other receivables | Subsidiaries of Hikvision | 1,365,117,094.96 | - | 454,474,087.76 | - |
Other receivables | Subsidiaries of CETC | 145,000.00 | 6,133.50 | 145,000.00 | 1,711.00 |
Other receivables | Haishi Huayue | 104,182.74 | 906.39 | 279,452.11 | 3,297.53 |
Total | 1,365,366,277.70 | 7,039.89 | 454,898,539.87 | 5,008.53 |
Item | Related party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Prepayments | Subsidiaries of Hikvision | 3,274,287.66 | - | 3,646,828.69 | - |
Prepayments | Maxio technology and its subsidiaries | 49,300,000.00 | - | - | - |
Prepayments | Subsidiaries of CETC | 26,700.00 | - | - | - |
Total | 52,600,987.66 | - | 3,646,828.69 | - |
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 | 18,579,578.71 | 161,642.33 | 53,512,305.64 | 1,446,519.44 |
Total | 18,579,578.71 | 161,642.33 | 53,512,305.64 | 1,446,519.44 |
Notes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
Item | Related party | Closing balance | Opening balance | ||
Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
Dividends receivable | Subsidiaries of Hikvision | 22,910,404.14 | - | 22,910,404.14 | - |
Total | 22,910,404.14 | - | 22,910,404.14 | - |
7.2 payables to related parties
Unit:RMB
Item | Related party | Closing balance | Opening balance |
Accounts payable | Subsidiaries of Hikvision | 441,107,077.18 | 329,639,516.11 |
Accounts payable | Subsidiaries of CETC | 5,000,503.43 | 3,010,132.22 |
Accounts payable | Aurotek Corporation and its subsidiaries | 648,139.19 | - |
Total | 446,755,719.80 | 332,649,648.33 |
Item | Related party | Closing balance | Opening balance |
Contract liabilities | Subsidiaries of Hikvision | 10,138,872.51 | 5,755.28 |
Contract liabilities | Subsidiaries of CETC | 242,618.30 | 382,332.53 |
Contract liabilities | INESA and its subsidiaries | 687.00 | - |
Contract liabilities | Daishan Hailai | Not Applicable | 688.00 |
Total | 10,382,177.81 | 388,775.81 |
Item | Related party | Closing balance | Opening balance |
Other payables | Subsidiaries of Hikvision | 793,064,398.78 | 289,914,770.68 |
Other payables | Qingtang Big Data | 9,310,000.00 | - |
Other payables | Subsidiaries of CETC | 190,790.00 | 337,710.00 |
Other payables | Shanghai Fullhan Micro | 100,000.00 | 100,000.00 |
Other payables | Zhejiang City Digital Technology | 10,000.00 | - |
Other payables | Wuhu Sensor Tech and its subsidiaries | 2,040.00 | 1,200.00 |
Total | 802,677,228.78 | 290,353,680.68 |
8. Supplementary Information to the Cash Flow Statement
8.1 Supplementary information to the cash flow statement
Unit:RMB
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st
2021
Supplementary information | 2021 | 2020 |
1. Reconciliation of net profit to cash flows from operating activities: | ||
Net profit | 14,088,727,668.02 | 12,671,388,440.50 |
Add: Assets impairment provision | 2,669,913.88 | (2,397,952.77) |
Credit loss provision | 119,440,900.17 | 35,765,705.73 |
Depreciation of fixed assets | 271,966,196.58 | 256,698,165.42 |
Amortization of intangible assets | 42,715,421.78 | 51,580,512.51 |
Depreciation of right of use assets | 35,547,052.78 | - |
Amortization of long-term deferred expenses | 66,502,221.67 | 21,910,527.64 |
Gains on disposal of fixed assets, intangible assets and other long-term assets | (30,917,301.16) | (16,966.03) |
Financial expenses | 138,779,449.86 | 270,249,113.29 |
Losses (gains) from change in fair value | 48,725,796.17 | (69,478,784.83) |
Investment income | (237,198,739.71) | (1,095,486,482.55) |
Share-based payment through equity settlement | 238,045,712.93 | 523,901,019.53 |
Decrease (increase) in restricted funds | 195,005,634.49 | (16,350,637.05) |
Decrease (increase) in deferred income tax assets | (171,826,866.94) | 16,291,195.35 |
Increase of inventories | (145,289,110.09) | (30,574,481.99) |
Decrease (increase) in operating receivables | (651,204,315.31) | 941,257,584.66 |
Increase in operating payables | 1,539,868,467.24 | 974,737,516.48 |
Increase (decrease) in deferred income | 243,243,770.27 | (39,562,793.01) |
Net cash flow from operating activities | 15,794,801,872.63 | 14,509,911,682.88 |
2. Major investing and financing activities not involving cash receipt and payment: | ||
3. Net change in cash and cash equivalents: | ||
Closing balance of cash | 26,639,582,696.49 | 23,264,693,578.70 |
Less: Opening balance of cash | 23,264,693,578.70 | 16,656,028,410.72 |
Add: Closing balance of cash equivalents | - | - |
Less: Opening balance of cash equivalents | - | - |
Net increase in cash and cash equivalents | 3,374,889,117.79 | 6,608,665,167.98 |
Notes to Financial StatementsFor the reporting period from January 1
st
2021 to December 31
st2021
8.2 Composition of cash and cash equivalents
Unit:RMB
Item | Closing balance | Opening balance |
I. Cash | 26,639,582,696.49 | 23,264,693,578.70 |
Including: Cash on hand | 261,314.61 | 264,936.39 |
Bank deposit for payment at any time | 26,639,219,718.83 | 23,264,326,122.65 |
Other monetary funds for payment at any time | 101,663.05 | 102,519.66 |
II. Cash equivalents | - | - |
III. Closing balance of cash and cash equivalents | 26,639,582,696.49 | 23,264,693,578.70 |
On December 31
st
2021, the Company’s closing balance of other monetary funds was RMB 17,008,779.94(December 31
st2020: RMB 212,015,271.04), of which RMB 16,907,116.89 were all various guarantee deposits(December 31
st2020: RMB 211,912,751.38), not cash or cash equivalents.
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 | 26,069,469.18 | / |
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) | 576,619,421.07 | / |
Investment losses from disposal of subsidiaries and other business units | (169,184,641.43) | |
The gains generated when the investment cost of acquiring a subsidiary, an associate or joint venture is less than the income derived from the fair value of the identifiable net assets of the investee | 1,163,932.96 | / |
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 | 75,408,081.63 | / |
Other non-operating income and expense except the items mentioned above | (1,471,007.77) | / |
Impact of income tax | (29,930,824.64) | / |
The impact of minority equity | (122,987,029.92) | / |
Total | 355,687,401.08 | / |
Hikvision 2021 Annual ReportNotes to Financial StatementsFor the reporting period from January 1
st 2021 to December 31
st2021
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 | 28.99% | 1.810 | 1.806 |
Net profit excluding non-recurring items of profit or loss attributable to ordinary shareholders of the Company | 28.38% | 1.772 | 1.767 |
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 16
th
2022
Note:
This document is a translated version of the Chinese version 2021 Annual Report (“2021年年度报告”), and the published announcements in the Chinese version shall prevail. The complete publishedChinese 2021 Annual Report may be obtained at www.cninfo.com.cn.