Hangzhou Hikvision Digital Technology Co., Ltd.
2023 Annual Report
April 20, 2024
To ShareholdersThe business performance of Hikvision kept improving on a quarterly basis in 2023. Despite theuneven performance of the Company’s five business groups-PBG, EBG, SMBG, overseas mainbusiness and the innovative business, greater stability in the operation has been achieved by Hikvision,in a complex and volatile business environment.Regardless of our performance, Hikvision has resolutely increased investment in research anddevelopment as we have always believed in long-term efforts. Over the past eight years, Hikvisionhas gradually expanded perception technology from visible light to centimeter wave, millimeter wave,far-infrared, medium wave infrared, shortwave infrared, ultraviolet and X-ray, as well as to infrasoundwave, acoustic wave, and ultrasonic wave. By combining perception with AI technologies, we havegradually built and improved our AIoT technology system, launched and improved the products andsolutions, which contributed to the business growth. The survellience business is currently one of thebusiness directions of the Company's AIoT strategy. We have enhanced our competitiveness in thesurvellience industry by increasing non-visible light detector product lines or integrating multipledetector product lines. Scenario-based digitalization, especially scenario-based digitalization forenterprises, is another direction of our AIoT strategy. Hikvision has launched some product lines inthis field and is becoming an OT (Operational Technology) manufacturer. Looking digitaltransformation of various businesses. We seek to become a partner of varied businesses in their digitaltransformation journey by continuously improving our internal operational mechanisms andoptimizing our operational processes. We believe that digital transformation of businesses is a longprocess that provides immense potential for our future business growth.Hikvision has applied AI technology to various perception products and combined AI with bigdata technologies for use in system solutions. While exploring and developing industrial large modelsand industrial large multimodal models, we will continue to develop industry software to providemore suitable products and system solutions for users.
Hikvision is committed to the internationalization strategy. Although severely suppressed insome countries, the Company has been increasing investment in overseas markets, resulting in
continuous growth of our international business. We will further increase investment in overseasmarketing and enhance our competitiveness in those markets.
Being customer-centric and creating value for customers are always Hikvision's originalaspiration and core values. We stay dedicated to being open, transparent, and honest towardscustomers, shareholders, and employees.
Our sincere gratitude goes to all shareholders for your commitment to Hikvision and for yourtrust in the management team!
See far, go further!
Board of Directors of Hangzhou Hikvision Digital Technology Co., Ltd.
April, 2024
Section I Important Notes, Contents and Definitions
The 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 of9,330,600,931 shares, the Company proposed to distribute cash dividend of RMB9 (tax inclusive) pereach 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil.
Note:
This document is a translated version of the Chinese version 2023 Annual Report ("2023年年度报告"), and the published announcements in the Chinese version shall prevail. The complete publishedChinese 2023 Annual Report may be obtained at www.cninfo.com.cn.
Please read the full annual report and pay particular attention to the following risk factors:
1) Geopolitical risks: Global geopolitical uncertainty remains acute as the political landscape is being
fragmented and reshaped, and local wars continue. In recent years, the Company has continuously strengthenedour risk control and response capabilities, and flexibly adjusted resources based on business opportunities.However, our operations in some countries and regions may be adversely affected should geopoliticalenvironment continues to deteriorate.
2) Global economic downside risks: In addition to slower growth and entrenched currency oversupply in some
major economies, different regions across the world develop at different rates, presenting a hidden risk that isdifficult to eliminate. The Company disperses the risk of operating in a single region with a wide businesslayout and conducts business based on the actual situation of various countries and regions. However, theCompany's business will be impacted if another global economic recession arises
3) Risks of domestic economic structural transformation: The infrastructure and real estate markets in China
continue to undergo adjustments. The exports of some commodities are restricted by trade protection policiesof destination countries, and the advantage of a large labor force is weakened. The Chinese economy is in aprocess of transformation of development mode and alternation of new and old driving forces. The Companyempowers the digital transformation of the economy and society with AIoT technologies and products,promoting new developments in productivity. However, economic transformation cannot be achievedovernight, and structural pressure and resistance will persist for a long time. Any problems that occur duringthe process will still affect the Company's business operations.
4) Supply chain risks: The integrity of the global supply system is undermined by geopolitics, and the timeliness
of the supply chain is affected by business cycles. The Company strives to develop a diversified supply networkand adjust inventory properly. However, our business stability may be affected if the supply chain is seriouslyinterrupted.
5) Technology upgrading risks: With the rapid development of AI, big data, IoT and other technologies,
technological applications are iterating quickly. The Company has some strength in technology fields such asIoT perception, AI, and big data, and keeps growing through business practices. However, if we cannot closelytrack the updates and changes of cutting-edge technologies and maintain business innovation and expansion,the uncertainty of the Company's future development will increase.
6) Risks of internal management: The Company's continual business expansion and development of new
products and business services add complexity to internal management, posing new challenges to ourmanagement capabilities. The Company accumulates management experience through the development ofsystems and procedures with a focus on talent cultivation and construction. However, the Company's operationswill be adversely affected if our management capabilities cannot keep up with the business expansion.
7) Legal and compliance risks: The world's multilateral trading system is greatly impacted by politics, and
business activities are required to comply with the complex laws and regulations of various regions. TheCompany has constantly strengthened the legal compliance system since countries around the world havestricter requirements for data supervision and legal compliance capabilities. However, the Company'soperations will be adversely affected if our legal compliance capabilities cannot keep up with the requirements.
8) Risks of exchange rate fluctuations: The Company operates in multiple countries and regions, where
transactions are mainly settled in non-RMB currencies. Although the Company uses appropriate financialinstruments to reduce risks, exchange rate fluctuations will affect our financial performance due to the foreigncurrency exposure arising from sales, procurement, and financing.
9) Financial risks caused by customers' reduced ability to pay: The flow of funds in commercial transactions
is affected by the economic environment. The Company has accumulated some cash reserves due to our soundcollection mechanism and stable business operations, and our financing costs are low. However, if the overallliquidity risk of the market increases, the Company's operations will be adversely affected as our paymentcollection maybe delayed.10) Risks of cybersecurity: The Company has always emphasized cybersecurity and taken active measures to
enhance the security of our products and systems. However, computer viruses, malicious software, hackerattacks and other security incidents that deliberately attempt to damage the Company's systems or productsmay take place, causing potential cybersecurity issues.
11) Risks of intellectual property (IP) rights: The Company has maintained considerable investment in R&D,
and made significant technological achievements. We have also implemented robust IP protection measures.However, the risk of IP disputes and infringement still exists.The above-mentioned alerts do not include all the potential risks for the Company. Investors are advised to investwith caution.
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 ...... 16
Section IV Corporate Governance ...... 148
Section V Environmental and Social Responsibility ...... 183
Section VI Significant Events ...... 184
Section VII Changes in Shares and Information about Shareholders ...... 207
Section VIII Information of Preferred Shares ...... 223
Section IX Bonds ...... 224
Section X Financial Report ...... 225
Section XI Documents Available for Reference ...... 385
Definitions
Term Definition
Reporting Period From January 1, 2023 to December 31, 2023Articles of Associations Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd
Company, the Group
Hangzhou Hikvision Digital Technology Co., Ltd.CETC China Electronics Technology Group Ltd., the actual controller of the CompanyCETHIK CETHIK Group Co., Ltd. Controlling Shareholder of the CompanyEZVIZ, EZVIZ NetworkHangzhou EZVIZ Network Co., Ltd.(According to the context, also refers to thecorresponding business)HikRobot, Robotic businessHangzhou Hikrobot Technology Co., Ltd. (According to the context, also refers tothe corresponding business)HikAuto, Auto electronicsbusiness
Hangzhou Hikauto Technology Ltd. (According to the context, also refers to the
corresponding business)HikMicro, Micro Sensing,Thermal imaging business
Hikvision, the Company, ourHangzhou Hikmicro Sensing Technology Ltd. (According to the context, also refers
to the corresponding business)HikSemi, HikStorage,Storage business
Wuhan Hikstorage Technology Ltd. (According to the context, also refers to the
corresponding business)HikImaging
Hangzhou Hikmicro Sensing Technology Ltd. (According to the context, also refersHangzhou Hikimaging Technology Ltd. (According to the context, also refers to the
corresponding business)HikFireHangzhou Hikfire Technology Ltd. (According to the context, also refers to the
corresponding business)HikRayin,Rayin,HikSecurityCheck
Hangzhou Rayin Technology Ltd. (According to the context, also refers to the
corresponding business)Chengdu Science andTechnology Park
Located in Chengdu, Sichuan Province, the planned use is for R&D, office space
and supporting facilities, etc.Xi’an Science andTechnology Park
Located in Xi'an, Shaanxi Province, the planned use is for R&D, office space and
supporting facilities, etc.Wuhan Intelligence IndustryPark
Located in Wuhan, Hubei Province, the planned use is for production plants,
warehouses and supporting facilities, etc.EZVIZ IntelligentManufacturing (Chongqing)Base
Located in Chongqing, the planned use is for production plants, warehouses and
supporting facilities, etc.Shijiazhuang Science andTechnology Park
Located in Shijiazhuang, Hebei Province, the planned use is for R&D, office space
and supporting facilities, etc.Hikvision GlobalWarehousing and Logistics
Located in Hangzhou City, Zhejiang Province, the planned use is for warehousing
and logistics buildings and supporting buildings, etc.
Term Definition
CenterIndustrialization Base ofInfrared Thermal ImagingProducts
Located in Hangzhou, Zhejiang Province, the planned use is for office, R&D sitesand supporting facilities, etc.HikRobot ProductIndustrialization BaseConstruction Project
Located in Hangzhou, Zhejiang Province, the planned use is for office, R&D sitesand supporting facilities, etc.HikRobot IntelligentManufacturing (Tonglu)Base Project
Located in Hangzhou, Zhejiang Province, the planned use is for factory buildings,comprehensive office buildings and supporting facilities, etc.
Innovative Business
A long investment cycle, business prospects uncertain, has the high risk anduncertainty, in need for direct or indirect investment in exploration, in order for theCompany to timely enter into new areas of business. Initially disclosed inAnnouncement about Management Measures for Core Staff Investment inInnovative Business (www.cninfo.com.cn).In this report, innovative business also refers to EZVIZ, HikRobot, HikAuto,HikMicro, HikSemi, HikImaging, HikFire, Rayin and their related business orproducts.
Section II Corporate Profile & Key Financial DataI. Corporate Information
Stock abbreviation HIKVISION Stock code 002415
are listed
Shenzhen Stock ExchangeName 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., LTDAbbr. of the Company name in English (if any) HIKVISION
Legal representative Chen ZongnianRegistered address No. 555 Qianmo Road, Binjiang District, Hangzhou, Zhejiang ProvincePostal code of Registered address 310051Changes in the Company's registered address
The Company was listed on the Shenzhen Stock Exchange on May 28
th
Stock exchange where the shares of the Company
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, HangzhouPostal code of Business address 310051Company website www.hikvision.comE-mail market@hikvision.com; ir@hikvision.com
II. Contacts and Contact Information
Board Secretary Securities Affairs RepresentativeName Huang Fanghong
Address
No. 518 WuLianWang Street, Binjiang
District, Hangzhou
Tel. 0571-88075998 ; 0571-89710492
Fax 0571-89986895
E-mail hikvision@hikvision.com
III. Information Disclosure and Place of the Report
The securities exchange website for the disclosure of the AnnualReport
www.szse.cnMedia and website for the disclosure of the Annual Report
Securities Times, China Securities Journal, Shanghai securities
Journal, www.cninfo.com.cnPlace where the Annual Report is available for inspectionOffice of the Board of Directors of the Company
IV. Company Registration and Alteration
Unified Social Credit Identifier 91330000733796106P
Changes in principle business activities since theCompany was listed (if any)
During the reporting period,
scope. 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 pr
V radioactive sources; engineering and construction activities; type II value-added telecommunications services; online
| data processing and transaction |
processing services (operating e-
business activities can be carried out only after having been appr
| oved 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 |
equipme
hardware and peripherals; whol
| esale 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
of electric
| signal appliances and devices; manufacturing of mechanical and electrical equipment; sales of mechanical and electrical equipment; |
manufacturing of special labor protective supplies; sales of special labor
protective supplies; production of commercial pass
| word products; sales of electronic products; sales of digital cultural and creative technological equipment; technical services, technical development, technical consultation, technical knowledge exchange, technology transfer and technology promotion; |
soft
application services; big data service
| s; data processing and storage support services; security system monitoring services; security technology defense |
system’
equipment maintenance (excluding special equipment); parking lot services
| ; digital cultural and creative content application services; environmental protection monitoring; business training (excluding education and vocational training that require licensing); import and export of goods; import and export |
of technology (Except f
the law by virtue of its business license).Changes of controlling shareholders of theCompany (if any)
No change during the reporting periodV. Other Relevant InformationAccounting firm engaged by the CompanyName of the accounting firmDeloitte Touche Tohmatsu Certified Public Accountants LLPBusiness address of the accounting firm30F Bund Center 222 Yan An Road East ShanghaiName of accountants for writing signatureChen Yan, Liu YingSponsor institution engaged by the Company to continuously perform its supervisory function during the ReportingPeriod
□ Applicable √ Inapplicable
Financial advisor engaged by the Company to perform the duties of continuous supervision during the reportingperiod
√ Applicable □ Inapplicable
Name of Financial Advisor
Office Address of Financial
Advisor
Name of the leadfinancial advisor
Supervision PeriodChina International CapitalCorporation Limited
27th & 28th Floors, Tower 2,China World Tower, No.1Jianguomen Outer Street,Chaoyang District, Beijing.
Wang Jian; Liu Jia
Company can determine and carry out operational activities in accordance withThe remaining period of the first year
of listing of Hangzhou Ezviz NetworkCo., Ltd., a subsidiary under the controlof the Company, and the followingcomplete fiscal year.（From December
| 28, 2022 to December 31, 2023 |
）
VI. Key Accounting Data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
√ Yes □ No
Reasons for retrospective adjustment or restatement of previous accounting data
√ Changes in accounting policies
Unit: RMB2023
2022
YoY Change
(%)
2021Before theadjustment
After theadjustment
After theadjustmentRevenue (RMB)89,339,856,855.68
YoY Change
83,166,321,681.14
| 83,166,321,681.14 |
7.42%
81,420,053,539.27
Net profit attributable to shareholdersof the Company (RMB)
14,107,621,359.66
12,837,342,061.07
| 12,837,704,462.49 |
9.89%
16,800,411,032.05
2023
2022
(%)
2021Before theadjustment
After theadjustment
After theadjustmentNet profit attributable to shareholdersof the Company excluding non-recurring gains and losses (RMB)
13,665,962,325.65
YoY Change
12,330,695,878.62
12,331,058,280.04
10.83%
16,444,723,630.97
Net cash flows from operating
16,623,254,305.92
10,164,135,382.38
| 10,164,135,382.38 |
63.55%
12,708,524,686.99
Basic earnings per share (RMB/share)
1.520
1.370
| 1.370 |
10.95%
1.810
Diluted earnings per share
1.520
1.370
| 1.370 |
10.95%
1.806
Weighted average ROE
19.64%
19.62%
19.62%
0.02%
28.99%
At December 31,
2023
At December 31, 2022
| YoY Change |
(%)
At December 31,
2021Before theadjustment
After theadjustment
After theadjustmentTotal assets (RMB)138,848,007,548.55
119,233,282,761.47
119,234,833,850.69
16.45%
103,864,543,195.18
Net assets attributable to shareholdersof the Company (RMB)
76,354,265,540.14
68,389,154,548.76
68,389,337,524.32
11.65%
63,460,886,665.26
Reasons for changes in accounting policies and situations of correction of accounting errors:
The Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for Business Enterprises(the "Interpretation No. 16") on November 30, 2022. The scope of the initial recognition exemption fordeferred income tax in the Accounting Standards for Business Enterprises No. 18-Income Tax was revised.Making it clear that the provisions on exemption of initial recognition of deferred income tax liabilities anddeferred income tax assets in Accounting Standards for Business Enterprises No. 18-Income Taxes shall notbe applied if a single transaction is not a business combination, that affects neither accounting profit nortaxable income (or deductible loss) when the transaction occurs, and that initially recognized assets andliabilities result in equal taxable temporary differences and deductible temporary differences. This provisionis effective as of January 1, 2023 and may be implemented in advance. The Group implemented thisrequirement from January 1, 2023, adopted the retrospective adjustment method for accounting treatment,and restated the financial statements for the comparative period.
The Company's net profit before and after deducting non-recurring gains and losses in the last three fiscal years isnegative, and the audit report of the most recent year shows that there is uncertainty about the Company's ability tocontinue operations
□ Yes √ No
Net profit before and after deducting extraordinary gains and losses is negative
□ Yes √ No
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 disclosure9,330,600,931
(share)Fully diluted earnings per share calculated with the latest share capitalFully diluted earnings per share (RMB/share) calculated with the latest share capital 1.512
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 of
International 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 Overseas
Accounting 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
st
Quarter 2
nd
Quarter 3
rd
Quarter 4
th
QuarterRevenue (RMB)16,201,189,412.53
| 21,369,596,985.36 | 23,704,377,795.74 | 28,064,692,662.05 |
Net profit
Company
1,811,255,388.03
| attributable to shareholders of the | 3,526,612,628.85 | 3,513,299,100.33 | 5,256,454,242.45 | |
| Net profit attributable to shareholders of the |
Company excluding non-recurring gainsand losses
1,554,094,332.67
| 3,482,034,300.29 | 3,425,870,315.02 | 5,203,963,377.67 |
Net cash flows from operating activities-3,285,523,507.64
| 4,311,914,370.44 | 4,887,462,618.15 | 10,709,400,824.97 |
Item 2023 2022 2021Profits or losses from disposal of non-current assets
write-off for the impairment provision of assets)
-10,507,192.80
| (including the |
-
| 18,617,582.10 | 26,069,469.18 | ||
| The government subsidies included in the current profits and losses |
(excluding the government subsidy that are closely related to
Company
| 's normal business operations, in line with national policies and regulations, enjoyed in accordance with the |
determined standards, and have a continuous impact on
Company's profit and loss)
518,953,527.79
| the | 726,269,569.92 | 576,619,421.07 |
The investmen
investment is obtained
- -
| t 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 | 1,163,932.96 |
Profits and losses attributed to
financial assets, derivative financial liabilities and other non-
| current financial assets; and investment gains and losses from disposal of derivative financial assets, derivative financial |
liabilities, and receivables f
Company.
-67,516,075.30
| inancing, excluding the effective hedging business related to the regular business operation of the |
-
| 99,112,871.09 | 75,408,081.63 | ||
| Investment gains and losses on disposal of subsidiaries and other |
business units
-
| 3,550,851.71 |
-169,184,641.43
not under common control
116,433,610.45
| Gains and losses from a business combination achieved in stages |
-
-Other non-
| operating income and expenditures except the items |
mentioned above
69,942,462.96
| 72,446,008.81 |
-
Other profit or loss items that meet the definition of non-
| 1,471,007.77 | ||
| recurring |
profit or loss
1,106,664.51
-
-
Less: Impact of income tax64,745,616.43
| 74,392,826.66 | 29,930,824.64 |
Impact of the minority interests (after tax)122,008,347.17
| 103,496,968.14 | 122,987,029.92 |
Total441,659,034.01
| 506,646,182.45 | 355,687,401.08 |
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
With the rapid development of AI, big data, and IoT technologies, digitalization has accelerated its penetrationinto various industries and fields, creating new industries and business models, and giving birth to a group of digital-era giants in retail, media, entertainment, local life, and other fields. Major countries around the world haveintroduced strategies and plans to promote the accelerated application of digital technologies.In 2016, the Chinesegovernment proposed to promote the deep integration of information technology and economic and socialdevelopment, and, for the first time, introduced the concept of "Digital China" in the Outline of the 13th Five-YearPlan for National Economic and Social Development. In 2021, "Digital China" was identified as one of theimportant national strategies in the 14th Five-Year Plan and 2035 Vision Goals of China.As digitization and digital transformation continue to unfold, data has become a new production factor. A vastmajority of companies built around the physical world (which can be referred to as non-digital native companies),especially manufacturing companies, have conducted a large amount of IT work, but the lack of core data requiredfor digital transformation of their core business processes and the data-based products and solutions for intelligentcontrol and decision-making remains the biggest pain point for these companies.The digitization of physical world scenarios is the fundamental unit of digital transformation. "Signals" arewidely present in the physical world and a variety of perceptual capabilities are needed to collect multi-dimensionaland multi-type data and enable them to be mapped in the digital world. The demand for digital transformation ispersonalized and highly fragmented. Different industries and even different participants within the same industryvary in their demands for digital transformation. Only by deeply integrating technology and user needs can we trulysolve the digital transformation problems in specific scenarios and empower business with digital technology.Hikvision's comprehensive perception capabilities facilitate acquisition of richer data. By focusing onvideo perception, Hikvision has built a comprehensive perception system that encompasses electromagnetic wavessuch as visible light, infrared, radar, and X-ray, mechanical waves such as sound waves and ultrasound, as well asvarious physical sensing technologies.At present, the Company has tens of thousands of IoT perception products,
covering multiple categories including front-end cameras, audios and sensors, enabling comprehensive aggregation
of images, sound, vibration, temperature, and other multi-dimensional data.
Hikvision's diverse digital technology further unlocks data value. With our profound expertise in cloudcomputing, big data and AI as well as deep understanding of AIoT, the Company has launched a capabilityarchitecture "integrating cloud and edge, IoT and information network, digitalization and intelligence".Meanwhile,
the Company continues to improve our data processing and analysis capabilities by increasing investment andaccumulation in basic computing power and large model construction. Recently, we have innovatively launched theGuanlan large model that promotes the wider value fulfilment of AI.
Hikvision leverages a deep understanding of the industry to meet the application needs of personalizedscenarios. Currently, the Company has covered over 500 segmented scenarios in nearly 90 sub-industries acrossover 10 main industries, and continues to expand our presence in many fields related to production, life, and socialgovernance.With the establishment of lower-level distribution channels and long-term communication andcooperation with industry customers, the Company has gained profound industry understanding and user insights,enabling us to better meet the personalized and customizeddigital transformation needs of downstream customers.
Faced with the unstoppable trend of digital transformation, Hikvision will help businesses to consolidate theirdata foundation for digital transformation through our comprehensive perception technologies and more innovativedigital technologies, respond to the highly customized digital transformation needs of various industries throughricher product portfolios and stronger platform capabilities, and accelerate the large-scale implementation of digitaltransformation through wider channel coverage and a more open partner ecosystem, thus enabling convenient andefficient government services, quality and efficiency improvement of business operations, and an intelligent andhealthy life for the people.
2. Technology System
With more than 20 years of innovation and experience, Hikvision has developed IoT perception, artificialintelligence, and big data technology systems that support the product development and application implementation.Using visible light as the technology foundation, the Company has created a business logic that comprises videosignal acquisition, processing, and application. We have continuously developed perception technologies to expandthese business services and established the business model of data acquisition, processing, and application with thesupport of artificial intelligence and big data. The three complementary technologies are combined to improveHikvision's business, continuously promoting the commercial realization of technology, and facilitating the
Company's implementation of the business cycle of technology-product-market-technology.
2.1 IoT Perception
With video technology as the starting point, Hikvision has been committed to developing perceptiontechnologies and improving our IoT perception capabilities. With more than 20 years of technological expertise, theCompany has grown to cover the fields of electromagnetic and mechanical waves, as well as other physical sensingtechnologies such as temperature, humidity, pressure, and magnetism.In the field of electromagnetic waves, Hikvision's perception technology has covered long waves from visiblelight to near-infrared, mid-infrared, far-infrared and millimeter waves, as well as short waves such as ultravioletlight and X-ray. Our profound know-how in signal processing, computer vision, large model, and multi-dimensional
perception integration technologies has promoted the application of digital technology in a range of industriesincluding food, medical, logistics, power, transportation, and manufacturing.
In the area of mechanical waves, Hikvision has achieved perception of sound that extends from audible toultrasonic frequencies, and developed microphone array, sound classification, industrial auscultation, ultrasonicnon-destructive detection, and ultrasound measurement technologies, which have been widely applied in scenariossuch as horn detection, high-voltage discharge detection, high-pressure gas leakage detection, belt fault monitoring,motor fault monitoring, and component quality inspection.
In other physical sensing sectors, Hikvision developed force, electrical, and magnetic sensing technologies.Utilizing multi-dimensional sensing devices such as pressure, flow, and temperature sensors, the Company ishelping businesses to achieve automated control of production, improve production efficiency, and advance theirprocess of digitalization.With an extensive perception capacity and multi-dimensional perception integration capabilities, Hikvision hasbuilt an underlying technology platform that supports our growing innovative applications in the field of scenario-based digitization to meet the sensing and perception needs of different fragmented scenarios. For instance, in theenergy field, the visible and ultraviolet lights, and thermal imaging integration technology is used to provide faultdiagnosis and detection for high-voltage power facilities, greatly improving the efficiency of power inspection.In
the industrial sector, audio and video integration technologies are utilized to provide fault monitoring and diagnosisfor production equipment, enabling predictive maintenance in unmanned scenarios. In the environment industry,real-time visual monitoring of water level changes is achieved by integrating video perception and millimeter-waveradar perception, thus enhancing intelligent management of water environments.
2.2 Artificial Intelligence
As early as 2006, Hikvision began to develop AI technology by building an algorithm team. After years ofcontinuous investment and R&D innovation, the Company has gained extensive experience in the AI field.Since
2016, Hikvision has won championships in over 30 international academic competitions related to AI. In 2019, ouropen AI platform was awarded the title of National Artificial Intelligence Innovation and Entrepreneurship Platformby the Ministry of Science and Technology. In 2021, considering the rapid development of AI technology and thepractical demand for AI application in digital scenarios, Hikvision began to launch a R&D project for a large pre-trained model. Subsequently, the Company innovatively introduced the Hikvision Guanlan Large Model with athree-tier architecture comprising large foundation model, large industry model, and task model.The large
foundation model has massive data and knowledge and is characterized by a large number of parameters, highgeneralization ability, and excellent performance. The large industry model uses industry data for further pre-training and fine-tuning on the basis of the large foundation model, and possesses expert-level capabilities in specificfields. The task model focuses on specific scenarios or business services and is an important way to implement thecapabilities of the large model.
The Guanlan Large Model offers four advantages: extensive modal data, professional industry capabilities,high deployment cost-effectiveness, and flexible and efficient application, promoting the implementation of AI:
Extensive modal data: The construction of large model applications requires high-quality training data. TheGuanlan Large Model can be widely integrated with extensive high-quality multi-modal data from fields such aselectromagnetic waves, mechanical waves, and other sensing technologies, and has comprehensive IoT perceptioncapabilities.
Professional industry capabilities: The Guanlan Large Model transforms Hikvision's practical experience ofmore than 10 main industries, nearly 90 sub-industries, and over 500 scenarios into industry application capabilities,
having a profound understanding of specific industries.High cost-effectiveness of deployment: The Guanlan Large Model effectively reduces performance coststhrough innovative hardware deployment technology, and utilizes cloud edge deployment solutions to efficientlymeet different scenario requirements, building a high cost-effective application model.
Flexible and efficient application: The Guanlan Large Model provides technical support for open AIplatforms and enables opening the inferencing capabilities to meet the fragmented, diverse, and personalizedalgorithm application needs.
2.3 Software and Big Data
Hikvision utilizes big data technology to organically integratehuman society, physical systems, and information systems,enhancing information interoperability and decision-makingintelligence in social production activities and people's life. TheAIoT field has enormous data with a low information density as thereare a large amount of unstructured data.To address the issue,Hikvision leverages big data technologies such as data collection,storage, processing, analysis, governance, security, and application to build a big data infrastructure and develop acomplete set of big data technology systems, further unleashing the value of AIoT data. Our key big datatechnologies include:
Big data storage and computing technologies: These technologies use an open architecture that integratesmulti-source heterogeneous storage methods such as relational databases, NoSQL databases, and data libraries,support multi-modal computing frameworks such as batch processing and streaming computing, and are equippedwith management technologies such as multi-tenant, user authentication, and refined monitoring. In terms of storageand computing acceleration, Hikvision has developed aggregative encoding, adaptive compression and other storagetechnologies for objects and relations, and built a computing engine that adapts to complex algorithms, enablingsecond-level spatiotemporal retrieval and robust relationship inference, which can support the computing of billion-scale graphed data.
Big data mining technology: By integrating AI, knowledge, and data, Hikvision has developed intelligenttechnologies in graph mining, time series prediction, and intelligent decision-making. In terms of graph mining, the
Company has developed knowledge construction, representation, and inference techniques that are designed to solvemulti-dimensional data fusion, relationship computing, node classification and other problems, and can be appliedin security risk control, intelligent recommendation and other scenarios.In the field of time series prediction, a deep
learning-based series prediction method has been improved to address the difficulties of unstable data trends andcomplex spatial relationships among multiple variables, enhancing prediction accuracy in multiple tasks such astraffic flow prediction, travel time estimation, and congestion warning.As for intelligent decision-making, progresshas been made in areas such as operations optimization, deep combinatorial optimization, and reinforcementlearning, which have been applied to intelligent supply chain scheduling, production optimization, intelligentcontrol of traffic lights, and other scenarios.Big data application technology: Hikvision takes advantage of the big data collection, governance, analysis,and service capabilities powered by the IoT-information network integration data resource platform to provide bigdata application services for various industries.During this process, a set of industry business data models have
been built, managed based on the model library, and can be replicated and optimized in other similar applicationscenarios.In an attempt to quickly satisfy fragmented market demand, Hikvision has completed the transformation fromdeveloping customized software to implementing the unified software technology architecture over a period of threeyears. Based on the unified software technology architecture, the Company has developed a software and hardwareproduct system that integrates software and hardware, cloud and edge, IoT and information network, as well asdigitalization and intelligence.Hikvision's unified software technology architecture supports a component-basedway for software development. Currently, the Company has more than 4,200 components in our software componentlibrary, an increase of more than 14 times compared to 2018. On average, each reusable component is integratedwith 18.3 product models, and each product model is reused in 80.3 reusable components.The vast softwarecomponent library and high component reuse rate greatly reduce the development and maintenance costs for users,helping to achieve agile development and rapid iteration of software applications in different industries.
3. Product System
AIoT products are the bridge between the physical and digital worlds, the carrier of intelligent algorithms, andthe fulcrum for creating digital transformation application solutions. To meet the needs of typical applications ofdigital transformation, Hikvision has quickly developed innovative and intelligent new products based on the
existing hardware products of over 30,000 models.
3.1 New Digital Products
With long-standing technical expertise, extensive product engineering capabilities, and years of in-depthunderstanding of the industry, Hikvision continues to launch new digital products that meet the digitaltransformation needs of various industries.From a technical perspective, the Company has developed increasinglydiverse products based on different perception technologies that are able to perceive data on more "objects" (suchas water quality, raw material composition, equipment status, etc.), paving the way for data analysis and applicationin different industries.From the perspective of application scenarios, the digital products launched by the Companyhave covered a growing number of application scenarios from the digitization of auxiliary management to that ofcore business processes, making digitization truly an important lever for government and corporate digitaltransformation and upgrading.
3.1.1 A variety of perception products building the foundation of the digital world
Perception provides a foundation for creating a digital twin for the physical world. The acquisition of data onobjects requires the use of different perception methods. Hikvision has launched a variety of digital perceptionproducts, making more data on objects easily accessible and building the foundation of the digital world.
1) Visible light perception
The deep integration of visible light and AI has enabled the evolution of cameras from being traditional videosurveillance terminals to AIoT terminals that connect the physical and digital worlds. The cameras, which makethings from visible, clear, to be understood, are no longer limited to surveillance, but have been applied in a widerrange of fields, which opens the space of intelligent application.
For example, by focusing on improving quality and efficiency in manufacturing and other sectors, the Companyhas launched a series of new innovative products for different scenarios based on visible light and AI:
Production line camera series: In terms of monitoring daily production processes, the Company has launcheda production line camera series. With a miniaturized design, these cameras can flexibly adapt to the production linescenarios, and observe key production processes at close range, making production status visualized and problemtracing justifiable.As for the scenarios of production workstations and packing workstations, the Company hasdeveloped a binocular traceability camera. With the large-depth-of-field imaging technology, the camera is able toprovide a panoramic view of the packaging process and detailed information on labels, ensuring clear identificationof sheets and barcodes.
Platform cameras: These cameras, equipped with deep learning-based intelligent recognition algorithms, areused for intelligent recognition of parking spaces, car doors, carriage loading status, etc., to improve logistics,transportation and management efficiency, achieve automated detection of loading in logistics, and enhancemanagement efficiency for platforms.
Inspection camera series: The Company has launched track inspection cameras specifically for the scenariosof power generation rooms and distribution rooms. These cameras can be used with an IoT sensing module andoptionally with partial discharge detection, temperature measurement, and environmental sensing modules asneeded to meet the inspection needs of different scenarios. They can also be used with obstacle avoidancetechnology to conduct safety inspections. The inspection plans can be customized to improve the efficiency ofremote inspections.
Macro camera series: Some problems exist in the observation of utility meters, production quality controland other scenarios that require close observation, such as unclear focus, and interference from fill light reflection.Our macro camera series use technologies of automatically focus and polarize to achieve all-weather color imaging.Low-temperature-resistant camera series: As for cold chain scenarios, Hikvision has launched low-temperature-resistant cameras that use technologies such as window heating to ensure stable operation attemperatures as low as minus 60 ℃ without fogging the lenses. These cameras can be used with multi-dimensionalsensors, such as temperature and humidity sensors, to facilitate managers in monitoring changes in the warehouseenvironment in real-time and achieve visual supervision of the entire cold chain transportation process.High-temperature-resistant camera series: In high-temperature production scenarios such as metallurgy,hazardous waste, petrochemical, and glass production, ordinary cameras are easily affected by noise and darkcurrent, resulting in a significant decrease in imaging quality. Hikvision's high-temperature-resistant camera seriescan meet application needs even in high-temperature environments through technologies such as air cooling, watercooling, and semiconductor cooling.Anti-vibration and anti-shake camera series: In industries such as steel, industrial and commercialenterprises, equipment manufacturing, logistics transportation, where heavy machinery is controlled automaticallyand remotely, cameras are often used for real-time assistance during the operation process. Due to long-termvibration in the installation scenarios, the cameras may produce unclear images, and even face the potential risk offalling off during long-term operation. Hikvision's anti-vibration and anti-shake camera series feature rigid anti-vibration, and scientific counterweight design, reducing the impact of vibration and ensuring stable and in-focusimages.Moreover, as high latency can seriously affect equipment control accuracy and endanger production safety,Hikvision has integrated the entire chain from cameras, high-speed storage and computing, to real-time flow display,which can meet the real-time remote-control needs.PDA product series: Combining deep learning-based barcode/character recognition technology with imagingtechnology and AI capabilities, Hikvision has launched multiple series of PDA products equipped with professionalscanners including full display, button, medical, and printing. In addition, by innovating product design as perscenario requirements, Hikvision has launched multiple mobile intelligent data terminals, including DPM PDA,cold chain PDA, and medical PDA for pressure ulcer treatment, based on the existing products. These terminalsprovide data collection, scenario-based intelligent recognition, and analysis capabilities for manufacturing, expresslogistics, retail & e-commerce, medical and health, public services and other industries, helping to achieve lean
management of data collection.
2) Sound wave perception
As sound waves are caused by mechanical vibrations, detecting changes in the waveform and intensity of soundwaves can reflect vibration status of various mechanical equipment, thereby determining the equipment status asnormal or abnormal.Sound wave perception technologies and products are widely used in the industrial field.Hikvision is able to design and produce acoustic devices by building a professional acoustic algorithm team, andhas developed a wide range of acoustic sensing products in the audible sound and ultrasound fields.Sound-vibration-temperature monitoring product series: These products can simultaneously collect dataon the voice, vibration, and temperature of machines, and upload them in real-time. By analyzing long-term multi-dimensional data, they can monitor, diagnose, and predict equipment faults, monitor the operating status of pumps,motors, fans, belts, and other machines in real-time, and warn of abnormal faults. They also provide predictiveoperation and maintenance services for equipment.Industrial auscultation microphone series: These microphones can detect abnormal noise in the productionprocess of various motors, pumps, and compressors by collecting information on the voiceprints of machines usingbone conduction sensors, and comparing them with AI voiceprints. They have expanded their applications fromequipment operation and maintenance to quality inspection of abnormal noise in automotive electric componentsand household appliance motors due to their ability to quickly identify workpiece faults with sound.
Audiovisual instrument: The Company's online audiovisual instrument features a combination of 64microphone arrays and camera lenses, and locates sound within the monitored target frequency band using soundsource localization algorithms. By visualizing sound through color cloud images, the instrument displays thedistribution of sound sources in the field of view, and quickly determines the location of partial discharge, gasleakage, and abnormal equipment noise. It can be used for real-time online monitoring of important equipment inindoor and outdoor scenarios such as substations, distribution cabinets, compressors, factory pipe galleries, andvalve rooms. Furthermore, the Company has introduced a handheld audiovisual camera and developed an explosion-proof version, which is lightweight and portable, and can serve as an effective supplement to corporate inspectionsby performing predictive maintenance, and quickly locating problem points.
3) Laser perception
Laser perception technology uses laser to perceive and measure various external physical quantities throughdifferent media such as optical fibers and air. It has the advantages of good anti-interference, high sensitivity, longdistance transmission, and high accuracy.With distributed positioning optical fiber products as the starting point,Hikvision continues to build our ability to develop core laser devices and optical-related embedded software, andgradually improves the family of laser sensing products.
Distributed positioning optical fiber: This type of optical fiber optimizes performance using the HIK-DASpatented acoustic detection algorithm and is characterized by long distance transmission, high accuracy, and anti-interference. These products can accurately locate abnormal vibrations that occur around the perimeters, pipelines,etc. in real-time, improving the efficiency of security protection.The application of Hikvision's distributed
positioning optical fiber products is becoming increasingly widespread, with benchmark application cases inperimeter protection across various industries such as general and higher education, petroleum and petrochemical,
energy and electricity, railway transportation, cultural museums and scenic spots. There are also multiple trialprojects where these products are used in the prevention of external damage to the communication networks ofoperators, and the buried oil and gas pipelines.Distributed positioning optical fiber for temperature measurement: This type of fiber can accuratelymeasure the temperature at various positions along the direction of fiber laying and locate points with abnormaltemperatures. A host covers tens of kilometers, achieving sub-meter level fault location and maintaining the healthof cables, belts, and other equipment.In addition to the 10/20/30 km general model, the specialized intrinsic safety
model is used for fire temperature measurement of belts and power cables in coal mines where heavy equipmenttransportation is inconvenient.The 2.5 km economical short-distance optical fiber for temperature measurement ismore suitable for scenarios such as energy storage cabinets and distribution cabinets that do not have high distancerequirements. At the Asian Games Hangzhou, the distributed positioning optical fiber for temperature measurementwas used for real-time monitoring 7/24, helping to ensure electricity safety during the games.
4) Spectral perception
As objects have their own unique spectral characteristics, spectra are unique and distinct fingerprints of objects.Spectral analysis of different objects helps us to gain more information about their composition.Hikvision's spectralsensing product family combines spectral technology and AI algorithms to qualitatively and quantitatively monitorthe composition and changes in substances such as gases, water quality, and vegetation. These products are widelyused in safety monitoring of petrochemical parks, quality control in production processes, ecological environmentprotection, crop growth monitoring and other sectors.Water environment monitoring: Traditional sampling monitoring methods have problems such as low datatimeliness and secondary pollution due to chemical reagents. Our hyperspectral water quality monitoring instrumentintegrates hyperspectral, liquid level radar, and visible light cameras. The instrument can collect 11 key water quality
parameters including chlorophyll, permanganate index and transparency in seconds. When used with a monitoringplatform, it can obtain information on the trend of water quality changes in a timely manner, and warn of abnormalconditions, helping to maintain a long-term clean water environment.
Gas monitoring: To address the difficulty in detecting and locating gas leaks in petroleum, chemical, naturalgas and other industries, Hikvision has launched a series of gas monitoring products that can analyze a single gasor hundreds of gases, meeting the needs of various gas monitoring scenarios.For example, our gas cloud imagingtelemetry device, which operates based on the principle of spectral absorption, can observe the distribution of VOCmasses in space in real-time. The device solves the problem of monitoring VOC leaks under traditional detectionmodes by making previously invisible VOCs "visible".The hyperspectral Fourier gas telemetry instrument uses thefingerprint spectrum of gas in different wavelength bands to remotely detect gas clouds, which can detect more than490 toxic and harmful gas substances such as methane and ethylene. The device can overlay spectra and RGBimages to visually display the distribution and diffusion trend of gas concentration. It continuously generatessequence diagrams for gas monitoring, and monitors the distribution of gas concentration throughout the day,achieving rapid and accurate quantitative analysis of sudden air pollution gases.Vegetation monitoring: The multispectral vegetation monitoring instrument collects high-precision spectraldata on the vegetation in real-time, and quickly converts them into multiple vegetation parameters that provideinformation on vegetation growth status, thus conducting intelligent health checks on the vegetation regardless ofweather.The instrument conducts all-weather, real-time and high-frequency monitoring of all kinds of vegetationfrom tens of thousands of acres of agricultural land and forestry to a single plant, helping to provide visualinformation on the growth trend of vegetation and promoting the digital upgrading of agriculture and forestry.
5) Location perception
The problem of insufficient accuracy with traditional area positioning technologies such as Wi-Fi, RFID andBluetooth has given birth to ultra-wideband (UWB) positioning, which provides a wide spectrum range, and lowspectrum power, and is not affected by signal stability or spatial attenuation. Hikvision's UWB products utilizewireless radio frequency positioning technology to achieve centimeter-level accurate ranging, suitable for high-precision positioning of personnel, vehicles, and materials. On the basis of centimeter-level precise positioning, ourUWB products combines personnel, space, and videos on our visual management platform to monitor, in real-time,the status of personnel, goods dynamics, and production progress in specific areas. These products are applied inindoor and outdoor scenarios such as digital factories, tunnel corridors, warehousing and logistics, energy andchemical hazardous operations, ensuring the safety of personnel and materials, and improving management andoperational efficiency.
6) Millimeter wave perception
Millimeter wave radars accurately measure target distance, velocity, angle and other data in real-time, and offerhigh accuracy, good stability, strong all-weather adaptability and other advantages.By leveraging technologicalinnovation, Hikvision has expanded our millimeter wave radar line through the launch of a full range of productlines for industrial fields, including one-dimensional level measurement, two-dimensional plane scanning, three-dimensional stereo imaging, and 4D obstacle avoidance. These products are widely used in nearly 500 industrialprocess scenarios, as well as intelligent operation scenarios for production tools (large operating machinery) across14 industries, including cement, metallurgy, petrochemical, chemicals, food processing, and pharmaceuticals.Radar level meters
High-frequency millimeter wave radar level meters: These level meters are mainly used for solid and liquidlevel measurement in industrial scenarios. They are characterized by small size, small beam angle, large bandwidth,and high ranging accuracy. In addition, with a 3° beam angle and a maximum measurement accuracy of 1 mm, theycan measure different materials in a non-contact, continuous, accurate, and stable manner.Furthermore, as the high
temperature, high pressure, and high dust environments during the production process can bring uncertainty to levelmeasurement, the Company has released a full range of high-frequency millimeter wave level meters for hightemperature, high pressure, corrosive, and explosion-proof conditions. With more accurate and stable levelmeasurement, these products help users fully explore the possibility of production process optimization and achievemore efficient and intelligent digital production.
Imaging radarsHikvision has introduced multiple millimeter wave volume imaging radars for different application scenariossuch as silos, tanks, and yards in industrial production processes:
Scanning imaging radars: Mainly used in large sheds and yards for storing materials in cement, coal,metallurgy, and chemical and other industries.These radars scan the surface of the material pile in real-time, anddetect the coordinates of the material points. Through backend point cloud data processing, they are able to scan thetarget contour and perform calculus calculations, ultimately achieving accurate presentation of the material shapeand precise measurement of the target volume. A single radar has a detection radius of 50 meters, and multipleradars can splice data together in the backend.
Silo imaging radars: Designed specifically for enclosed environments such as silos and tanks.These radarscan perform real-time 360° scanning of materials under complex working conditions such as heavy dust, hightemperature, and adhesion in silos and tanks. They offer a number of features including static target detection withina spatial range, point cloud data output, spatial scanning imaging, volume and weight calculation output. In addition,they are not affected by harsh environments such as rainwater, dust, and light, and can be automatically and digitallymanaged to improve utilization and safety. At Huaxin Cement, this series of products allows for intelligent materialdischarge, which ensures that the aggregate particle size ratio meets the requirements, and improves the stability of
aggregate quality by 60%, thus driving the digital transformation and upgrading of this century-old company.
Cross-section imaging radars: Mainly used for imaging in mobile scenarios, such as moving vehicles, cranes,gantry cranes, scrapers and other machinery, and often equipped with track robots for operations.These radars havesignificant advantages in all-weather scenarios such as dust, water mist, rain and snow. With a detection radius ofup to 100 meters, they can scan the shape and contour of the material pile in real-time. This information can be usedwith position information of the machinery to obtain the volume of the material pile through point cloud dataprocessing. These products help to precisely control mechanical grabbing and retrieval, facilitating more efficientand safer mechanical operations.Obstacle avoidance radars
Accidents are sometimes caused by collisions during the operation of large construction machinery such asoverhead cranes, cranes, gantry cranes, stackers and reclaimers, ship loaders, and scrapers. Obstacle detection hasalways been a top priority for companies in safety production supervision. Mechanical obstacle avoidance is mainlydivided into three types: obstacle avoidance between large moving machines and people, obstacle avoidancebetween machines, and obstacle avoidance during operations. Hikvision has launched corresponding millimeterwave radars for all three scenarios.
4D obstacle avoidance radars: Installed on mechanical support legs, these radars are mainly used for obstacleavoidance between large moving machines and people by detecting obstacles in real-time within 20 meters aheadat a horizontal angle of 120 degrees, and a vertical angle of 60 degrees.
Location radars: These radars are installed in the upper middle area of machinery and mainly used for obstacleavoidance between machines in enclosed areas within a detection range of over 500 meters at a horizontal angle of60 degrees, and a vertical angle of 20 degrees.These radars effectively solve the problem of poor environmental
adaptability caused by the unique path in traditional laser ranging and infrared detection solutions in these scenarios.They also have independent emission and reception forms and provide greatly improved anti-interference andstability.Scanning obstacle avoidance radars: These radars scan at a horizontal angle of 330 degrees and within aradius of 100 meters, which can be extended to 150 meters, and have a refresh rate of 10 Hz. They are mainly usedfor large-scale, all-weather obstacle avoidance during operations of stackers and reclaimers, ship loaders, cokepushers, coal loading trucks, coke blocking trucks, and coke quenching trucks, etc.
7) Infrared perception
Infrared thermal imaging technology offers many advantages such as all-weather operation, wide coverage,non-contact temperature measurement, and real-time monitoring. It can detect and image the surface temperaturedistribution of objects. Combining infrared thermal imaging technology with MEMS technology, the Company hasbuilt a comprehensive perception network for businesses that covers production safety, production control andproduction efficiency improvement, helping them with digital transformation.
Panoramic photoelectric turntable: With regard to the monitoring needs of large scenarios, traditionalcamera solutions have longer inspection times and are difficult to directly generate panoramic images. Ourpanoramic photoelectric turntable features the fast-steering mirror technology that ensures clear imaging withouttrailing during high-speed operation. It scans the target by rotating 360° down to 2.4 s per revolution, and generatesa visual panoramic splicing image using infrared thermal imaging. A single device is able to quickly control theoverall situation.The turntable can quickly detect small targets when used with our self-developed small targetdetection algorithm, and can also be connected to a thermal imaging PTZ camera, which allows users to view andverify details by zooming in the targets.Additionally, the product provides clear imaging even at night,compensating for the disadvantage of visible light. It is widely used in many scenarios such as oil fields, ports, andkey area boundaries to facilitate high-altitude panoramic protection for companies.
Thermal imaging-based fire prevention product series: Thermal imaging can be used to quickly locate firesources and warn of flames through temperature sensing. This series of products is designed to meet the indoor andoutdoor fire protection needs. Taking corporate safety production as an example, these products are used to developa high-precision fire protection system based on thermal imaging applications, which responds quickly to accuratelydetect fire points and prevent potential hazards.These products warn of flames through thermal imaging monitoring
and analyze data with a multi-algorithm engine to reduce false alarms, and make alarms more accurate and alarmhandling more efficient, minimizing losses, and warning of fire for companies.
Multispectral fire detector series: This series is designed for fire scenarios such as fires in factories,warehouses, traffic tunnels, and laboratories. These detectors innovatively integrate spectral technology, thermalimaging technology, and AI algorithms. Compared with single fire detection technology, the fusion of severaltechnologies allows second-level synchronous identification of temperature, flames, smoke, and other elements,thus recognizing fire hazards more accurately and intelligently through multiple verifications. A 0.1 square-meterfire panel can detect and locate abnormal temperatures, flames, and smoke within a distance of up to 150 meters,helping to detect and handle fire hazards in advance. In addition, these products can provide reliable support fordecision-making in digital fire protection command and scheduling through dual verification of infraredspectroscopy and visual videos.
Thermal imaging-based ultra-high temperature cameras: Ordinary cameras cannot work properly in high-temperature operation scenarios. However, with a wide temperature measurement range of 0–1,800 ℃ and a -20–200 ℃ circulating refrigeration system, our thermal imaging-based ultra-high temperature cameras can meetthe vast majority of high-temperature production scenarios.Equipped with the self-cleaning technology for
germanium windows, these cameras allow precise and sensitive temperature detection and presentation of clearthermal images even in dusty environments. The devices are widely used in many industries such as steel,automotive, liquor, electronic manufacturing, and food, providing real-time monitoring of operational processes to
ensure quality inspection of production processes and products for businesses.
Visual colorimetric infrared thermometer: The thermometer determines the temperature of an object bymeasuring the ratio of energy at two different wavelengths. It provides higher accuracy in temperature measurementthan monochromatic thermometers by eliminating environmental influences such as water vapor, dust, changes intarget size, partial occlusion, and changes in emissivity. The equipment can accurately measure the temperature ofthe target at high temperatures ranging from 600 ℃ to 3,200 ℃, and is widely used in various industrialapplications such as steel rolling, forging, casting, kilns, heat treatment, induction heating, and monocrystallinesilicon. It helps businesses effectively control production, reduce energy waste, and improve product quality.
Thermal imaging-based dual spectrum temperature measurement camera: With a small size and largefield of view, the product can perform real-time temperature monitoring in any weather and even in narrow andenclosed areas that are difficult to cover by daily manual inspections.The camera supports single/dual light and is
available in wired and wireless transmission versions. It can be used with various sensors and gateways to analyzethe temperature change trend and quickly locate and warn of high-temperature hazard points. The product is suitablefor use in cabinet temperature measurement, indoor fire prevention, equipment monitoring, and other scenarios,
helping to ensure corporate electrical safety.A full range of thermal imaging-based temperature measurement products: By utilizing the characteristicsof thermal imaging-based visual temperature measurement, the Company has developed two major categories ofproducts: online and handheld. Both of these products meet the required accuracy of ± 2 ℃ and are widely usedin multiple scenarios such as power temperature measurement, industrial inspection, temperature sensing, andelectronic inspection. The products can be paired with analyzer, HikMicro Vision app and other software to providepredictive maintenance of devices and improve production stability for businesses.
8) X-ray perception
X-rays can detect objects without causing any damage to them due to their strong penetration ability, allowingusers to see the internal features and defects of the objects through image processing.In response to the demand forperspective inspection in industrial production, the Company leverages our strong expertise in X-ray perception, AIand equipment IoT to continuously launch new X-ray perception products that are available in offline or online andflat or 3D formats and focus on three business services: electronic manufacturing inspection, food and druginspection, and industrial flaw detection.
Offline/online fully automatic AXI equipment: Used for quality control in electronic and electricalmanufacturing processes, and for defect detection of PCBA, LED, semiconductor components, IGBT modules, die-casting components, precision structural components, connectors and other related devices. With the next-generation Raytina image enhancement engine, the equipment enables clearer X-ray imaging and better presentationof image details, making it easier for staff to troubleshoot problems. Compared to traditional methods, the use of AIdetection algorithms allows the equipment to automatically identify defects and perform high-precision detectionin complex processes with image brightness changes and background interference, greatly reducing the false alarmrate with traditional manual sampling and improving the defect detection efficiency of electronic productionenterprises. The offline version is suitable for production scenarios with multiple small batches and full quantityinspection. The online version can be directly connected to the production line, allowing for automatic full linedetection.
Second-generation intelligent electronic material counting machine: The machine is applied in SMT left-over materials counting and warehouse inventory processes. With an AI recognition algorithm, it can solve theproblem of inability to effectively count irregularly shaped and packaged materials as with traditional algorithms,and detects materials with an accuracy of over 99.99%, and a scanning recognition rate of 99.9%. Moreover, itsupports automatic counting and is able to count materials in as short as 8 seconds per time. The machine can rapidlyand accurately count a large variety of electronic materials, and supports automatic loading and unloading and dataconnection to MES, greatly improving the efficiency of leftover materials counting, effectively saving enterprisecosts, and enhancing digital production.
Intelligent foreign object/defect detection system: Faced with the challenges of multiple backgroundinterferences, small foreign objects, and complex defects in the field of food and drug detection, the Company hasoptimized our product detection capabilities by greatly improving detection accuracy from 0.4 mm to 0.1 mm,effectively ensuring detection speed without compromising accuracy.On a high-speed bottle production line (>600bottles/minute), this system can accurately detect and remove defective products in real-time, greatly improving theproduction and testing capabilities of users, reducing defect rates, and enhancing their product quality, marketcompetitiveness, and brand satisfaction.
Industrial flaw detection equipment: The Company has released the RN570 series of industrial flawdetection equipment. By combining precision X-ray and image processing technologies with AI algorithms, theequipment can clearly present the internal condition of castings, perform non-destructive defect detection onelectronic products, and send alarms for various defects automatically. Currently, the equipment has been used inthe new energy vehicle industry, including tires, castings/wheels, electromechanical components, providing anefficient defect detection method and helping to improve the process quality of electronic products for users.
9) UV perception
When electrical discharge occurs with high-voltage equipment, corona, flashover, or arc may occur dependingon the strength of the electric field. The surrounding air is broken down and ionized, and the emitted spectrummainly falls in the ultraviolet light band. The wavelength range below 300 nm is referred to as the solar blind band.The ultraviolet signal in solar blind area the generated by the discharge is received by a UV monitor and processedby overlaying it with visible light images to determine the position and intensity of the corona.
UV corona online monitoring instrument: To address the safety hazards that weak discharge poses to thetransmission system, the Company has launched the UV corona online monitoring instrument. Through the multi-dimensional integration of UV detection, visible light imaging, and thermal imaging-based temperaturemeasurement technologies, the instrument can accurately locate corona discharge at difficult-to-detect positions ina non-contact manner from a long distance, improving the detection rate of high-voltage equipment and line faults,and preventing any potential circuit risks.
3.1.2 Use of professional products in business services to create more value
1) Digital products for applications ranging from auxiliary management to core business
Hikvision has always focused on digital business services. In the past, the Company provided digital productsand services mainly for auxiliary management in security-fire protection integration, park management, and otherscenarios. Today, as our technical capabilities continue to improve, the Company has developed digital productsthat help to solve core pain points of users in an increasing number of core business scenarios, such as productionand operation, quality inspection, equipment status monitoring, safety production, and environmental factormonitoring. The company has laid out digital products to help solve the core pain points of users, achieve scenariodigitalization, equipment digitalization, environment digitalization, and operation digitalization, and create morevalue for thousands of industries.Improving production and operational efficiency, and optimizing management processesProduction is a central part of corporate operations and the key to ensuring sustainable and stable developmentof enterprises. The production and operation services focus on the organization, coordination, and control of coreproduction factors in the production process, mainly including equipment, personnel, and logistics operations.
Hikvision has launched a series of intelligent perception products to help enterprises monitor and manage theoperation of various production factors in real-time, ensuring the stable and efficient operation of productionsystems.
Managers from manufacturing companies need to gain timely information about the on-site operation of keyproduction line nodes, but it is difficult for traditional manual methods to provide real-time and visual on-site data.Hikvision's production line series cameras feature a miniaturized design and can flexibly adapt to the productionline scenarios. With the high-frame-rate image acquisition technology, these cameras can clearly record the live
scene in narrow spaces on the production line, and observe key production processes at close range, makingproduction status visual and problem tracing justifiable.This system has been implemented in the productionprocess of LED products at Hikvision's intelligent manufacturing base. Each product has been assigned a specialidentification code, so that users can scan the code to obtain a video of the key production processes of the productand understand how it is manufactured.
In terms of the management of production materials, these materials are usually attached QR codes, barcodesand model labels to facilitate the inbound, outbound, sorting, inventory, and traceability operations. The scanningPDA series products launched by Hikvision can help corporate users timely and accurately collect and managegoods data, further improving their production efficiency and capabilities. These products supervise the countingand inventory of incoming materials during the inbound and outbound processes, control and manage variousproduction processes through production line traceability using PDA, and provide timely information on inventorystatus during the inventory counting process, which allows users to address insufficient or excess inventory in atimely manner.Moreover, these PDA products can be used for anti-counterfeiting management of manufacturedproducts through effective traceability, allowing users to promptly respond to and solve any possible productproblems.
In the manufacturing and distribution industry, mobile robots are an important driving force for automationand intelligence. By focusing on internal logistics, the Company has continuously optimized and iterated productsin four hardware product series: Latent LMR, Conveyor/Heavy-duty CMR/HMR, Forklift FMR, and Cargo To You(CTU). Additionally, the Company leverages two software platforms, RCS (robot control system) and iWMS(intelligent warehouse management system), to provide professional intelligent logistics solutions that allow forefficient handling of various materials in different scenarios. These solutions cover automotive, new energy, 3Celectronics, pharmaceuticals and healthcare, e-commerce & retail, and other industry segments, reducing
operational costs in logistics, and improving logistics efficiency and management quality for users.
In terms of logistics scheduling process, the utilization efficiency of platforms directly affects the efficiency ofgoods circulation, thereby indirectly affecting the sales revenue of enterprises. Some common problems exist in themanagement of platforms, such as improper parking of loading and unloading trucks on the platform, excessiveworking hours, non-standard working processes, and unsupervised operations. The platform cameras launched byHikvision are based on video technology and AI algorithms. They can automatically identify information on vehiclesworking at the platform, the number of operators, and the real-time loading rate of vehicles, helping platformdispatchers to reasonably schedule logistics vehicles by efficiently matching platform resources with loading andunloading needs, and improving the utilization and management efficiency of the platform.Businesses are burdened with high costs of handling customer complaints as difficulties in accountabilityattribution, long processing times, and other problems often occur in the handling of abnormal returns from buyers(such as empty packages, missing items, and wrong goods) in the after-sales scenario of customer complaints in thee-commerce industry.Hikvision's sheets camera with large depth of field, binocular traceability camera, and
traceable packing machine series can clearly capture the waybill information in each step and record a video of theprocess. Furthermore, these cameras can be used with corporate order systems to quickly provide video evidence,thus helping businesses to quickly complete accountability attribution, gain recognition from e-commerce platforms,and maintain a good customer experience.The comprehensive processing time for customer complaints can be
reduced by more than 90%.
Intelligent quality inspection enhances the core competitiveness of businesses
As product quality is the lifeline of an enterprise, quality improvement is a means to enhance its corecompetitiveness. Combining multi-dimensional perception technology and professional AI algorithms, Hikvisionhas launched a rich range of digital products for quality inspection of raw materials, semi-finished and finishedproducts in the production process, helping enterprises improve their quality inspection process and efficiency.Foreign object detection is one of the important inspection items for products related to human health, such asfood, drugs, and cosmetics. To address quality risks such as presence of foreign objects and insufficient fillingvolume, non-destructive and efficient quality inspection methods are key means of product quality management.
By integrating the X-ray image enhancement technology and an AI algorithm for foreign object monitoring,Hikvision has introduced a series of products for X-ray-based foreign object and defect detection. The products canquickly identify quality problems such as internal foreign objects, abnormal morphology and filling volumes, andcan deformation, helping enterprises to steadily improve production and quality.
Casting is one of the basic techniques in modern mechanical manufacturing industry. The presence of defectssuch as small holes and cracks in iron/aluminum castings during the manufacturing process have some impact onthe overall tightness and quality of the castings. Traditional quality inspection methods are often used for surfacedefect detection, while internal defect detection methods are often destructive.Hikvision has released an industrial
flaw detection series of products by integrating the X-ray imaging technology with AI algorithms. The products canclearly present the internal condition of castings, detect defects such as cracks, bubbles, or looseness inside metalworkpieces, and provide non-destructive defect detection, helping users to efficiently detect defects and improveproduct quality in industrial production scenarios.
To meet the demand for automated quality inspection of components in the manufacturing industry, theCompany has launched an industrial auscultation microphone series. By collecting voiceprint information ofmachine through bone conduction sensors and comparing them with AI voiceprint models, these microphones candetect abnormal noise in the production process of various motors, pumps, and compressors, and intelligently
determine whether the sound of the workpiece is normal or abnormal. Traditional quality inspection methods arebased on manual listening. As workers vary in experience and the parameters are difficult to quantify, it is difficultto ensure timeliness and accuracy, and trace the detection process. Our industrial auscultation microphones are ableto detect abnormal sound without disrupting the original production arrangements. They can be used to inspect eachworkpiece instead of inspecting them randomly, and trace workpiece problems. The quality inspection results canbe integrated into the MES, making quality inspection more efficient, accurate, and standardized. These productscan be used for quality inspection of abnormal noise in automotive electric components and household appliancemotors.
Machine vision, as the core of industrial sensing, is the eye of robots and automation equipment, and is alsoone of the key drivers for digital and intelligent production.In addition to developing and optimizing our productlines around 2D vision, intelligent ID, and 3D vision, Hikvision has leveraged the VM (VisionMaster) algorithmsoftware platform to achieve various applications such as positioning, measurement, identification, and defectdetection, improving production flexibility and product quality. With regard to industrial quality inspection, theCompany continues to introduce perception cameras and AI detection algorithms to better capture and accuratelydetect various defects in the industrial production process.For example, in response to the needs of wafer detection
and hidden crack detection, the Company has launched a new SWIR shortwave infrared industrial camera with agreatly expanded range of spectral imaging.To meet the demand for defect detection of objects with high surfacereflectivity and transparent materials, the Company has launched a new high-speed line scanning 2.5D vision system.The Company has introduced multiple series of laser profilers and VM-3D algorithm software platforms forapplications such as welding seam and point inspection in the lithium battery industry, pin inspection in theautomotive parts industry, and silicon wafer thickness measurement in the photovoltaic industry. In addition, theCompany has released more than 10 AI detection algorithm tools to help partners efficiently respond to variousdefect detection needs and drive the rapid development of the industry.
Accurate monitoring of equipment status to ensure stable operationThe stable operation of equipment is a key element in guaranteeing smooth production of enterprises. Byleveraging our multi-dimensional perception capabilities, Hikvision comprehensively monitors and collects data onequipment operation status from various perception dimensions such as temperature, sound, and vibration.Moreover, our intelligent analysis capabilities enable us to timely detect equipment abnormalities and assignrelevant personnel to quickly address the problems.It is difficult to collect real-time data with traditional manual inspection methods for online operation andmaintenance of equipment in industries such as steel and wind power. Furthermore, the difficulty in operation andmaintenance is increased by environmental characteristics of these industries such as high temperature and widegeographical distribution. Therefore, fault detection and resolution require a large amount of time.Hikvision's
sound-vibration-temperature monitoring series products can simultaneously collect data on the voiceprint, vibrationmechanism, and temperature of machines, and upload them in real-time. By analyzing long-term multi-dimensionaldata, they can monitor, diagnose, and predict equipment faults, monitor the operating status of pumps, motors, fans,belts, distribution cabinets, and other machines in real-time, and warn of abnormal faults. They also providepredictive operation and maintenance services for equipment, effectively improving operation and maintenanceefficiency.
During the equipment and facility inspection operations in the power industry, people often rely on the readingsof various meters to determine the abnormal status of equipment. However, some problems such as unclear focusand interference from fill light reflection exist in the scenario of close-range observation such as meters. The macrometer camera provided by Hikvision features an integrated structural design, automatic focus and polarized fill light,and can read meters at close range. When used with an auxiliary platform for power operation inspection and anintelligent analysis host, it enables remote intelligent meter reading and online meter inspection, helping to improvequality and efficiency, and reduce risks.
The stable operation of production areas such as distribution rooms, production equipment rooms, and relayrooms provides the foundation for the safe and efficient operation of enterprises. However, some problems existwith the manual operation and maintenance approaches, including heavy workload, high personnel costs, humaninspection risks and hazards, and even the presence of missed and wrong detections. Hikvision's track inspectioncamera series can be used with an IoT sensing module and optionally with partial discharge detection, temperaturemeasurement, and environmental sensing modules as needed to meet the inspection needs of different scenarios.They can also be used with obstacle avoidance technology to conduct safety inspections. Staff can remotelyconfigure inspection plans as needed to meet the personalized needs of different users and perform all-weatherinspections.
In industrial pipe galleries and pipeline inspection scenarios, gas leakage inside pipelines can cause energy lossand even safety hazards, which can easily lead to safety accidents if not handled in a timely manner. Hikvision haslaunched an audiovisual instrument that combines microphone arrays and camera components, and locates gasleakage points using sound source localization algorithm. By visualizing sound source locations through color cloudimages, the instrument displays the distribution of sound sources in the field of view. This can reduce energy waste
caused by pipeline leaks, avoid potential risks of personnel or property damage due to delayed detection, and ensurethe safety of pipeline transportation.
Improving hazard detection capabilities to ensure safety productionSafety production is an indispensable part of production management for organizations. Hikvision endeavorsto help companies build comprehensive safety management capabilities through comprehensive monitoring ofunsafe behaviors of people, unsafe states of objects, and unsafe factors of the environment to effectively preventsafety risks, improve hazard detection capabilities, and reduce safety accidents.There is a risk of leakage of industrial materials such as liquefied gas and alkanes during the productionoperations in petrochemical facility and tank areas, which may cause fire accidents if exposed to open flames.However, as these gases are transparent and colorless, it is difficult to detect gas leaks in a timely manner. Hikvisionhas developed a multispectral gas cloud imaging camera by utilizing multispectral technology and based on theprinciple of unique spectral absorption peaks for hydrocarbon media. The camera can timely detect leaks inhydrocarbon gas media such as ethylene and methane, and visually display the leak points. By monitoring andwarning of gas leaks in real-time, it can facilitate and guide maintenance operations, and provide reference foremergency evacuation due to gas leaks.
In the power industry, high-voltage equipment and lines may experience insulation performance degradation,structural defects, surface contamination, and increased humidity during long-term use, leading to corona dischargeand even equipment and transmission line failures in serious cases, resulting in large-scale power outages. Toaddress the safety hazards that weak discharge poses to the transmission system, Hikvision has launched the UVcorona online monitoring instrument. Through the multi-dimensional integration of UV detection, visible lightimaging, and thermal imaging-based temperature measurement technologies, the instrument can accurately locatecorona discharge at difficult-to-detect positions in a non-contact manner from a long distance, improving thedetection rate of high-voltage equipment and line faults, and preventing any potential circuit risks.Unsafe behavior of people has always been a pain point in the safety production management of powergeneration enterprises. By utilizing the UWB positioning technology, Hikvision has introduced positioning basestations, tags, and systems to provide functions such as visual display of personnel positions, rapid playback ofhistorical movements, and timely warn of personnel approaching or entering dangerous areas. In addition, thepositioning technology can be combined with video surveillance and 3D technology, as well as the two-ticketmanagement process to enhance the real-time, interactive, and proactive site safety control, and improve safetymanagement of power enterprises.Real-time perception of environmental factors to provide technical support for decision-making
Real-time and high-frequency monitoring of environmental factors enables managers to timely understand theon-site conditions, and handle any problems in a more prompt and effective manner. Hikvision uses multi-dimensional perception technology to intelligently monitor various environmental factors, providing decision-making support for scientific management of government and business departments.
Water is the source of life that humans rely on for survival and development. Traditional water qualitymonitoring mainly uses chemical methods, which have problems such as low monitoring frequency, highconstruction and operation costs, fewer monitoring spots, large blind areas, and secondary pollution, making itdifficult to achieve refined management of water quality in rivers and lakes. To meet the demand for monitoringsurface water quality of lakes, reservoirs, watersheds and drinking water sources, the Company has launched ahyperspectral water quality monitoring instrument, which integrates hyperspectral, liquid level radar, and visiblelight cameras. The instrument can collect 11 key water quality parameters including chlorophyll, permanganateindex and transparency in less than 1 second. When used with a monitoring platform, it can obtain information onthe trend of water quality changes in a timely manner, and warn of abnormal conditions, helping to maintain a long-term clean water environment.In addition to water quality, Hikvision's intelligent perception technology can also be used in multi-dimensionalmonitoring of water. During the peak period of rainy season, rivers and lakes with developed water systems are keyareas for flood control, and water level is the core indicator reflecting the water regime of rivers and lakes.The
Company has launched a ball camera for water level observation specifically for water level monitoring scenariossuch as rivers, reservoirs, and culverts. The ball camera integrates video perception technology and millimeter waveradar technology to achieve all-weather, high-precision, non-contact, and visual water level monitoring.Our radarflowmeter also features an integrated design and measures the surface flow velocity and level of water in real-timebased on the principle of Doppler radar velocity measurement. The flowmeter works stably all day with a millimeter-level monitoring accuracy, providing decision-making support for flood control and prevention.
Minor geological changes are often difficult to observe with the naked eye, but they can pose long-term safetyhazards and even trigger geological disasters. The Company has launched a displacement observation ball camera
specifically for scenarios such as reservoirs, dams, mines, iron towers and bridges where displacement, tilting, andsettlement are likely to happen. Through the integration of GNSS and video technologies, this product improves theperception efficiency of displacement, settlement and other factors that may cause geological disasters, and providesmillimeter-level accuracy in displacement change monitoring and remote video inspections. It is designed to providelong-term all-weather monitoring trends, helping to ensure geological safety.
2) Specialized products with strong environmental adaptability
Data collection in complex scenarios relies on the comprehensive product innovation capabilities in the processof implementing digital applications. A sensing device that can better adapt to complex and ever-changing specialenvironments is more useful in collecting higher-quality data to improve the effectiveness of practical applications.At present, the Company has launched a series of specialized products with strong environmental adaptability fordifferent special scenarios, such as low illumination, short and far distance, vibration, dirty, flammable and explosive,no electricity or network connection, humid and corrosive, ultra-high and low temperature scenarios.
The Company has introduced a series of products for high-temperature scenarios including an endoscopicfurnace flame observation camera and a high-temperature high-brightness camera.The endoscopic furnace flameobservation camera is deployed in high-temperature and dusty heating furnaces, where it can accurately measurethe real-time temperature inside the furnace even at a maximum temperature of 2,000℃. Moreover, it can timelycontrol and adjust the working status of the heating furnace, ensuring product quality, and controlling material scrap.
The Company has launched a low-temperature-resistant cold chain cameras for the low-temperature scenarios.The cameras use technologies such as window heating to ensure stable operation at temperatures as low as minus60 ℃ without fogging the lenses. These cameras can be used with multi-dimensional sensors, such as temperatureand humidity sensors, to facilitate managers in monitoring changes in the warehouse environment in real-time andachieve visual supervision of the entire cold chain transportation process.
In industrial remote-control scenarios, there is a problem of high end-to-end latency (hundreds of millisecondsor even seconds) with conventional video monitoring systems. Remote high-latency monitoring may causemisoperations and accidents. To address the problem, the Company has launched a series of low latency products.These products can achieve a minimum end-to-end latency of 70 ms by optimizing the entire video encoding chainfrom on-site cameras to centralized control centers, thus improving the security of centralized control, andfacilitating production collaboration.
As for flammable and explosive energy operation scenarios, the Company has launched explosion-proofmobile wearables, portables, and violation detection products by combining our technical capabilities of explosion-proof design with a rich product system based on different scenarios, explosion-proof requirements, and functionalrequirements.Taking our Zone 1 explosion-proof portable ball camera as an example, we've selected new materialsand innovated explosion-proof design to reduce its weight by 60% and its size by 30%. Moreover, we've added newfunctions such as intercom and gas detection to improve the product's functional adaptability, user experience, andsafety in energy scenarios. The camera is designed to meet the needs of video recording and supervision duringspecial operation processes, as well as remote command and scheduling in emergency scenarios.
The Company has developed a dedicated crane camera for use in crane operation scenarios with obviousvibration and a large amount of dust and water vapor. The camera features an anti-vibration and anti-shake structuraldesign that effectively reduces the impact of mechanical vibration on images. With a professional dust penetrationalgorithm, the camera can remove interference from dust and water vapor to generate clear and stable video images.It is also equipped with an intelligent lifting tool tracking algorithm that ensures the video images are always focusedon the lifting tool and the object being lifted, providing visual, clear, and real-time operation video images for cranedispatchers and ensuring the safety of crane operations.
3.2 Hardware Product Family: Comprehensive Edge Node Perception + Edge Domain Scenario Intelligence
+ Central Intelligent Storage and Computing
In addition to launching new digital products, Hikvision has continuously promoted technological innovationand breakthroughs in different product areas such as edge nodes, edge domains, and cloud centers, and strengthenedour product innovation capabilities to better meet the needs of customers in various industries.
3.2.1 Edge node products: comprehensive perception and growing product mix
In terms of perception products, Hikvision has constructed a diverse and competitive product matrix thatprovides solid support for numerous industry applications by consolidating our technological advantages andimproving our IoT perception capabilities.
1) Front-end cameras
Hikvision continues to optimize optical systems, image algorithms, environmental adaptation, transmissionencoding and other multi-dimensional technological architectures with a focus on video perception technology,bringing about innovation in optical technology, and comprehensively enhancing imaging quality and scenarioadaptation.At the product level, Hikvision leads the evolution from unidirectional single cameras to panoramicdetail and then to multi-directional multi-cameras, so that a single camera can solve perspective loss, datainefficiency, difficulty in intelligent calling and other problems in practical applications, making video data morecomprehensive, effective, and easier to use.The Company continues to improve AIoT video perception capabilities,and expand video perception boundaries, fields of view and scenarios to build comprehensive perception capabilitiesthat meet business needs in various scenarios and under different conditions.
Focusing on optical imaging technology and inclusive AI-ISP
By consolidating our core technology foundation in video perception and leveraging our ColorVu andDarkFighter technologies in optical systems, Hikvision has made breakthroughs in close range and ultra telephotoimaging, expanded the sight distance, and innovatively developed anti-vibration self-locking lenses that acceleratethe zoom speed and improve the stability of the lens.To improve the imaging quality in low light environments, the
Company has comprehensively upgraded AI-ISP image processing technology, and optimized intelligent scenario-based image recognition that enables clear detail restoration. To reduce the difficulty of later-stage camera operation
and maintenance, we have made more efforts in scenario design, and used harmonic drive and auto-correctiontechniques to ensure that PTZ and dome cameras do not deviate in the long term. Moreover, self-cleaning and anti-spider web technologies have been adopted to keep the lens clean and reduce daily maintenance costs.
Leading the trend of multi-directional multi-cameras and improving scenario adaptation
To further solve the problem of cameras’ universality in different scenarios, Hikvision has comprehensivelyimproved the practicality of video perception data and innovatively released a series of multi-directional multi-cameras, so that a single device allows free multi-perspective visibility, multi-directional adjustment, and flexibleapplications in multiple scenarios.Large aperture, panoramic depth, AI-ISP, and DarkFighter technologies havebeen used to improve imaging quality and ensure the quality of origin data. A range of functions including remoteadjustment, algorithm switching without downtime, energy consumption monitoring, and intelligent data captureand statistics enable quick deployment and use, and efficient operation and maintenance of the cameras. Front-endand back-end collaboration and domain-end large model application allow faster use of the intelligent cameras andmake it easier to use the data.
Improving product applications in different scenarios and building comprehensive perception capabilities
AIoT has diverse application scenarios. Hikvision has expanded product categories and developed a series ofproducts that better meet the needs of the specific scenarios and environments to address poor imaging quality andother problems in different industry scenarios and environments.A range of dirt-proof and self-cleaning products have been introduced for use in the wild, reservoirs, factoryareas, and other scenarios that are prone to insect nets, dust, and oil stains. For example, the anti-spider web camerais designed to prevent attraction of mosquitoes and other insects and spider web formation on the lens, which affectsimaging. The manual maintenance costs of outdoor cameras are systematically reduced through an array of gentlesupplementary light that decreases insect attraction, an innovative design of horizontal mirror and lamp separationthat reduces insect interference with the lens, and a smooth front cover that prevents spider web formation.
Wildlife cameras create a network on their own and coordinate their behaviors through layered protocols anddistributed algorithms in remote nature reserves that are rarely visited by humans, and not covered by publicnetworks. After the power is on, these devices can quickly and automatically form an independent network,achieving real-time transmission of high-definition image data in areas without public networks. They provide amore efficient monitoring tool for biodiversity conservation.
With regard to elevator operation and safety management, Hikvision has upgraded and released a lineup ofcameras for elevator health monitoring, which not only supervise the safety management of electric scooters, butalso monitor the daily operation and maintenance of elevators. These cameras feature a TOF design that preventsthe lenses from being blocked and are equipped with built-in multi-dimensional sensors that can intelligentlydetermine the elevator speed, and daily status of door opening and closing, parking floors, etc., providing datasupport for elevator health testing, and facilitating the upgrade of elevator maintenance from responsive to predictivemaintenance.
As for near and far object observation scenarios, a series of ultra telephoto cameras that can clearly see farawaytargets have been introduced for application at urban high points, and in coastal areas, the forests for fire prevention,and other scenarios that require long-distance observation; a series of micro cameras that can quickly focus havsbeen launched to allow close-range metered snap shots, observation of cracks in cultural relics sites, and defectdetection in production lines, etc.
In terms of extreme temperatures, corrosion, no electricity or network connection and other special scenarios,Hikvision has released a series of temperature-resistant cameras that can work properly at temperatures as low as -60 ℃ and as high as 2,000 ℃, a series of cameras that are resistant to corrosive substances by the seaside or inenvironments involving sulfuric acid, formic acid, and acetic acid, and a series of solar energy cameras that operatewith electricity generated from light in environments without electricity.
2) Smart traffic and mobile devices
Smart traffic products: Hikvision has continuously iterated our capture system series based on the new lightpollution standards, developed and classified capture systems, and contributed to the improvement of light pollutionproblems.As for multi-dimensional perception products, long and short focus dual-image sensor technologies are
integrated to achieve applications in super-resolution and ultra depth of field scenarios. By combining radars, ETC,RFID, and videos, the Company has introduced a series of multi-dimensional perception products to improve thetarget capture rate and accuracy, and meet the needs of new business scenarios, which are widely used in the fieldof traffic management.
In the field of intelligent signal control systems, Hikvision takes advantage of our own products across thesupply chain to integrate and apply perception data and signal control algorithms, enabling radar-video assistedvehicle detectors to accurately collect traffic parameters. Combining the radar-video assisted multi-modal largemodel with millimeter-wave radars and high-definition cameras, the Company has acquired millions of segmentsof radar-video assisted perception, and constructed the radar-video assisted integrated large model thatsimultaneously perceives spatial physical information and semantic image information. This model is capable ofultra-long-distance perception and the detection of vehicle flow trajectories with a precision of more than 95%.Compared with the vision or single-mode radar models, the radar-video assisted multi-modal large model providesa deeper understanding of the physical world by extracting effective information from multi-dimensional signalsand exploring the potential relationships among different modal information, so that the radar-video assistedproducts can deliver unparalleled performance at day and night and in rainy and foggy environments, and are usedat a large scale.Meanwhile, in contrast to the traditional radar-video assisted products that have a shorter detectiondistance in the algorithm scheme, our new products featuring the radar-video assisted multi-modal large model aretwo times more powerful in perceiving targets.Hikvision's radar-video assisted all-in-one devices, equipped with
ultra-long-range radars and multi-lens long and short focus videos, are capable of high-precision detection of ultra-long-range vehicles and traffic trajectories. With a breakthrough performance in detection distance, these radar-video assisted fusion products can significantly reduce the construction costs of intelligent signal control systemsand digital roads, and improve the ability to manage traffic congestion and ensure traffic safety.
Hikvision is also actively conducting research on the basic models of intelligent signal control algorithms,promoting the intelligent development of the industry's signal control systems. The Company has completed the
development of control algorithms based on traffic knowledge and AI technology, as well as consultation algorithmsbased on traffic knowledge graph and field of view graph technologies.Furthermore, based on the perception datafrom radar-video assisted vehicle detectors, we have implemented an AI-assisted high-order signal timing controloptimization algorithm. For example, the algorithm can intelligently divide the daily traffic volumes of a particularintersection into morning and evening peak hours, off-peak hours, and other time periods based on its historicaltraffic flow, and generate a traffic release plan for each time period that supports dynamic generation. It can alsoaccurately predict the next cycle of traffic based on historical traffic and real-time traffic of the day, so as to providemore precise solutions in case of sudden changes in traffic volumes (start/end of a peak period).The Company continues to enhance comprehensive road management and control capabilities by promotingthe construction of digital roads. Our safety warning product series integrates all-weather traffic safety detectionand risk warning, and is designed to strengthen traffic order management and road safety risk prevention and control,providing safety warnings for traffic participants, and addressing road hazards.Entrance and exit parking products: Hikvision has improved intelligent video and unmanned productsolutions, helping customers and users to increase operational management and service efficiency.Through the
launch and iteration of products such as the Guardian Series, Roadside Series, and automotive charging stations, theCompany has expanded our business scope and customer services, and strengthened the intensive, intelligent anddigital capabilities of our products and systems and our ability to continuously provide customers withcomprehensive products and solutions for segmented scenarios including vehicle entrances and exits, parking lots,roadside parking, and parking spaces for new energy vehicles.In addition, Hikvision continues to expand ourchannel coverage and service capabilities, further improving the reputation of our products in the market and theservice experience for users. By investing in the R&D capabilities of a full range of products, we have expandedour urban parking business, helping to improve urban parking efficiency and the people's parking experience.Mobile terminals: Hikvision focuses on industrial wearables and portables, handheld PDAs and other sectors.The Company leverages miniaturization, low power consumption and explosion-proof technologies to launch aseries of industrial wearable and portable products, facilitating mobile visual management in mobile lawenforcement, safety production, construction site inspection, financial services and other scenarios.In the field ofhandheld PDAs, the Company continues to improve and innovate mobile intelligent data products by combiningdeep learning-based barcode/character recognition technologies with imaging technology and AI capabilities,developing more scenario-based business models.
3) Access control, intercom and alarm products
Hikvision conducts research on perception detection and identity recognition for various scenarios and spaces,with a focus on technological innovation and product development for people- and object-based businessapplications. The Company continues to explore product applications for segmented scenarios and has developedsolutions for a range of scenarios, including access control, attendance, visitor management, elevator control,financial checkout, inventory management, building intercom, smart medical and elderly care, entrance and exitmanagement, intrusion alarm, and perimeter prevention.
Hikvision's access control products, represented by MinMoe, are a result of the research and integration ofmulti-modal and other basic technologies that are used to create digital and intelligent identity recognition andpermission control-related products. The Company has established two sets of access control product systems, wiredand wireless, covering a full range of scenarios. In an effort to create industry-specific solutions and products, wehave introduced a series of new products such as explosion-proof, violence-proof, and national security products,providing customers with more diverse solutions.
Hikvision's visual intercom products feature the two-wire communication technology and optimized mobileapplications, and are characterized by easy usability, deployment, and maintenance. They are designed to create amulti-level product array, and adapt to different building intercom scenarios.Hikvision continues to promote bustechnologies and integrate multiple subsystems such as smart homes, intrusion alarms, and elevator control,providing customers with one-stop application solutions for residential control scenarios. On the basis of buildingintercom product solutions, the Company continues to explore industry application scenarios, including commonintercom scenarios, and integrate radar, infrared and other detection technologies, gradually incubating relatedbusiness ideas such as smart medical and elderly care.
Hikvision's turnstile products consistently serve customers and users with continuous technological innovation.On the R&D end, these products feature an integrated design that combines advanced technologies including self-developed LiDAR, multi-modal recognition, digital debugging, operation and maintenance, and are designed foreasier use during installation, debugging, use, operation and maintenance stages, bringing value to customers. Onthe manufacturing end, the entire assembly line from raw materials to finished products is automated to efficientlyimprove product quality.
Hikvision's alarm products continue to make breakthroughs in infrared, microwave, sound wave, and vibrationand other detection technologies, further improving the wireless and hybrid intrusion alarm ecosystems. Our high-speed BUS technology is speed-adaptive and enables flexible topology; our RF technology features lower powerconsumption, a longer communication distance, and higher data efficiency. By integrating indoor intrusion andoutdoor perimeter fence, and CCTV systems, Hikvision provides a one-stop solution package for scenarioapplications, delivering more valuable services to customers.The Company continues to improve cloud serviceapplications by providing professional and easy-to-use application tools that allow more convenient access to, moreefficient management, and easier operation and maintenance of cloud services.
4) Interactive audio products
Over the course of three years, Hikvision has built independent product R&D capabilities covering allprocesses of the interactive audio field. The Company has developed three product systems: security audio,broadcasting audio, and professional audio, leading the audio industry towards an array-based, intelligent networkedfuture. We provide pleasant, easily adjustable and manageable system solutions for sound capture and reinforcementthat are widely used in different scenarios such as conference rooms, lecture halls, venues, and campuses, bringinghigher quality sound, more comfortable speeches, and smoother communication.
Array-based - Precise sound capture and reinforcement bring higher definition quality: As speakers needto hold microphones or stand close to desktop microphones in traditional large conferences and other sound capturescenarios, the microphones are largely affected by the distance and environment, and likely to produce unstablesound quality. Combining multi-beam and algorithm technologies, Hikvision's sound capture array can effectivelyshield noise, suppress interference, and capture sound precisely over long distances across multiple areas.Just oneof the 128mic ceiling array microphones released by Hikvision can cover a space of 100 square meters, freeing upusers' hands through seamless sound reinforcement. On the other hand, heterogeneous array square microphonesincrease the sound capture distance while ensuring sound quality and volume, allowing speakers to speak clearlyand stably without leaning forward. They are suitable for middle- to high-end conference rooms, lecture halls, andmore.
With regard to sound reinforcement, multiple individual speakers are installed together in traditional soundreinforcement scenarios, which can easily lead to reverberation, uneven listening experience for the front and rearlisteners, and other problems. Hikvision's source linear array-based sound column uses a combination of multiplespeaker arrays and a constant beamwidth beamforming algorithm to make the sound field beam adjustable andcontrollable, creating an even sound field for both the front and rear listeners. Moreover, sound waves emitted fromthe column surfaces are more effective in suppressing whistling and have a more stable output. The sound beamscan accurately reach the target audience, reducing noise and echoes, and producing clearer sound quality. The remotesound-field beams are adjustable, eliminating the need for on-site adjustment of the installation angle, making thesound column more harmonious with the environment and more aesthetically pleasing.
Networked - Audio effects are remote adjustable for more convenient management: Unlike networkedvideos, which have brought revolutionary changes to the entire security monitoring industry, networked audios arecurrently in their early days, but represent an inevitable trend. An analog audio system requires a large amount ofwiring, complicated deployment, and can easily cause interference with sound quality.However, a networked audiosystem connects all audio devices with only one Ethernet cable, allowing for simplified wiring, convenientexpansion, and extended space, and further improves sound quality by eliminating the need for multiple analog-to-digital conversions. Hikvision's 8000 series networked professional audio system is entirely networked from soundcapture to processing and to playback, and transmits audio data in milliseconds by implementing the AES67transmission protocol. With the system, different speakers can synchronize in nanoseconds, and capture and enhancesound without delay or acoustic differences, producing audio effects that can be conveniently managed through
remote online precise adjustment.Intelligent - Sound quality is further improved using AI algorithms:
With the support of AI algorithms,audio products can now be optimized with software algorithms instead of hardware and devices alone, thusovercoming hardware bottlenecks, further improving sound quality, and significantly reducing system costs.Hikvision's 8000 series networked professional audio system comprehensively utilizes AI in signal processing,audio playback, and sound tuning to enhance product capabilities.AI-based noise reduction: With hundreds of noise models, the system automatically filters out non-stationarynoise such as mouse clicks and keyboard typing, as well as stationary noise such as air conditioning and equipmentsounds in conference scenarios, making the sound quality clearer;
AI-based sound source localization: The system supports beams in 8 areas, and gives priority to capturingthe voice of the main speaker if multiple people speak simultaneously. It focuses on the position of the main speakerin real-time and automatically shields interference outside the beam area, clearly capturing the sound of the mainspeaker even though he/she walks around;AI-based device detection: The system monitors the real-time operation status of equipment andautomatically triggers alarms in case of abnormal conditions;
AI-based sound field calibration: The system automatically detects parameters such as echo delay,environmental reverberation, and noise reduction level, and enables one-click debugging by automatically adjustingto the optimal configuration parameters.
After continuous efforts, Hikvision has improved our capabilities in independent R&D of audio products. TheCompany has a professional acoustic product R&D team and several automated assembly, testing, and packagingproduction lines, which empower us with design and production capacity across the industry chain from acousticdesign and algorithm development to manufacturing. With multiple globally-leading RMB 10 million-level acousticlaboratories certified by Ceprei and SGS, we have established a complete set of acoustic evaluation systems forbasic acoustic/speech/noise testing, standard acoustic certification testing, etc. We possess professional acoustictesting capabilities including objective evaluation, subjective listening, and precise evaluation and testing forindustry-specific scenarios.
3.2.2 Edge domain products: Building a domain-end brain through intelligent upgrades and IoT acceleration
Hikvision's customer-centric edge domain products are continuously upgraded for use in different industry
scenarios by utilizing large model and other AI technologies, creating value for customers. Moreover, these productshave accelerated the integration of intelligence and IoT, achieving the aggregation, parsing, and comprehensivedomain-end application of multi-dimensional perception data.
1) Integrated devices for intelligent applications
Hikvision DeepinMind NVR - A core product for edge domain: In 2023, Hikvision kept enriching andexpanding the DeepinMind NVR product mix by deeply understanding user needs and optimizing product design,which were widely applied in various industries.
In response to the demand for high-definition and long-term storage, Hikvision has released a high-densityseries of NVRs, leading the industry towards high-definition storage. The Company has intensified efforts ininclusive AI and gradually achieved the application of comprehensive inclusive AI in general NVR products.
Hikvision is committed to building a domain-end brain in the era of AIoT. The Company has launched a new
5.0 system architecture for domain-end products, which has six capabilities: perceptual access, domain-end
management, fusion and aggregation, multi-dimensional storage, edge computing, and intelligent applications.Facing the future, we have established the cornerstone of AIoT product solutions, continuously improving thecompetitiveness of our products.In terms of algorithms, Hikvision has conducted in-depth research on visual largemodel technology and transformed it into products. Meanwhile, the use of algorithm orchestration, computingpower virtualization and other strategies have significantly improved the performance and accuracy of algorithms,allowing AI to truly create value for customers. Believing in open cooperation, the Company has continuouslyenriched the algorithm models and capabilities of our open AI platform, and upgraded and iterated HEOP hardwareopenness capabilities to rapidly expand algorithms and applications, and establish extensive cooperation.
AIoT gateway - Multi-dimensional data fusion products: AIoT perception data are rich and diverse.Hikvision's domain-end AIoT products integrate videos, sensor data, and AI, and support data aggregation,processing, and application. These products can be easily and intelligently networked and controlled by ourcustomers, which cover industries and scenarios including energy grid, agricultural applications, water conservancyand affairs, computer rooms, energy consumption, industrial IoT, and financial services, achieving a closed loop ofmulti-dimensional perception data application and creating value for customers with data.
2) Smart displays and video conference products
Hikvision's smart displays and video conference products focus on conference and educational scenarios. Withimprovements in display control, operating systems, touch interaction, audio and video processing, and AIrecognition technologies in digital era, Hikvision has launched intelligent interactive terminals and software systems.The IoT media data in conference rooms, classrooms, and other spaces are integrated through display viewing, audioand video interaction, touch interaction, and other means to provide professional intelligent scenario-based solutionsfor customers.
Smart displays - The use of smart displays in conference scenarios can comprehensively enhance theparticipation experience: With the continuous iteration of WonderOS and the launch of connected displays,conference tablets can be seamlessly connected with mobile phones, computers, audio and video accessories toshare resources, making screen projection and interaction more convenient, and conference operations moreefficient.Powered by intelligent audio and video processing algorithms, conference tablets can display humanimages clearly with excellent sound capture and noise reduction effects, and track the speaker more accurately,making remote conferences as immersive as offline ones. Hikvision has launched our flagship audio and videoconference tablet, which comes with built-in SIP/323 and cloud conference capabilities, and can be used withmainstream MCU conference platforms.By iterating products for teaching scenarios, the Company has created acomplete set of educational product solutions that include flagship, traffic, and basic smart blackboards and all-in-one devices, as well as push-pull and memory blackboards. Additionally, dual-screen smart blackboards and all-in-one devices have been introduced to enrich smart product solutions for higher education seminar, remote and lectureclassrooms, and regular classrooms.
Video conference products: In 2023, Hikvision comprehensively enhanced the audio and video effects of ourvideo conference system using AI capabilities. The product supports the intelligent window mode, and providesindependent conference screens, allowing each participant in the conference room to enjoy a front row experience.
By combining AI audio-based deep learning technology, the product has been upgraded with intelligent noisereduction, echo cancellation, and reverberation removal algorithms that enable automatic elimination of hundredsof types of noise and improve the clarity and restoration of conference sound.
Conference management software: As the value of platforms further increases, Hikvision has improved theequipment control and maintenance capabilities of our conference management software apart from businessmeeting needs. The software is designed to control, in a real-time and comprehensive manner, various displays,audio enhancement devices, control and sensing devices, video conference equipment, etc. in the conference room.It timely detects equipment abnormalities, and remotely debugs any problems and upgrades configurations, reducingthe workload of IT operation and maintenance personnel.Moreover, the software explores conference data, analyzesconference results from multiple dimensions such as organizational departments, conference rooms, and individuals,and provides a visual display of space utilization and conference duration, assisting management personnel indecision-making and boosting efficiency with digital technology
3) PCs
Hikvision has developed security PCs by combining traditional IoT with the characteristics of securityapplications and video application requirements. This product series is equipped with our self-developed graphicsdecoding card and other technologies that enhance video decoding and output capabilities. These PCs arepreinstalled with various business application software, which can be used conveniently on startup, providing robustdecoding, high stability, and greater professionalism.
Hikvision's PCs feature multiple platform architecture technologies and a range of components made of self-developed materials such as storage media, displays, output display cards, and motherboards. These products areavailable in different formats including desktops, laptops and all-in-one computers and support desktop cloudsolutions in different modes such as VOI
and VDI
. They are usable, user-friendly, and reliable, suitable for officeapplications, education and teaching, business practices, specific business support, and other scenarios.
4) Network products
Hikvision's network products are designed to provide scenario-based monitoring network solutions for securityIP. Our products come in different types including switching, routing, wireless, and all optical. The access capacityof a single core switch has been increased to 10,000 4-megapixel front-end devices.
In 2023, we focused on promoting the centralized and unified management of IT + IoT terminals in the networkof small and medium-sized businesses. Leveraging the Company's IoT perception capabilities at the front and backends, we used a globally visible topology view to help users quickly discover, locate, and solve network-relatedproblems, reducing the difficulties of network operation and maintenance. The switches represented by the lightnetwork management series are more suitable solutions for network access needs in IoT scenarios.Based on their unified management capability of IT + IoT networks, Hikvision's network products areexpanding to a wider corporate park network, helping users to build a safe, reliable, and intelligent network.
3.2.3 Cloud center products: Creating an IoT-information network base and providing a variety of solutions
With the rapid development of cloud, AI and other technologies, high-performance and more secure ITinfrastructure becomes essential. By integrating servers, storage, network transmission, and PCs, Hikvision hasestablished a complete set of IT products that cover from the center to the edge of "computing - storage -transmission - end", providing comprehensive, secure, available, and advanced IT infrastructure for IoT.
1) General computing products
After more than ten years of development, Hikvision has built a complete server product system thatencompasses different specifications such as single channel, dual channel, multi-channel, and high-density, anddifferent product forms such as workstations, tower servers, rack servers, edge servers. Our diverse and robustportfolio of servers adequately meets the market demand.
2) Intelligent computing products
Hikvision has built a rich and highly competitive product system of intelligent servers that are fully compatiblewith mainstream CPU and GPU products from home and abroad. These products not only meet the general needs
of information market, but also provide a solid and reliable infrastructure for intelligent computing centers, cloudcomputing and big data. They are suitable for professional application scenarios in government, internet, energy,finance, operators and other industries, providing a high-performance, and highly reliable and secure infrastructurefor these industries.
3) Central storage products
Hikvision has a wide range of central storage products, including controller architecture, server architecture,and other product systems, which meet the needs of various business scenarios. In 2023, in response to the newdemand for high definition and ultra-long-duration storage, the Company launched new products including ultra-high-density series and ultra-long-duration series to meet the video storage needs of users. At the same time, bycombining existing products with SSD and HDD technologies, the Company has built a new hardware system, andupgraded software for the development of new system capabilities.
Hikvision has introduced a fully symmetrical architecture for cloud storage products that significantlyimproves performance and makes storage systems more secure and robust, establishing our leadership in the fieldof cloud storage. Moreover, in the era of AIoT, massive data are generated every day in addition to large volumesof high-definition video data. By leveraging our powerful video streaming storage capabilities, and advancedtechnologies such as storage layering, virtualization, and modeling, Hikvision has actively developed multi-dimensional IoT data storage capabilities and released a series of integrated storage products that suit thecomprehensive storage needs of various industries.
Hikvision continues to iterate the entire family of general storage products that cover SAN, NAS, and objectstorage. These products have server and controller architectures, and support the most advanced technologies in theindustry such as SDS
and HCI
. Based on distributed storage technology, the Company has developed mixed
application capabilities for industry-specific and B/C-end services in terms of private and public cloud solutions. Inrecent years, to meet different needs for warm, hot and cool scenarios, Hikvision has developed a range of solutionsand products including single device applications, clustered distributed solutions, high availability with nodowntime throughout the year, and upgrades with minute-level downtime. These products are widely used in variousindustries and play a valuable role in office OA, database hosting, production management, IDC data centerconstruction, and other areas.For many years, they have been among the best in the sales ranking of domestic IPstorage products in IDCs.
4) Large screen displays and control products
Hikvision's display products are powered by video processing, image restoration, image enhancement, ultra-high-resolution display, and intelligent interaction technologies, and widely used in monitoring centers, commandcenters, and pan-conference/exhibition scenarios.The Company continues to introduce Mini LED, COB, and
energy-saving series products by building two development and production bases in Tonglu and Wuhan. We focuson core LED manufacturing processes and standardize quality control to improve product quality, and shorten themanufacturing process. Furthermore, the Company has expanded application scenarios in the fields of specializedand commercial displays with an emphasis on better color consistency and higher resolution, providing cost-effective display products and solutions.
For business scenarios such as command centers, monitoring centers, and conference displays, Hikvision haslaunched the third-generation integrated video platform, splicing controller, and LED control system, furtherimproving the display effects and adaptability of LED screens, and enhancing the efficiency of command,scheduling and business display applications. The third-generation integrated video platform features a new high-speed bus system architecture, and is able to process high frame rate, high bit depth, wide color gamut, and highdynamic video data in real-time. With Hikvision's robust video technology, the platform can assure lossless displayof video images. For the conference display scenarios, the third-generation splicing controller adopts full-link high-definition audio and video, intelligent interaction, IoT perception, and 3D display technologies, providing users witha delicate and immersive interactive experience.
3.3 Software Product Family: Software Platforms + Intelligent Algorithms + Data Models + Business Services
Hikvision's software product family is composed of software platforms, intelligent algorithms, data modelsand business services.
3.3.1 Software platforms: Basic platforms + general platforms + industry-specific platforms
Basic software platforms: Hikvision continues to improve our basic software in four categories: storage andcomputing, IoT, intelligence, and data. Our storage and computing software includes cloud computing and cloudstorage platforms, providing pooling service capabilities for basic running environment in different applicationscenarios.Our AI software includes algorithm libraries, resource management and scheduling platforms, open AI
platforms, perception fusion and empowerment platforms, open intelligent application platforms, and other relatedproducts, providing intelligent algorithm training and operation, intelligent service orchestration and publishing,intelligent application development and reuse capabilities for intelligent application scenarios.Our big data softwareincludes model libraries, basic big data platforms, IoT-information network integration data resource platforms,data integration software, data mining software, knowledge graph software, spatiotemporal intelligence software,BI visualization analysis platforms and other related products, providing data model management, data aggregationgovernance, data storage and computing analysis, open data service, and data visualization application capabilitiesfor data application scenarios.
General software platforms: Hikvision provides general software functions across multiple industries,including comprehensive security software, regulatory and command software, ARVR software, and four-dimensional spatiotemporal operating environment. For instance, our general software platforms in the category ofvisual command include comprehensive security management, integrated drone management, video and audiointegration and application, cafeteria consumption management, and digital building management platforms.
Industry-specific software platforms: Hikvision, serving over 80 sub-industries, has gradually built 126industry-specific software platforms.Taking the transportation industry as an example, we provide a smart stationplatform for rail transit, a comprehensive law enforcement platform for transportation administration, an integratedmonitoring platform for smart highways, a comprehensive management platform for highway speeding, a dynamicsupervision platform for ships, a digital management platform for ports, an integrated management platform forairport security, and a comprehensive monitoring platform for transportation operations.
3.3.2 Intelligent algorithms: General algorithms + industry-specific algorithms
Matching hardware design and improving general algorithm capabilities: In response to intelligentscenario demands, Hikvision has optimized the AI effects of multi-dimensional perception devices by leveragingnew technological capabilities.For example, our intelligent dual-spectrum firework recognition device is designed
to address any misrecognition caused by water mist and clouds. The device features multi-algorithm engineoptimization technology that enhances its ability to resist interference from water mist and clouds, and spatialcoordinate conversion technology that enables it to geographically locate the mist and clouds.Our intelligentmillimeter-wave radar recognition device optimizes AI signal processing to perform better in fall and sign detectioncompared to traditional signal processing.Our hyperspectral water quality testing device, combined with a drone,is able to conduct measurements in a non-hovering state, and gains a real-time understanding of water qualitychanges and trends in the form of heat maps.
Hikvision uses multi-dimensional perception technology to optimize industry-specific algorithms:
(1) Soil and water protection: hyperspectral water quality testing, infrared sediment content monitoring, gas
monitoring with a radar flow meter or acoustic imaging device, atmospheric particle detection with a quantumLiDAR, raindrop impact detection using electrical sensing, remote sensing-based image analysis of illegalconstruction events;
(2) Hazard investigation: thermal imaging-based fire point monitoring and positioning in combination with
visible light-based smoke detection, optical fiber-based temperature measurement, and fire exit blockage detection; (3) Urban governance: analysis of crowd gathering, vehicle congestion and other abnormal events with high-altitude images from inspection drones; analysis of roadside stall business, road waterlogging and other abnormalevents with low-altitude images from mobile vehicle-mounted cameras; water level detection using a water levelsensor in the manhole cover;
(4) Public security supervision: analysis of climbing over railings, delivering goods through barriers and other
abnormal behaviors using key point detection technology; dangerous area entry detection and high-altitude throwingusing thermal imaging; analysis of people falling to the ground, and other abnormal events using images from a lawenforcement recorder.
Innovation in algorithm applications based on large models: from large visual models to large multimodalmodels, from large model technology to innovative applications of large models.
1) Algorithm optimization: The
analysis results of the end-side small model are filtered twice by the center-side large model to ensure accurateoutput while minimizing resource consumption. For example, in the scenario of a chemical park, false alarms ofsmoking and making phone calls can be reduced by more than 80%.
2) Innovation in intelligent applications: The
original video structuring level is improved by utilizing the image understanding ability of the CV large model. Forexample, analyzing the full information of images allows for intelligent view search. 3) Project delivery efficiency
improvement: The generalization ability of large models is utilized to automatically segment images, extract labelelements of a scene, and accelerate the efficiency of algorithm development and implementation. For example, theuniversal segmentation ability of large-scale models is used to quickly divide the scenes and associate each scenewith applicable algorithms. The target detection ability of large-scale models is used with parameter fine-tuning toquickly incubate new algorithms, and complete the fast validation of new scenario algorithms with the Zero to Onestrategy.
3.3.3 Data models: Industry data library governance models + professional business application models
Hikvision provides big data application services for various industries based on the big data collection,governance, analysis, and service capabilities provided by the IoT-information network integration data resourceplatform, and has accumulated a number of industry business data models in the process.These data models are
managed through a model library and can be replicated and optimized in other similar application scenarios.According to different usage scenarios, these models are divided into two categories by application scenario:
industry data library governance models and professional business application models.
(1) Industry data library governance models
The Company has formulated industry data library construction standards, and standardized the descriptionsof tables, fields and dictionaries in the data library, and data processing rules in compliance with national andindustry standards, and policy documents. These standards and rules pave the way for the construction of industrydata libraries. Examples of these models include data library governance models for the transportation industry anddata library governance models for the emergency industry.
(2) Professional business application models
Using the transportation sector as an example, Hikvision has provided a highway traffic situation fusion model,a highway congestion warning model, a highway vehicle trajectory restoration model, an urban road traffic operationevaluation and diagnosis model, an urban road traffic tracing analysis model,an urban road traffic short-term
prediction model, a changeable lane feature research, judgment and control model for urban roads, a tidal lanefeature research, judgment and control model for urban roads, a high-precision real-time online traffic flowsimulation model,an urban road traffic indicator model, a real-time target vehicle trajectory prediction model, asubway station flow prediction model, a bus priority signal control model, a bus passenger flow OD analysis model,a bus operation shift analysis model,an dynamic risk identification model for operating vehicles, an illegal operating
vehicle analysis model, a research and judgment model for shuttle buses recruiting passengers outside the station, aparking point detection model for vehicles transporting hazardous chemicals, a time-space analysis, research andjudgment model for fake-licensed vehicles, a racketeering car analysis model, a high-frequency path analysis modelfor oversized vehicles, a safety risk management and control model for driving behaviors, a warning analysis modelfor drivers deprived of their driving license, a traffic safety code assignment model for drivers, and a risky sectionmining model based on active safety data.
3.3.4 Business services: System operation and maintenance + Data engineering + business operations
By focusing on users' application needs, Hikvision explores the transformation from being a product andsystem supplier to being a service provider for certain business services.
System operation and maintenance services: Hikvision provides system operation and maintenance servicesto some industry users. For systems and equipment that have exceeded the warranty period, the operation andmaintenance team will offer professional system operation and maintenance services.
Data engineering services: Hikvision delivers data engineering services including IoT resources management,and integration of data collection, management and services.
Business operations services: Hikvision offers over 10 business operation services based on the internetoperation platform and our private deployment methods. Among them, urban parking operation services have beenadopted in more than 400 cities, and their coverage scope is expanding. The number of cities using our signal timingservices is gradually increasing. The user base of business operation platforms for fire protection operation, smartcommunity operation, safety risk monitoring and warning, and comprehensive monitoring of low-grade highwaysis also increasing.
4. Business Layout
The data collected by IoT is a new production factor in the digital world. The IoT data can be used to promotethe iterative development of existing technologies and tools, improve the quality and efficiency of labor and laborprocesses, explore the deep value of nature, and achieve more sustainable benefits by utilizing capital.This
facilitates the replacement of old production factors and the penetration of digital capabilities into every aspect ofglobal transformation, thereby promoting the transformation and upgrading of production, life, and governancemodels.
Hikvision has been serving for various domestic and international industries for many years, providing over300 solutions in 54 sub-industries across 9 industries related to enterprises and institutions, and over 200 solutionsin 35 sub-industries across 5 industries related to public services.The Company has gained extensive and in-depth
practical experience in the process of promoting socio-economic transformation and upgrading. Our business layoutwill be described below by taking typical applications and industry scenarios as examples.
4.1 Facilitating the digital transformation of production management
As a clear development trend of the digital economy, industrial digitization helps to improve quality andefficiency and reduce costs for Chinese and international companies, thereby enabling them to achieve sustainableand high-quality development. It is not only a requirement of the times, but also a huge industrial opportunity.
Hikvision is concentrating efforts on the core production areas of businesses by creating six digital productseries including "control and execution", "detection and measurement", "production and operation", "equipmentstatus", "safety production" and "security-fire protection integration". Moreover, the Company focuses ondeveloping AIoT solutions powered by operation technology (OT) to continuously strengthen our intelligentperception capabilities, and help organizations to build efficient production and operation management systems.By
promoting the integration of OT with IT (Information Technology) and DT (Data Technology), we strive to createenterprise-level IT applications in business directions such as large enterprise chain, smart parks, safety management,and equipment management.
1) Control and execution series
By applying the multi-dimensional intelligent perception technology to frontline production scenarios,Hikvision helps organizations to strengthen their capabilities of monitoring the production process, timely identifyany abnormal situations in production and scheduling activities, and build safe and reliable systematic capabilitiesin remote monitoring and auxiliary execution.The overhead crane is a common piece of lifting equipment, and the efficiency and safety of overhead craneoperations is greatly affected by the scheduling ability of site operators. However, dust, noise, overhead cranevibration, and equipment obstruction can all interfere with on-site scheduling operations.Hikvision has developeda dedicated camera for the overhead crane scenarios. The camera features a patented structural design thateffectively reduces the impact of mechanical vibration on the image. With a professional dust penetration algorithm,the camera is able to generate clear and stable video images in extremely low-visibility environments. It is alsoequipped with an intelligent lifting tool tracking algorithm that ensures the images are always focused on the liftingtool and the object being lifted, providing visual, clear, and real-time operation images for crane dispatchers andensuring safe and efficient crane operations.
Heating furnaces are widely used in the combustion process of metals and materials. To ensure that thecombustion process in the furnace meets the process requirements, it is necessary to know the temperature insidethe furnace in real-time. However, the traditional method of manual observation through opening holes on thefurnace wall is limited in accuracy and poses safety risks.Hikvision's endoscopic furnace flame observation camera
can reach into the heating furnace for precise temperature measurement and real-time monitoring of the flamedynamics inside the furnace, making it perfect for high-temperature and high-dust environments. When thetemperature inside the furnace becomes abnormal, the operator can adjust the working status of the heating furnacein a timely manner to ensure product quality and avoid material scrap.
The flying shear is an important device for cutting metal billets in steel, paper and other companies. The fixedlength cutting process requires the flying shear to adjust its working status in real-time based on the movementspeed of the rolled piece to ensure that the fixed length of the workpiece meets the specifications. Hikvision has
developed a laser Doppler measurement instrument based on the Doppler effect, which can quickly and accuratelymeasure the movement speed of plates, bars, and pipes in a non-contact manner. The instrument allows the flyingshear to adjust its operating parameters in real-time to precisely cut rolled parts, ensuring product quality.
These solutions have been implemented in a variety of industries, including metallurgy, manufacturing,petrochemicals, and power, serving Baowu Steel Group, Urumqi Petrochemical Company and other users.
2) Detection and measurement series
Material inventory counting and product quality inspection during the production process are of paramountsignificance in ensuring production continuity and product quality.Hikvision combines multi-dimensionalperception technology and professional AI algorithms to build intelligent perception capabilities for product qualityinspection and material inventory counting scenarios of enterprises, helping them improve quality inspectionefficiency and material management.
In the automotive parts manufacturing industry, friction stir welding technology is widely used in theproduction and processing of battery cold plates, motor shells, heaters, packing boxes, and other components.Traditional quality inspection methods can only detect surface defects such as shrinkage, porosity, and slag inclusionthat may occur in welded components, while internal defects require destructive sampling. By combining ultrasonictechnology and AI algorithms, Hikvision has launched an industrial flaw detection series of products, which canperform non-destructive defect detection on key internal parts of welded components and automatically identifywelding defects.
Material inventory counting helps companies understand the dynamics of production materials and ensuresmooth production operations. Manual inventory counting is slow and costly when dealing with massive amountsof materials of different shapes, sizes and types, and is inaccurate when dealing with irregularly stacked materialssuch as aggregate and ores. By integrating video, radar and other technologies, Hikvision has created an intelligentinventory counting solution that is suitable for high-temperature and high-dust working environments. The solutionallows accurate measurement of the volume of irregularly stacked materials, and assists warehouse managementpersonnel in quickly and accurately collecting inventory data, thus improving inventory efficiency, and achievingscientific material management.
Foreign object detection is one of the important inspection items for products such as food, drugs, andcosmetics. To address quality risks such as presence of foreign objects and insufficient filling volume, non-destructive and efficient quality inspection methods are key means of product quality management. By integratingthe X-ray image enhancement technology and an AI algorithm for foreign object monitoring, Hikvision hasintroduced a series of products for X-ray-based foreign object and defect detection. The products can quicklyidentify quality problems such as internal foreign objects, abnormal morphology and filling volumes, and candeformation, helping to steadily improve production and quality.
These solutions have been implemented in a variety of industries, including manufacturing, cement, food,pharmaceutical, and new energy, serving Huaxin Cement, Xiduoduo and other users.
3) Production and operation series
The production and operation services focus on the organization, coordination, and control of core productionfactors in the production process, mainly including equipment, personnel, and logistics operations. Hikvision haslaunched a series of intelligent perception products to help enterprises monitor and manage the operation of variousproduction factors in real-time, ensuring the stable and efficient operation of production systems.
Managers from manufacturing companies need to gain timely information about the operation of key nodes ofthe production line in the daily line maintenance, line replacement design, troubleshooting, and capacity ramp-upscenarios, but it is difficult for traditional manual methods to provide real-time and visual on-site data.Hikvision's
production line series cameras can be deployed in narrow spaces on the production line due to a unique compactstructural design. With the high-frame-rate image acquisition technology, these cameras can clearly record the liveimages, achieving traceability of production line problems and providing strong support for on-site production linemanagement.
Businesses are burdened with high costs of handling customer complaints as difficulties in accountabilityattribution, long processing times, and other problems often occur in the handling of abnormal returns from buyers(such as empty packages, missing items, and wrong goods) in the after-sales scenario of customer complaints in the
e-commerce industry. To address these pain points, Hikvision has launched large depth of field single camera,binocular traceability camera, and traceable packing machine series. These cameras can clearly capture the waybillinformation in each step and record a video of the process. Furthermore, they can be used with corporate ordersystems to quickly provide video evidence, thus helping businesses to quickly complete accountability attribution,gain recognition from e-commerce platforms, and maintain a good customer experience. The comprehensiveprocessing time for customer complaints can be reduced by more than 90%.
The DPM (Direct Part Mark) technology can directly mark the surface of components through engraving,stippling, inkjet printing, and other methods. The technology is commonly used for tracking and tracing mechanicalcomponents, electronic devices, instruments and other products. However, it is difficult for traditional scanningequipment to effectively recognize DPMs as their clarity can be affected by the reflective properties of metal.Therefore, Hikvision has developed a DPM version of PDA products, which can reduce interference from metalreflection through a surface fill light source design. These products can be used with professional scanners equippedwith deep learning algorithms to capture ultra-clear images of DPMs and rapidly scan and recognize them.
These solutions have been implemented in a variety of industries, including automotive, electronics andlogistics, serving Pingyuan Filter, Apower, Excellent Fashion Garment (Hangzhou), and other users.
4) Equipment status series
The stable operation of equipment is a key element in guaranteeing smooth production of enterprises. By
leveraging our multi-dimensional perception capabilities, Hikvision comprehensively detects and maintains data onequipment operation status from various perception dimensions such as temperature, sound, and vibration.Moreover, our intelligent analysis capabilities enable us to timely detect equipment abnormalities and assignrelevant personnel to quickly address the problems.
In industrial pipe galleries and pipeline inspection scenarios, gas leakage inside pipelines can cause energy lossand even safety hazards, which can easily lead to safety accidents if not handled in a timely manner. Hikvision haslaunched an audiovisual instrument that combines microphone arrays and camera components, and locates gasleakage points using sound source localization algorithm. By visualizing sound source locations through color cloudimages, the instrument displays the distribution of sound sources in the field of view. This can reduce energy wastecaused by pipeline leaks, avoid potential risks of personnel or property damage due to delayed detection, and ensurethe safety of pipeline transportation.
The daily power inspection work includes regular inspections of various meters in order to detect relevanthazards in advance. In recent years, State Grid Corporation of China has been accelerating the application of "dual-replacement" (remote intelligent inspection replacing on-site manual routine inspection, and one-key sequentialcontrol operation replacing conventional switching operation) technologies.For these application scenarios,Hikvision has developed a series of macro meter cameras. This series features an integrated structural design, andallows the users to see the dial pointer and scale clearly up close. When used with an auxiliary platform for poweroperation inspection and an intelligent analysis host, these cameras enable remote intelligent meter reading andonline meter inspection, helping to improve quality and efficiency and reduce risks.
Sound is an important indicator of the health status of equipment. Traditional equipment maintenance methodsrequire on-site "auscultation" of the equipment by maintenance personnel, who rely on personal experience toanalyze the sound and determine the equipment's health status.Hikvision has launched an industrial auscultationinstrument. Through a bone conduction or ultrasonic sound capture device, the instrument can monitor keyequipment such as transformers, switchgear, and circuit breakers 24 hours a day online. Moreover, by analyzingfault voiceprint data with AI algorithms, the instrument allows real-time detection and warning of faults of variousequipment, and provides monitoring curves throughout the equipment lifecycle to operation and inspectionpersonnel, offering support for operation and inspection decision-making.
Belt conveyors are widely used in material transportation scenarios in industries such as coal mines, steel,
cement, and power generation. The safe and stable operation of belts is crucial for production. As an importantcomponent of the belt, the roller is installed in large quantities and is prone to wear, which may cause accidents suchas belt fires in severe cases. Hikvision has developed an optical fiber auscultation device to meet the needs for real-
time monitoring of belt rollers. Multiple sets of optical fiber detectors are laid along the belt to collect data on rolleroperation, enabling long-distance and multi-point monitoring of belt operation, and effectively reducing thefrequency of on-site manual inspections.
These solutions have been implemented in a variety of industries, including power, chemical, new energy, steel,pharmaceutical, and mining, serving Nanjing Steel, the Asian Games Hangzhou Stadium and other users.
5) Safety production series
Safety production is an indispensable part of production management for organizations. Hikvision endeavorsto help companies build comprehensive safety management capabilities through comprehensive monitoring ofunsafe behaviors of people, unsafe states of objects, and unsafe factors of the environment to effectively preventsafety risks, improve hazard detection capabilities, and reduce safety accidents.
There is a risk of leakage of industrial materials such as liquefied gas and alkanes during the productionoperations in petrochemical facility and tank areas, which may cause fire accidents if exposed to open flames. Asthese gases are transparent and colorless, it is difficult to detect gas leaks in a timely manner. However, Hikvisionhas developed a multispectral gas cloud imaging camera by utilizing multispectral technology and based on theprinciple of unique spectral absorption peaks for hydrocarbon media. The camera can timely detect leaks inhydrocarbon gas media such as ethylene and methane, and visually display the leak points. By monitoring andwarning of gas leaks in real-time, it can facilitate and guide maintenance operations, and provide reference foremergency evacuation due to gas leaks.
Unsafe behavior of people has always been a pain point in the safety production management of powergeneration enterprises, such as non-standardized operations, inadequate supervision of outsourced personnel, anddifficulty in confirming whether an employee is on duty. By utilizing the UWB positioning technology, Hikvisionhas introduced positioning base stations, tags, and systems to provide functions such as visual display of personnelpositions, rapid playback of historical movements, and timely warn of personnel approaching or entering dangerousareas. In addition, the positioning technology can be combined with video surveillance and 3D modeling technology,as well as the two-ticket management process to enhance the real-time, interactive, and proactive site safety control,and improve safety management of power enterprises.In addition, Hikvision has developed a risk classification and control system module that is designed to createan online risk classification and control process for businesses that meets safety regulations. The module definesrisk units based on the operational activities, equipment and facilities, and production processes of an organization,identifies hazardous and harmful factors, and generates a list of these factors.Three built-in risk assessment models,LS, LEC, and MES, are used to automatically calculate risk values and levels, generate a risk classification andcontrol list and a risk notification card, and construct a dynamic four-color risk distribution map for the organization.The map visually displays the overall safety situation of the organization, paving the way for intelligent monitoringand control of hazards.
Finally, as the last crucial step, emergency command plays an indispensable role in the safety productionmanagement of organizations. Hikvision's emergency command solution combines integrated communicationcapabilities with digital means such as structured contingency plans, data graphs and walls, and AR to assist usersin developing an emergency command capability system for monitoring and warning, prevention and preparation,
response and rescue, recovery and reconstruction. Our solution allows efficient information exchange and visualscheduling management of safety accidents, thereby facilitating scientific decision-making and helping enterprisesimprove a closed-loop system of safety production management.
These solutions have been implemented in a variety of industries, including power, chemical, construction,petroleum, new energy, and manufacturing, serving Shouguang Power Plant, Xin'ao Gas and other users.
6) Security-fire protection integration series
Security-fire protection integration can improve the efficiency of security and fire protection by integratingsecurity and fire protection resources. By leveraging AIoT technologies such as multispectral, thermal imaging, andcombustible gas detection, Hikvision accurately identifies core elements related to security and fire hazards toenable early detection and handling of risks and hazards, reducing the probability of fire accidents, and enhancingan organization's capacity for emergency handling of safety and fire accidents.
For the fire source monitoring scenarios, Hikvision's multispectral fire detectors integrate image processing,temperature detection, and multi-band sensing fusion technologies to allow for temperature measurement andalarming, fire point orientation and shape recognition in key areas, thus warning of fire at a very early stage andshortening the response time for fire prevention and extinguishing.
In terms of smoke monitoring scenarios, Hikvision's visual smoke detectors combine smoke and temperaturedetection with video monitoring capabilities to enable high temperature/smoke detection and alarming and videorecording in unmanned locations such as warehouses and high-temperature work areas, and support remoteverification of alarm information.
With regard to abnormal temperature monitoring scenarios, Hikvision uses temperature-measuring opticalfibers to measure surface temperature of linear objects in narrow spaces, enabling abnormal temperature monitoringof bus ducts, cables, distribution cabinets, and stereoscopic battery warehouses. This will help to warn of fireaccidents, prevent safety hazards, and ensure stable operation of important production equipment.
These solutions have been implemented in a variety of industries, including energy, electronic appliances,education, cultural tourism, and finance, serving Luzhou Laojiao, Han Energy Technology and other users.
4.2 Promoting the digital transformation of lifestyle
In recent years, digital technology has found applications in various aspects of social life, improving people'sexperiences in clothing, food, housing and transportation, and enhancing their sense of gain and happiness.
Hikvision relentlessly explores new business opportunities for lifestyle improvement and upgrading, andcontinuously innovates for digital life service application scenarios to promote the digital transformation of lifestyle.
In fields such as education and healthcare, Hikvision empowers traditional service facilities with digitaltechnology to improve the quality of public services. In sectors such as trade and commerce, finance, and real estate,Hikvision helps users improve their operational management and enhance their corporate service capabilities. Inindustries such as culture and tourism, Hikvision provides safe and comfortable digital services to create newcultural and tourism experiences.
1) Education and teaching: Helping to digitize educational and teaching scenarios
As the digital transformation of education evolves, Hikvision actively promotes innovation in teachingproducts to meet the needs for high-quality education development, and help schools build a safe and beautifulenvironment and develop innovative education methods.
As the teaching methods continue to diversify in universities and the number of intelligent devices continuesto grow in classrooms, there is a growing demand for unified management and control of equipment. Hikvision'ssmart classroom solution is designed with a fully networked and minimalist architecture based on an intelligentcontrol engine. The solution is integrated with various systems to allow for fully automated and minimalistapplications. By providing automated operation and maintenance capabilities, the solution easily enablesinterconnection and integration of various equipment and facilities in the classroom, creating a convenient and easy-to-use smart teaching space for teachers and students.
In university laboratory scenarios, Hikvision provides digital products and applications with a focus onexperimental teaching services and experimental resource sharing. The Company provides analytical instrumentssuch as ultra-high performance liquid chromatography and gas chromatography for teaching and experimentalcenters, as well as analysis and testing centers. These instruments utilize advanced analytical techniques to strictlycontrol data quality and ensure the accuracy and reliability of experimental results.To address the waste of resourcesin experimental resource management, Hikvision uses smart laboratory doorplates to display real-time informationon laboratory reservation and the use of experimental resources, facilitating online reservations for teachers andstudents, and improving the efficiency of experimental resource utilization.
With the Hik-Cloud general education platform, Hikvision has launched an all-in-one device (6000E) forprimary and secondary school campuses. The device features an innovative cloud-edge fusion architecture thatallows intelligent and integrated management of campuses. It can be connected to an education bureau's system tocomprehensively meet the needs of management of parents, schools, and the education bureau, achieving joint homeand school education and interconnection between the education bureau and schools.Furthermore, Hikvisionprovides a high-quality digital teaching environment for teachers and students through intelligent products such as
class displays, electronic class plates, and smart integrated sports machines.Hikvision builds a new digital infrastructure for education through AIoT technologies and products, and workswith numerous partners including Ningbo University and the Education Bureau of Sucheng District, Suqian City tocreate a new perspective on high-quality education and promote the high-quality development of education.
2) Smart healthcare: Helping to create a high-quality and efficient medical experience by focusing on
diagnosis and treatment scenariosIt is well known that the medical care process plays a very important role in patient diagnosis and treatmentprocess. Hikvision seeks to create a new nursing management model by focusing on improving nursing quality andefficiency.
In clinical nursing, patients are prone to pressure injuries due to long-term bed rest. Hikvision provides wounddetection PDA that helps nurses measure the area of pressure ulcers and automatically records data into workingdocuments, achieving refined management of nursing quality. As for the patient monitoring scenarios, Hikvisionapplies multiple kind of millimeter wave perception radar products to daily patient monitoring, which can quicklyidentify risk events such as patient falls, and monitor the patient's breathing, heart rate, and body movement in real-time, thereby improving monitoring management.
Additionally, to address the issue of inconsistent information during the surgical process, Hikvision uses videoterminals to achieve rapid interaction of various information, improving the efficiency of surgical information queryand doctor-nurse collaboration. In biological laboratories, intelligent visual products provide intelligent tools forremote guidance and standardized management of operating areas. In the pre-hospital emergency scenarios, real-time information transmission can be achieved through intelligent terminals, providing support for remoteconsultation and pre-hospital and intra-hospital collaborative treatment, and improving pre-hospital medicalemergency capabilities.
Hikvision empowers patient-centered diagnosis and treatment services with digital technology, and works with
customers such as the First Hospital of Ningbo University and Qilu Hospital of Shandong University to improvethe quality and efficiency of modern healthcare.
3) Trade and commerce: Building digital capabilities for marketing and supply chain scenarios
With the Hik-Cloud platform and the Guanlan Large Model, Hikvision provides highly cost-effective productsand solutions for trade and commercial enterprises in multiple aspects such as production, processing, logistics, andsales, enhancing digital management and marketing capabilities, and helping enterprises reduce costs and increaseefficiency.
In the retail scenarios, Hikvision uses industry large models to perceive cashier violations and other behaviorsin real-time, strengthening the standardized management of stores. As for the catering scenarios, the Companycombines anti-oil cameras, unsupervised open fire work cameras, temperature and humidity sensors and otherequipment to ensure standardized kitchen operations. In business management, the Company assists businesses indigital marketing through products such as commercial displays, audio broadcasting, customer flow analysis, andlive streaming cameras.
Hikvision provides products such as smart cold storage cameras, railway platform cameras, and packagingtraceability machine in the logistics part of the supply chain. These products help trade and commercial enterprisesestablish a transparent, efficient, and collaborative supply chain network and build agile operation centers,strengthening the management of core elements—people, vehicles, goods, and warehouses.
Hikvision uses a variety of AIoT products to help trade and commercial enterprises build manageable marketingand supply chain networks, continuously improving their digital operational capabilities. As of 2023, the number ofHik-Cloud chain users and access devices has maintained rapid growth, with over 5 million access devices, servingapproximately 600,000 chain stores.
4) Financial services: Facilitating the digitalization of outlet services and customer management
Financial services continue to penetrate into every aspect of the economy and society, giving a strong impetusto social development. Hikvision leverages technological advantages to assist financial institutions in strengtheningtheir management and service capabilities, thus better contributing to economic and social development.
In terms of the smart branches, Hikvision participates in the intelligent construction of virtual reception services,interactive marketing, energy-conserving IoT central control systems. The Company is also actively promoting theconstruction of themed and characteristic outlets such as agricultural assistance, and facilitating the orderlymanagement of theme-related content displayed on media devices such as information release screens, LED screens,and smart screens based on the information release management platform, making financial services moreconsiderate and heart-warming.
The asset owners are generally found to be small, scattered, and weak in the asset mortgage process ofagricultural entities, which restricts the growth potential of agricultural users by leveraging financial services aswell as the in-depth development of the bank's agricultural services. Combining video and AI technologies andmultispectral vegetation monitoring devices, Hikvision helps customers quickly establish a closed loop system ofproduction, operations, and fund management by building capabilities for remote asset inventory counting, visualabnormality warning, and intelligent growth detection in planting, breeding, and animal husbandry scenarios,
thereby reducing the threshold for agricultural loans and promoting construction for rural revitalization.
At present, these solutions have served multiple first-tier branches of banks including Agricultural Bank ofChina, Industrial and Commercial Bank of China, and China Construction Bank.
5) Real estate and property management: Focusing on digital solutions in core scenarios
Aiming to serve people's livelihoods through technology, Hikvision has launched a cloud-edge integrationarchitecture based on Hik-Cloud+6000C, which is a smart community and property solution powered by a digitaland intelligent application system that supports digital services such as property decoration, property managementservices, and house operation and maintenance.
During the pre-construction phase of real estate, Hikvision integrates smart community spaces with smart hometechnology to increase the technological premium of real estate projects. In the property management service stage,Hikvision uses intelligent perception products to monitor and warn in real-time of high-altitude littering, electricbikes entering the elevator, abnormal charging and other situations. AI property inspections enable the placementand processing of online work orders and closed-loop service management, helping to improve the quality andefficiency of property management services. Moreover, these inspections can be used to manage the charging andoperation of new energy vehicles to increase the revenue of property management companies. In the house operationand maintenance stage, the Company assists in monitoring the status of dangerous buildings and enables intelligentsupervision and management.
Hikvision has been in the real estate industry for many years, and has established cooperation with BinjiangReal Estate, CR Vanguard Life, Deji Commercial Group, Shanghai Construction and many other customers in the
fields of community, property management, business management, and construction, creating a win-win situation.
6) Cultural and museum venues: Building digital preservation and exhibition of cultural relics
Hikvision utilizes digital technology to promote the inheritance of brilliant human civilization that has beenestablished over thousands of years. As for the scenarios of cultural relics and historical sites, Hikvision uses macrocameras to observe cracks in stone carvings, providing accurate data on crack changes for researchers in culturalrelics protection and facilitating research on the protection of stone carvings. In terms of the scenarios of culturalrelic exhibition preparations, the Company uses laser radars to provide senseless protection for openly-exhibitedcultural relics, ensuring their safety. With regard to the cultural exhibition scenarios, the Company enhances theinteractivity and fun of the exhibition and makes the exhibits more vivid through various forms of LED screens,creating an immersive experience for tourists. The use of digital protection enables cultural relics to be presented ina more vibrant state to the public, allowing them to better experience and appreciate the beauty of culture.
Furthermore, at the entrance and exit of the museum, Hikvision's intelligent security machines and securitygates are used to conduct security checks on people and their bags and assist security inspectors in quicklyidentifying prohibited items based on a deep learning algorithm, protecting the safety of both tourists and culturalrelics. At the entrance and exit of the exhibition hall, Hikvision's passenger flow cameras track the number of visitorsin each exhibition hall in real-time, assisting museum managers in guiding visitors in an orderly manner andproviding a comfortable environment for visitors.
These technologies have been used by many users including the Shanghai Museum, He'nan Museum, LuoyangLongmen Grottoes, and China Animation Museum, facilitating the protection and inheritance of civilization.
7) Tourist attractions: Empowering tourist attraction management and services with digitization
With the recovery of the tourism industry and changes in tourism consumption structure, the high-qualityrequirements of tourists for tourism experience are driving the refinement of tourist attraction operation andmanagement. Hikvision drives innovative development of smart tourism by integrating digital technology intotourist attractions.
As for daily management of tourist attractions, Hikvision uses passenger flow cameras to monitor and calculatethe number of people at ticket gates, waiting points, and various scenic areas in real-time, and to warn of exceedingpassenger flow limits. Hikvision's GNSS displacement observation dome cameras can be used to timely detectgeological disasters such as landslides, rockfalls, and collapses. Hikvision's water-level observation dome camerasand hyperspectral water quality detection cameras can monitor the water level and quality in scenic areas in real-time. Hikvision helps scenic area managers build intelligent perception and warning capabilities through digitalproducts, facilitating grid-based inspections in scenic areas. By creating a scenic area command center, the Companyintegrates and analyzes multi-dimensional data to enhance scenic area management and emergency responsecapabilities, ensuring a safe, orderly, and convenient tourist experience in the scenic area.
In addition, as for tourist service scenarios, Hikvision provides services such as pre-tour live streaming, self-driving parking guidance, scenic spot information inquiry, and automatic attraction explanation. To address thelong wait time for buses during peak hours, the lack of information synchronization and other problems, theCompany integrates, analyzes, and processes data on tourist flow in the scenic area and at each station, andvehicle operation trajectories to provide real-time information on vehicle arrival time, available parking spaces,and reasonable and interesting travel routes for tourists, thereby enhancing the tourist experience in the scenic
area.
These technical solutions have served many cultural and tourism organizations, including Mount Wuyi NationalPark in Fujian, Datang Never Night City in Xi'an, and Yulong Snow Mountain in Lijiang, Yunnan.
4.3 Facilitating the digital transformation of governance methods
As the digital transformation of governance methods is inevitable in the digital age, the construction of digitalgovernments has picked up speed. With the growing use of IoT perception, AI, big data, and cloud computingtechnologies in the construction of digital governments, the importance of digital and intelligent governance hasincreasingly attracted attention, and improving digital and intelligent governance capabilities has become animportant component of digital government construction.
Combining AIoT technology with years of profound understanding of user needs in the public service field,Hikvision continues our efforts in five industrial business areas, security, traffic, ecosystem, governance andservice. Moreover, the Company integrates product and technology capabilities to support the data and AIgovernance of governments at municipal, county, town, village and community levels. With the philosophy of "AIuniversal empowerment and deepening of data value", Hikvision has constantly expanded our product portfolio interms of "hardware, platforms, algorithms, models and services" and deeply integrated product and systemcapabilities with a focus on the value fulfillment of solutions. Ultimately, the Company serves to empower digitalgovernment transformation through the comprehensive expansion of intelligent businesses in public security,transportation, urban governance, livelihood services, ecological and environmental protection, etc.
In response to the urgent need for digital government transformation, Hikvision continues to strengthen urban-level basic capabilities of AIoT such as Perception Base, Intelligence Base, Data Base and EmpoweringPlatform. The Company intensifies efforts in various sectors and expands applications across industry segments,developing and consolidating our industrial service capabilities.
Hikvision continues our efforts in different industry segments. By integrating our scenario-based AIoTcapabilities with strong expertise in image-data integration and our Guanlan Large Model's universal detection andrecognition capabilities, the Company provides localized end-to-end application solutions for users from variousindustries, helping to expand scenario-based intelligent innovation applications and promoting a closed-loopbusiness process in these industries.As of today, the Company has sorted out more than 2,000 business scenarios,
developed more than 250 industrial solutions and improved more than 500 intelligent industrial applications in smartcities, public security, traffic management, urban governance, livelihood services, ecological and environmentalprotection, and other sectors. All these efforts are aimed at optimizing government's operational mechanisms andconstruction modes, and providing strong support for modernized urban governance.
Combining a profound understanding of each industry with years of experience, Hikvision has continuouslyconsolidated our service capabilities in AI engineering, data engineering, business operation and system operationand maintenance. The Company has also established a nationwide professional service team to better serve users .AI engineering services: Hikvision provides users with scenario-based AI engineering services, includingpersonalized algorithm training, tuning of intelligent algorithms, tuning of correlation clustering, tuning ofintelligent strategies, intelligent scenario arrangement, event analysis, research and judgment. The Company hasprovided AI engineering services for more than 300 projects.
Data engineering services: Hikvision provides users with data engineering services involving multi-dimensional perception data and business data, and optimizes data engineering delivery systems. With big datagovernance tools such as the IoT-information network integration data resource platform, the Company provides
data engineering services for users on demand, including IoT element governance implementation, data integrationimplementation, data governance implementation, and data model implementation. We have provided dataengineering services for more than 300 projects.Business operation services: Hikvision has increasingly expanded the scope of business operation servicesthat are provided based on Internet operation platforms, and these services have covered a number of fields includingcomprehensive urban operations, urban parking management, firefighting management, community securitymanagement, security inspection management, and intelligent management of garbage classification.System operation and maintenance services: Hikvision provides users with comprehensive operation andmaintenance services covering equipment, systems, and services, including daily inspection of software andhardware, fault repair, active monitoring, technical guidance, major project support, software updates and upgrades,and regular customer service reports, etc. The Company has provided system operation and maintenance servicesfor 291 projects.Hikvision continues to strengthen product and service integration, and comprehensively enhance our systemengineering service capabilities, including planning and design, survey and governance, engineering construction,and system integration, covering scientific deployment of perception devices, intelligent analysis and correlation ofperception data, and deep integration of IoT-information network data. The Company also continuously strengthensproject management in the construction of complex systems, enhances project management capabilities in variousstages such as initiation, planning, execution, monitoring, and closure, and collaborates with integration customersto provide users with a closed loop process for the project.While deepening our understanding of business services in public security, transportation, urban governance,livelihood services, ecological and environmental protection and other fields, Hikvision strives to build thecapabilities of the "Perception Base, Intelligence Base and Data Base" for cities with a focus on perception,intelligence and data. In addition, the Company has continuously expanded smart industrial services through theFusion of Perceptions Empowering Platform. We are committed to making cities smarter, society safer,transportation more convenient, governance more refined, services more targeted, and the ecological environmentmore livable.
1) Smarter cities
In the field of smart cities, Hikvision focuses on governance with perception data and empowerment withdata and AI. The Company has optimized the urban AIoT perception system, promoted an organic integration of
multi-source data, and created an AIoT application ecosystem with the goal of empowering urban governance withdata and AI.Utilizing IoT, AI, big data and other technologies, the Company has established a governance networkfeatured by multi-dimensional perception, intelligent research and judgment, and efficient collaboration, assistingin developing an efficient, accurate, and intelligent urban digital governance system that makes the city smarter.Hikvision continues to optimize the Fusion of Perceptions Empowering Platform. Guided by the corephilosophy of "resource co-construction, video sharing, algorithm co-management, capacity sharing, computingpower integration, and event co-governance," the Company cultivates unified resource networking, cataloggovernance, intelligent analysis, strategic efficiency enhancement, fusion and exploration, and open sharingcapabilities for cities to meet the needs of intelligent perception and fusion applications across industries anddepartments, comprehensively enhancing the co-construction and sharing of urban IoT perception resources.
In terms of digital villages, Hikvision provides a management platform for digital villages, which enablesdigital planting, rural smart tourism and other applications for multiple scenarios including rural industries,ecological protection, rural governance, and rural services, empowering the digital transformation of rural industries.
The platform allows management of straw burning prohibition, intelligent farmland protection, and waterenvironment monitoring, enabling intelligent perception and warning of rural ecological environment elements, andhelping to improve the rural living environment.It is also used for multi-dimensional rural archiving, rural drowning
prevention, rural fire management and other applications, helping to improve the comprehensive governancecapacity of rural areas. In addition, the platform provides intelligent elderly care, digital radio, village affairsdisclosure and other applications that help to improve rural service capabilities.
Furthermore, Hikvision provides comprehensive and diverse solutions for city managers at all levels. Forexample, in the field of smart towns, Hikvision provides a management platform for smart towns, which enablescomprehensive management of waste trucks, smart store management, smart management of construction sites, andother applications for multiple scenarios such as public management, safety construction, public services, ecologicalprotection, and comprehensive law enforcement, helping to improve the efficiency of public management.The
platform provides fire safety management, emergency assistance for residents, drowning prevention supervisionand other applications, helping to improve safety construction. It also offers home-based elderly care services, self-service government services, information release services and other applications, helping to improve the capacityof serving the people. Moreover, the platform is used for forest fire monitoring and management, smart flood controlsupervision, smart river and lake supervision and other applications, helping to strengthen ecological environmentprotection capabilities. The platform also allows management of law enforcement teams, management of objects oflaw enforcement, electronic evidence management and other applications, helping to enhance comprehensive lawenforcement capabilities at the grassroots level.As for smart communities, Hikvision provides a comprehensivemanagement platform for smart communities, which enables supervision of high-altitude littering, fire passages andnon-motor vehicles and other applications for multiple applications such as community governance, communitysafety and community services to timely identify various abnormal risks and hazards, helping to improve theefficiency of community governance.The platform is used for intelligent supervision of pedestrian and vehicle
transportation, community fire protection, and manhole covers and other applications, expanding the measures ofsafety prevention and helping to improve community safety management. The platform also provides smart propertyservices, community-based elderly care services, mobile welfare services and other applications, helping to improvethe happiness of community residents.
2) Safer societies
In the public safety domain, by following the core development path of "perception + intelligence", Hikvisionis committed to providing comprehensive "video-image intelligence-based" solutions and products. The Companydeeply explores and expands application scenarios by focusing on the core capability of "video-image intelligence"to consolidate and expand our position in urban public safety.For instance, with regard to the security for the Asian Games Hangzhou, Hikvision has built the Intelligenceand Data Bases by focusing on game security to enable AIoT, image and data fusion, data-assisted decision-making,venue digital twins, intelligent assisted warning, multi-party collaborative consultation, remote visual command andother capabilities. The Company has provided comprehensive, three-dimensional, and intelligent solutions andproduct systems in event command and scheduling, opening and closing ceremony support, Asian Games Villagemanagement, traffic support, social control, moat defense, torch relay, marathons, and other aspects.In terms of road traffic safety, Hikvision provides system capabilities for traffic safety hazard research andjudgment, diagnosis and management, large truck control, and non-motor vehicle control. The Company accuratelydetermines the road traffic safety situation and comprehensively analyzes the causes of safety risks to enable refinedhazard management in multiple scenarios and comprehensive safety control of large trucks and non-motor vehicles,helping to improve the management of road traffic safety.
Taking the management and control of large trucks as an example, Hikvision provides Internet permitapplication, police platform permit approval and other applications for scenarios such as the handling of large truckpasses, identification of illegal acts, warning of dangerous acts, visit-based publicity and education to quickly andefficiently complete the application and review of permits, and prevent high-risk trucks from getting on the road.The Company enables identification of illegal acts of large trucks such as running red lights, driving on prohibitedlanes, carrying passengers in the truck compartment, modification and speeding, helping to investigate and dealwith illegal activities related to large trucks and prevent traffic accidents. The Company timely reminds drivers ofsafe driving by warning of dangerous behaviors such as fatigue driving, making phone calls, lane departure, andapproaching other vehicles. The Company also provides enterprise operation and examination forms, visit-basedenterprise publicity and education and other applications, comprehensively evaluates high-risk enterprises, vehicles,and drivers, and conducts targeted visits and education, facilitating joint efforts of the police and enterprises toeliminate accident hazards.In emergency management, Hikvision has built a comprehensive application platform for emergencymanagement by using our AIoT perception, intelligence and data bases, and four-dimensional spatiotemporaloperating environment, which enables various emergency management applications for scenarios such asproduction safety, natural disasters emergency management, command and rescue.
Hikvision provides a comprehensive supervision platform for safety production, which enables IoT access,risk monitoring, intelligent warning, hierarchical push and other applications to meet the needs of supervisinghazardous chemicals, fireworks and firecrackers, non-coal mines, tailings ponds, and various industrial and tradeenterprises. The platform also provides special operation management applications for key high-risk scenarios suchas open fire work and limited space operations, helping to improve comprehensive supervision capabilities for safetyproduction.The Company offers a comprehensive monitoring and warning platform for natural disaster risks, whichenables disaster risk monitoring, comprehensive risk assessment, disaster warning, disaster situation analysis andother applications for various natural disaster scenarios such as forest and grassland fires, typhoons and floods, andgeological disasters, helping to improve the monitoring and warning capabilities of natural disasters.The Companyalso provides an emergency command platform, which offers full-process emergency command and dispatchcapabilities for various unexpected accidents and disasters, including duty fulfillment, event reporting, planmanagement, collaborative consultation, command and dispatch, summarization and evaluation and other coreapplications. The platform also enables specialized research and judgment applications for specific disasters suchas hazardous chemical accidents, forest fires, and urban waterlogging, helping to improve emergency command and
rescue capabilities.
3) More convenient transportation
By combining IoT perception technology with industry scenarios, Hikvision provides the industry with refinedperception, big data-based scientific decision-making control and other capabilities in areas such as digitalizationof transportation infrastructure, traffic operation guarantee, traffic management organization, hub passenger andfreight flow, traffic and travel, ensuring the safe and efficient operation of transportation.Taking traffic signal control in the field of traffic management organization as an example, Hikvisionprovides a smart platform for traffic signal control, which offers single-point induction control, single-point adaptivecontrol and other control capabilities for single-point signal control intersection scenarios to solve the problem ofunreasonable signal timing plans at intersections.The platform provides dynamic green waves, static green waves,
and other control capabilities for signal control of urban trunk lines, enabling vehicles to pass through green lightsall the way and improving the overall efficiency of trunk line traffic. It offers regional coordination and controlcapabilities for intersection linkage control scenarios to achieve optimal overall traffic efficiency in the region.Moreover, the platform provides anti-overflow planning and control capabilities for queue overflow scenarios toeffectively prevent queue overflow at intersections, and offers variable lane control capabilities for uneven trafficflow distribution at intersections to intelligently allocate lane resources, and alleviate lane congestion.
In addition, Hikvision can provide complete and diverse solutions for traffic management services in differentfields. For example, in the field of highway transportation, Hikvision fully combines IoT perception technologywith industry scenarios to provide safe and efficient monitoring capabilities for super highways as well as bridges,slopes, tunnels, service areas/stations, construction sites, toll stations, mountainous sections, and sections with poorvisibility on ordinary national and provincial roads. The Company also provides abnormality detection and dataanalysis capabilities for highway events and weather, visual industry supervision capabilities for engineeringconstruction and industry management, as well as AI road fault inspection and other auxiliary equipment and roadsurface maintenance decision-making systems for daily maintenance inspections. The Company has provided end-to-end services for thousands of users in this area.With regard to port management, combining multi-dimensional
perception and AI algorithms with production safety management needs of the port area, Hikvision providesscenario-based intelligent warning and effective supervision of elements related to "people, vehicles, goods,machines, and environment" in the production process. By utilizing various perception methods such as video, radar,and thermal imaging, the Company improves the overall perception and monitoring capabilities for safetyproduction scenarios. Moreover, the Company offers 25 intelligent algorithms in 4 categories that provide morecomprehensive production hazard investigation, tracking, and disposal capabilities for port safety managementdepartments, helping ports to gain full information on overall safety hazards.In terms of railway transportation
and rail transit, Hikvision provides comprehensive monitoring and detection in scenarios such as railway stationsand hubs, freight yards, power substations, train carriages, railway lines, and railway overpass bridges and culvertsthrough multi-dimensional perception technology, serving 18 railway administration groups and hundreds of high-speed railway station hubs across China, and providing supporting services for railway travel. Hikvision'stechnologies have been applied to public safety precautions, smart operation, intelligent operation and maintenance,
digital service, smart stations and other scenarios in over 100 urban rail transit lines in the country, providing supportand guarantee for the safe, efficient and smooth operation of urban rail transit and creating a safer and morecomfortable ride experience for citizens.
4) More refined governance
Using urban operation management as an example, Hikvision offers a smart urban management platformthat provides intelligent inspection of urban appearance, management of general sanitation of the store entrancearea, urban waterlogging monitoring, urban illegal construction monitoring, command and dispatch, operation andmonitoring centers and other applications through urban management dome cameras, urban management panoramicPTZ cameras, intelligent analysis servers and other devices. The platform provides warning and algorithmicscheduling capabilities for nearly 70 types of violations ranging, helping to create a clean, tidy and orderly urbanenvironment.
Additionally, Hikvision can provide comprehensive and diverse solutions for different types of urbangovernance activities. For instance, in the field of municipal supervision, Hikvision provides a smart municipalsupervision platform with a focus on scenarios such as pipeline blockage, waterlogging, and gas leakage. Theplatform enables municipal facility operation monitoring, pipeline visualization modeling, emergency command
and dispatch, and other applications through the use of underground liquid level and flow sensors, intelligentmonitoring terminals for manhole covers, dome cameras for water level observation, combustible gas detectors inenclosed spaces and other devices. The platform also provides a management process that integrates problemcollection, dispatch and disposal, feedback and evaluation, providing support for the closed-loop supervision ofmunicipal facilities. In terms of environmental sanitation supervision, Hikvision provides a smart environmentalsanitation platform with a focus on scenarios such as sanitation worker and vehicle operation, garbage collectionand transportation, station management, and garbage classification. The platform allows worker and vehicleoperation supervision, garbage collection and transportation management, garbage classification management,station operation supervision and other applications through the use of intelligent vehicle terminals, garbageclassification cameras, intelligent analysis supercomputers and other devices, facilitating refined supervision ofurban appearance and environmental sanitation.As for comprehensive law enforcement, Hikvision provides acomprehensive management platform for mobile law enforcement with a focus on law enforcement event collection,law enforcement process recording, law enforcement command and dispatch and other scenarios. The platformallows off-site collection of law enforcement events, management of objects of law enforcement, command anddispatch, electronic evidence management, intelligent review and closure of cases and other applications throughthe use of law enforcement recorders, law enforcement case terminals, collection stations and other devices, helpingto improve the effectiveness of comprehensive law enforcement.
5) More targeted services
Hikvision utilizes industry software platforms such as a comprehensive management platform for smartgovernment halls, an online supervision platform for market supervision, a smart elderly care platform and amanagement platform for urban parking operations to provide complete solutions for government services, marketsupervision, smart elderly care, smart parking and other business fields, helping to provide more targeted services.
For example, in the field of market supervision, Hikvision has built an online market supervision platformfor catering enterprises, elevators, agricultural markets and other segmented scenarios through the use of elevatorhealth monitoring cameras, elevator safety gateways, anti-oil cameras, kitchen inspection super brains and otherproducts, facilitating refined supervision services.
Hikvision provides an online supervision application for catering, which intelligently analyzes the wearing ofcatering staff, shipstandardized operations and other aspects, and provides visible, perceptible, and accessibleproduction process services for users and the public, helping to create a safer and more hygienic and standardizedcatering environment. The Company also provides an online elevator supervision application, which enableselevator fault supervision services, elevator maintenance and quality supervision services, and annual elevatorinspection supervision services, helping to upgrade elevator operation services. The application also provideselevator video inspection and other services to help improve the safe operation of elevators.Moreover, as for smart elderly care, Hikvision provides a smart elderly care platform with a focus oninstitutional elderly care, elderly nursing, service supervision and other scenarios. The platform enables smartnursing, everything about elderly care in one diagram, safety warning services and other applications through theuse of smart elderly care all-in-one machines, elderly care alarm boxes, fall detection radars, smart nursing terminalsand other devices, promoting the intelligent transformation of elderly care services.In the area of smart parking,Hikvision provides a management platform for urban parking operations with a focus on roadside parking, off-roadclosed parking lots and other scenarios. The platform allows resource management, operation management,customer service management, financial management, operation and maintenance management, public services andother urban parking business applications through the use of parking space detection cameras, radar-video assistedparking posts, geomagnetic instruments, entrance and exit control equipment and other devices, providingprofessional parking operations services and promoting more efficient and convenient parking experience.
6) A more livable ecological environment
With the help of video, radar, thermal imaging, hyperspectral and other multi-dimensional perception andintelligent analysis technologies, Hikvision strives to build an ecological monitoring, management and servicesystem for natural resources, ecological environment, meteorology and other business services, creating a morelivable ecological environment.For example, in the field of smart water conservancy, Hikvision has built a digital twin platform for waterconservancy by providing AIoT perception, data base construction, intelligent analysis, simulation, computingsupport and other capabilities for rivers and lakes, water conservancy projects and other scenarios, helping waterconservancy users across the country to implement scenario-based applications.
Hikvision provides an intelligent management platform for river and lake management and protection, whichintelligently detects the four violations related to rivers and lakes, such as illegal sand excavation, shorelinedestruction and garbage stacking, helping to improve the long-term protection and dynamic control of rivers andlakes.A comprehensive monitoring and management platform for water conservancy projects is set up to achievesafety monitoring and warning of dams, embankments, water gates, pumping stations and other projects, safetymonitoring and warning of mechanical and electrical equipment status, rainwater monitoring and warning,
intelligent inspection, contingency plan management, control center diagram and other applications, thus obtainingreal-time updates on safe project operation and protecting water conservancy projects during floods.A monitoring
and warning platform for mountain torrents and a command and scheduling platform for water disaster preventionare provided to offer dynamic monitoring and warning of mountain torrents, GIS scheduling, conference scheduling,video scheduling and other functions, and realize "full access for one system, full connectivity of one network, fulldisplay on one screen," ensuring easy access to flood information at the front-line level as well as vertical linkageand horizontal coordination of flood control command and scheduling.An irrigation area management andapplication platform is provided to offer applications such as water measurement management and irrigation areasafety inspection, facilitating the renovation and modernization of irrigation areas. An intelligent managementplatform for water plant safety is created to achieve intelligent inspection of water plants, safety management ofsecondary water supply pump houses, ensuring safe production of water plants and pump houses.
As the construction of digital economy, society and governments gains speed, IoT perception, AI, big data andother technologies continue to find applications in cities and industries, gradually fulfilling their value. Theapplication of ubiquitous security has expanded from public security to security control needs in various fieldsincluding public areas, municipal administration, transportation, resources, and production in a broader sense.Its application in a single industry has been gradually brought to a new level with growing demand for integrationand empowerment based on all scenarios, all weathers and all-round perception. The picture of a smart city isincreasingly clearer, transforming from "all operations via one network" to "unified management via onenetwork", from "Internet +" to "intelligent +", and from "scenario intelligence to "industry intelligence."With a user-centered approach, Hikvision seeks to work with partners in the AIoT sector such as researchinstitutes, product providers, algorithm vendors, independent software developers, system integrators and productdistributors to create a closed-loop ecosystem that covers the entire value chain from technology, products tosolutions and services by understanding the value preferences and core needs of users. Moreover, the Company willcontinue to upgrade the products, systems and services, while providing high-quality technologies, products andservices to industrial users in the public service field.
4.4 Promoting the digital transformation of domestic distribution systems and overseas marketing networks,
and driving the digital development of commercial users at all levels
In the digital era, Hikvision continues to create digital marketing tools. With these tools, the Company helps
more than 10,000 primary and tens of thousands of secondary distribution agents at home and abroad, as well asmillions of engineering contractors, installation companies, small integrators and other customers and partnerscovered by this distribution network to overcome development bottlenecks, improve their ability to survive in avolatile business environment, and build long-term competitiveness.By leveraging the multi-level coverage
capabilities of our domestic and foreign partners, end-users at all levels can benefit from Hikvision's AIoT productsand solutions, laying a solid foundation for digital development.
4.4.1 Domestic channels: Enhancing the service capabilities of the industry and promoting the digital
transformation of small and medium-sized enterprisesHikvision continues to expand our channel ecosystem by accelerating the transformation from a traditionaldistribution service model to a solution model. The Company collaborates with ecosystem partners to build a digitalsystem for the value chain that brings marketing, stores and services online. Moreover, the system encourages moreindustry professionals and devices to get online and offers online AIoT capabilities for ecosystem partners andonline scenario capabilities for users. With the system, the Company provides low-cost, lightweight, tailor-madeand precise solutions and services for various SMEs.
1) Capacity building: Developing an intelligent cloud-edge system to promote the implementation of
intelligent business servicesBy leveraging our Hikvision SMBG E-commerce, Hikvision SMBG HikLink and Easy to Debug platform,Hikvision connects and empowers distributors, engineering contractors, and industrial workers to reach and serveSME users through digital marketing, service crowdsourcing, online devices and other means, thus creating a
collaborative network for the AIoT industry, and promoting the prosperity, transformation and upgrading of theindustry.Hikvision SMBG HikLink: This is an AIoT cloud platform that serves SME users. The platform mainlyprovides general product capabilities such as video, access control, attendance, visual intercom, visitor, broadcasting,and network management, as well as alarm, fire protection, information release, and OA approval. In collaborationwith ecosystem partners, Hikvision provides scenario-based solutions for self-built houses, communities, factories,schools, construction sites, parks, breeding farms, and entertainment venues, and offers innovative servicesincluding 4G with no power or network access and intelligent reminders, thus achieving unmanned operations, costreduction and efficiency improvement, and facilitating the digital and intelligent transformation of SMEs.
Based on people and vehicle detection algorithm, Hikvision has developed more intelligent scenario algorithms,and built an intelligent business platform that integrates intelligent hardware, cloud visual model and services. TheCompany also collaborates with ecosystem partners to create more vertical scenario applications, promotingintelligent inclusiveness.
Hikvision SMBG E-commerce: This is an industrial digital empowerment platform that mainly servesdistributors, engineering contractors, service providers, and industrial workers. Currently, it has served over amillion security professionals.
The platform offers a product and solution showroom, enables customers to search information on Hikvision'sfull range of products and solutions, and provides a VR display of scenario-based solutions. The platform helpscustomers with digital marketing as it provides structured marketing materials for products and solutions, supportscustomers in live streaming marketing through a new media matrix including TikTok, Kuaishou and Video Account,and enables them to build private marketing networks and obtain sales leads. Moreover, with the platform, userscan experience digital stores or assign orders at the cloud business service plaza with products and services deliveredat the engineering contractors/service providers/stores offline, thus reducing customer acquisition costs, andimproving industrial synergy efficiency.
Easy to Debug: This is a professional and simple debugging tool for installation companies. It is used toimprove debugging efficiency by reducing service difficulties with tooling. Over the past year, the number of serviceproviders using this tool has increased rapidly. Moreover, an order matching tool is provided to improve pre-salesefficiency, lower employment barriers, and promote flexible employment.
2) Business direction: Arming practitioners with digital capabilities and improving quality and efficiency
for SME users using digital solutionsPromoting the digital transformation of security practitioners and enhancing their service capabilitiesHikvision SMBG E-commerce facilitates practitioners in content marketing and service support through theorder matching tool, product information, solution showroom, service squares and other sections during pre-sales,mid-sales, and post-sales stages.
The Easy to Debug platform offers configuration and debugging functions for various professional devices andis a job assistant that reduces the threshold for employment. It has served hundreds of thousands of service providers,with key functions used over a million times. Furthermore, it helps practitioners maintain user relations and build agood reputation through maintenance services.Looking ahead, Hikvision will work with partners to provide more competitive solutions, while establishingconnection with SME users to facilitate their digital transformation. An IoT system will be established to unlockmore possibilities.Facilitating digital transformation of SMEs through the provision of one-stop solutions and servicesWith long-term investment and R&D efforts in AIoT, Hikvision has achieved rapid growth in commercialdisplays, parking, access control, audio, conference tablets, fire protection, alarm, network and other non-videobusiness services in addition to maintaining stable growth in video business and supporting products. By expandingprofessional channels and building a nationwide service network, the Company provides customers with diversifiedproduct choices and timely and professional local services.In response to the demand of SMEs for lightweight and easy-to-use products and systems, Hikvision hascreated Hikvision SMBG HikLink, an AIoT cloud platform that provides small and quality solutions andstandardized services to promote the digital transformation of SMEs in a more convenient, efficient, and economicalmanner. Hikvision SMBG HikLink integrates multi-terminal capabilities, and expands multiple light intelligentalgorithms. In collaboration with ecosystem partners, the platform has created multiple vertical small scenarioapplications and solutions, which have been implemented nationwide. The number of access devices and users ofthe platform maintained high growth throughout the year.In order to better meet the demand of users for one-stop security and intelligent application solutions, theCompany has developed digital store business based on solution marketing to offer scenario-based, structured, andonline solutions and attract online traffic through full-touch aggregation. Along with nationwide partners, the
Company actively explores new media e-commerce and live streaming channels while leveraging the experience,service, and systematic delivery capabilities of offline terminal stores to enhance lead conversion rate, facilitateefficient consultation, experience, and purchase for users, connect users online, and continuously provide services.
4.4.2 Overseas layout: Continuously improving the international marketing system and building an open
international cooperation ecosystem
Hikvision's international business has evolved from its initial foreign trade model to localized sales via regionalcenters, and now to localized marketing through a global network of sales and service channels and theimplementation of the "one policy for one country" strategy. By 2023, the Company has set up 80 branch offices inthe international market including Hong Kong, Macau and Taiwan regions of China, providing localized servicesto more than 150 countries and regions. Hikvision is strategically positioned in overseas markets as a leading globalprovider of AIoT products and solutions.
1) Development of international marketing capabilities and systems
Guided by the "one policy for one country" strategy, Hikvision continues to promote localization strategy witha greater focus on the cultivation of digital precision marketing capabilities, expansion of multiple channels,development of lower-tier markets, and the improvement of global operational service capabilities.
For the video business, the Company focuses on developing lower-level city-based markets. Efforts are beingmade to further develop existing channels in tier 1 and 2 cities by focusing on the introduction and repurchase ofstrategic products through secondary channels, and to develop new channels in tier 3 and 4 cities by focusing on thecoverage and transformation of secondary channels. In countries where the business development is relativelymature, in addition to optimizing customer structure and consolidating channel foundation, the focus of marketingis gradually shifting towards the coverage of and effective impact on the installation companies, with a greateremphasis on effective promotion on the demand side.
On the basis of consolidating our video business, the Company has been actively seeking a second growthcurve in overseas markets in recent years. For non-video business, there has been a significant improvement inproduct strength. While maintaining and re-using existing channels, the Company is accelerating the developmentof new professional channels. In 2023, a breakthrough was made in the development of new channels. For example,the Company has continued to expand the market share of our access control and intercom products in multiplecountries, establishing a leading position in these markets. Our LED and interactive screen products have been
introduced to and highly recognized by users in many countries in the Middle East and Europe, achieving rapidsales growth.The Company continues to promote the construction of localized operational capabilities. In terms of overseaswarehousing operations, the Company has effectively optimized the local delivery chain and responded quickly tocustomer needs by accelerating inventory turnover in overseas warehouses, visualizing local order delivery times,and optimizing warehousing and distribution.With regard to after-sales service, in 2023, the Company focused ondelegating repair capabilities to lower-level markets and providing replacement instead of repair services for someproducts. Over 100 authorized service customers were added throughout the year, and customer satisfaction wassignificantly improved regarding to after-sales response and problem-solving.
2) Establishing international ecological cooperation through product technology openness and
collaborative resource opennessAs a leader in the AIoT industry, Hikvision has always been committed to developing an internationalecological cooperation plan through open products, technologies and resources that meets the diverse andpersonalized scenario-based needs of various industries. In 2023, the Company's international business achievedsignificant results in both product technology openness and collaborative resource openness.At the level of product technology openness, the Company has transformed from video surveillance integrationto key AI data integration, and systematic software integration has also become the mainstream integration methodoverseas. The multi-level and multi-faceted integration methods provide flexible integration solutions and optimizeduser experience.
At the level of collaborative resource openness, the Company's Technology Partner Portal has continuouslyexpanded its business to provide comprehensive technical support and services for partners. As of 2023, more than11,000 overseas partners have registered and obtained integrating resources on the platform, learned about opentechnology, and engaged in collaborative business. Through regular online and offline activities, the Company
strengthens communication and exchange with partners, shares the latest technological trends and success cases,and creates a favorable environment for ecological cooperation.With the advancement of the global digital wave, the Company will continue to enhance our marketing network,and expand our openness capabilities with a focus on vertical markets overseas. As AIoT technology and scenario-based solutions propel us forward, we are looking to empower all industries and help users improve operational andmanagement efficiency.
4.5 Cultivating new growth curves for innovative business services, and exploring new technologies, products,
and formats for AIoTHikvision's continuous efforts in technical reserves and expanding business scope provide a good environmentfor innovative business development. Both our main and innovative business services revolve around the clearbusiness direction of AIoT, but they also differ in technology construction, product development, and businesslayout, supporting and promoting each other, and jointly empowering the digital transformation of the economy andsociety.Currently, our innovative business services include EZVIZ Network, HikRobot, HikMicro, HikAuto, HikSemi,HikFire, Rayin and HikImaging. More new innovative business units are being explored, incubated, and cultivated.The solid growth of these innovative business services has continuously injected new impetus into the long-termsustainable development of the Company.After nearly a decade of thoughtful operations, EZVIZ Network has built "EZVIZ", a leading brand in high-quality smart home. With a vision to becoming a trusted provider of smart home and IoT cloud platformservices, EZVIZ Network has developed smart home and IoT cloud platform services as its two main businessservices and built its core competitiveness. Today, EZVIZ Network has grown into one of the few AIoT companiesin the industry with complete vertical service capabilities including hardware design, R&D, manufacturing, and IoTcloud platform services.
Combining visual perception, AI and navigation control technologies, HikRobot focuses on industrial IoT, smartlogistics and intelligent manufacturing with solid algorithm accumulation, strong software and hardwaredevelopment capabilities, and a complete marketing system. HikRobot continues to invest in mobile robots andmachine vision to improve quality, reduce costs, and increase efficiency and promote the digital and intelligenttransformation of manufacturing and logistics.
Combining infrared thermal imaging technology with MEMS technology, HikMicro provides corecomponents, detectors, modules, infrared thermal imaging products and overall solutions to the world. Thecompany's products are widely used in industrial, outdoor, integrated, and smart IoT fields. By focusing ontemperatures, HikMicro is developing multi-dimensional technology and product solutions, expanding theboundaries of human perception.
HikAuto has grown into a leading company in intelligent driving sensors in China thanks to its leadingdomestic market share in vehicle-mounted cameras and millimeter-wave radars, as well as its mass production ofmature ultrasonic radars. HikAuto endeavors to make traffic safer and transportation more efficient by providingfull stack sensor solutions for different levels of intelligent driving systems of the vehicle, which have coveredmore than 10 commercial and aftermarket industries.
HikSemi is committed to providing worldwide users with professional overall storage solutions, with a focus
on industrial control, data center, video surveillance, consumer-end customers and other applicationscenarios. With complete design, development and manufacturing capabilities, the Company operates fourproduct lines: solid-state hard disks, front-end storage, embedded storage and flash memory application.HikSemi continues to provide consumers with safe and reliable storage devices, systems, and solutions, striving tobecome a leading provider of overall storage solutions in China.
HikFire's business services cover traditional fire protection, smart fire protection, and fire protection platforms.By leveraging cloud computing, big data, and AI technologies, HikFire has developed a full range of multi-dimensional perception, ubiquitous IoT, as well as intelligent and visual security-fire protection integration productsand solutions with a focus on six fire perception elements, including smoke, temperatures, gases, fire, water,and electricity. The company aims to strongly promote the construction of urban fire protection IoT, optimizethe integrated management of corporate security and fire protection, and improve home fire safety.
Rayin is focusing on X-ray imaging technologies, dedicated to becoming a leading technology R&D,manufacturing, sales and leasing services provider of invisible light detection equipment. The company has theability to independently produce security inspection machines, security doors, industrial X-ray equipment, anda full range of supporting products. With long-standing expertise in X-ray technology, AI, equipment IoT, etc., Rayinkeeps enabling technology and creating value for smart security inspection and intelligent industrialmanufacturing and other fields.
HikImaging, rooted in the medical technology industry, is committed to the research and application of multi-dimensional perception, intelligent analysis, video/audio transmission, computing and display control and other
related technologies in medical scenarios. The company provides rigid endoscopes, electronic endoscopes,operation video management, and other products and solutions for customers in the medical device industry,working with customers to promote the digital and intelligent transformation of the surgical and clinical scenarios.
II. Analysis of Core CompetitivenessAIoT is an industry where the Company sees potential for long-term development. Combining multi-dimensional perception with AI and big data, we have created tens of thousands of products from detectors to systemsolutions that cover more than 500 scenarios across over 90 sub-sectors in over 10 industries. These technologies,products and consumer needs promote one another through continuous changes, updates and iterations, becominga competitive driver of Hikvision's technological innovation.Demands in the AIoT industry has always been fragmented and scenario-based. How to meet personalizeddemands and create scenario-based solutions while maximizing business economies of scale is a challenge that isfaced by all industry participants. Hikvision has established and consistently improved the operating mechanismand organizational systems to adapt to the fragmented demands, and has continuously promoted the refinement andoptimization of baseline products and standardized business services while meeting personalized demands.Digital transformation has exerted a profound impact on retail, media, entertainment, local life and other sectors,and created a group of giants in the digital era.As digital transformation advances, the demand for quality and
efficiency improvement and costs reduction has become increasingly prominent in traditional industries.Digitization is a primary way to meet these needs. With strong technological expertise and profound industryunderstanding, Hikvision is rapidly expanding digital transformation business services.
1. Continuously investing in R&D to build a comprehensive technology and product mix
Since our establishment, Hikvision has always focused on technological innovation, and developed a productsystem including detectors, modules, devices and systems through the combination and integration of commontechnologies (hardware technology, process materials, embedded software, system-level software development, bigdata technology, network security, etc.) and scenario-based application technologies. As an AIoT company,perception technology has been our long-term focus. The Company has gradually expanded perception technologyfrom visible light to infrared, X-ray, millimeter wave and other fields, explored audible sound, ultrasonic and otherfields, continuously developed perception methods such as temperature, humidity, pressure and magnetism, andfurther expanded the fusion of multi-dimensional perception applications.In addition, combining strong expertisein technology fields such as cloud computing, big data, and AI with a deep understanding of AIoT, the Companyhas formed a complete system ranging from perception to intelligent perception and cognition, from products tosolutions, and from data to applications. By leveraging our technical capabilities and engineering thinking, we'vecontinuously improved our implementation capabilities, technologies, products, and solutions in projects, and
created a circular iterative system that connects R&D to the market and vice versa.Hikvision continues to invest in R&D with a cumulative investment of RMB 41.32 billion in R&D over thepast five years. In addition to the research institute, hardware product R&D center, and software product R&Dcenter at the Hangzhou headquarters, the Company has also established a number of local R&D centers at homeand abroad, which have formed a headquarters-centered multi-level R&D system.The Company will continue to
maintain heavy R&D investment, strengthen and consolidate our foundation of AIoT technology, and expanded ourAIoT devices. We will also take advantage of digital transformation to consolidate our market position in the fieldof AIoT.During the reporting period, by leveraging our technical expertise and industry understanding, Hikvisionrapidly promoted the R&D of new digital products, and developed a large number of multi-dimensional perceptionand audio products that solved the core pain points of users and were suitable for various typical applicationscenarios.The launch of these digital products will accelerate the advancement of Hikvision's AIoT strategy andfurther expand the proportion of corporate business services in our business structure.
2. Continuously improving domestic and foreign marketing networks and gaining insight into customer
needs
The Company is committed to building a comprehensive marketing system covering the world that quicklyresponds to customer needs. In China, the Company has developed a city-centered marketing network. As of 2023,the Company has established 32 provincial-level business centers, and more than 300 city-level branches and officesunder the business centers, forming a hierarchical city-based marketing system.At the same time, the Company has
expanded industry scenario applications for domestic business services by differentiating users into public businessgroups, enterprise business groups, and small and medium-sized enterprises business groups. Overseas, theCompany has continuously promoted the process of localization and implemented the strategy of "one policy forone country". As of 2023, we have set up 80 branches, subsidiaries and offices in the international market includingHong Kong, Macau and Taiwan regions of China, establishing a presence in more than 150 major countries andregions worldwide.
In terms of services, the Company has a three-level vertical service system including Hangzhou GlobalTechnical Support and Service Center, Business Center Technical Service Department, and Authorized CustomerService Station, which ensures global and local quality services. In China, we have set up 32 provincial-leveltechnical service departments and 300 municipal service outlets, and established cooperation with more than 3000
important partners and authorized service providers. Overseas, the Company focuses on extending authorizedmaintenance capabilities and providing replacement services instead of repair services for some products. Byaccelerating inventory turnover in overseas warehouses, visualizing the delivery times of local orders, andoptimizing warehousing and distribution, we have effectively optimized the local delivery chain to respond quicklyto customer needs.
3. Continuously building a flexible manufacturing system to enhance supply chain stability
The AIoT market is fragmented due to the diversity and personalization of AIoT products. On the productionend, this market characteristic is manifested as the formation of large-scale customized manufacturing needs ofmultiple small-lot orders.As an answer to this challenge, Hikvision has focused on continuously building a flexible
and efficient manufacturing system, and has used new technologies such as AI to enhance manufacturingcapabilities and improve lean production and automation. The Company operates domestic manufacturing bases inTonglu of Hangzhou, Chongqing and other places, orderly promotes the construction and expansion for newmanufacturing bases, and supports the global product supply through local factories in India, Brazil, and UK.
The Company has always been committed to establishing long-term and stable partnerships with suppliers,helping them iteratively improve raw materials, components, etc. By leveraging our digital capabilities supportedby a smart supply chain we've developed over the years, we have empowered industry chain partners to build ahealthy supplier ecosystem, and enhance the overall stability of the industry's supply chain.
During the reporting period, Hikvision vigorously promoted the development of digital products for productionparks by verifying our own ideas through practice. By promoting innovative applications of automated, digital, andintelligent technologies and products, we aim to improve supply quality, increase operational efficiency, and reduceproduction costs.
4. Continuously promoting the evolution of the management system and improving the operating efficiency
As for business direction and goal setting, the Company has annually updated and applied the strategic planningand annual business planning based on the BLM strategic planning methodology, facilitating effectivecommunication and alignment of each business and functional departments to ensure clear goals and division ofresponsibilities. In terms of internal management, focusing on revolution of management, Hikvision hasimplemented over 100 management reform initiatives each year to optimize resource layout and improve overallcapabilities. With regard to risk management, the Company has established a sound risk management system,promoted the construction of a global compliance governance system, and continuously improved compliance risk
management. Relying on the construction of an IT system, the Company has continuously optimized businessprocesses and improved efficiency of the business system. Furthermore, the Company continues to refine the digitalmanagement capabilities in many aspects including promoting the identification and management of financial risks,building a digital quality management system, improving internal control mechanisms, pursing the construction ofcompliance systems, and protecting innovation achievements.
5. Continuously building a people-oriented organizational climate and uniting outstanding talents
Hikvision firmly believes that talent is an important driver for the sustainable development of organizations,as well as the core competitive advantage for corporate development.Therefore, the Company recruits talent fromall around the world by adhering to the employment concept of "people-oriented, growing together with talents".By improving the talent discovery and performance appraisal mechanism and identifying and assigning peoplethrough a scientific approach, the Company has boosted the morale and creativity of employees to improveorganizational capabilities.Guided by our business strategy, the Company has built an agile and efficientorganization to ensure the supply of talent for key positions, continuously strengthening organizational capabilities,and helping to achieve profitable business growth.The comprehensive employee reward system has been formed, which consists of compensation and benefits,equity incentives, innovative business co-investment and etc., further developing the distribution mechanism foremployees to participate in and benefit from the Company's growth. Employees participating in equity incentivesand co-investment can obtain long-term returns through their contributions to the Company's performance,coordinating the long-term development of business with the continuous employee growth.
III. Core Business Analysis
1. Overview
The concentrated outbreak of social demand during a certain period often accompanies the rise of a group ofenterprises. Looking back at the past two decades, Hikvision has taken advantage of the demand for social securityimprovement and become a leading global security enterprise. Looking towards the future, the continuousimprovement of production efficiency is the key to enhancing competitiveness. As a traditional manufacturingpower, China considers enhancing the competitiveness of manufacturing enterprises as a top priority.Hikvisioncontinues to pave the way for business transformation by shifting our business positioning from security to AIoT,aiming to fully apply AIoT technologies and products to all aspects of social life, thoroughly solve users' core painpoints from the dimensions of quality improvement, efficiency enhancement, and cost reduction, and help userscreate more value.In recent years, the global economy and politics have suffered from severe external turmoil such as anti-globalization, public health event, inflation, and regional military conflicts. If Hikvision were a moving truck,strategic transformation would be like replacing the engine of the moving truck, which was made even more difficultby the exceptionally bumpy roads.Nevertheless, in 2023, Hikvision preliminarily completed the transformation ofour AIoT strategy, recording a total operating revenue of RMB 89.34 billion with a year-on-year increase of 7.42%,and a net profit attributable to shareholders of the Company of RMB 14.11 billion with a year-on-year increase of
9.89%. We will continue to invest in research, production, and sales, firmly believing in stable and long-term
development.
1. Sustained investment in R&D to consolidate the innovation foundation for business transformation. After
more than a decade of development, Hikvision has accumulated significant expertise in multidimensional perceptionand sensory fusion technologies, with a well-established scale in the research and development and application ofartificial intelligence. Sustained investment in AI has substantially improved our development of products,algorithms and solutions.The iterative evolution of numerous technology sets has brought favorable clustering
effects to Hikvision's product development in terms of technology combination and aggregation. On the basis ofthese efforts, Hikvision has rapidly promoted the innovation and R&D of digital products. In 2023, the Companylaunched a large number of new products with vastly different functions and forms to adapt to new scenarios andneeds, laying the foundation for the implementation of our AIoT strategy.
2. Continuous organizational change towards business objectives. In terms of the marketing, Hikvision has
established a unique marketing strategy with a focus on market expansion into lower-tier regions. The Companyhas set up provincial-level business centers and city-level branches in China and implemented the strategy of "onepolicy for one country" overseas to foster lower-level business organizations, making marketing activities closer tousers and responding quickly to their needs.In addition, Hikvision has promoted organizational change driven by
vertical industries to meet the business needs of industries represented by headquarters, branches, and chainenterprises. Our marketing organizations have become more flexible and adaptable to the business environment.
Furthermore, guided by the business differentiation strategy, the Company has focused on key business services bysplitting our product lines, industry lines, and innovative business services. We have promoted moderateindependent operation and assessment, and continuously expanded and strengthened small product and industrycategories, facilitating organizational development towards business changes.
3. Continuously improving the flexibility of the supply chain and optimizing manufacturing costs.
Comparedto the highly automated and scaled production lines of a single product category, the demand for multiple smallbatches of multiple product categories has posed an enormous challenge to the production lines. Hikvision has longbeen committed to building a flexible and efficient manufacturing system that continuously improves ourmanufacturing capabilities by promoting factory automation and R&D automation, and using AI technology. Onlyby solving the manufacturing problems can fragmented market demands be met quickly and with high quality. In2023, Hikvision vigorously promoted the development of digital products for production parks by verifying ourown ideas through practice. By promoting innovative applications of automated, digital, and intelligent technologiesand products, we aim to improve supply quality, increase operational efficiency, and reduce production costs.
4. Expanding a presence in AIoT and strengthening innovative business services.
In 2023, the Company's totalrevenue from innovative business services was RMB 18.55 billion, accounting for 20.77% of our overall revenue.EZVIZ Network, which was listed on the Science and Technology Innovation Board in 2022, has become one ofthe few AIoT companies in the industry with complete vertical integration service capabilities, ranging fromhardware design, R&D, manufacturing to IoT cloud platforms.By focusing on industrial IoT, smart logistics, and
intelligent manufacturing, HikRobot has continuously invested in mobile robots and machine vision, and hasbecome a domestic leader in the two fields. It has submitted an IPO application to the SZSE ChiNext Market. Ourother innovative business services are in a period of rapid development, and their market competitiveness continuesto improve. Centralized or decentralized operations are performed for these business services to support theCompany's sustained and stable business growth, helping the Company achieve stable, long-term success.
The trend of digital transformation has arrived, and AIoT is Hikvision's choice of the times. In 2023, we willstick to our strategic positioning, firmly promote the Company's business transformation, and make positiveprogress in the fields of technology system, product system, manufacturing system, marketing system, andinnovative business group, taking a solid step on the Company's strategic transformation and laying a goodfoundation for steady progress in the future on the road of AIoT. The company will continue to consolidate thetechnical foundation, enrich the product matrix, innovate intelligent applications, contribute to the digitaltransformation of various fields of economy and society, and create tangible value for users.
2. Revenue /cost of sales and services
1) Revenue structure
Unit：RMB
2023 2022
YoY Change
(%)Amount
Amount
| Proportion to revenue | Proportion to revenue |
Revenue89,339,856,855.68
100.00%
83,166,321,681.14
100.00%
7.42%
Classified by industryAIoT products and services89,339,856,855.68
100.00%
83,166,321,681.14
100.00%
7.42%
Classified by productProducts and services formain business (Note 1)
68,779,757,950.20
76.99%
65,873,570,961.21
79.21%
4.41%
Constructions for mainbusiness
2,007,188,913.81
2.25%
2,222,876,059.14
2.67%
-9.70%
Subtotal 70,786,946,864.01
79.23%
68,096,447,020.35
81.88%
3.95%
Robotic business4,940,495,688.57
5.53%
3,916,176,952.59
4.71%
26.16%
Smart home business4,686,023,001.37
5.25%
4,077,290,933.03
4.90%
14.93%
Thermal imaging business3,284,778,727.13
3.68%
2,790,033,744.03
3.35%
17.73%
Auto electronics business2,706,680,020.16
3.03%
1,905,289,927.53
2.29%
42.06%
Storage business1,931,387,706.41
2.16%
1,616,267,518.08
1.94%
19.50%
Other innovative businesses(Note 2)
1,003,544,848.03
1.12%
764,815,585.53
0.92%
31.21%
Subtotal (Note 3) 18,552,909,991.67
20.77%
15,069,874,660.79
18.12%
23.11%
Classified by regionDomestic60,372,251,251.28
67.58%
56,890,890,769.45
68.41%
6.12%
Overseas28,967,605,604.40
32.42%
26,275,430,911.69
31.59%
10.25%
Note 1: Main business refers to the business parts other than the innovative businesses.Note 2: Other innovative businesses include the products and services of the innovative business subsidiaries, such as HikFire, Rayinand HikImaging. Same below.Note 3: The data listed in the subtotals may differ slightly from the aggregated results of the relevant individual data due to rounding.
Revenue structure
Unit: RMB 100mn2023 2022 YoY Change (%) 2021
Domestic mainbusiness
PBG
153.54
161.35 -4.84%
191.61
EBG 178.45 165.05 8.12% 166.29SMBG 126.79 124.97 1.46% 134.90Other products andservices for mainbusiness
9.32 9.27 0.54% 9.43Overseas mainbusiness
Products and servicesfor main business
239.77
220.32 8.83% 189.26Innovative businesses
185.53
150.70 23.11% 122.71Total
893.40
831.66 7.42% 814.20Note 4: The operating income from domestic main business (including three major business groups in domestic and other productsand services for main business) and overseas main business only include Hikvision’s main business's products and services,excluding revenue from innovative businesses.Note 5: Innovative businesses' revenue includes its domestic and overseas revenue
2）Industries, products or regions accounting for more than 10% of the Company's revenue or operatingprofit
√ Applicable □ Inapplicable
Unit: RMBRevenue
Cost of sales and
services
Gross margin
YoY Change(%) of revenue
(%) of
| operating cost | YoY Change |
(%) of gross
Classified by industryAIoT products andservices
89,339,856,855.68
margin
49,637,055,845.33
44.44%
7.42%
3.42%
2.15%
Classified by product
services for main
| business |
68,779,757,950.20
36,907,185,097.37
46.34%
4.41%
-0.42%
2.60%
Constructions formain business
2,007,188,913.81
1,529,858,191.39
23.78%
-9.70%
-8.55%
-0.96%
Innovativebusinesses
18,552,909,991.67
11,200,012,556.57
39.63%
23.11%
20.95%
1.08%
Subtotal 89,339,856,855.68
49,637,055,845.33
44.44%
7.42%
3.42%
2.15%
Classified by regionDomestic60,372,251,251.28
33,920,287,429.21
43.81%
6.12%
2.50%
1.98%
Revenue
Cost of sales and
services
Gross margin
YoY Change(%) of revenue
(%) of
| operating cost | YoY Change |
(%) of gross
Overseas28,967,605,604.40
| margin | ||
15,716,768,416.12
45.74%
10.25%
5.46%
2.46%
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 2023 2022 YoY Change (%)AIoT products andservices
Sales volume Per unit227,487,010
202,935,192
12.10%
Output volume Per unit240,073,553
207,698,031
15.59%
Explanation on why the related data varied by more than 30% on a YoY basis
□Applicable √Inapplicable
4) Fulfillment of signed significant sales contracts and procurement contracts by the reporting period
□ Applicable √Inapplicable
5) Cost of sales and services structure
Classified by industry
Unit: RMBIndustry Item
| 2023 | 2022 |
YoY Change
(%)Amount
cost of sales
| and services |
Amount
cost of sales
| and services | |||
| AIoT products and services | Cost of sales and services |
49,637,055,845.33
100.00%
| 47,996,254,466.32 |
100.00%
3.42%
Classified by product
Unit: RMBProduct Item
| 2023 | 2022 |
YoY Change(%)Amount
cost of sales
| and services |
Amount
cost of sales
| and services | ||
| Products and |
services for main
| business | Cost of sales |
and services36,907,185,097.37
74.35%
| 37,063,587,434.45 |
77.22%
-0.42%
Constructions formain business
and services
1,529,858,191.39
| Cost of sales |
3.08%
| 1,672,876,250.28 |
3.49%
-8.55%
Innovativebusinesses
and services
11,200,012,556.57
| Cost of sales |
22.56%
| 9,259,790,781.59 |
19.29%
20.95%
Product Item
| 2023 | 2022 |
YoY Change(%)Amount
cost of sales
| and services |
Amount
cost of sales
| and services |
Subtotal
and services
49,637,055,845.33
| Cost of sales |
100.00%
| 47,996,254,466.32 |
100.00%
3.42%
Note: The data listed in the subtotals may differ slightly from the aggregated results of the relevant individual data due to rounding.
6) Any change in consolidation scope during the reporting period
√Yes □ No
During the reporting period, the Company established three domestic subsidiaries, three overseas subsidiaries,and acquired two subsidiaries. All of this result in changes in the scope of its consolidation scope. For details, pleaserefer to changes in the consolidation scope in Note (Ⅵ) to the financial statements.
7) Significant change or adjustment of the Company’s business, products or services during the reporting
period:
□ Applicable √ Inapplicable
8) Major customers and suppliers:
Sales to major customers of the Company
Sales to top five customers (RMB) 2,019,184,544.05
Total sales to top five customers as a percentage of the total sales for the year (%)
2.26%
| 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 customersNo. Name of Customer Sales Amount (RMB) Percentage of total sales for the year
1 First
663,582,455.14
0.74%
| 663,582,455.14 |
2 Second
0.57%
| 505,858,674.52 |
3 Third
0.33%
| 294,396,573.73 |
4 Fourth
0.32%
| 288,396,578.78 |
5 Fifth
0.30%
| 266,950,261.88 |
Total --
2.26%
| 2,019,184,544.05 |
Other information of major customers
□Applicable √Inapplicable
Major suppliers of the CompanyTotal purchases from top five suppliers (RMB) 7,384,910,178.70
Total purchases from top five suppliers as a percentage of the total purchases for the year
15.86%
| (%) | |
| Total purchases from the related parties in the top five suppliers as a percentage of the total purchases for the year (%) |
6.65%
Information on top five suppliers of the CompanyNo. Supplier Name Purchase Amount (RMB) Percentage of total purchase for the year1 First
1,856,306,127.19
3.99%
| 1,856,306,127.19 |
2 Second
3.70%
| 1,724,031,662.99 |
3 Third
2.81%
| 1,309,828,018.03 |
4 Fourth
2.70%
| 1,257,177,731.27 |
5 Fifth
2.66%
| 1,237,566,639.22 |
Total --
15.86%
| 7,384,910,178.70 |
Other information of major suppliers
□ Applicable √ Inapplicable
3. Expenses
Unit: RMB2023 2022
(%)
Note of significant changeSelling expenses10,842,500,778.25
| YoY Change | ||
9,773,457,336.23
10.94%
| Continue to increase investment in domestic |
and overseas marketing networksAdministrative expenses2,769,731,410.40
2,642,113,372.00
4.83%
No significant changeR&D expenses11,392,948,404.47
9,814,444,260.55
16.08%
Continue to increase R&D investmentFinancial expenses-749,780,213.12
-990,401,533.32
24.30%
| Affected by foreign exchange rate fluctuations, |
foreign exchange income decreased
4. R&D Investment
√Applicable □Inapplicable
R&D personnel of the Company
2023 2022 Change PercentageNumber of R&D staff (ppl)
| 28,479 | 27,951 |
1.89%
| R&D staff as percentage of Total |
headcount
48.65%
47.96%
0.69%
Education structure of R&D staff-
- -Bachelor degree
17,502
| 17,502 | 17,376 |
0.73%
2023 2022 Change PercentageMaster’s degree
| 8,602 | 8,528 |
0.87%
Master’s degree or above
| 161 | 162 |
-0.62%
others
| 2,214 | 1,885 |
17.45%
Age composition of R&D staff- - -Under 30 years old
14,967
| 14,967 | 16,442 |
-8.97%
30-40 years old
| 12,655 | 10,844 |
16.70%
Over 40 years old
| 857 | 665 |
28.87%
R&D investment of the Company
2023 2022 Change PercentageAmount of R&D expenses (RMB)11,392,948,404.47
9,814,444,260.55
16.08%
| R&D expenses as a percentage of |
revenue
12.75%
11.80%
0.95%
Capitalized R&D expenses (RMB)
0.00
0.00
0.00%
| Capitalized R&D expenses as a percentage of R&D expenses |
0.00%
0.00%
0.00%
Reason and effect of significant change in the composition of the Company's R&D personnel
□ Applicable √ Inapplicable
Reason of significant change of total R&D expenses as a percentage of revenue as compared to last year
□ Applicable √ Inapplicable
Reason and explanation of its reasonableness of significant change of the capitalized R&D expenses
□ Applicable √ Inapplicable
5. Cash Flow
Unit: RMBItem 2023 2022 YoY Change (%)
Subtotal of cash inflows fromoperating activities
99,392,055,313.32
| Subtotal of cash inflows from operating activities |
92,669,076,379.69
7.25%
| Subtotal of cash outflows from operating activities |
82,768,801,007.40
82,504,940,997.31
0.32%
| Net cash flows from operating |
activities
16,623,254,305.92
10,164,135,382.38
63.55%
| Subtotal of cash inflows from |
investing activities
4,907,512,153.30
7,422,373,113.52
-33.88%
| Subtotal of cash outflows from investing activities |
8,894,812,143.31
11,147,754,175.76
-20.21%
| Net cash flows from investing activities |
-3,987,299,990.01
-3,725,381,062.24
-7.03%
Item 2023 2022 YoY Change (%)
11,109,937,859.61
| Subtotal of cash inflows from financing activities |
14,375,530,041.46
-22.72%
| Subtotal of cash outflows from financing activities |
14,255,369,357.73
15,831,448,254.21
-9.96%
| Net cash flows from financing activities |
-3,145,431,498.12
-1,455,918,212.75
-116.04%
| Net increase in cash and cash |
equivalents
9,603,887,833.13
5,211,446,085.37
84.28%
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 increase in sales collection duringthe reporting period; the main reason for the change in net cash flow from investing activities was the purchase oflong-term assets during the reporting period; the main reason for the change in net cash flow from financingactivities was mainly due to the issuance of restricted shares and the listing of the subsidiary in the previous year,and there wereno such fundraising activities in the current period.
Explanation of reasons leading to the material difference between cash flow from operating activities during thereporting period and net profit for the year
□ Applicable √ Inapplicable
IV. Non-core Business Analysis
□Applicable √Inapplicable
V. Analysis of Assets and Liabilities
1. Material changes of asset items
Unit：RMB
December 31, 2023 December 31, 2022
YoYChange
(%)
Note of significant change
Amount
Percentage
of totalassets
Amount
Percentage
of totalassetsCash and bank balances49,629,469,654.46
| Percentage | |||
| 35.74% |
40,011,863,999.94
33.56%
2.18%
Increase in salescollectionAccounts receivable35,815,173,511.44
| 25.79% |
29,906,294,410.40
25.08%
0.71%
No significant changeContract assets1,173,312,415.20
| 0.85% |
2,118,223,370.98
1.78%
-0.93%
Part of construction
projects met payment
conditions transferred to
accounts receivableInventories19,211,434,385.32
| 13.84% |
18,998,222,978.81
15.93%
-2.09%
No significant changeLong-term equityinvestment
1,151,104,887.85
| 0.83% |
1,252,033,513.41
1.05%
-0.22%
No significant change
December 31, 2023 December 31, 2022
YoYChange
(%)
Note of significant change
Amount
Percentageof totalassets
Amount
Percentage
of totalassets
Fixed assets11,508,302,317.75
| Percentage | |||
| 8.29% |
8,539,842,630.68
7.16%
1.13%
Chengdu Science andTechnology Park Project,Wuhan Smart IndustrialPark Project Phase I andother projects weretransferred to fixed assets
Construction in process4,307,651,074.46
| 3.10% |
3,770,803,300.80
3.16%
-0.06%
No significant changeRight-of-use assets521,061,396.66
| 0.38% |
574,478,326.31
0.48%
-0.10%
No significant changeLease liabilities344,005,866.13
| 0.25% |
277,255,924.83
0.23%
0.02%
Contract liabilities2,977,990,775.40
| 2.14% |
2,644,496,508.36
2.22%
-0.08%
No significant changeShort-term borrowings2,118,952,026.06
| 1.53% |
3,343,071,972.89
2.80%
-1.27%
Increase in demands for
working capitalLong-term borrowings8,940,122,961.01
| 6.44% |
7,522,315,341.60
6.31%
0.13%
Non-current liabilitiesdue within one year
5,814,660,214.96
| 4.19% |
868,197,272.46
0.73%
3.46%
High proportion of overseas assets
□ Applicable √ Inapplicable
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMBItem Opening balance
change in fairvalue during theperiod
Cumulative fairvalue changesincluded in equity
Provision
| Profit or loss from | for decline |
in value
currentperiod
Purchased
| during the | amount during |
the period
Sales during
the period
Other changes Closing balance
Financial assets
1. Derivative financial assets
-
| 12,807,438.36 | 12,770,058.36 |
2. Other non-current financial assets
| 37,380.00 | ||
| 423,893,239.94 |
| 5,229,385.72 | 25,000,000.00 |
| 604,313.00 | 18,666,625.00 |
3. Receivables for financing
| 472,184,937.66 | |||||||
| 1,484,218,258.74 |
| 110,001,573.88 | 1,594,219,832.62 |
Subtotal of financial assets
-
| 1,920,918,937.04 | 7,540,672.64 | 25,000,000.00 |
| 604,313.00 | 128,668,198.88 | 2,066,442,150.28 |
Financial liabilities
| 68,299,685.57 | 30,219,930.53 |
Whether there were any material changes on the measurement attributes of major assets of the Company during the reporting period:
□ Yes √ No
3. Assets right restrictions as of the end of the reporting period
Unit: RMB
VI. Investments
1. Overview
√Applicable □ Inapplicable
2. Significant equity investment during the current reporting period
□Applicable √Inapplicable
Item Closing book value (RMB) Reasons for being restricted
210,191,306.76
| Cash and bank balances | Various cash deposits and |
other restricted funds
receivable1,172,749,062.48
| Notes | Endorsed to suppliers, discounted to banks, and pledged for the issuance of the banker's acceptance | |
| Receivables for financing |
42,274,830.03
| Pledge for issuance of bank’s acceptance bills | ||
| Accounts receivable |
320,648,995.89
-term debts
Pledge for longContract assets
129,223,004.39
| Contract assets | Pledge for long |
-term debts
79,633,944.01
| Fixed assets | Fixed assets leased out under operating leases |
37,374,930.65
| Intangible assets | Pledge and mortgage for long |
-term debts
-current assets1,500,999,221.99
| Other non | Pledge for long |
-term debtsTotal3,493,095,296.20
Investment in 2023 (RMB) Investment in 2022 (RMB) YoY (%)
4,935,643,770.15 4,686,051,570.44 5.33%
3. Significant non-equity investment during the current reporting period
√ Applicable □ Inapplicable
Unit: RMB
Project name
Investmethod
Fixedassetsinvestment or not
Projectindustry
Investment during
period
Cumulativeamount ofinvestment by theend of the currentreporting period
Source of
funds
Projectschedule
| the current reporting | Reasons |
for not
planned
| progress |
and
benefits
Disclosure Date
(if applicable)
Disclosure Index (if applicable)
Chengdu Science andTechnology Park Project
Self-builtYes
AIoTproductsandservices
4,687,853.06 1,429,368,089.70
Self-financing
100.00%
| expected | |
None
September 23,
2017
Announcement on Investment andConstruction of Chengdu Scienceand Technology Park Project in
Chengdu (No. 2017-033)Xi’an Science andTechnology Park Project
Self-builtYes
AIoTproducts
andservices
679,169,622.18 1,189,310,650.73
Self-financing
73.29%
None
September 23,
2017
Announcement on Investment andConstruction of Xi’an Science and
Technology Park in Xi’an (No.
2017-031)
| Wuhan Intelligence Industry |
Park Project (Phase I)
Self-builtYes
AIoTproducts
andservices
597,753,883.32 960,249,154.48
Self-financing
100.00%
None
September 23,
2017
Announcement on Investment and
Construction of WuhanIntelligence Industry Park inWuhan (No. 2017-036)
| Wuhan Intelligence Industry |
Park Project (Phase II)
Self-builtYes
AIoTproducts
andservices
1,698,562.38 5,671,116.16
Self-financing
0.37%
None
Project name
Investmethod
Fixedassetsinvestment or not
Projectindustry
Investment during
period
Cumulativeamount ofinvestment by theend of the currentreporting period
Source offunds
Projectschedule
| the current reporting | Reasons |
for not
planned
| progress |
and
benefits
Disclosure Date(if applicable)
Disclosure Index (if applicable)
EZVIZ IntelligentManufacturing ChongqingBase Project(Infrastructure
Part)
Self-builtYes
AIoTproductsandservices
556,041,674.60 628,214,692.80
Self-financing/Raisefunds
53.69%
| expected | |
None
August 11,2021
Announcement on the Investment
and Construction of EZVIZIntelligent Manufacturing(Chongqing) Base Project byHolding Subsidiaries (No. 2021-
052)Shijiazhuang Science andTechnology Park Project
(Phase I)
Self-builtYes
AIoTproducts
andservices
169,836,308.93 288,123,484.13
Self-financing
100.00%
None
March 22,
2018
Announcement on Investment and
Construction of ShijiazhuangScience and Technology Park in
Shijiazhuang (No. 2018-016)Shijiazhuang Science andTechnology Park Project
(Phase II)
Self-builtYes
AIoTproducts
andservices
153,547,142.02 276,247,602.73
Self-financing
61.57%
None
Hikvision GlobalWarehousing LogisticsCenter (Phase I)
Self-builtYes
AIoTproducts
andservices
84,761,013.93 106,599,361.06
Self-financing
100.00%
None
January 19,
2022
Announcement on the Investmentand Construction of HikvisionGlobal Warehousing and Logistics
Center Project (No. 2022-010)
Project name
Investmethod
Fixedassetsinvestment or not
Projectindustry
Investment during
period
Cumulativeamount ofinvestment by theend of the currentreporting period
Source offunds
Projectschedule
| the current reporting | Reasons |
for not
planned
| progress |
and
benefits
Disclosure Date
(if applicable)
Disclosure Index (if applicable)
Industrialization Base ofInfrared Thermal Imaging
Products
Self-builtYes
AIoTproducts
andservices
70,562,828.92 70,932,363.98
Self-financing
8.60%
| expected | |
None
January 19,2022
Announcement on the Investment
and Construction of theIndustrialization Base of InfraredThermal Imaging Products by the
Holding Subsidiary (No. 2022-
008)HikRobot ProductIndustrialization BaseConstruction Project
Self-builtYes
AIoTproducts
andservices
61,041,691.51 61,417,606.81
Self-financing
6.06%
None
January 19,
2022
Announcement on the Investmentand Construction of HikRobotProduct Industrialization BaseConstruction Project by Holding
Subsidiary (No. 2022-007)HikRobot IntelligentManufacturing (Tonglu)
Base Project
Self-builtYes
AIoTproducts
andservices
19,640,816.79 20,299,490.56
Self-financing
1.90%
None
January 19,
2022
Announcement on the Investmentand Construction of HikRobot
Base Project by a HoldingSubsidiary (No. 2022-009)Total -- -- --2,398,741,397.64 5,036,433,613.14 -- -- -- -- --
Note: In accordance with the Company's Authorization Management System, new investments on fixed assets of Chengdu Science and Technology Park Project, Xi’anScience and Technology Park Project, Wuhan Intelligence Industry Park Project, and Shijiazhuang Science and Technology Park Project were approved by the StrategyCommittee of the Board of Directors.
4. Financial asset investment
(1) Securities Investments
□ Applicable √ Inapplicable
There no such case in the reporting period.
(2) Derivatives Investments
√ Applicable □ Inapplicable
1) Derivative investments for hedging purposes during the reporting period
√ Applicable □ Inapplicable
Unit: 0,000 RMBType of derivativesinvestment
Initial investmentamount
Openingamount
Gain or loss on
during the reporting
period
Changes incumulative fairvalue included inequity
Purchased amountduring thereporting period
Sold amount
during thereporting period
| changes in fair value |
Closingamount
Proportion of closinginvestment amount to theCompany’s net assets at theend of the reporting periodForeign exchange contract 235,153.63 235,153.63 1,744.99 0.00 611,695.94 0.00 176,133.92 2.31%Total 235,153.63 235,153.63 1,744.99 0.00 611,695.94 0.00 176,133.92 2.31%Accounting policies and specific accountingprinciples for hedging business during the reportingperiod and explanations on whether there have beensignificant changes from the previous reporting
In accordance with the provisions of Accounting Standards for Business Enterprises (hereinafter referred to as "ASBE") No. 22 -
and Measurement of Financial Instruments, ASBE No. 24 - Hedge Accounting, ASBE No. 37 -
| Presentation of Financial Instruments and |
other relevant regulations and guides, the Company correspondingly conducted accounting and reporting for foreign exchange derivatives
business carried out. The Company conducted initial and subsequent measurements on contracts of foreign exchange derivatives by held-
Type of derivativesinvestment
Initial investmentamount
Openingamount
Gain or loss on
during the reportingperiod
Changes incumulative fairvalue included in
equity
Purchased amountduring thereporting period
Sold amountduring thereporting period
| changes in fair value |
Closingamount
Proportion of closinginvestment amount to theCompany’s net assets at theend of the reporting periodperiod for-trading financial assets/ held-for-trading financial liabilities, and the fair value for held-for-trading financial assets and held-for-
financial liabilities is determined by financial institutions based on trading data of open market. There
| was no significant changes from the |
previous reporting period.Explanations on actual gain or loss during thereporting period
There was a total of RMB90.20 million actual losses during the reporting period.Explanations on the effect of hedging business
The Company's purpose was to avoid and prevent risks of exchange rate or interest rate fluctuations and prohibited any speculative
actions, further improving the Company's ability to cope with risks of foreign exchange fluctuations, better avoiding and preventing risks
of foreign exchange rate and interest rate fluctuations, and enhancing its financial stability.Capital source of derivatives investment The Company's own fund.Risk analysis and control measures (including butnot limited to, market risk, liquidity risk, credit risk,operational risk, legal risk, etc.) of holdingderivatives during the reporting period
For details of the risk analysis and control measures, please refer to the Announcement on Carrying out Foreign Exchange Hedging
Business in 2023 (Announcement No. 2023-016) disclosed by the Company on April 15, 2023.Change of market price or fair value of investedderivatives during the reporting period; specificmethods, related assumptions and parameter settingof the derivatives’ fair value analysis should bedisclosed
The Company recognized and measured the fair value of derivatives in accordance with the Accounting Standards for Business
Enterprises Article 22 - Recognition and Measurement of Financial Instruments. During the reporting period, a total of RMB17.45
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.Prosecution (if applicable) NoneAnnouncement date for approvals of derivativesinvestment from the Board of Directors (if any)
April 15, 2023Announcement date for approvals of derivativesinvestment from the general meeting of shareholders
Inapplicable
Type of derivativesinvestment
Initial investmentamount
Openingamount
Gain or loss on
during the reportingperiod
Changes incumulative fairvalue included inequity
Purchased amountduring thereporting period
Sold amountduring thereporting period
| changes in fair value |
Closingamount
Proportion of closinginvestment amount to theCompany’s net assets at theend of the reporting period(if any)
Specific opinions on the Company’s derivativesinvestments and risk control from independentdirectors
The relevant approval procedures for the Company’s foreign exchange hedging business complies with the relevant national laws andregulations 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, and formulated the Foreign Exchange HedgingManagement System. The relevant internal control processes have been improved, and the targeted risk control measures taken by theCompany are feasible and effective. The Company has issued a feasibility analysis report on the proposed foreign exchange hedgingbusiness, and it is reasonable and feasible for the Company to carry out hedging business based on avoiding foreign exchange marketrisks. Under the premise of ensuring normal production and operation, the Company conducts foreign exchange hedging business, whichenables the Company to avoid and prevent sharp exchange rate fluctuations and its adverse effects on the Company’s operations, andcontributes to controlling foreign exchange risks. There is no damage to the interests of the Company nor of its shareholders.
2) Derivative investments for speculative purposes during the reporting period
□Applicable √ Inapplicable
There is no derivative investments for speculative purposes during the reporting period.
5. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund.The details of the use of funds raised by EZVIZ Network, the Company's holding subsidiary, was disclosed on April 13, 2024 in Annual Report of Hangzhou EZVIZNetwork Co., Ltd Section Ⅵ (14) - Progress of the Use of Funds Raised on the website of Shanghai Stock Exchange ( www.sse.com.cn).
VII. Disposal of Significant Assets and Equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable
There is no disposal of significant asset for the Company during the current reporting period.
2. Sale of significant equity:
□ Applicable √ Inapplicable
VIII. Analysis of Major Subsidiaries and Holding CompaniesInformation about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable
Company name
Equity acquisition and disposalmethod during the reporting period
Impact on overall production results
subsidiaries
Transfer of equity in cash Business developmentZhejiang Haishi Luyue Technology Ltd. Cash contribution Business developmentLLC VIETNAM HIKVISION TECHNOLOGY
COMPANY LIMITED
Cash contribution Expand overseas sales channelsShijiazhuang Haishi Digital Technology Ltd. Cash contribution Business development
Hikrobot Europe B.V. Cash contribution Expand overseas sales channelsHikrobot Singapore Pte. Ltd. Cash contribution Expand overseas sales channelsZhengzhou Hikvision Technology Ltd Cash contribution Business developmentIX. Structural Entities Controlled by the Company
□ Applicable √ Inapplicable
X. Outlook for the Future Development of the Company
1. Development Trends for the Industry
IoT perception, AI, and big data are the core technologies of the AIoT industry and key drivers for digitaltransformation. The development of the AIoT industry will drive various industries, and bring unprecedentedchanges to the society and economy in the process of promoting digital transformation of more business scenarios.The Company has long-standing technical expertise and first-mover advantage in the field of AIoT, andpossesses the core capabilities for digital transformation. We are confident in taking advantage of the opportunitiesbrought by digital transformation and working with partners to facilitate the digital transformation of the society.
2. Development Strategy of the Company
Hikvision is committed to serving various industries with IoT perception, AI, and big data technologies, leadingthe future of AIoT. Through comprehensive perception technologies, we aim to help people better connect with theworld around them. With a wealth of intelligent products, we strive to identify and satisfy diverse demands bydelivering intelligence at your fingertips. Through innovative AIoT applications, we are dedicated to empowering
every individual to enjoy a better future by building an intelligent world that is more convenient, efficient and secure.
3. Key Priorities in 2024
(1) Consolidate and enhance innovation advantages by focusing on products and technologies.
(2) Expand business scope and product categories by seizing the opportunities of digital transformation.
(3) Continuously implement the marketing strategy, and promote the construction of digital marketing capabilities
to ensure continuous business growth.
(4) Enhance manufacturing capabilities and build a flexible and smart supply chain to ensure supply security.
(5) Expand the scale of innovative business services, strengthen their competitiveness, and strive for a better
position in their respective markets.
(6) Promote the integration and mutual facilitation of the Company's organizational systems, and improve
operational efficiency.XI. Reception of Activities including Research, Communication and Interviews during theReport Period
√ Applicable □ Inapplicable
Time ofreception
Location of
reception
Method ofreception
Type ofreception
object
Reception object
The main content of
the discussion and
the informationprovided
Index of basic situation of the
research
April 15, 2023
Headquartersmeeting room
of theCompany
Performance
resultconference call
| Institutional |
investors;individuals
InvestorsincludingTianhong Fund-
Chen Hao
The Company'soperations in 2022and the first quarter
of 2023
CNINF, Investor RelationsActivity Record on April 15,
2023
– May 19,2023
Headquartersmeeting room
of theCompany
Site researchand telephonecommunication
| April 17, 2023 | Institutional |
investors
Investorsincluding Huaxia
Fund-Xu Heng
The Company's
and future prospects
CNINF, Investor RelationsActivity Record: From April17, 2023 – May 19, 2023
– June 21,
2023
Headquartersmeeting room
of theCompany
Site Researchand telephonecommunication
| May 25, 2023 | Institutional |
investors
Investorsincluding Caitong
AssetsManagement-
Miao Feng
The Company's
and future prospects
CNINF, Investor RelationsActivity Record: From May25, 2023 – June 21, 2023
– July 19,
2023
Headquartersmeeting room
of the
Site Researchand telephonecommunication
| June 28, 2023 | Institutional |
investors
Investorsincluding GuoxinSecurities-Ye Zi
The Company's
and future prospects
CNINF, Investor RelationsActivity Record: from
2023 – July 19, 2023
Time ofreception
Location of
reception
Method ofreception
Type ofreceptionobject
Reception object
The main content ofthe discussion andthe informationprovided
Index of basic situation of the
researchCompanyAugust 19,
2023
Headquartersmeeting room
of theCompany
Performance
resultconference call
| Institutional |
investors;individuals
Investorsincluding FidelityFund-Liu Xuqing
The Company'soperations in thefirst half of 2023
CNINF, Investor RelationsActivity Record on August 19,
2023October 21,2023
Headquartersmeeting room
of theCompany
Performanceresultconference call
| Institutional |
investors;individuals
Investorsincluding BoshiFund-Chen Wei
The Company'soperations in thethird quarter of 2023
CNINF, Investor RelationsActivity Record on October
21, 2023
Section IV Corporate GovernanceI. Basic Situation of Corporate Governance
Since the inception of the Company, we have been strictly following relevant laws and regulations such as theCompany Law, Securities Law, Code of Corporate Governance of Listed Companies, Rules Governing the Listingof Shares on Shenzhen Stock Exchange, and Shenzhen Stock Exchange Listed Companies Self-RegulatorySupervision Guidelines No. 1 - Standardized Operation of Main Board Listed Companies as well as the requirementsof the regulations and regulatory documents of the regulatory authorities and continuously improving the "3+1"corporate governance structure comprising shareholders’ meeting, the Board of Directors, the Board of Supervisors,and the management taking into consideration the actual situation of the Company, and strictly follow the principleof disclosing information in a true, accurate, complete, timely and impartial manner; we have also established andimproved internal management and control system, promoted the standardized operation of the Company andensured the legitimate rights and interests of the Company and investors. During the reporting period, the basicdetails of corporate governance is as follows:
1. Shareholders and shareholders’ meeting
All shareholders of the Company have the equal status and full rights, especially small and mediumshareholders.During the reporting period, the Company held a total of 1 general meetings of shareholders, whichwas convened by the Company's Board of Directors, and witnessed by lawyers on-site with legal opinions issued.Proposals of general meetings of shareholders were reviewed in compliance with legal procedures to ensure that allshareholders have the right to know, participate, and vote on major issues of the Company and to fully exercise theirlegal rights.
2. The controlling shareholders and listed company
The Company’s controlling shareholders had no improper conduct and have never directly or indirectlyinterfered with the Company’s decision-making and operating activities overriding shareholders’ meeting. Thereare no such cases that controlling shareholders illegally occupy the Company's funds or the Company illegallyprovides guarantees for controlling shareholders. The Company, with its own complete business system andmanagement capabilities, has been independent of controlling shareholders in terms of business, personnel, assets,organizations, and finances. The Company's Board of Directors, Board of Supervisors and internal institutions hasbeen operating separately and major company decisions are made and implemented by the Company.
3. Directors and the Board of Directors
The Company's Board of Directors, operating in a normalized way, has exercised its authority invested by theArticles of Association and relevant laws and regulations, and implemented the relevant decisions of theshareholders’ meeting. The number and composition of the Company's Board of Directors comply with therequirements of laws and regulations. There are four committees for strategy, audit, nomination, remuneration andappraisal under it. Each committee has a clear division of labor, clear powers and responsibilities, and effectiveoperation. All directors of the Company have performed their duties with integrity, loyalty, diligence,professionalism and due diligence, and earnestly safeguard the legitimate rights and interests of the Company andshareholders with a view to the interests of the Company and shareholders.The independent directors of the
Company performed their duties independently and unaffected in accordance with the Measures for theAdministration of Independent Directors of Listed Companies and other relevant regulations, attended theCompany's Board of Directors and shareholders' general meetings, conducted special discussion and research onrelated party transactions that should be disclosed and issued prior approval opinions. The special committee hasstudied and deliberated on matters such as employing accounting firms and foreign exchange hedging, and hasplayed its due role in improving the Company's supervision mechanism, safeguarding the interests of the Companyand its shareholders, especially the shareholders of public shares, providing professional and objective suggestionsfor the Company's operation and development, promoting the improvement of the decision-making level of theboard of directors, and ensuring the standardized operation of the Company.
During the reporting period, the Company convened 4 board meetings, reviewed and approved 29 proposalsincluding the Annual Report 2022 and its Summary, Proposal on Capital Increase and Introduction of StrategicInvestors for Wholly-Owned Subsidiary Shijiazhuang Sensortech Intelligent Technology Co., Ltd., Proposal onRenewing the "Financial Services Agreement" and Related Party Transactions with China Electronics TechnologyFinance Co., Ltd., etc.
4. Supervisors and Board of Supervisors
The Company's Board of Supervisors, operating in a normalized way, has exercised its authority invested bythe Articles of Association and relevant laws and regulations The number and composition of the Company’s Boardof Supervisors meet the requirements of laws and regulations; the Company’s supervisors have diligently performedtheir duties and obligations, and carried out supervision and inspection functions being responsible to shareholders,and supervised the Company’s financial status, operating conditions and related transactions, and the performanceof duties by directors and senior managers to fully protect the legal rights and interests of the Company and all
shareholders.During the reporting period, the Company held 3 Board of Supervisors’ meetings, reviewed and approved 14proposals including the Annual Report 2022 and its Summary, Proposal on the Change of Certain AccountingPolicies, etc.
5. Performance appraisal and incentive and restraint mechanism
The Company has established a complete performance appraisal system and remuneration system. Theappointment procedures for senior management personnel are open and transparent, and comply with relevant lawsand regulations. The remuneration and appraisal committee under the Company's Board of Directors is responsiblefor performance appraisal of the Company's senior management at the end of the year to determine theirremuneration. To further set up and improve the Company’s incentive mechanism and strengthen the concept ofsustainable development of both the Company and employees, the Company has adopted a restricted share schemeand the plan of core staff’s co-investment into innovation business to achieve its development strategy and businessobjectives, and realize sustainable health development.
6. Information disclosure and transparency
The Company has strictly followed the relevant laws and regulations and the Information DisclosureManagement System to disclose relevant information truthfully, accurately, completely, timely and impartially, andthoroughly implemented the Information Insider Management System to register insiders and file to furtherstandardize inside information management and to ensure that all shareholders and other stakeholders of theCompany have equal access to company information. During the reporting period, the Company disclosed 4 periodicreports and 37 temporary announcements. The Company's information disclosure has been recognized by theregulatory authorities: the Company has been rated as Level A by the Shenzhen Stock Exchange for 13 consecutiveyears in the main board listed company information disclosure assessment.
7. Continue to improve the internal management system
In accordance with relevant laws and regulations of regulatory authorities such as the Company Law and theSecurities Law, requirements of normative documents and other internal management systems such as the Articlesof Association, the Rules of Procedure for the General Meeting of Shareholders, the Rules of Procedure for theBoard of Directors, the Authorization Management System, The Company continuously strengthened the internalmanagement, improved the governance structure, promoted the normative operation, and protected the legitimaterights and interests of the Company and shareholders.
8. Investor relations activities
The Company has proactively organized result briefing conferences and investor research activities after thedisclosure of regular reports to actively listen to investors’ opinions and suggestions, and released the 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 was awarded the "17thOutstanding Digital Intelligence Enterprise of China's Listed Companies" in the 17th China’s Most Valuable ListedCompany Selection hosted by the Securities Times, the "2023 Best Practice Case of Corporate Governance" by theChina Association of Listed Companies, and the "Excellent Case of Corporate Social Responsibility Report inZhejiang Province" by the Zhejiang Federation of Industrial Economics and the Zhejiang State-owned AssetsManagement Association.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 the Company,controlling shareholders, and related parties.
2. Personnel independence: The Company has independent personnel. The management has set up various
independent departments, including R&D, production, administration, finance and operation managementdivisions, etc., and established complete management methods for labor, personnel, and salary management.Personnel of the Company is independent from controlling shareholders, e.g. the chairman is elected through the
general meetings of the Board. In addition, the general manager, senior deputy general managers, CFO, thesecretary of the Board, and other senior management personnel of the Company are work full-time in the Companyand receive remuneration, and do not receive remuneration in the controlling shareholders, nor do they hold anyadministrative positions other than directors and supervisors in the controlling shareholders. Directors, supervisors,and senior management personnel are appointed through legal procedures strictly in accordance with relevantregulations stipulated in Company Law and Articles of Association. There is no controlling shareholder illegalintervention in the Company’s personnel decisions in general meetings of the Board or shareholders.
3. Asset Completeness: The property rights of assets are explicitly between the Company and the controlling
shareholders, and no assets, funds, or other resources owned by the Company are illegally and irregularly occupiedor controlled by the controlling shareholders. Assets of the Company are integrated, including complete propertyrights of fixed assets for production, supporting assets for production, and intangible assets of patents, etc. TheCompany has the full control and ownership of all assets.
4. Independence in organizations: The Company’s Board of Directors, Board of Supervisor, management
and other internal organizations operate independently, and each functional department is independent fromcontrolling shareholders in duty and personnel. There is no superior-subordinate relation between functionaldepartments of controlling shareholders and those of the Company, which would have an impact on the Company’sindependent 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 decisions independently.There is a standardized financial accounting system and a financial management system for the Company’sbranches and subsidiaries, and there is no controlling shareholder intervention in the Company’s financial andaccounting activities. The Company has maintained accounts with banks independently of and do not share anybank account with our Controlling Shareholders. The Company has undertaken independent tax registration inaccordance with applicable 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
investors
Convened Date Disclosure Date Resolution of the Meeting
| participating |
2022 Annual General Meeting
Annual GeneralMeeting
67. 0703% May 9, 2023 May 10, 2023
14 proposals including the2022 Annual Report andSummary were reviewedand voted. For details,please refer to theCompany's announcement:
No. 2023-025.
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with Resumed
Voting Rights:
□ Applicable √ Inapplicable
V. Information about Directors, Supervisors, Senior Management
1. Basic Situation
Name Title
Tenurestatus
Gender
Age
| Commencement |
of term ofoffice
of term of
office
Shares held at thebeginning of thePeriod (Shares)
Shares
| Termination | increased |
during
thePeriod(shares)
(Shares)
Otherincrease ordecrease of
shares
(Share)
Shares held atthe end of thePeriod (Shares)
| Shares decreased during the Period |
Reasons for increase ordecrease of shares
ChenZongnian
Chairman Incumbent
Male 59 June 19, 2008
March 4,2024
0 0 0 0 0 --Qu Liyang
Director Incumbent
Male 60 March 7, 2018
March 4,
2024
15,750 0 0 0 15,750 --WangQiuchao
Director Incumbent
Male 73 March 5, 2021
March 4,
2024
35,000 0 0 0 35,000 --HuYangzhong
Director,GeneralManager
(CEO)
Incumbent
Male 59
December 28,
2001
March 4,
2024
155,246,477 390,000 0 0 155,636,477
Increase of shares during
the Period
Wu Weiqi
Director,StandingDeputyGeneralManager
Incumbent
Male 60 March 1, 2003
March 4,2024
8,631,089 54,700 0 0 8,685,789
Increase of shares duringthe PeriodWuXiaobo
Independent
Director
Incumbent
Male 64 March 5, 2021
March 4,
2024
0 0 0 0 0 --
Name Title
Tenurestatus
Gender
Age
| Commencement |
of term of
office
of term of
office
Shares held at thebeginning of thePeriod (Shares)
Shares
| Termination | increased |
during
thePeriod(shares)
(Shares)
Otherincrease ordecrease ofshares(Share)
Shares held atthe end of thePeriod (Shares)
| Shares decreased during the Period |
Reasons for increase or
decrease of shares
Hu Ruimin
Independent
Director
Incumbent
Male 60 March 5, 2021
March 4,2024
0 0 0 0 0 --Li Shuhua
Independent
Director
Incumbent
Male 53 March 5, 2021
March 4,
2024
0 0 0 0 0 --GuanQingyou
Independent
Director
Incumbent
Male 47 March 5, 2021
March 4,2024
0 0 0 0 0 --HongTianfeng
SupervisorChairman
Incumbent
Male 58 March 5, 2021
March 4,
2024
0 0 0 0 0 --Xu Lirong
Supervisor Incumbent
Male 61 March 21, 2018
March 4,2024
303,000 0 0 0 303,000 --LuJianzhong
Supervisor Incumbent
Male 70 March 5, 2021
March 4,
2024
0 0 0 0 0 --He Hongli
SeniorDeputyGeneralManager
Incumbent
Female
2005
March 11,2024
331,500 0 0 0 331,500 --CaiChangyang
| December 18, | ||
SeniorDeputyGeneralManager
Incumbent
Male 53 April 8, 2016
March 11,
2024
109,500 0 0 0 109,500 --Xu Ximing
SeniorDeputy
Incumbent
| General |
Male 51
October 11,
2016
March 11,
2024
287,000 0 0 -59,100 227,900
The third repurchase and
cancellation of the
Name Title
Tenurestatus
Gender
Age
| Commencement |
of term ofoffice
of term of
office
Shares held at thebeginning of thePeriod (Shares)
Shares
| Termination | increased |
during
thePeriod(shares)
(Shares)
Otherincrease ordecrease of
shares
(Share)
Shares held atthe end of thePeriod (Shares)
| Shares decreased during the Period |
Reasons for increase or
decrease of shares
Company's 2018 restricted
sharesBi Huijuan
| Manager | |
SeniorDeputyGeneralManager
Incumbent
Female
October 11,2016
March 11,2024
273,000 0 0 -36,900 236,100
The third repurchase and
cancellation of theCompany's 2018 restricted
sharesPuShiliang
SeniorDeputyGeneralManager
Incumbent
Male 47 March 21, 2018
March 11,2024
385,900 0 0 -30,000 3555,900
The third repurchase and
cancellation of theCompany's 2018 restricted
sharesJin Duo
SeniorDeputyGeneralManager
Incumbent
Male 59 March 10, 2015
March 11,2024
109,500 0 0 0 109,500 --
Jin Yan
SeniorDeputyGeneralManager,Person incharge of
finance
Incumbent
Female
45 July 22, 2015
March 11,
2024
364,000 0 0 -33,000 331,000
The third repurchase and
cancellation of theCompany's 2018 restricted
sharesHuangFanghong
SeniorDeputyGeneral
Incumbent
Female
42 April 8, 2016
March 11,
2024
482,500 0 0 -33,000 449,500
The third repurchase and
cancellation of theCompany's 2018 restricted
Name Title
Tenurestatus
Gender
Age
| Commencement |
of term of
office
of term ofoffice
Shares held at thebeginning of thePeriod (Shares)
Shares
| Termination | increased |
during
thePeriod(shares)
(Shares)
Otherincrease ordecrease of
shares
(Share)
Shares held atthe end of thePeriod (Shares)
| Shares decreased during the Period |
Reasons for increase or
decrease of sharesManager,
BoardSecretary
shares
ChenJunke
Senior
DeputyGeneralManager
Incumbent
Male 53 March 21, 2018
March 11,2024
0 0 0 0 0 --
Xu Peng
Senior
DeputyGeneralManager
Incumbent
Male 48
March 12,
2021
March 11,
2024
147,244 0 0 -38,622 108,622
The third repurchase and
cancellation of theCompany's 2018 restricted
sharesGuoXudong
SeniorDeputyGeneralManager
Incumbent
Male 52
March 12,
2021
March 11,
2024
44,280 0 1,000 -22,140 21,140
The third repurchase and
cancellation of theCompany's 2018 restricted
shares and reduction ofshares during the PeriodTotal -- -- -- -- -- -- 166,765,740 444,700 1,000 -252,762 166,956,678 --
Note: The number of shares held at the beginning of the period, shares increased during the period, shares decreased during the period, other increase or decrease ofshares, and shares held at the end of the period for directors, supervisors, and senior management personnel above are all shares directly held by them accordingly,including restricted shares.
Any resignation of directors or supervisors and dismissals of senior management personnel during their term of office during the reporting period.
□Yes √No
Change of directors, supervisors and senior management personnel
□Applicable √Inapplicable
2. Positions and Incumbency
1) Directors
Mr Chen Zongnian (陈宗年): Born in 1965, Chen holds a PhD of business administration and has served as deputygeneral manager of Shenzhen Gao Ke Run Electronics, director and general manager of Zhejiang HaikangInformation Technology Co., Ltd. and Zhejiang Haikang Group Co., Ltd. He also served as an assistant of the head,deputy head, and the head of 52
ndResearch Institute at China Electronics Technology Group Corporation(hereinafter referred to as "52
nd
Research Institute"). Chen currently serves as the Chairman of China ElectronicsTechnology HIK Group Co., Ltd. (CETHIK), the Chairman of Phoenix Optics Co., Ltd. and the Chairman of theCompany.Mr. Qu Liyang (屈力扬): Born in 1964, bachelor degree of engineering, researcher-level senior engineer. Heserved as the director, deputy director, party secretary and deputy director of the 52
nd
Research Institute, andChairman of the Board of Supervisors of CETHIK. He is currently a member of the Strategy Committee of ChinaElectronic Technology Group Co., Ltd., director of the Science and Technology Innovation Committee of CETHIK,and a director of the Company.Mr. Wang Qiuchao (王秋潮): Born in 1951, master degree in law. Wang served as director of Zhejiang T&C LawFirm (浙江天册律师事务所), Chairman of the Zhejiang Lawyers Association (浙江省律师协会) , vice-presidentof the Zhejiang Law Society (浙江省法学会), and a supervisor of the Company. Wang currently serves as honorarypartner of Zhejiang T&C Law Firm, arbitrator of the China International Economic and Trade ArbitrationCommission (中国国际经济贸易仲裁委员会, "CIETAC") , an arbitrator of Shanghai International ArbitrationCenter (上海国际仲裁中心) and Shenzhen International Economic and Trade Arbitration Commission (深圳国际仲裁中心), and a director of the Company.Mr. Hu Yangzhong (胡扬忠): Born in 1965, master degree of engineering, senior research engineer. He served asan engineer of the 52
ndResearch Institute from June 1989 to December 2001. From December 2013 to April 2022,he served as a director of CETHIK Group Co., Ltd. He has been appointed as a director of the Company and generalmanager of the Company since December 2001. Hu currently serves as a director and the general manager of theCompany.Mr. Wu Weiqi (邬伟琪): Born in 1964, bachelor degree of engineering, senior engineer. Wu held various positionsat the 52
nd
Research Institute, including technician, engineer associate, engineer and senior engineer, from July 1986
to December 2001. Since November 2001, He has been appointed as a deputy general manager, 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, postdoctoral fellow in finance and law, non-practicingmember of the China Institute of Certified Public Accountants, National-level candidates for the New CenturyHundreds and Thousands of Talents Project, National Leading Talents in Accounting, and National Leading Talentsin Shenzhen. He has successively served as deputy director of the Audit Division of the Accounting Department ofthe China Securities Regulatory Commission (presiding), deputy director of the General Office (presiding), directorof the Financial and Budget Management Department and director of the General Office, a member of the ExecutiveCommittee and Chief Financial Officer, Chief Risk Officer and Chief Compliance Officer of China GalaxySecurities Co., Ltd. He concurrently served as a PE professor and master’s tutor at the National Accounting Institute(Xiamen), Peking University, Shanghai Institute of Advanced Finance, Shanghai Jiaotong University, and TsinghuaUniversity. He is currently the Chairman of Changzhou NRB Corporation (常州光洋軸承股份有限公司), and an
independent director of the Company.Mr. Guan Qingyou (管清友): Born in 1977, a holder of Ph.D. in economics, Young Economist. He hassuccessively served as the former vice president of Minsheng Securities and the president of the research institute;He is currently the President and Chief Economist of the Institute of Finance, Vice President of the China PrivateEconomic Research Association, Professor of the School of Economics of Hainan University, Chief Economist ofZhongguancun Private Equity & Venture Capital Association (ZVCA) and Guangdong Province Venture CapitalAssociation, and an independent director of the Company.
2) Supervisors
Mr. Hong Tianfeng (洪天峰): Born in 1966, master degree in engineering. Hong was an engineer in NanjingUniversity of Posts and Telecommunication (南京邮电大学) from July 1990 to June 1993; He served as anexecutive deputy general manager, chief executive of Operation and Delivery, chairman of investment decisioncommittee, and vice chairman of Huawei Technologies Co., Ltd. (华为技术有限公司) from July 1993 to September2011. Hong has served as an independent director of the Company. Hong currently serves as an executive directorof Shanghai Fangguang Investment Management Co., Ltd. (上海方广投资管理有限公司), and supervisor of theCompany.
Mr. Lu Jianzhong (陆建忠): Born in 1954, holds bachelor degree in economics and CPA certificate. Lu served asa lecturer and an associate professor of finance and accounting department at Shanghai Maritime University (上海海事大学) from September 1986 to September 1997; he was a CPA and a partner of the auditing department ofPricewaterhouseCoopers, from October 1997 to June 2012; he was a chartered accountant of Shanghai De’anCertified Public Accountants LLP (上海德安会计师事务所) from July 2012 to July 2013; he was a charteredaccountant of the Shanghai branch of PKF Daxin Certified Public Accountants LLP (大信会计师事务所上海分所), from August 2013 to July 2014；he was a partner and a chartered accountant and a partner of ZhongxinghuaCertificated Public Accountants LLP (中兴华会计师事务所) from August 2014 to January 2016; he was achartered accountant of Dahua Certificated Public Accountants LLP (大华会计师事务所) from January 2016 toDecember 2021. Lu has served as an independent director of Hikvision. Lu currently serves as a charteredaccountant of Zhongxinghua Certificated Public Accountants LLP Shanghai Branch, and a supervisor of theCompany.
Mr. Xu Lirong (徐礼荣): Born in 1963, master degree of engineering, senior engineer. In January 2002, he joinedHikvision and served as manager of development division under the R&D center, secretary of the Board of Directors,
the person in charge of internal audit, and a deputy general manager of the Company. He is currently the employeerepresentative supervisor.
3) Senior Management Personnel
Mr. Hu Yangzhong (胡扬忠): Please refer to his profile in preceding part of the report.Mr. Wu Weiqi (邬伟琪): Please refer to his profile in preceding part of the report.Ms. He Hongli (何虹丽): Born in 1973, master degree in business administration. She joined Hikvision inDecember 2001 and served as an assistant to the general manager and a deputy general manager. Ms. He currentlyserves as a senior deputy general manager of the Company.Mr. Cai Changyang (蔡昶阳): Born in 1971, bachelor degree in engineering. He joined Hikvision in 2004, andheld various positions of the Company, including general manager of Beijing branch, director for government andenterprise corporation department, director of investment department, director of strategy and marketing department,and a deputy general manager of the Company. Mr. Cai currently serves as senior deputy general manager of theCompany.
Mr. Xu Ximing (徐习明): Born in 1973, bachelor degree in engineering. From July 1996 to September 2016, heheld various positions in IBM, including engineer, department manager, director, partner of consulting service,senior partner of consulting service, and a vice president. He joined Hikvision in September 2016, and served as adeputy general manager of the Company. Mr. Xu currently serves as a senior deputy general manager of theCompany.Ms. Bi Huijuan (毕会娟): Born in 1971, PhD in engineering, senior research engineer. From April 1999 to August2016, she held various positions in the 15
thResearch Institute at China Electronics Technology Group Corporation(CETC), including engineer, senior engineer, senior research engineer, head of R&D department, vice chiefengineer, and deputy director. She joined Hikvision in August 2016, and served as a deputy general manager of theCompany. Ms. Bi currently serves as a senior deputy general manager of the Company.
Mr. Pu Shiliang (浦世亮): Born in 1977, doctor of engineering, a senior engineer. He joined Hikvision in April2006 and held various positions in the Company, including R&D engineer, R&D manager, R&D director, dean ofthe R&D institute, and chief expert. He currently serves as a senior deputy general manager of the Company.
Mr. Jin Duo (金铎): Born in 1965, bachelor degree in engineering, a senior engineer. He served as a technician,assistant to engineers, an engineer and a senior engineer of the 52
nd
Research Institute from July 1986 to June 2004.
He joined Hikvision in July 2004 and served as general manager of Hangzhou Branch, and a deputy general managerof the Company. Mr. Jin currently serves as a senior deputy general manager of the Company.Ms. Jin Yan (金艳): Born in 1979, master degree in management, an accountant. She joined Hikvision in 2004 andheld various positions at the Company, including financial manager, the general manager of the FinancialManagement Center, and a deputy general manager and the person in charge of finance and accounting. Ms. Jincurrently serves as a senior deputy general manager and the person in charge of finance and accounting of theCompany.
Ms. Huang Fanghong (黄方红): Born in 1982, bachelor degree in law. She joined Hikvision in June 2009 andheld various positions at the Company including legal department manager, internal audit manager, internal controldirector, and a deputy general manager and the board secretary. Ms. Huang currently serves as a senior deputygeneral manager, and board secretary of the Company.Mr. Chen Junke (陈军科): Born in 1971, bachelor degree in engineering, senior engineer. Chen held variouspositions in the 52
ndResearch Institute from 1994 to 2001, including assistant engineer, engineer and senior engineer.He joined the Company in 2001 and served as the technology director of the Digital Video Recorder (DVR) Divisionof the Technology Management Center, general manager of supply chain management center, employeerepresentative supervisor. Chen currently serves as senior deputy general manager of the Company.
Mr. Xu Peng (徐鹏): Born in 1976, bachelor of engineering, senior engineer. From 1998 to 2004, he successivelyserved as an assistant engineer and engineer of 52
ndResearch Institute, and in 2004, he joined Hikvision, where heserved as camera research and development manager, research and development director, product director, generalmanager of front-end product business, and deputy general manager of the Company. He is currently the seniordeputy general manager of the Company.Mr. Guo Xudong (郭旭东): Born in 1972, bachelor of engineering. In July 2002, he joined Hikvision, andsuccessively served as general manager of Shenzhen Branch, marketing director of domestic marketing center anddeputy general manager of domestic marketing center. He is currently the senior deputy general manager of theCompany.
Position held in shareholders’ entities
√Applicable □ Inapplicable
Name Shareholder's entity
Position in shareholders’
entities
Commencementof the term
Termination of theterm
Compensation andallowance from theshareholders' entityChenZongnian
China ElectronicsTechnology HIK Group Ltd.
Chairman, Secretary ofParty Committee
November 2013 -- YXu Lirong
China ElectronicsTechnology HIK Group Ltd.
| Member of Commission for |
Discipline Inspection
December 2013 December 2023 NXu Lirong
China ElectronicsTechnology HIK Group Ltd.
SupervisorDecember 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 andallowance from the other
entitiesChengZongnian
Zhejiang AIoT Technology
Magazine
Legal representative
| Termination of | ||
May 2009 NChengZongnian
Phoenix Optics Ltd. ChairmanDecember 2019 NWang Qiuchao Zhejiang T&C Law Firm Partner June 1986 YWang Qiuchao
Shanghai Kehui ValueInvestment Management Ltd.
Director July 2009 NWang Qiuchao
Yalongxing InvestmentDevelopment Ltd.
Director February 2012 NWang Qiuchao Botsy Technology Co., Ltd
Independent
director
June 2020 May 2023 YWu Weiqi
Hangzhou Pukang EquityInvestment Partnership(Limited Partnership)
Executive Partner April 2011 NWu Weiqi
Wuhu Sensortech Intelligent
Technology Ltd.
Director January 2017 February 2023
N
Wu Weiqi
| Hangzhou Qianmo Tongzhou |
Equity InvestmentPartnership (Limited
Partnership)
Executive partner July 2021
December
2022
N
Wu Xiaobo
Shanghai Yirui Management
Consultants Ltd.
Director April 2004 NWu Xiaobo
Hangzhou Co-Rui EnterpriseManagement Consulting Ltd.
Director April 2011 NWu Xiaobo
Ningbo Industrial Internet
Research Institute Ltd.
Outside director May 2018 Y
Name Name of other Entity
Position in otherentity
Commencementof the term
the term
Compensation andallowance from the other
entitiesWu Xiaobo Eddy Co., Ltd.
Independentdirector
August 2018 YWu Xiaobo
Zhongliang Holdings Group
Ltd.
Independentdirector
June 2019 YWu Xiaobo
Ruihua InnovationManagement ResearchInstitute (Hangzhou) Ltd.
Director November 2019 NWu Xiaobo UCloud Technology Co., Ltd.
Termination of
Independent
director
June 2020 YWu Xiaobo
Zhongtian Holding Group
Ltd.
Independentdirector
July 2021 YLi Shuhua
Xi'an ShaanGu Power Co.,
Ltd.
Independentdirector
May 2018 YLi Shuhua
Luoyang Yuchuan YuyeGroup Co., Ltd.
Independentdirector
August 2018 YLi Shuhua
Changzhou Guangyang
Holdings Ltd.
Director & CEO August 2019
December2022
NLi Shuhua
Changzhou Guangyang
Holdings Ltd.
Legalrepresentative,Chairman, and CEO
December 2022 NLi Shuhua Changzhou NRB Co., Ltd. Chairman October 2019 YLi Shuhua Weihai Shiyi Electronics Ltd.
Chairman December 2020 NLi Shuhua Juzhengyuan Co., Ltd.
Independent
director
December 2020 YLi Shuhua
CIMC-TianDa Holdings
Company Ltd.
Independent
director
May 2021 YLi Shuhua
Guangdong ShengyiTechnology Co., Ltd.
Independent
director
October 2021 YLi Shuhua
TianJin TianHai PrecisionForging Co., Ltd.
Chairman December 2022 NLi Shuhua Yingda Securities Co.,Ltd.
Independent
director
July 2023 YGuan Qingyou
Beijing Rushi ChengjinInformation Consulting
Services Ltd.
CEO October 2016 NGuan QingyouBeijing Rushiwo Research Executive directorDecember 2017 Y
Name Name of other Entity
Position in otherentity
Commencement
of the term
the term
Compensation andallowance from the other
entitiesInformation ConsultingService Ltd.
& CEOGuan Qingyou Midea Group Co., Ltd.
Independent
director
August 2018 YGuan Qingyou
Beijing Xincai ZhibeiInformation Technology Ltd.
Supervisor October 2018 NGuan Qingyou South China Futures Co., Ltd.
Termination of
Independent
director
March 2019 YGuan Qingyou
Shanxi International Trust
Co., Ltd.
Independentdirector
July 2019 YGuan Qingyou
Beijing Rushiwo Research
Institute of Science and
Technology Ltd.
Executive director& CEO
May 2020 N
Guan Qingyou
Beijing Rushi WanchengTechnology Development
Ltd.
Executive director& CEO
June 2020 NGuan Qingyou
Hainan WuyongtangInformation Technology Ltd.
Executive director
& CEO
July 2020 NGuan Qingyou
Beijing Yaocen YuanmuInformation Technology Ltd.
Executive director& CEO
July 2020 NGuan Qingyou
Beijing Ruoan Jiatai
Technology Ltd.
Executive director
r& CEO
December 2020 NGuan Qingyou
Zhongchancheng Investment
(Shenzhen) Ltd.
Supervisor March 2021 NGuan Qingyou
Qingdao Rushiwo ResearchInvestment Management Ltd.
Supervisor November 2021 NGuan Qingyou
Shenzhen Jiuzhoutongyu
Technology Ltd.
Supervisor January 2022 NGuan Qingyou
Ucap Cloud InformationTechnology Co.,Ltd.
Independentdirector
September 2022 YGuan Qingyou
Beijing Film SpectrumTechnology Co., Ltd.
Independentdirector
March 2019 January 2024 YHong Tianfeng
Shanghai FangguangInvestment Management Ltd.
Executive director February 2012 YHong Tianfeng
Shenzhen YunzhixunNetwork Technology Ltd.
Director May 2014 N
Name Name of other Entity
Position in other
entity
Commencementof the term
the term
Compensation andallowance from the other
entitiesHong Tianfeng
Shenzhen FangguangEnterprise ManagementConsulting Ltd.
Executive director& CEO
May 2016 NHong Tianfeng
CETC Huayun InformationTechnology Ltd.
Director March 2017 NHong Tianfeng
Quanzhi Technology
(Hangzhou) Ltd.
Director June2020 NHong Tianfeng
Shanghai FangguangEnterprise ManagementConsulting Ltd.
Executive director
Termination of
November 2022 NHong Tianfeng
Nantong Fangjun EnterpriseManagement Co., Ltd.
Supervisor March 2023 NHong Tianfeng
Nantong Fangyuan
Enterprise
Management Co., Ltd.
Executive director March 2023 NHong Tianfeng
Sannuo Biology Sensor Co.,
Ltd.
Director September 2013 January 2023 YHong Tianfeng
Zhongwei Dahe Cloud
Connection Network
Technology Ltd.
Director November 2016 October 2023 NHong Tianfeng
Shenzhen YingFeiYuan
Technology Ltd.
Director October 2017
December
2023
NHong Tianfeng
Beijing ZhiZhangYi Sicence
and Technology Ltd.
Director January 2018 June 2023 NHong Tianfeng
Shenzhen Chip and Semi-conductor Technology Ltd.
Director February 2018
December
2023
NHong Tianfeng
Shanghai Daxian IntelligentScience and Technology Ltd.
Director June 2018 January 2024 NHong Tianfeng
Shanghai Fanglan Enterprise
Management Center
Executive Director
& CEO
March 2021 January 2024 NLu Jianzhong
Huatai Baoxing Fund
Management Ltd.
Director July 2016 YLu Jianzhong
COSCO Maritime TransportDevelopment Co., Ltd.
Independent
Director
January 2018 YLu Jianzhong
Shanghai Xinnanyang AngliEducation Technology Co.,
Ltd.
IndependentDirector
January 2019 Y
Name Name of other Entity
Position in otherentity
Commencement
of the term
the term
Compensation andallowance from the other
entitiesLu Jianzhong INESA (Group) Co., Ltd. Director December 2019 NLu Jianzhong
Shanghai Vico PrecisionMold &Plastics Co., Ltd.
IndependentDirector
May 2021 YLu Jianzhong
BOMESC OffshoreEngineering Co., Ltd.
Independent
Director
December 2021 YLu Jianzhong
Zhongxinghua CertifiedPublic Accountants LLP
(Shanghai Branch)
CharteredAccountant
January 2022 NLu Jianzhong Bank of Tianjin Co., Ltd.
Independent
Director
August 2022 YXu Ximing
Shenzhen Wangyu Security
Service Science and
Technology Ltd.
Director November 2019 NXu Ximing
Chengdu Guoshengtianfeng
Network Technology Ltd.
Director August 2020 NXu Ximing
Hangzhou Confirmware
Technology Co., Ltd.
Director August 2021 NJin Duo
Zhejiang Haishi HuayueDigital Technology Ltd
Chairman January 2020 NXu Peng
Maxio Technology(Hangzhou) Co., Ltd.
Director December 2021 NGuo Xudong
Zhejiang Fast Line data
fusion InformationTechnology Co., Ltd.
Director January 2021 N
Incumbent and off-office directors, supervisors and senior management personnel during the reporting period thathave been imposed administrative penalties by the CSRC during the last three years.
□ Applicable √ Inapplicable
3. Remuneration of Directors, Supervisors and Senior Management Personnel
The 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 the
Company’s current Salary System and Performance Appraisal Schemes.Explanations on other situations.
□ Applicable √ Inapplicable
Remuneration of directors, supervisors and senior management personnel
Unit: RMB 0,000Name Title Gender Age Tenure status
Total remunerationfrom the Company(RMB'0,000)
Remunerationfrom relatedparties (Y/N)Chen Zongnian Chairman M59 Incumbent 0 YQu Liyang Director M60 Incumbent 0 YWang Qiuchao Director M73 Incumbent 30.00 NHu Yangzhong Director, CEOM 59 Incumbent 300.93 NWu Weiqi
Director, Standing Deputy
General Manager
M 60 Incumbent 300.89 NWu Xiaobo Independent DirectorM 64 Incumbent 30.00 NHu Ruimin Independent DirectorM 60 Incumbent 30.00 NLi Shuhua Independent DirectorM 53 Incumbent 30.00 NGuan Qingyou Independent DirectorM 47 Incumbent 30.00 NHong Tianfeng Supervisor ChairmanM 58 Incumbent 20.00 NLu Jianzhong SupervisorM 70 Incumbent 20.00 NXu Lirong SupervisorM 61 Incumbent 147.86 NHe Hongli
Senior Deputy General
Manager
F 51 Incumbent 290.37 NCai Changyang
Senior Deputy General
Manager
M 53 Incumbent 265.57 NXu Ximing
Senior Deputy General
Manager
M 51 Incumbent 416.43 NBi Huijuan
Senior Deputy General
Manager
F 53 Incumbent 401.90 NPu Shiliang
Senior Deputy GeneralManager
M 47 Incumbent 301.49 NJin duo
Senior Deputy General
Manager
M 59 Incumbent 290.94 NJin Yan
Senior Deputy GeneralManager, person in charge offinance and accounting
F 45 Incumbent 262.26 NHuang Fanghong
Senior Deputy General
ManagerBoard Secretary
F 42 Incumbent 262.61 N
Name Title Gender Age Tenure status
Total remunerationfrom the Company
(RMB'0,000)
Remuneration
from relatedparties (Y/N)Chen Junke
Senior Deputy General
Manager
M 53 Incumbent 262.55 NXu Peng
Senior Deputy GeneralManager
M 48 Incumbent 299.72 NGuo Xudong
Senior Deputy GeneralManager
M 52 Incumbent 262.02 NTotal -- -- -- -- 4,255.54 --
Note 1: Directors (excluding independent directors), supervisors (excluding non-employee representativesupervisors) and senior managers who serve in the Company and receive remuneration with the numeration structurecomposed of 50% of basic salary, 50% of bonuses linked to the Company's performance, and social insurance andprovident fund paid in accordance with the statutory proportion.Note 2: During the reporting period, the remuneration of incumbent directors, supervisors and senior managementare the remuneration for the period in which they held their positions.
VI. Performance of Duties by Directors during the Reporting Period
1. The Board of Directors during the Reporting Period
Meeting Session Convening Date Disclosure Date Meeting Resolutions
The 16th
meeting of the 5
th
of the Board
February 15, 2023 February 16, 2023
1 proposals was considered and approved at themeeting,
| session | Proposal on Capital Increase and |
Introduction of Strategic Investors forWholly-Owned Subsidiary ShijiazhuangSensortech Intelligent Technology Co.,Ltd.. For details, please refer to the Company’sannouncement: No. 2023-004.The 17
th
meeting of the 5
th
of the Board
April 13, 2023 April 15, 2023
25 proposals were considered and approved atthe meeting, including the 2022 Annual Reportand Its Summary. For details, please refer to theCompany’s announcement: No. 2023-010.The 18th meeting of the 5
th
| session |
| session |
of the Board
August 18, 2023 August 19, 2023
2 proposals were considered and approved at themeeting, including the 2023 Half Year Reportand Its Summary. For details, please refer to theCompany’s announcement: No. 2023-029The 19
th meeting of the 5
th
of the Board
October 20, 2023 October 21, 2023
1 proposal was considered and approved at themeeting, the 2023Q3 Report and Its Summary.For details, please refer to the Company’s
Meeting Session Convening Date Disclosure Date Meeting Resolutions
announcement: No. 2023-034
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
reportingperiod (times)
Boardmeetingpresenceon site(times)
Board meetingpresence bytelecom-communication(times)
Board meetingpresence throu
| required in the | gh |
a proxy (times)
Board meetingabsence(times)
not attend in
| person for two |
consecutivetimes
Presence ofindependentdirectors in
generalmeetings
(times)Chen Zongnian 4 1 3 0 0 N 1
Qu Liyang 4 1 3 0 0 N 1Wang Qiuchao 4 1 3 0 0 N 1Hu Yangzhong 4 1 3 0 0 N 1
Wu Weiqi 4 1 3 0 0 N 1
Wu Xiaobo 4 1 3 0 0 N 1
Hu Ruimin 4 1 3 0 0 N 1
Li Shuhua 4 1 3 0 0 N 1Guan Qingyou 4 1 3 0 0 N 1
3. Objections from Directors on Related Issues of the Company
Were there any objections on related issues of the Company from directors?
□ Yes √ No
During the reporting period, there is no objections on related issues of the Company from directors.
4. Other Details about the Performance of Duties by Directors
Were there any suggestions from directors accepted by the Company?
√ Yes □ No
Details: During the Reporting Period, directors strictly followed related rules, regulations, including CompanyLaw, Rules Governing the Listing of Shares on Shenzhen Stock Exchange, Shenzhen Stock Exchange ListedCompanies Self-Regulatory Supervision Guidelines No. 1 - Standardized Operation of Main Board ListedCompanies and Articles of Association. They focused on the Company operation, carefully review the Company'srelevant meeting materials, reviewed and approved a number of board resolutions, and have no objection to all the
proposals; 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 Measures for the Administration of IndependentDirectors of Listed Companies and related rules/ regulations, carried out their duties, attended the board meetingand the shareholders' general meetings, and issued prior approval opinions after conducting special discussion onrelated transactions that should be disclosed. The special committee of in dependent directors studied anddeliberated matters such as hiring accounting firms and hedging foreign exchange. To improve the Companysupervisory systems and to protect the legal rights of the Company and shareholders, especially public shareholdersas a whole, independent directors provided professional and subjective advices, enhancing the board’s managementcapability, ensuring the Company’s standardized operations. For details, please refer to Independent Directors’2023 Debriefings disclosed on www.cninfo.com.cn.VII. The Special Committees under the Board during the Reporting PeriodCommittee Name Members
Number ofmeetings held
Convening Date Meeting Content
Importantcomments andsuggestionsStrategy Committeeof the 5
th
session ofthe Board of
Directors
Chen Zongnian(convener), WuXiaobo, Hu Ruimin
January 18, 2023 to
October 31, 2023
Reviewed and approved 7proposals including the 2022
Annual Work Report of the
Strategy Committee of the
Board of Directors
All expressed
concurringopinions
Audit Committee ofthe 5th
Board of Directors
Li Shuhua(convener), Wang
Qiuchao, Guan
Qingyou
| session of the | February 10, 2023 to |
October 20, 2023
Reviewed and approved 13proposals including Proposal
on 2023 Reappointment ofCertificated Public
Accountants LLP
All expressed
concurring
opinionsRemuneration and
AppraisalCommittee of the 5
th
of Directors
Guan Qingyou(convener), WuXiaobo, Wu Weiqi
March 3, 2023 toDecember 26, 2023
Reviewed and approved 8proposals including the 2022Annual Report of theRemuneration and Appraisal
Committee
All expressedconcurringopinionsNominationCommittee of the 5
th
| session of the Board |
| session of the Board |
of Directors
Hu Ruimin(convener), QuLiyang, Li shuhua
1 13 April 2023
Reviewed and approved the2022 Annual Report of the
Nomination Committee
All expressed
concurring
opinions
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 period19,140Number of incumbent employees in major subsidiaries at the end of the reporting period39,404Number of incumbent employees at the end of the reporting period58,544Number of employees receiving salaries in current period58,544Number of retired employees requiring the parent Company and its subsidiaries to bear costs
Professional structureTier Number of employeesManagerial personnel
Production staff17,332Sales staff9,927Technical staff28,479Financial staff
Administrative Staff1,442Total 58,544
Educational backgroundEducation background Number of employeesMaster and/or doctor/or above10,971Bachelor28,890Junior College (professional training)6,131Other12,552Total 58,544
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 focuses 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.
From 2020 to 2023, the Company committed to the twin strategies of "system construction" and "resourceconstruction", consolidating the system and resource base , enhancing the training system combined with leadership,general skills, new employee orientation, business skills, and professional competence.
With respect to rapid changes in external business environment, the human resources department carried outan agile and effective talent development model based on current implementation. On one hand, they worked withbusiness experts to timely summarize experiences, identifying typical scenarios of business development, learningpractical methodologies and skills, and implementing the large learning project that is a combination of theoreticaltraining and practical training. On the other hand, they designed learning map for key roles and positions based on"721 learning rule" derived from Competency Model for Qualifications, and lunched an online learning system tosupport talent development.
In 2024, the Company will further strengthen the talent development systems, providing talents for keypositions for business development, through better design and result of the talent development program and thecultivation project of core business talents.
4. Labor Outsourcing
□ Applicable √ Inapplicable
X. Profit Distribution and Capitalization of Capital ReservesProfit distribution policy in the reporting period, especially the formulation, implementation and adjustment ofcash dividend policy
√Applicable □Inapplicable
Special explanation of cash dividend policy
the resolution of the shareholders' meeting:
YesWhether the dividend standard and dividend ratio are clear: YesWhether the relevant decision-making procedures and mechanisms are complete: YesWhether independent directors performed their duties and played their due roles: YesFor companies with no cash dividend, disclose detailed reasons and further measures to improveinvestment return for shareholders:
InapplicableWhether minority shareholders have the opportunity to fully express their opinions and demands, andwhether their legitimate rights and interests are fully protected:
YesIf the cash dividend policy is adjusted or changed, whether the conditions and procedures arecompliant and transparent:
InapplicableThe 17
th meeting of the 5
thsession of the Board of Directors of the Company reviewed and approved the 2022Annual Profit Distribution Proposal, and was reviewed and approved by the Company's 2021 annual generalmeeting: based on the Company’s current total share capital of 9,363,932,789 shares, the Company proposed todistribute cash dividend of RMB 7 (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 18, 2023, the ex-rights/ex-dividend date is May 19, 2023, and the total cash dividends (tax inclusive) is RMB6,554,752,952.30.
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)
Cash dividend per 10 shares (RMB) (taxinclusive)
9.00
Additional shares converted from capital reservesfor 10 shares (share)
| Total capital shares as the basis for the distribution |
proposal (share)
9,330,600,931
Total cash dividend (RMB) (tax inclusive)8,397,540,837.90
Amount of cash dividends in other methods (suchas share repurchase) (RMB)
0.00
Total cash dividends (including other methods)(RMB)
8,397,540,837.90
Distributable profits (RMB)43,150,159,133.80
Percentage of cash dividends in the totaldistributed profit (%)
100.00%
Cash dividend policy:
The Company is in the development stage and has a substantial plan of cash expenditure. In the current profit distribution, cashdividends shall account for at least 20%.
Details about the plan for profit distribution and capitalizing capital reserves into share capital
net profit of RMB10,552,055,515.88
| , with no withdraowal of statutory surplus reserve, adding the undistributed profit of the parent |
company at the beginning of the year of RMB 39,030,437,901.96, deducting the cash dividends of RMB6,554,752,952.30
back RMB123,327,874.60 of the unpaid dividends for the repurchased restricted shares, as of December 31, 2023
| , the profits |
distributable to shareholders of the parent company amounted to RMB43,150,159,133.80. As of December 31, 2023
distributable to shareholders in the consolidated statement were RMB57,136,620,244.01
| (consolidated). To sum up, according to the |
principle of "whichever is lower", the profits distributable to shareholders this year was RMB43,150,159,133.80.Based agree on the Company’s current total share capital of 9,330,600,931
of RMB9 (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 RMB8,397,540,837.90
transferred to the next year.XI. The Implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or otherIncentive Plans
√Applicable □Inapplicable
1. Share Incentive
During the reporting period, the Company accomplished the repurchase and cancellation of the granted but
unvested restricted shares under the third unlocking period of the 2018 Restricted Share Incentive Scheme.
On 13th
April 2023 and 9
th May 2023, the17
th
Meeting of the 5
thsession of the Board of Directors and the 2022annual shareholders’ general meeting, reviewed and approved the Proposal on the Unfulfilled Unlocking Conditionsfor the Third Unlocking Period of the 2018 Restricted Share Plan and the Repurchase of Restricted Shares Grantedbut Not Unlocked , as the Company performance did not meet the unlocking conditions for the third unlockingperiod of the 2018 Restricted Stock Plan (Revised Draft), and agreed on the repurchase and cancellation of the33,331,858 granted but not unlocked restricted shares of the 2018 Restricted Stock Plan. On 5
thJuly 2023, theCompany completed the cancellation procedures for the above shares at the Shenzhen branch of China SecuritiesDepository and Clearing Ltd. As a result, the Company's total share capital changes from 9,363,932,789 shares to9,330,600,931 shares.
For details, please refer to the Proposal on the Unfulfilled Unlocking Conditions for the Third Unlocking Periodof the 2018 Restricted Share Plan and the Repurchase of Restricted Shares Granted but Not Unlocked (No. 2023-021) published by the Company on www.cninfo.com.cn on April 15, 2023 and The Proposal of the CompletedCancellation of the Restricted Shares that have been Granted but not yet Unlocked for the Third Uncloking Periodof the 2018 Restricted Plan (No. 2023-028) published by the Company on www.cninfo.com.cn on July 7, 2023.
At the end of the reporting period, the Company has a total amount of 97,402,605 granted but unvested shares,accounting for 1.04%.
The Company performs accounting treatments related to restricted share incentive plans in accordance withthe requirements of Accounting Standards for Business Enterprises No. 11-Share Payments and other relatedaccounting standards. The cost of the shares granted by the 2021 Restricted Share Incentive Scheme is amortizedduring the vesting period.
During the reporting period, the amortization cost of the Company's 2021 Restricted Share Incentive Schemehad no significant impact on the Company's financial status and operating results. For details, please refer toFinancial Statement Note (XII)-Share-based Payment.
Equity incentives obtained by the directors and senior management of the Company
√Applicable □Inapplicable
Unit: Share
Name Title
Restricted
the beginningof the period
| Shares held at | Shares vested in |
the current
period
Shares newlygranted in thecurrent period
Price forrestricted
(RMB pershare)
RestrictedShares held atperiod-endHu Yangzhong Director, CEO0 0 - - 0Wu Weiqi
shares grantedDirector, Standing Deputy
General Manager
0 0 - - 0He Hongli
Senior Deputy GeneralManager
0 0 - - 0Cai Changyang
Senior Deputy GeneralManager
0 0 - - 0Xu Ximing
Senior Deputy GeneralManager,
149,100 59,100 - - 90,000Bi Huijuan
Senior Deputy GeneralManager
36,900 36,900 - - 0Pu Shiliang
Senior Deputy General
Manager
120,000 30,000 - - 90,000Jin Duo
Senior Deputy General
Manager
0 0 - - 0Jin Yan
Senior Deputy General
Manager, Person inCharge of Finance
113,000 33,000 - - 80,000
Huang Fanghong
Senior Deputy GeneralManager, Secretary of the
Board
113,000 33,000 - - 80,000Chen Junke
Senior Deputy General
Manager
0 0 - - 0Xu Peng
Senior Deputy General
Manager
108,622 38,622 - - 70,000Guo Xudong
Senior Deputy GeneralManager
22,140 22,140 - - 0Total -- 662,762 252,762 -- -- 410,000
Note:
(1) Persons listed above are grantees who are senior executives that are the Company’s incumbent senior
executives.
(2) During the reporting period, the third third unlocking plan of the 2018 Restricted Share Incentive Scheme
were repurchased and cancelled, of which 252,762 were repurchased and cancelled by senior executives.
Assessment and incentive mechanism for the senior managementThe Company has established a fairly sophisticated mechanism on employees’ evaluation and incentive
restraint, 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 2023, senior management personnelcarried out their duties diligently with good performance. In the face of complex and changing business environment,better of internal management, improve operating efficiency and continue to promote the steady development of theCompany.
2. The Implementation of Employee Stock Incentive Plan
□Applicable √Inapplicable
3. Other Incentive Plans
□Applicable √Inapplicable
XII. Construction and Implementation of Internal Control System during the Reporting Period
1. Construction and Implementation of Internal Control
The Company shall establish, improve and effectively implement internal control, further improve theconstruction of internal control system and strengthen internal audit supervision in accordance with the BasicStandard for Enterprise Internal Control, its associated Guidelines and other internal control supervisionrequirements. The Board of Directors of the Company truthfully discloses the internal control evaluation report.The Board of Supervisors supervises the establishment by the Board of Directors and its implementation of internalcontrol. The management is responsible for organizing and leading the daily internal controls of the Company.The Audit Committee of the Company under the Board of Directors inspects and supervises the scientificity,rationality, effectiveness and implementation of the Company's internal control system. At the same time, the AuditCommittee has organized special work meetings to follow up on the implementation of major matters by thefinancial center and internal audit department, and puts forward relevant requirements on the normativeness ofinternal control of the Company. The Company has set up an internal audit department under the Audit Committee
of the Board of Directors, which is equipped with full-time personnel to independently carry out internal audits,supervise and inspect the effectiveness and rationality of internal control. The internal audit department isaccountable and reports to the Audit Committee and reports on their work regularly. The internal audit departmentaudits the risk profiles of the Company’s business areas according to an annual audit plan. It highlights internalcontrol defects and gives rational suggestions, and standardizes and supervises the operation and management ofthe Company.During the reporting period, the Company continuously strengthened its self-evaluation and self-improvementon internal control. It continued to improve and thoroughly implement internal control in its departments andstrengthened the awareness of compliance management, to ensure the effective implementation of the internalcontrol system, improve the standard of the Company’s operations, and promote the healthy and sustainabledevelopment of the Company. For more details, please refer to the 2023 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 PeriodIn strict adherence to the relevant laws and regulations such as the Authorization Management System and theregulations and normative documents of regulatory authorities, the Company considers and approves proposals onthe acquisition and cancellation the registration of new subsidiaries, and exercises management powers over majormatters of the subsidiaries in accordance with the requirements regarding assets control over the subsidiaries andthe standard operations of the Company. At the same time, subsidiaries shall provide timely, complete and accurateinformation to the Company such as operating results, financial position and operating prospects, so that theCompany can conduct scientific decision-making, supervision and coordination.
During the reporting period, the Company established two domestic subsidiaries and four overseas subsidiaries,acquired one subsidiary, and liquidated and cancelled three subsidiaries. All of this result in changes in the scope ofits consolidation scope. For details, please refer to changes in the consolidation scope in Note (6) to the 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 20, 2024Disclosure index of full text of self-evaluation report on internal control www.cninfo.com.cnProportion of assets evaluated in total assets 100.00%Proportion of revenue evaluated in total revenue per consolidated financial statement 100.00%
Recognition standard of deficienciesNature Financial report level Non-financial report level
Qualitative criteria
Significant deficiency:
A deficiency or a combination of deficiencies in internal
identified or prevented, e.g.:
A. Invalid internal control environment;B. Fraud of directors, supervisors and senior managementpersonnel on the financial report ;C. Significant errors identified by external auditors but notidentified during the Company is operating;D. Invalid supervision of audit committee and internal auditsystem;E. Other deficiencies that may lead to the wrong judgement offinancial statement reporter.Important deficiency:
| A deficiency or a combination of deficiencies in internal control |
may prevent errors in financial report from being identified orprevented, although such deficiency is not significant, butrequire attention of the Board and Management, e.g.:
A. Application of accounting policies does not follow theenterprise accounting standard;B. No internal control systems for fraud;C. No control systems or system not effective for unusual orspecial transactions or no compensatory relevant control;D. One or more deficiencies which prevent the preparation oftrue and fair financial statements.Normal deficiency: Not significant and not importantdeficiency.
Internal control deficiencies at non-financial report level are mainly identifiedby the likelihood of occurrence and theextent of impacts on operating effective inbusiness.Significant deficiency: the high likelihoodleading to significant reduction of workingefficiency, or significant increase ofuncertainty, or significant deviation fromthe expected target;Important deficiency: a higher likelihoodleading to remarkable reduction ofworking efficiency, or remarkable increaseof uncertainty, or remarkable deviationfrom the expected target;Normal deficiency: a low likelihoodleading to reduction of working efficiency,or increase of uncertainty, or deviationfrom the expected target;
Quantitative criteria
Significant deficiency: potential errors 5% or more of totalprofitsImportant deficiency: potential errors 2% or more but below5% of total profitsNormal deficiency: potential errors is 2% or less of totalprofits
Significant deficiency: direct losses ofassets is 5% or more of total profitsImportant deficiency: direct losses ofassets is2% or more but below 5% of totalprofitsNormal deficiency: direct losses of assetsis below 2% of total profitsNumber of significant deficiencies in financial report level
Number of significant deficiencies in non-financial report level
Number of important deficiencies in financial report level
Number of important deficiencies in non-financial report level
2. Internal Control Audit Report
√Applicable □Inapplicable
Deliberation Opinion Paragraph in Internal Control Audit ReportWe believe that Hangzhou Hikvision Digital Technology Co., Ltd. maintained effective internal control over financial reporting inall material aspects as of December 31
st2023 in accordance with the Basic Standard for Enterprise Internal Control and otherrelated regulations.Disclosure of internal control auditreport
DiscloseDisclosure date of the full text ofthe internal control audit report
April 20, 2024Disclosure index of full text ofinternal control audit report
www.cninfo.com.cn 2023 Internal Control Audit ReportInternal control audit opinion Standard unqualified audit opinionWhether there are materialweakness of non-financial report
NoWhether the accounting firm issued an internal control audit report with a non-standard opinion
□ Yes √ No
Whether the internal control audit report issued by the accounting firm is consistent with the opinion of the self-evaluation report fromthe Board of Directors
√ Yes □No
Section V Environmental and Social ResponsibilityI. Significant Environmental IssuesWhether the Company or any of its subsidiaries should be categorized as a critical pollutant enterprises publishedby environmental protection department
□Yes √No.
II. Social ResponsibilitiesFor details, please refer to the Company’s 2023 Environment, Social and Governance Report disclosed onCNINFO (www.cninfo.com.cn).
III. The Achievements of Poverty Alleviation and Rural RevitalizationDuring the reporting period, the Company did not conduct any targeted poverty alleviation and rural revitalizationwork.
Section VI Significant Events
I. Performance of Commitments
1. Complete and incomplete commitments of the Company and its actual controller, shareholders, related parties, acquirers, and other related
parties for the commitments by the end of the reporting period.
√ Applicable □ Inapplicable
Commitments Giver of commitmentsCommitment typeDetails of commitments
Date ofcommitments
Term ofcommitments
Performance
| Commitments in |
offeringdocuments orshareholdingalterations
CETHIK Group Co., Ltd.
Commitments
competition andrelated partytransactions
1. Commitments in non-competition within the industry: In the period as
controlling shareholders of the Hikvision, CETHIK and its controlling
| regarding horizontal | subsidiaries (excluding Hikvision and its subsidiaries, the same below) will not |
be engaged in such business that is competitive to Hikvision and itssubsidiaries directly or indirectly.
2. Commitments in decrease and regulation of transactions with related party:
Zhejiang Haikang Group Co., Ltd. (hereinafter referred to as Haikang Groupor actual controller) as the controlling shareholders of Hangzhou HikvisionDigital Technology Co., Ltd. (hereinafter referred to as "Hikvision" or "ListedCompany") are committed as below for the transactions with Hikvision:
(1) Haikang Group will not make use of the controlling power to offer more
favorable conditions to Hikvision than those to any independent third party inany fair market transactions in the cooperation with Hikvision.
(2) Haikang Group will not make use of the controlling power to obtain the
prior right to complete the transaction with Hikvision.
(3) Haikang Group will not deal with Hikvision in not fair terms comparing to
the market prices to prejudice the Company’s interests.For unavoidable related transactions, the Company will observe theprinciples of justice and fairness to determine prices according to the marketon the basis of equality, voluntarily. The Company will obey the Articles of
October 29,2013
Long-term
Strict
| Association and other regulatory documents related to the avoiding of issues | performance |
Commitments Giver of commitmentsCommitment typeDetails of commitments
Date ofcommitments
Term ofcommitments
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 relatedtransactions
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 seniormanagement shall not assume any positions other than directors andsupervisors or get any remuneration in CETHIK and/or any of its controlledentities; (2) Commitment in keeping the management of labor, humanresources and issues related to remuneration of the listed Companyindependent 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 ofCETHIK.
3.5 Commitment to business Independence of the listed Company
Commitments Giver of commitmentsCommitment typeDetails of commitments
Date ofcommitments
Term ofcommitments
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
Company, Haikang Group has committed as below for the subsequentdevelopment of Hikvision according to the Securities Acts and relevant lawsand 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 subsidiariesin 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 theappointment and removal of the directors or senior management. The team ofBoard of Directors and senior management will remain unchanged for theforeseeable 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.
| 4. Regarding plans for the development and relevant commitment for the listed | ||
| Commitments in |
Initial Public
Hangzhou Weixun EquityInvestment Partnership
Share restrictioncommitment
During Hu Yangzhong, Wu Weiqi, Jiang Haiqing, Zhou Zhiping, Xu Lirong,Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan, Jiang Yufeng, Liu Xiang,
May 17,2010
Long term
Strictperformance
Commitments Giver of commitmentsCommitment typeDetails of commitments
Date ofcommitments
Term ofcommitments
Performance
| Offering or re- |
financing
(Limited Partnership) Wang Ruihong, Chen Junke’s tenure of the Company’s Board of Directors,
supervisors and senior management personnel, the annual transfer ofHikvision’s total shares should not exceed 25% of total number of shares heldunder Weixun; within 6 months after abovementioned personnel’s demission,should not transfer Hikvision’s shares held under Weixun.Hangzhou Pukang EquityInvestment Partnership(Limited Partnership)
Share restrictioncommitment
During Hu Yangzhong, Wu Weiqi, Gong Hongjia’s tenure of the Company’sBoard of Directors, supervisors and senior management personnel, the annualtransfer of Hikvision’s total shares should not exceed 25% of total number ofshares held under Pukang; within 6 months after abovementioned personnel’sdemission, should not transfer Hikvision’s shares held under Pukang.
May 17,2010
Long term
Strictperformance
The Company's directors,supervisors and executive:
HuYangzhong, Wu Weiqi,Jiang Haiqing, ZhouZhiping, Xu Lirong, CaiDingguo, He Hongli, ZhengYibo, Hu Dan, JiangYufeng, Liu Xiang, WangRuihong, Chen Junke
Share restrictioncommitment
During their tenure of the Company’s Board of Directors, supervisors andsenior management personnel, the annual shares transfer should not exceed25% of total number of shares held under Weixun; within 6 months after theirdemission, they should not transfer their shares held under Weixun.
May 17,2010
Long term
Strictperformance
| Directors, executive officers |
of the Company: HuYangzhong, Wu Weiqi
Share restrictioncommitment
During their tenure of the Company’s Board of Directors, supervisors andsenior management personnel, the annual shares transfer should not exceed25% of total number of shares held under Pukang; within 6 months after theirdemission, they should not transfer their shares held under Pukang.
May 17,2010
Long term
Strictperformance
The Company’s directorGong Hongjia’s spouse,Chen Chunmei
Share restrictioncommitment
During Gong Hongjia’s tenure of the Company’s Board of Directors,supervisors and senior management personnel, Chen’s annual shares transfershould not exceed 25% of total number of shares held under Pukang; within 6
May 17,2010
Long-term
Strict
| performance |
Commitments Giver of commitmentsCommitment typeDetails of commitments
Date ofcommitments
Term ofcommitments
Performance
months after the demission of Gong Hongjia, Chen should not transfer hershares held under Pukang.
China ElectronicsTechnology Group Co., Ltd.
Commitment toavoid horizontalcompetition
To avoid any loss of the Company and other shareholders arising from anycompeting business, China Electronics Technology Group Co., Ltd., the actualcontroller of the Company, issued Letters of non-competition on 18September, 2008.
September18, 2008
Long term
Strictperformance
Gong Hongjia; HangzhouWeixun Equity InvestmentPartnership (LimitedPartnership); HangzhouPukang Equity InvestmentPartnership (LimitedPartnership); ZheJiangOrient Holdings Co., Ltd.
Commitment toavoid horizontalcompetition
To avoid any loss of the Company and other shareholders arising from anycompeting business, Gong Hongjia, Hangzhou WeiXun I Equity InvestmentPartnership (Limited Partnership), ZheJiang Orient Holdings Co., Ltd. andHangzhou Pukang Equity Investment Partnership (Limited Partnership), thepromoters of the Company, issued Commitment Letters of non-competition inthe same industry on July 10, 2008.
July 10, 2008
Long term
Strictperformance
Othercommitments(commitmentsrelating to thespin-off of
to be listed onthe Science andTechnologyInnovationBoard)
| EZVIZ Network | Hangzhou Hikvision Digital |
Technology Co., Ltd.
Commitmentrelating to the spin-off of EZVIZ
on the Science andTechnologyInnovation Board
Arrangement on trading restriction and commitement to voluntarily restrictshares relating to the spin-off of EZVIZ Network to be listed on the Scienceand Technology Innovation Board, for details, please refer to the appendix Ⅵ
of the Prospectus on the Initial Public Share Offering and Listing on the STARMarket of the Shanghai Stock Exchange of Hangzhou EZVIZ Network Co.,Ltd.
| Network to be listed | published by EZVIZ Network on the website of Shanghai Stock Exchange |
(www.sse.com.cn): commitments relating to investor protection.
December28, 2022
Within 36months fromthe date ofissuing andlisting ofEZVIZNetwork
Strictperformance
| Commitment relating to the intention to hold shares and the intention to reduce |
holdings of shares of EZVIZ Network of the spin-
to the appendix Ⅵ of
| the Prospectus on the Initial Public Share Offering and Listing on the STAR Market of the Shanghai Stock Exchange of Hangzhou |
EZVIZ Network Co., Ltd.
December28, 2022
Within 2 yearsfrom the enddate of sharesrestrictionperiod of
Strictperformance
| published by EZVIZ Network on the website of Shanghai Stock Exchange (www.sse.com.cn): commitments relating to investor |
Commitments Giver of commitmentsCommitment typeDetails of commitments
Date ofcommitments
Term ofcommitments
Performance
| protection. |
EZVIZNetworkCommitments and
compensation or liability in accordance with the
| law, to have constraints for |
failing to fulfill commitments, to avoid intra-
system independent after the spin-of of EZVIZ Network to be liste
| d on the Science and Technology Innovation Board. For details, please refer the Prospectus on the Initial Public Share Offering and Listing on the STAR Market |
of the Shanghai Stock Exchange of Hangzhou EZVIZ Network Co., Ltd.
published by EZVIZ Network on
| the website of Shanghai Stock Exchange |
(www.sse.com.cn): commitments relating to investor protection.
December28, 2022
Long term
Strictperformance
Whether thecommitments isfulfilled in time
Yes
2. Where any profit forecast was made for any of the Company’s assets or projects and the current
reporting 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
II. The Company’s Funds Used by the Controlling Shareholder or Other Related Parties forNon-operating Purposes
□ Applicable √ Inapplicable
No such case during the current reporting period.
III. Illegal Provision of Guarantees for External Parties
□ Applicable √ Inapplicable
No such case in the current reporting period.
IV. Explanation Given by the Board of Directors regarding the Latest "Non-standard Auditor’sReport"
□ Applicable √ Inapplicable
V. Explanation Given by the Board of Directors, Supervisory Committee and IndependentDirectors (if applicable) regarding the "Non-standard Auditor’s Report" Issued by the CPAFirm for the Current Reporting Period
□ Applicable √ Inapplicable
VI. For Changes in Accounting Policies, Accounting Estimates or Correction of SignificantAccounting Errors Compared with the Financial Report for the Prior Year
√ Applicable □Inapplicable
For details, please refer to the Note (III) 35.
VII. Explanation for Changes in Scope of the Consolidated Financial Statements as Comparedto the Financial Report for the Prior Year
√ Applicable □ Inapplicable
During the reporting period, the Company established three domestic subsidiaries and three overseas
subsidiaries, and acquired two subsidiaries. All of this result in changes in the scope of its consolidation scope. Fordetails, please refer to changes in the consolidation scope in Note (VI) to the financial statements.
VIII. Engagement and Disengagement of the CPA firmCPA firm engaged at presentName of the domestic CPA firmDeloitte Touche Tohmatsu Certified Public Accountants LLPRemuneration for the domestic CPA firm (RMB’0000)
Consecutive years of the audit service provided by thedomestic CPA firm
Name of the certified public accountants from thedomestic CPA firm
Chen Yan, Liu YingConsecutive years of the audit service provided by thecertified public accountants from the domestic CPAfirm
Chen Yan has provided audit service for 1 year;Liu Ying has provided audit service for 1 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 630,000 of internal control audit fees duringthe period.
IX. Delisting after Disclosure of this Annual Report
□ Applicable √ Inapplicable
X. Bankruptcy and Restructuring
□ Applicable √ Inapplicable
No such case during the reporting period.
XI. Material Litigations and Arbitration
□ Applicable √ Inapplicable
The Company had no material litigation or arbitration during the current reporting period.XII. Punishments and Rectifications
□ Applicable √ Inapplicable
No such case during the reporting period.XIII. Integrity of the Company and its Controlling Shareholders and Actual Controllers
□ Applicable √ Inapplicable
XIV. Significant Related-party Transaction
1. Related-party Transactions Arising from Routine Daily Operations
√ Applicable □Inapplicable
Related party Relationship
Type ofrelatedtransaction
Content ofrelatedtransaction
Pricingprinciplesfor relatedpartytransactions
Trading Amount（0’000 RMB）
Proportion
to theamount of
similartransactions.
Approvedtrading quota(0’000 RMB）
Whetherexceed
approvedquota
Settlement
method
| the | Disclosure |
date
DisclosurereferenceSubsidiaries orresearch institutesof CETC
Under the commoncontrol of the Company’sactual controller
Procurement
Purchasing
of rawmaterials,receivingservices
Reference
market
priceagreed byboth parties
241,106.58
5.18%
| 350,000 |
No
delivery
April 15,
2023
| Payment on | Announcement on the forecast | |
of dailyrelated-party
2023 (No.2023-015)
Joint ventures
Joint ventures held by theCompany
Procurement
transactions in
283.97
0.01%
| 2,130 |
No
deliveryAssociatedcompanies
Associated companiesheld by the Company
Procurement
| Payment on | ||
27,103.98
0.58%
No
| 73,050 | Payment on |
deliveryOther relatedparties
See Note 1 for details
Procurement
128,661.34
2.76%
| 220,050 |
No
deliverySubsidiaries orresearch institutesof CETC
Under the commoncontrol of the Company’sactual controller.
Sales
Providingservices,
sellingproducts and
| Payment on | ||
commercial
goods
Reference
market
priceagreed byboth parties
26,945.45
0.30%
70,000
No
delivery
April 15
| Payment on | , |
2023
of dailyrelated-party
| transactions in |
2023 (No.2023-015)
Joint ventures
Joint ventures held by theCompany
Sales 6,905.60
0.08%
14,600
No
| Payment on |
deliveryAssociatedcompanies
Associated companiesheld by the Company
Sales 6,670.61
0.07%
20,450
No
| Payment on |
deliveryOther relatedparties
See Note 1 for details
Sales 2,412.21
0.03%
8,720
No
| Payment on |
delivery
Related party Relationship
Type ofrelatedtransaction
Content of
relatedtransaction
Pricingprinciplesfor relatedpartytransactions
Trading Amount（0’000 RMB）
Proportionto theamount ofsimilartransactions.
Approvedtrading quota(0’000 RMB）
Whetherexceed
approved
quota
Settlement
method
| the | Disclosure |
date
Disclosurereference
Subsidiaries orresearch institutesof CETC
Under the commoncontrol of the Company’sactual controller.
Lease
Rentinghouse fromrelatedparties
Referencemarketpriceagreed byboth parties
232.41
0.55%
No
Based oncontract
April 15,
2023
| Announcement on the forecast |
of dailyrelated-party
2023 (No.2023-015)Total 440,322.15
| transactions in | ||
-
759,500
- - - -Details on significant sales return NoneTotal amount of related transactions projected based ondifferent categories, and the actual performance during thecurrent reporting period (if any)
The above newly increased trading quotas include forecast quota amount of RMB300,000 for purchasing of raw materials
receiving services from joint ventures, the estimated newly increased amount of RMB5.5 million for purchasing of raw materials
| and |
receiving services from associated companies, the estimated newly increased amount of RMB2 million for
products and commercial goods to associated companies, the estimated newly increased amount of RMB47.2 million for
| providing |
services, selling products and commercial goods to other related parties
Chairman of the Company according to related regulations and the Company's Management System of Related Transaction.
| . Those forecast quota amount has been approved by the | |
| Reasons on significant difference between trading price and |
market referencing price (if applicable)
Not applicableNote 1: Enterprises controlled, jointly controlled or serving as directors or senior management personnel by affiliated natural persons of the Company (includingdirectors, supervisors, senior management of the Company, shareholders holding more than 5% of the shares of the Company and their close family members).Note 2: The data shown in the totals may differ slightly from the sum of the relevant individual data due to rounding.
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
Maximumdaily depositlimit (0,000RMB)
rate range
OpeningBala
| Deposit interest | nce (0,000 |
RMB)
Amount incurred (0,000 RMB)
ClosingBalance
RMB)Total depositamount for thecurrent period(0,000 RMB)
Totalwithdrawalamount for thecurrent period(0,000 RMB)CETC FinanceCo., Ltd.
Under thecommoncontrol of theCompany'sultimatecontroller
1,459,403.08
| (0,000 | ||
0.2%-
400,003.35
| 2.0% |
451,436.54
450,922.15
400,517.74
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 theCompany's ultimate controller
Other financial
services
600,000.00
| Actual amount incurred | |
252,300.00
Note: The above amount is the amount of entrusted loans issued by the Group to its subsidiaries through China Electronics
Technology Finance Co., Ltd. during the year.
Related Party Relationship Business Type
Total Amount(0,000 RMB)
(0,000 RMB)CETC Finance Co., Ltd.Under the common control of theCompany's ultimate controller
Credit 500,000.00
| Actual amount incurred | |
-
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
There is no other significant related party transactions during the reporting period.
XV. Significant Contracts and Their Execution
1. Trusteeship, Contracting and Leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such case in the reporting period.
(2) Contracting
□ Applicable √ Inapplicable
No such case in the reporting period.
(3) Leasing
□Applicable √Inapplicable
2. Significant Guarantees
√Applicable □ Inapplicable
Unit: RMB’0000Guarantees provided by the Company to its subsidiariesGuaranteed party
Disclosure date ofannouncement ofthe guarantee cap
Guaranteecap
Actualoccurrence date
Actual guaranteedamount
Type ofguarantee
Guarantee expiration date
| Fulfilled |
or not
for arelatedparty or
notHangzhou Hikvision Technology Ltd. April 15, 2023 1,250,000.00
| Guarantee | ||
December 1,2019
686,260.20 Joint guarantee
December 31, 2029
No NoLuoPu HaiShi DingXin Electronic
Technology Ltd.
April 15, 2023 29,000.00
March 26, 2019 20,560.00 Joint guarantee
March 26, 2035
No NoPiShan HaiShi YongAn Electronic
Technology Ltd.
April 15, 2023 28,000.00
March 26, 2019 19,678.00 Joint guarantee
March 26 2040
No NoUrumqi HaiShi Xin’An Electronic
Technology Ltd.
April 15, 2023 37,000.00
March 26, 2019 17,523.57 Joint guarantee
June 20, 2028
No NoMoyu HaiShi Meitian Electronic Technology
Ltd.
April 15, 2023 24,000.00
March 26, 2019 16,240.00 Joint guarantee
March 26, 2035
No NoHangzhou Hikvision System Technology Ltd.
April 15, 2023 80,000.00 March 23, 2021 15,103.46 Joint guarantee
November 28, 2025 No NoYutian HaiShi Meitian Electronic
Technology Ltd.
April 15, 2023 30,000.00
March 26, 2019 9,480.00 Joint guarantee
March 26, 2034
No NoWuhan Haorong Technology Ltd. April 15, 2023 30,000.00
December 4,
2023
5,543.48 Joint guarantee
July 30, 2025
No NoXi'an Hikvision Digital Technology Ltd. April 15, 2023 24,000.00
September 29,
2022
4,421.14 Joint guarantee
July 31, 2025
No NoChongqing Hikvision Technology Ltd. April 15, 2023 27,000.00
December 20, 4,131.14 Joint guarantee
March 30, 2024 No No
Guarantees provided by the Company to its subsidiariesGuaranteed party
Disclosure date ofannouncement ofthe guarantee cap
Guaranteecap
Actualoccurrence date
Actual guaranteed
amount
Type ofguarantee
Guarantee expiration date
| Fulfilled |
or not
for arelatedparty ornot2022Hangzhou Hikvision Electronic Ltd. April 15, 2023 45,000.00
Guarantee
August 8, 2023 1,311.82 Joint guarantee
November 29, 2024 No NoNanjing Hikvision Digital Technology Ltd. April 15, 2023
June 30, 2022 3,853.70 Joint guarantee
| 12,000.00 |
July 31, 2025 No NoChongqing Hikvision System Technology
Ltd.
April 15, 2023
March 30, 2023 521.85 Joint guarantee
| 6,000.00 |
July 24, 2024
No NoShijiazhuang Hikvision Technology Ltd. April 15, 2023
October 18, 2023
| 12,000.00 |
159.31 Joint guarantee
July 31, 2025 Yes NoZhengzhou Hikvision Digital Technology Ltd.
April 15, 2023
Not happened during the reporting periodNanchang Hikvision Digital Technology Ltd. April 15, 2023
| 8,500.00 |
| 2,000.00 |
Not happened during the reporting periodHikvision Digital Technology (Shanghai) Ltd.
April 15, 2023
| 3,000.00 |
Not happened during the reporting periodHefei Hikvision Digital Technology Ltd. April 15, 2023
Not happened during the reporting periodFuzhou Hikvision Digital Technology Ltd. April 15, 2023
| 3,500.00 |
| 2,500.00 |
Not happened during the reporting periodChengdu Hikvision Digital Technology Ltd. April 15, 2023
Not happened during the reporting periodWuhan Hikvision Technology Ltd. April 15, 2023
| 6,000.00 |
| 1,000.00 |
Not happened during the reporting periodPrama Hikvision India Private Ltd. April 15, 2023
Not happened during the reporting periodHikvision International Co., Ltd.. April 15, 2023
| 9,000.00 |
| 151,200.00 |
Not happened during the reporting periodHIKVISION UK LTD. April 15, 2023
Not happened during the reporting periodHIKVISION TECHNOLOGY PTE. LTD. April 15, 2023
| 2,000.00 |
| 25,000.00 |
Not happened during the reporting periodTotal guarantee cap for subsidiaries approved during the reportingperiod(B1)
1,847,700.00
Total actual guarantee amount forsubsidiaries during the reportingperiod(B2)
1,178,665.18
Guarantees provided by the Company to its subsidiariesGuaranteed party
Disclosure date ofannouncement ofthe guarantee cap
Guaranteecap
Actualoccurrence date
Actual guaranteedamount
Type ofguarantee
Guarantee expiration date
| Fulfilled |
or not
for arelatedparty or
notTotal approved guarantee cap for subsidiaries at the end of thereporting period(B3)
1,847,700.00
| Guarantee | ||
Total actual guarantee balance forsubsidiaries at the end of the reportingperiod(B4)
804,787.67
Guarantees provided by the Company’s subsidiary to another subsidiaryGuaranteed party
Disclosure date ofannouncement ofthe guarantee cap
Guaranteecap
Actualoccurrence date
Actual guaranteed
amount
Type ofguarantee
Guarantee expiration date
| Fulfilled or |
not
for arelatedHangzhou Haikang Intelligent TechnologyLtd.
April 15, 2023
| Guarantee | ||
| 80,000.00 |
March 14, 2022
Joint guarantee
| 19,693.02 |
2025.11.30 No NoHangzhou Haikang Machine Intelligence Ltd. April 15, 2023
June 13, 2023
| 80,000.00 | 1,363.53 |
Joint guarantee
2024.04.12 No NoHangzhou Hikmicro Intelligent TechnologyLtd.
April 15, 2023
| 92,000.00 |
November 2,
2022
Joint guarantee
| 957.53 |
2024.04.12 No NoChongqing EZVIZ Electronic Ltd. April 15, 2023
September 11,2023
| 30,000.00 | 800.00 |
Joint guarantee
2024.09.11 No NoWuhu Sensortech Intelligent Technology
Ltd.
April 15, 2023
September 27,2022
-
| 6,500.00 |
Joint guarantee
2024.01.16 No NoSensortech Hebei Technology Ltd. April 15, 2023
| 12,000.00 |
July 28, 2022 -
Joint guarantee
2023.12.12 No NoHangzhou Hikmicro Software Ltd. April 15, 2023
Not happened during the reporting periodHangzhou Hikstorage Technology Ltd. April 15, 2023
| 10,000.00 |
| 10,000.00 |
Not happened during the reporting periodWuhan Hikfire Technology Ltd. April 15, 2023
Not happened during the reporting periodZhangjiang Hikfire Technology Ltd. April 15, 2023
| 3,000.00 |
| 3,000.00 |
Not happened during the reporting period
Guarantees provided by the Company to its subsidiariesGuaranteed party
Disclosure date ofannouncement ofthe guarantee cap
Guarantee
cap
Actualoccurrence date
Actual guaranteedamount
Type ofguarantee
Guarantee expiration date
| Fulfilled |
or not
for arelatedparty or
notTotal guarantee cap for subsidiaries approved during the reportingperiod (C1)
326,500.00
| Guarantee | ||
Total actual guarantee amount forsubsidiaries during the reportingperiod (C2)
55,566.63
Total approved guarantee cap for subsidiaries at the end of thereporting period（C3）
326,500.00
Total actual guarantee balance forsubsidiaries at the end of the reportingperiod(C4)
22,814.08
The total amount of Company’s guarantees (that is, the total of the first three items)Total guarantee cap approved during the reporting period（A1+B1+C1）
2,174,200.00
Total actual guarantee amount duringthe reporting period（A2+B2+C2）
1,234,231.81
Total approved guarantee cap at the end of the reporting period（A3+B3+C3）
2,174,200.00
Total actual guarantee balance at theend of the reporting period（A4+B4+C4）
827,601.75
Portion of the total actual guarantee (A4+B4+C4) amount in netassets of the Company
10.84%
Of which:
The balance of guarantee for shareholders, actual controllers andtheir affiliates. (D)
0.00
Amount of debt guarantees provided directly or indirectly forentities with a liability-to-asset ratio over 70% (E)
811,976.44
Total amount of guarantee exceeding 50% of net assets (F) 0.00
Total guarantee amount of the above-mentioned 3 kinds of811,976.44
Guarantees provided by the Company to its subsidiariesGuaranteed party
Disclosure date ofannouncement ofthe guarantee cap
Guaranteecap
Actualoccurrence date
Actual guaranteed
amount
Type ofguarantee
Guarantee expiration date
| Fulfilled |
or not
for arelatedparty ornotguarantees (D+E+F)
3. Entrusted Others to Manage Cash Assets
(1) Entrusted financial management
□ Applicable √ Inapplicable
No such case during the reporting period
(2) Entrusted loan management
□ Applicable √ Inapplicable
No such case during the reporting period
4. Other Significant Contracts
□ Applicable √ Inapplicable
No such case during the reporting period
XVI. Other Significant Events
√ Applicable □ Inapplicable
1. Repurchase of the Company's Public Shares
On September 15, 2022 and October 10,
2022, the Company held the 13
h meeting of the 5
thsession of the Board of Directors and the second extraordinary generalmeeting of shareholders in 2022 respectively, deliberated and approved the Proposal on the Plan of Repurchase Part of the Company's Public Shares, approved theCompany using its own fund to repurchase part of its RMB common shares (A shares) that have been issued domestically by means of centralized bidding through thetrading system of the SZSE, the aggregate amount of repurchase funds shall not exceed RMB2.5 billion (inclusive) and not less than RMB 2 billion (inclusive), therepurchase price shall not exceed RMB40 per share (inclusive), the implementation period of the repurchase shall not exceed 12 months from the date of the generalmeeting of shareholders of the Company at which the proposal on the plan of repurchase part of the Company's public shares is reviewed and approved, and theCompany will make repurchase decisions and implement them based on market conditions during the repurchase period. The shares repurchased by the Company willbe cancelled for reducing the registered capital according to law. For details, please refer to the Announcement on Resolutions of 13
th
Meeting of the 5
th
Session of theBoard of Directors (Announcement No.: 2022-049), the Announcement on the Plan of Repurchase Part of the Company's Public Shares (Announcement No.: 2022-050), the Announcement on Resolutions of the Second Extraordinary General Meeting of Shareholders in 2022 (Announcement No.: 2022-056), the Report on the Planof Repurchase Part of the Company's Public Shares (Announcement No.: 2022-057) published by the Company on cninfo website (www.cninfo.com.cn) on September16, 2022 and October 11,
2022. On October 11,
2022, the Company first repurchased 6,820,968 shares of the Company by means of centralized bidding through adedicated securities account for the repurchase, accounting for 0.0723% of the Company's total share capital at that time. The highest transaction price was RMB29.65per share, the lowest transaction price was RMB28.71 per share, and the total transaction amount was RMB199,981,024.67 (excluding transaction fees). For details,please refer to the Announcement on the Initial Repurchase of the Company's Shares (Announcement No.: 2022-059) published by the Company on cninfo website(www.cninfo.com.cn) on October 12,
2022. During the repurchase period, the Company disclosed the progress of repurchase as of the end of last month within the firstthree trading days each month based on the regulation. For details, please refer to the Announcement on the Progress of Repurchase (Announcement No.: 2022-063)(Announcement No.: 2022-066) published by the Company on cninfo website (www.cninfo.com.cn) on November 2, 2022, December 3, 2022, respectively. As ofDecember 30, 2022, the repurchase of shares had been completed, and the actual repurchase date was between October 11, 2022 and December 30, 2022, meet therequirement on implementation period of repurchase in repurchase plan. As of December 30, 2022, the Company used the dedicated securities account for share
repurchase to cumulatively repurchase shares with the total amount of 66,987,835 shares by means of centralized bidding, accounting for 0.7103% of the Company'stotal share capital at that time (9,430,920,624 shares). The highest transaction price was RMB35.13 per share, the lowest transaction price was RMB26.83 per share,and the total transaction amount was RMB2,043,476,488.53 (excluding transaction fees). The source of share-repurchase funding was from the Company's own fund,and the price of repurchase did not exceed the upper limit of the price (RMB40 per share) specified in the repurchase plan. The repurchase complies with relevant laws,regulations and rules from the disclosed repurchase plan. For details, please refer to the Announcement on the Progress and Result of Repurchase of the Company'sShares and Changes in Shares (Announcement No.: 2023-001) published by the Company on cninfo website (www.cninfo.com.cn) on January 4,
2023. On January 13,2023, the Company had completed the cancellation procedures for the above shares at the Shenzhen branch of China Securities Depository and Clearing CorporationLtd., with the total amount of 66,987,835 shares, accounting for 0.7103% of the Company's total share capital before the cancellation (9,430,920,624 shares), and thenumber of cancelled shares is equal to the number of actual repurchased shares. After the completion of the repurchase and cancellation of shares, the Company's totalshare capital changes from 9,430,920,624 shares to 9,363,932,789 shares. For details, please refer to the Announcement on the Completion of the Cancellation of theCompany's Repurchased Shares and Changes in Shares (Announcement No.: 2023-002) published by the Company on cninfo website (www.cninfo.com.cn) on January17, 2023.
2. Matters Relating to
Capital Increase and Introduction of Strategic Investors for Wholly-Owned Subsidiary Shijiazhuang Sensortech On February 15, 2023, the Company held the 16
th meeting of the 5
thsession of the Board of Directors, reviewed and approved the Proposal on Capital Increaseand Introduction of Strategic Investors for Wholly-Owned Subsidiary Shijiazhuang Sensortech Intelligent Technology Co., Ltd. (hereinafter referred to as "ShijiazhuangSensortech") and agreed to increase the registered capital of Shijiazhuang Sensortech by RMB2,398,000,000. Hikvision intended to increase the registered capital ofShijiazhuang Sensortech by RMB1,345,200,000 to hold no less than 56.0969% equity in the subsidiary. Meanwhile, Shijiazhuang Sensortech planned to introduce oneor more strategic investors via public listing with a total investment of RMB1,052,800,000 to obtain no more than 43.9031% equity. The final amount of capital increaseand shareholding ratios will be subject to the results of the listing subscription. For details, please refer to the Announcement on Capital Increase and Introduction ofStrategic Investors for Wholly-Owned Subsidiary Shijiazhuang Sensortech Intelligent Technology Co., Ltd. (Announcement No.: 2023-005) published by the Company
on cninfo website (www.cninfo.com.cn) on February 16,
2023.On February 24, 2023, the capital increase of Shijiazhuang Sensortech was listed on the China Beijing Equity Exchange. Two potential investors were identifiedfor the Shijiazhuang Sensortech Capital Increase Project at the end of the announcement period. They were Hangzhou Qianmo Qinghe Equity Investment Partnership(Limited Partnership) (hereinafter referred to as "Qianmo Qinghe") and a consortium of two investors: Qin Yi (a natural person) and Wuhu Sensi Yingwo InvestmentCenter (Limited Partnership) (hereinafter referred to as "Sensi Yingwo"). The Company signed the Capital Increase Agreement (hereinafter referred to as "TheAgreement") with Qianmo Qinghe, Sensi Yingwo and Qin Yi on March 28, 2023. Hikvision intended to use equity to subscribe a capital increase of RMB1,345,200,000and hold 56.0969% equity in Shijiazhuang Sensortech through an agreement. The strategic investors participated in the capital increase through public delisting on theChina Beijing Equity Exchange. They subscribed a capital increase of RMB1,052,800,000 to hold 43.9031% equity in Shijiazhuang Sensortech. Upon completion ofthe capital increase, the registered capital of Shijiazhuang Sensortech will increase from RMB10,000 to RMB2,398,010,000. Hikvision will hold 56.0969% equity,maintaining a controlling interest in Shijiazhuang Sensortech and shall consolidate the financial statements of this subsidiary. For details, please refer to theAnnouncement on Progress of Capital Increase and Introduction of Strategic Investors for Wholly-Owned Subsidiary Shijiazhuang Sensortech Intelligent TechnologyCo., Ltd. (Announcement No.: 2023-009) published by the Company on cninfo website (www.cninfo.com.cn) on March 29,
2023.
3. The Company's controlling shareholder disclosed and implemented the plan to increase the Company's shares
The Company received a notice from China Electronics Technology HIK Group Co., Ltd. (hereinafter referred to as "CETHIK"), the Company's controlling shareholder,on October 16, 2023 that CETHIK intended to increase its shareholdings of the Company's shares through the trading system of the Shenzhen Stock Exchange throughcentralized bidding, block trading or other trading methods permitted by laws and regulations within 6 months from October 17, 2023. The total amount of the increasedshareholdings would not be less than RMB200 million and not more than RMB300 million, and the proposed price of increased shareholdings should not be higherthan RMB40 per share (inclusive). The plan of increase shareholding would be implemented at the opportunity with the consideration of the fluctuation of Hikvision'sstock price and the overall trend of the capital market. From January 4, 2024 to January 9, 2024, CETHIK increased its holdings of 6,271,400 shares of the Companythrough the trading system of the Shenzhen Stock Exchange through centralized bidding, accounting for 0.0672% of the Company's current total share capital, and the
amount of additional shares is 200,160,059.77 yuan (excluding transaction fees). The shareholding increase plan of CETHIK has been implemented. For details, pleaserefer to the Announcement on the Plan for the Company's Controlling Shareholders to Increase Their Shareholdings in the Company (Announcement No.: 2023-033)and Announcement on the Completion of the Implementation of the Company's Controlling Shareholders' Plan to Increase Their Shareholdings in the Company(Announcement No.: 2024-001) published by the Company on cninfo website (www.cninfo.com.cn) on October 17, 2023 and January 10, 2024
4. The person acting in concert of the controlling shareholder of the Company disclosed and implemented the plan to increase the Company's shares
After the close of trading on January 16, 2024, the Company received a notice from CETC Investment Holdings Co., Ltd. (hereinafter referred to as "CETC Investment"),a person acting in concert of the CETHIK, the controlling shareholder of the Company, that on January 16, 2024, CETC Investment increased its holdings of 1,319,906shares of the Company through centralized bidding through the trading system of the Shenzhen Stock Exchange, with the amount of RMB40,363,848.49. CETCInvestment intends to continue to increase its holdings of the Company's shares within 6 months from January 16, 2024, with an increase of not less than RMB300million and no more than RMB600 million (including the amount of increase on January 16, 2024). There is no fixed price range for this increase plan, and CETCInvestment will implement the shareholding increase plan at the opportunity with the reasonable judgment of the Company's stock value. From January 16, 2024 toFebruary 6, 2024, CETC Investment has increased its holdings of 12,853,665 shares of the Company through centralized bidding through the Shenzhen Stock Exchangetrading system, accounting for 0.1378% of the Company's current total share capital, and the amount of additional shares is 400,027,006.81 yuan (excluding transactionFEEs). For details, please refer to the Announcement on the Increase of the Company's Shares and the Subsequent Shareholding Increase Plan by the person acting inconcert of the controlling shareholder of the Company ( Announcement No.: 2024-002) and the Announcement on the Completion of the Company's ShareholdingIncrease Plan by the person acting in concert of the controlling shareholder of the Company (Announcement No.: 2024-005) published by the Company on cninfowebsite (www.cninfo.com.cn) on January 17, 2024 and February 7, 2024.
XVII. Significant Events of the Company’s Subsidiaries
√ Applicable □Inapplicable
1. Matters Relating to Steady Promotion of the Spin-off of HikRobot to be Listed on the SZSE ChiNext Market
On March 7, 2023, Hangzhou Hikrobot Co., Ltd. (hereinafter referred to as "HikRobot") received Notice on Accepting the Application Documents for the InitialPublic Offering of Shares and Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd. (SZSE Listing Review [2023] No. 252) issued by Shenzhen StockExchange, and SZSE considered that application documents were completed and decided to accept. For details, please refer to the Announcement on the Applicationfor the Initial Public Offering of Shares and Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd., a Subsidiary of the Company, is Accepted by theSZSE (Announcement No.: 2023-008) published by the Company on cninfo website (www.cninfo.com.cn) on March 8, 2023. Shenzhen Stock Exchange issed theInquiry Letter on the Review of Application Documents for the Initial Public Share Offering of Shares and Listing on the SZSE ChiNext Market of Hangzhou HikrobotCo., Ltd. (Inquiry Letter (2023) No. 010121) on March 30, 2023, and HikRobot has submitted the Reply to the Inquiry Letter on the Review of Application Documentsfor the Initial Public Share Offering of Shares and Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd. on May 17, 2023. Shenzhen Stock Exchangeissed the Second Inquiry Letter on the Review of Application Documents for the Initial Public Share Offering of Shares and Listing on the SZSE ChiNext Market ofHangzhou Hikrobot Co., Ltd. (Inquiry Letter (2023) No. 010218) on June 30, 2023, and HikRobot has submitted the Reply to the Second Inquiry Letter on the Reviewof Application Documents for the Initial Public Share Offering of Shares and Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd. on July 27, 2023
Section VII Changes in Shares and Information about ShareholdersI. Changes in Share Capital
1. Table of Changes in Share Capital
Unit: Share
Before the change
Changes in the period (+, -)
After the changeShares Ratio
New SharesIssued
Bonusshare
Sharetransferredfrom capitalreserve
Others Sub-total Shares Ratio
1. Shares subject to conditional restriction(s)
255,248,506
2.71%
-33,080,833
-33,080,833
222,167,673
2.38%
1) State holdings
2) Shares held by state-owned corporates
3) Shares held by other domestic investors
255,055,236
2.70%
-33,023,563
-33,023,563
222,031,673
2.38%
Including: held by domestic corporations
held by domestic individuals255,055,236
2.70%
-33,023,563
-33,023,563
222,031,673
2.38%
4) Shares held by overseas investors
193,270
0.00%
-57,270
-57,270
136,000
0.00%
Including: held by overseas corporations
held by overseas individuals
193,270
0.00%
-57,270
-57,270
136,000
0.00%
2. Shares without restriction
9,175,672,118
97.29%
-67,238,860
-67,238,860
9,108,433,258
| 97.62% |
1) RMB ordinary shares
9,175,672,118
97.29%
-67,238,860
-67,238,860
9,108,433,258
| 97.62% |
2) Domestically listed foreign shares
Before the change
Changes in the period (+, -)
After the changeShares Ratio
New Shares
Issued
Bonusshare
Sharetransferredfrom capitalreserve
Others Sub-total Shares Ratio
3) Foreign shares listed overseas
4) Others
3. Total
9,430,920,624
100.00%
-100,319,693
-100,319,693
9,330,600,931
100.00%
Note: the tailing difference of the data in the table above is due to rounding to two decimal.
Reason for the changes in share capital
√Applicable □Inapplicable
(1) During the Reporting Period, the Company has completed the repurchase and cancellation of the Company's Public Shares
On December 30, 2022, the Company had completed the repurchase of parts of the Company's public shares. The Company used the dedicated securities accountfor share repurchase to cumulatively repurchase shares with the total amount of 66,987,835 shares by means of centralized bidding, accounting for 0.7103% of theCompany's total share capital at that time (9,430,920,624 shares). The highest transaction price was RMB35.13 per share, the lowest transaction price was RMB26.83per share, and the total transaction amount was RMB2,043,476,488.53 (excluding transaction fees).On January 13, 2023, the Company had completed the cancellation procedures for the above shares at the Shenzhen branch of China Securities Depository andClearing Corporation Limited, with the total amount of 66,987,835 shares, accounting for 0.7103% of the Company's total share capital before the cancellation(9,430,920,624 shares), and the number of cancelled shares is equal to the number of actual repurchased shares. After the completion of the repurchase and cancellationof shares, the Company's total share capital changes from 9,430,920,624 shares to 9,363,932,789 shares..For details, please refer to the Announcement on Resolutions of 13th Meeting of the 5th Session of the Board of Directors (Announcement No.: 2022-049), theAnnouncement on the Plan of Repurchase Part of the Company's Public Shares (Announcement No.: 2022-050), the Announcement on Resolutions of the Second
Extraordinary General Meeting of Shareholders in 2022 (Announcement No.: 2022-056), the Report on the Plan of Repurchase Part of the Company's Public Shares(Announcement No.: 2022-057) published by the Company on cninfo website (www.cninfo.com.cn) on September 16, 2022 and October 11, 2022.
(2) During the reporting period, the Company has completed the third repurchase and cancellation of the 2018 restricted share incentive scheme.
On April 13, 2023 and May 9, 2023, the 17th meeting of the 5th session of the Board of Directors, the 15th meeting of the 5th session of the Board of Supervisorsand 2022 Annual General Meeting reviewed and approved the Proposal on the Unfulfilled Unlocking Conditions for the Third Unlocking Period of the 2018 RestrictedShare Plan and the Repurchase of Restricted Shares Granted but Not Unlocked. As the Company performance did not meet the unlocking conditions for the thirdunlocking period of the 2018 Restricted Stock Plan (Revised Draft), 33,331,858 restricted shares granted but not unlocked in the current period for all grantees of the2018 Restricted Stock Plan were repurchased and cancelled. And the Company had completed the cancellation procedures for the above shares at the Shenzhen branchof China Securities Depository and Clearing Ltd. on July 5, 2023.For details, please refer to the Proposal on the Unfulfilled Unlocking Conditions for the Third Unlocking Period of the 2018 Restricted Share Plan and theRepurchase of Restricted Shares Granted but Not Unlocked ((No. 2023-021) published by the Company on www.cninfo.com.cn on April 15, 2023 and The Proposalof the Completed Cancellation of the Restricted Shares that have been Granted but not yet Unlocked for the Third Uncloking Period of the 2018 Restricted Plan (2023-028) published by the Company on www.cninfo.com.cn on July 7, 2023, and the total share capital of the Company decreased from 9,363,932,789 shares to9,330,600,931 shares.As of the end of the current reporting period, the Company has a total of 97,402,605 granted but unvested shares, accounting for 1.04% of the Company's totalshare capital at the end of the reporting period, and the total share capital of the Company decreased by 2,288,095 shares from 9,433,208,719 shares to 9,430,920,624shares.
Approval for changes in share capital
√Applicable □Inapplicable
(1) The Company has completed the repurchase and cancellation of the Company's Public Shares
On September 15, 2022 and October 10, 2022, the Company held the 13th meeting of the 5th session of the Board of Directors and the second extraordinarygeneral meeting of shareholders in 2022 respectively, deliberated and approved the Proposal on the Plan of Repurchase Part of the Company's Public Shares, approvedthe Company using its own fund to repurchase part of its RMB common shares (A shares) that have been issued domestically by means of centralized bidding throughthe trading system of the SZSE, the aggregate amount of repurchase funds shall not exceed RMB2.5 billion (inclusive) and not less than RMB2 billion (inclusive), therepurchase price shall not exceed RMB40 per share (inclusive), the implementation period of the repurchase shall not exceed 12 months from the date of the generalmeeting of shareholders of the Company at which the proposal on the plan of repurchase part of the Company's public shares is reviewed and approved, and theCompany will make repurchase decisions and implement them based on market conditions during the repurchase period. The shares repurchased by the Company willbe cancelled for reducing the registered capital according to law.On January 13, 2023, the Company had completed the cancellation procedures for the above shares at
the Shenzhen branch of China Securities Depository and Clearing Corporation Ltd.
(2) The Third Repurchase and Cancellation of the 2018 Restricted Share Incentive Scheme
On April 13, 2023 and May 9, 2023, the 17th meeting of the 5th session of the Board of Directors, the 15th meeting of the 5th session of the Board of Supervisorsand 2022 Annual General Meeting reviewed and approved the Proposal on the Unfulfilled Unlocking Conditions for the Third Unlocking Period of the 2018 RestrictedShare Plan and the Repurchase of Restricted Shares Granted but Not Unlocked. 33,331,858 restricted shares granted but not unlocked in the current period for allgrantees of the 2018 Restricted Stock Plan were repurchased and cancelled. And the Company had completed the cancellation procedures for the above shares at theShenzhen branch of China Securities Depository and Clearing Ltd. on July 5, 2023.
Transfer for changes in share capital
√Applicable □Inapplicable
(1) The Company has completed the repurchase and cancellation of the Company's Public Shares
On January 13, 2023, the Company completed the cancellation procedures for some of the Company's Public Shares at the Shenzhen branch of China SecuritiesDepository and Clearing Ltd, and the cancelled shares amounted to 66,987,835 shares, accounting for 0.7103% of the total share capital of the Company (9,430,920,624shares) before the cancellation. The number of shares cancelled this time is consistent with the number of shares actually repurchased by the Company. After thecompletion of this share repurchase cancellation procedure, the total share capital of the Company was changed from 9,430,920,624 shares to 9,363,932,789 shares.
(2) The Third Repurchase and Cancellation of the 2018 Restricted Share Incentive Scheme
On July 5, 2023, 33,331,858 restricted shares granted but not unlocked in the third period for all grantees of the 2018 Restricted Stock Plan were canceled at theShenzhen branch of China Securities Depository and Clearing Ltd., and the total share capital of the Company decreased from 9,363,932,789 shares to 9,330,600,931shares.
After the completion of the above matters, there has been no significant change in the shareholder structure, asset and liability structure of the Company.
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: ShareName of shareholder
| Opening restricted shares | Increased in current period | Vested in current period |
Closing restricted shares Note for restricted shares Vesting date
share incentive plan(consolidated)
| Grantees of restricted | 130,734,463 | 0 | 33,331,858 | 97,402,605 | Equity Incentive Restricted Shares |
the third
| repurchase and cancellation of the 2018 restricted share |
incentive
Qu Liyang
| scheme | |||||
| 11,812 | 0 | 0 | 11,812 | Restricted shares for senior executives |
Wang Qiuchao
According to the relevantregulations on themanagement of executiveshares
26,250
| 26,250 | 0 | 0 | 26,250 | Restricted shares for senior executives |
Xu Lirong
| 227,250 | 0 | 0 | 227,250 | Restricted shares for senior executives |
Hu Yangzhong
| 116,434,858 | 292,500 | 0 | 116,727,358 | Restricted shares for senior executives |
Wu Weiqi
| 6,473,317 | 41,025 | 0 | 6,514,342 | Restricted shares for senior executives |
He Hongli
| 248,625 | 0 | 0 | 248,625 | Restricted shares for senior executives |
Cai Changyang
| 82,125 | 0 | 0 | 82,125 | Restricted shares for senior executives |
Xu Ximing
| 66,150 | 0 | 0 | 66,150 | Restricted shares for senior executive |
Bi Huijuan
| 167,850 | 0 | 0 | 167,850 | Restricted shares for senior executives |
Pu Shiliang
| 169,425 | 0 | 0 | 169,425 | Restricted shares for senior executives |
Jin Duo
| 82,125 | 0 | 0 | 82,125 | Restricted shares for senior executives |
Jin Yan
| 180,000 | 0 | 0 | 180,000 | Restricted shares for senior executives |
Huang Fanghong
| 248,875 | 0 | 0 | 248,875 | Restricted shares for senior executives |
Xu Peng
| 1,811 | 0 | 0 | 1,811 | Restricted shares for senior executives |
Guo Xudong
| 11,070 | 0 | 0 | 11,070 | Restricted shares for senior executives |
Name of shareholder
| Opening restricted shares | Increased in current period | Vested in current period |
Closing restricted shares Note for restricted shares Vesting dateTotal
| 255,166,006 | 333,525 | 33,331,858 | 222,167,673 |
-- --
Note:
1) Executives who are grantees under incentive restricted shares scheme, his/her holding incentive restricted shares are counted within the "Grantees of restricted
share incentive plan (consolidated)" on the second row.
2) The total amount of vested shares of the "Grantees of restricted share incentive plan (consolidated)" in current period is 33,331,858 shares, which is the third
repurchase and cancellation of restricted stock granted but not unlocked in the current period under the Company's 2018 restricted stock plan (Including the repurchaseand cancellation of the corresponding restricted shares for equity incentives held by the above senior executives).
3) The directors of the Company, Hu Yangzhong and Wu weiqi, increased their holdings of the Company by 390,000 shares and 54,700 shares, respectively, which
were partially included in the restricted shares for senior executives in accordance with the relevant rules for the restriction of shares for senior executives.II. Issuance and Listing of Securities
1. Securities (exclude Preferred Share) Issued during the Reporting Period
□Applicable √Inapplicable
2. Explanation on Changes in Total Share Capital, the Structure of Shareholders, and the Structure of Assets and Liabilities of the Company
√ Applicable □ Inapplicable
(1) The repurchase and cancellation of the Company's Public Shares
On January 13, 2023, the Company completed the cancellation procedures for some of the Company's Public Shares at the Shenzhen branch of China SecuritiesDepository and Clearing Ltd, and the cancelled shares amounted to 66,987,835 shares, accounting for 0.7103% of the total share capital of the Company (9,430,920,624shares) before the cancellation. After the completion of this share repurchase cancellation procedure, the total share capital of the Company was changed from9,430,920,624 shares to 9,363,932,789 shares.
(2) The Third Repurchase and Cancellation of the 2018 Restricted Share Incentive Scheme
On July 5, 2023, 33,331,858 restricted shares granted but not unlocked in the third period for all grantees of the 2018 Restricted Stock Plan were canceled at theShenzhen branch of China Securities Depository and Clearing Ltd., and the total share capital of the Company decreased from 9,363,932,789 shares to 9,330,600,931shares.After the completion of the above matters, there has been no significant change in the shareholder structure, asset and liability structure of the Company.
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: ShareTotal number of common shareholders at theend of the reporting period
324,840
The total number of ordinary shareholders at the end of the previous month beforethe disclosure date of the annual report
356,222Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them (Excluding shares lent through refinancing)Name of shareholder
Nature ofshareholder
Share-holdingpercentage
(%)
Total ordinaryshares held at theend of the reportingperiod
Increase/decreas
e during thereporting period
The numberof shares held
with trading
restrictions
The number of sharesheld without trading
restrictions
Pledged or marked or frozenStatus AmountChina ElectronicsTechnology HIK GroupCo., Ltd.
Domestic state-
ownedcorporation
36.48% 3,403,879,509 - - 3,403,879,509Pledged 50,000,000Gong Hongjia
Overseasindividual
10.32% 962,504,814 - - 962,504,814Pledged 190,548,700Hangzhou Weixun EquityInvestment Partnership(Limited Partnership)
Domestic non-state-ownedcorporation
4.83% 450,795,176 - - 450,795,176Pledged 18,100,000
Shanghai PerseveranceAsset ManagementPartnership (LimitedPartnership) -Perseverance AdjacentMountain 1 YuanwangFund
Other
4.58% 427,000,000 -5,000,000 - 427,000,000- -
CETC InvestmentHoldings Co., Ltd.
Domestic state-ownedcorporation
2.49% 232,307,903 - - 232,307,903- -Hangzhou Pukang EquityInvestment Partnership(Limited Partnership)
Domestic non-state-ownedcorporation
1.96% 182,510,174 - - 182,510,174Pledged 48,300,000The 52ndResearchInstitute at ChinaElectronics TechnologyGroup Corporation
Domestic state-ownedcorporation
1.94% 180,775,044 - - 180,775,044- -Hu Yangzhong
Domesticindividual
1.67% 155,636,477 390,000 116,727,358 38,909,119- -Central Huijin InvestmentCo., Ltd.
Domestic state-ownedcorporation
0.69% 64,700,691 - - 64,700,691- -Hong Kong SecuritiesClearing CompanyLtd.(HKSCC)
Overseascorporation
0.58% 53,720,436 2,256,602 - 53,720,436-
Explanation on associated relationship orconcerted actions among the above-mentionedshareholders:
China Electronics Technology HIK Group Co., Ltd., CETC Investment Holdings Co., Ltd., and the 52
ndResearch Institute at ChinaElectronics Technology Group Co., Ltd.are all subject to control of China Electronics Technology Group Corporation. Ms. Chen Chunmei,limited partner of Hangzhou Pukang Equity Investment Partnership (Limited Partnership), is the spouse of Mr. Gong Hongjia, overseasindividual shareholder of the Company. Hu Yangzhong, domestic individual, is holding the capital contribution shares of both HangzhouWeixun Equity Investment Partnership (Limited Partnership) and Hangzhou Pukang Equity Investment Partnership (Limited Partnership).Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-
in accordance with the Administrative Measures for Acquisitions of Listed Companies.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 tradingrestrictions held at the period-end
Type of shares
concert parties
Type NumberChina Electronics Technology HIK Group Co., Ltd. 3,403,879,509 RMB ordinary shares 3,403,879,509Gong Hongjia 962,504,814 RMB ordinary shares 962,504,814Hangzhou Weixun Equity Investment Partnership (Limited Partnership) 450,795,176 RMB ordinary shares 450,795,176Shanghai Perseverance Asset Management Partnership (LimitedPartnership) - Perseverance Adjacent Mountain 1 Yuanwang Fund
427,000,000RMB ordinary shares 427,000,000CETC Investment Holdings Co., Ltd. 232,307,903 RMB ordinary shares 232,307,903Hangzhou Pukang Equity Investment Partnership (Limited Partnership) 182,510,174 RMB ordinary shares 182,510,174The 52
ndResearch Institute at China Electronics Technology Group Co.,Ltd.
180,775,044RMB ordinary shares 180,775,044Central Huijin Investment Co., Ltd. 64,700,691 RMB ordinary shares 64,700,691Hong Kong Securities Clearing Company Ltd.(HKSCC) 53,720,436 RMB ordinary shares 53,720,436Hu Yangzhong 38,909,119 RMB ordinary shares 38,909,119Explanation on associated relationship andconcerted actions among Top 10 shareholdersholding shares without trading restrictions, andamong Top 10 shareholders and Top 10shareholders holding shares without tradingrestrictions
China Electronics Technology HIK Group Co., Ltd., China Electronics Technology Investment Holdings Co., Ltd. and The 52nd ResearchInstitute 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 individualshareholder of the Company. Hu Yangzhong, domestic individual, is holding the capital contribution shares of both Xinjiang WeixunInvestment 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-concertparties in accordance with the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the ListedCompany.
Top 10 shareholders participate in refinancing business lending shares
□ Applicable √ Inapplicable
The top ten shareholders have changed from the previous period
□ Applicable √ Inapplicable
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: CorporationName of controlling
shareholder
Legal Representative
/People in charge
Date of establishment Organization code Business scopeChina Electronics TechnologyHIK Group Co., Ltd.
Chen Zongnian November 29, 20029133000014306073XD
Industrial investment; R&D of environmental protection products, networkproducts, 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 controllingshareholder in other listed
holding during the reportingperiod
Directly holds 47.16% shares of domestic listed company Phoenix Optical Co. Ltd., and directly holds 13.50% shares of domestic listed company AnbangGuarding Group Co. and indirectly holds 17.51% shares of domestic listed company Hangzhou EZVIZ Network Co., Ltd. (China Electronics TechnologyHIK Group Co., Ltd.holds 36.48% shares of the Company and the Company holds 48.00% shares of Hangzhou EZVIZ Network Co., Ltd).Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
The Company's controlling shareholder has not changed during the reporting period.
3. Particulars about the Company’s Actual Controller & Concerted Parties
Nature of the actual controller: Central state-owned assets management agencyType of the actual controller: Corporation
Name of the
actualcontroller
LegalRepresentative/People in charge
Date ofestablishment
Organizationcode
Business scope
China Electronics
Ltd.
Wang Haibo
February 25,2002
| Technology Group | 91110000710929498G | The Company is responsible for the development and manufacturing of military electronic equipment and |
systems integration, electronic
system; the rese
| arch, development, production and sales of civil electronic information software, materials, components, equipment and system integration and related |
common technology; self-
export business of various commodities and technolog
| ies (except for goods and technologies that are restricted or |
restricted by the state-
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 |
pr
or restricted by national and municipal industrial policies.)
Shares held by theactual controllingshareholder inother listedcompaniesthroughcontrolling orholding during thereporting period
China Electronics Technology Group Ltd. is the actual controller of 18 domestic listed
Technology Co., Ltd., Tai’ji Computer Corporation Limited, GLARUN Technology Co., Ltd. , Phoenix Optics Co., Lt
| d., Chengdu Tianao Electronic Co., Ltd., CETC Chip Technology Inc., Hebei Sinopack Electronic Technology Co., Ltd., Eastern Communications Co.,Ltd., Eastcompeace Technology Co.,Ltd., Nanjing Putian Telecommunications Co., Ltd., |
Chengdu Siwei Science and Te
Co., Ltd., Nanjing Les Information Technology Co., Ltd., Beijing E-hualu Information Technology Co., Ltd. and etc.Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
No such change during the reporting period.
The ownership and controlling relationship between the actual controller of the Company and the Company is detailedas follows:
The actual controller controls the Company through trust or other asset management methods
□ Applicable √Inapplicable
4. The Company's Controlling Shareholder or the Largest Shareholder and its Concerted Action Person's
Cumulative Pledged Shares Account for 80% of the Company's Shares Held by Them
□ Applicable √ Inapplicable
5. Particulars about Other Corporate Shareholders with Shareholding Proportion over 10%
□ Applicable √ Inapplicable
6. Particulars on Shareholding Decrease Restrictions for the Controlling Shareholders, Actual Controller,
Restructurer or Other Committing Parties
□ Applicable √ Inapplicable
IV.The Specific Implementation of Share Repurchase during the Reporting Period
Implementation progress of share repurchase
√ Applicable □Inapplicable
Disclosure
Date
Plannedrepurchaseamount ofshares
Proportion to
total share
capital
Plannedamount ofrepurchasefund
Repurchaseperiod
Use ofrepurchase
Amount ofrepurchasedshares(share)
The number ofrepurchasedshares as aproportion ofthe underlyingstock coveredby the share
incentivescheme
September 16,2022
based on thatthe repurchaseprice shall not
| exceed RMB40 |
per share. Theamount shallnot exceed62,500,000shares and notless than50,000,000share, and thefinal result issubject to theactual
| repurchase. | Calculated based on that the repurchase price shall not exceed RMB40 per share. The repurchased portion of shares shall not exceed 0.66% and not less than 0.53%, and final result is subject to the actual repurchase |
.
| RMB2.5 billion (inclusive) and not less than RMB 2 billion (inclusive) |
October 11,2022 –December 30,
Cancel andreduceregisteredcapital inaccordancewith law
66,987,835
Inapplicable
On September 15, 2022 and October 10,
2022, the Company held the 13
h meeting of the 5
th
session of the Board ofDirectors and the second extraordinary general meeting of shareholders in 2022 respectively, deliberated and approved theProposal on the Plan of Repurchase Part of the Company's Public Shares, approved the Company using its own fund torepurchase part of its RMB common shares (A shares) that have been issued domestically by means of centralized biddingthrough the trading system of the SZSE, the aggregate amount of repurchase funds shall not exceed RMB2.5 billion(inclusive) and not less than RMB 2 billion (inclusive), the repurchase price shall not exceed RMB40 per share (inclusive),the implementation period of the repurchase shall not exceed 12 months from the date of the general meeting ofshareholders of the Company at which the proposal on the plan of repurchase part of the Company's public shares isreviewed and approved, and the Company will make repurchase decisions and implement them based on market conditionsduring the repurchase period. The shares repurchased by the Company will be cancelled for reducing the registered capitalaccording to law. For details, please refer to the Announcement on Resolutions of 13
th Meeting of the 5
thSession of theBoard of Directors (Announcement No.: 2022-049), the Announcement on the Plan of Repurchase Part of the Company'sPublic Shares (Announcement No.: 2022-050), the Announcement on Resolutions of the Second Extraordinary GeneralMeeting of Shareholders in 2022 (Announcement No.: 2022-056), the Report on the Plan of Repurchase Part of theCompany's Public Shares (Announcement No.: 2022-057) published by the Company on cninfo website(www.cninfo.com.cn) on September 16, 2022 and October 11,
2022. On October 11,
2022, the Company first repurchased6,820,968 shares of the Companyby means of centralized bidding through a dedicated securities account for the repurchase,accounting for 0.0723% of the Company's total share capital at that time. The highest transaction price was RMB29.65per share, the lowest transaction price was RMB28.71 per share, and the total transaction amount was RMB199,981,024.67(excluding transaction fees). For details, please refer to the Announcement on the Initial Repurchase of the Company'sShares (Announcement No.: 2022-059) published by the Company on cninfo website (www.cninfo.com.cn) on October12,
2022. During the repurchase period, the Company disclosed the progress of repurchase as of the end of last monthwithin the first three trading days each month based on the regulation. For details, please refer to the Announcement onthe Progress of Repurchase (Announcement No.: 2022-063) (Announcement No.: 2022-066) published by the Company
on cninfo website (www.cninfo.com.cn) on November 2, 2022, December 3, 2022, respectively. As of December 30, 2022,the repurchase of shares had been completed, and the actual repurchase date was between October 11, 2022 and December30, 2022, meet the requirement on implementation period of repurchase in repurchase plan. As of December 30, 2022, theCompany used the dedicated securities account for share repurchase to cumulatively repurchase shares with the totalamount of 66,987,835 shares by means of centralized bidding, accounting for 0.7103% of the Company's total share capitalat that time (9,430,920,624 shares). The highest transaction price was RMB35.13 per share, the lowest transaction pricewas RMB26.83 per share, and the total transaction amount was RMB2,043,476,488.53 (excluding transaction fees). Thesource of share-repurchase funding was from the Company's own fund, and the price of repurchase did not exceed theupper limit of the price (RMB40 per share) specified in the repurchase plan. The repurchase complies with relevant laws,regulations and rules from the disclosed repurchase plan. For details, please refer to the Announcement on the Progressand Result of Repurchase of the Company's Shares and Changes in Shares (Announcement No.: 2023-001) published bythe Company on cninfo website (www.cninfo.com.cn) on January 4,
2023. On January 13, 2023, the Company hadcompleted the cancellation procedures for the above shares at the Shenzhen branch of China Securities Depository andClearing Ltd., with the total amount of 66,987,835 shares, accounting for 0.7103% of the Company's total share capitalbefore the cancellation (9,430,920,624 shares), and the number of cancelled shares is equal to the number of actualrepurchased shares. After the completion of the repurchase and cancellation of shares, the Company's total share capitalchanges from 9,430,920,624 shares to 9,363,932,789 shares. For details, please refer to the Announcement on theCompletion of the Cancellation of the Company's Repurchased Shares and Changes in Shares (Announcement No.: 2023-002) published by the Company on cninfo website (www.cninfo.com.cn) on January 17, 2023.Implementation progress of reduce holdings of repurchased shares by means of centralized bidding
□Applicable√ Inapplicable
Section VIII Information of Preferred Shares
□ Applicable √ Inapplicable
There is no preferred share existed for the Company during the current reporting period.
Section IX Bonds
□ Applicable √ Inapplicable
Section X Financial Report
Audit Report
Audit Opinion Standard unqualified audit opinionAudit Report sign-off Date April 18, 2024Audit Institution Name Deloitte Touche Tohmatsu Certified Public Accountants LLPAudit Report Number Deloitte Auditors’ Report (Audit) No. 24- P04366Certified Public Accounts Name Chen yan, Liu ying
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, 2023, consolidated and parent company's income statement, cash flow statement and statement of changesin owners’ equity of 2023 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, 2023 and consolidated and parent company’s financial performance and cashflows of 2023.
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) 46, the operating revenue in the consolidated financial statements of the Group for the yearended December 31, 2023 is RMB89,339,856,855.68. The product sales revenue, a key performance indicator, reachesRMB84,971,000,242.56, accounting for 95.11% of the operating revenue, which is a significant indicator of the Groupand has a significant influence on results of business operations. The product sales revenue include different sales modelssuch as product domestic sales and product export sales by domestic companies and the overseas sales of overseassubsidiaries, and therevenue recognition is complicated. Therefore, we regard the occurrence of product sales revenue asa 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 theGroup 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 modelof the selected domestic companies, additional inspections will be made to the customs declaration record andshipment 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, 2023, the balanceof accounts receivable amounted to RMB39,006,606,967.83, and the balance of provision for credit losses of accountsreceivable amounted to RMB3,191,433,456.39. 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) 11.2, Note (III) 13 and Note (III) 34 of the financial statements, the Group makes provisions for credit losses foraccounts receivable at an amount equivalent to expected credit losses during the entire duration. For accounts receivablewith significant individual amount and when the debtor has major financial difficulties, etc., the Group recognizes its creditlosses based on individual assets, and classifies other accounts receivable into different combinations based on commoncredit risk characteristics and calculates expected credit losses on a portfolio basis.
For accounts receivable classified into portfolios, the Group uses impairment matrix to determine the expected creditloss provision for accounts receivable. The expected credit loss provision ratio for each portfolio is determined based onthe Group’s historical overdue ratio and default and with reference to the forward-looking information of the industry. The
accounting estimates above are subject to a high level of uncertainties. Therefore, we identify the recognition of credit lossprovision for accounts receivable on a portfolio basis as a key audit matter.
Audit Measures:
Main audit procedures that we perform for the aforesaid key audit matters include:
(1) Understanding and evaluating design and implementation of key internal control in relation to expected credit loss
provision for accounts receivable by the Group, and testing the effectiveness of its operation;
(2) Understanding the Group’s accounting policies for expected credit loss on accounts receivable; for the model credit
loss provision for accounts receivable on a portfolio basis, the following main procedures were performed-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 maintenanceof necessary internal control to enable the financial statements are free from material misstatement, whether due to fraudor error.
When preparing the financial statements, the management is responsible for assessing the going-concern ability ofHikvision, disclosing issues related to going-concern as applicable, and applying going-concern assumptions, unless themanagement plans to liquidate Hikvision, terminate operation or has no other realistic choice.
The governance is responsible for supervising financial reporting processes of Hikvision.
6. Responsibility of Certified Public Accountants on Audit of the Financial Statements
Our objective is to obtain reasonable assurance as to whether the overall financial statements are free from materialmisstatement, whether due to fraud or error, and to issue audit report that contain audit opinions. Reasonable assurance isa high level of assurance, but could not guarantee that an audit performed in accordance with the Auditing Standards canalways figure out any existing material misstatements. Misstatements may be caused by fraud or error. Misstatement isgenerally considered to be material if it is reasonably expected that the misstatement, alone or aggregated, may affect theusers’ financial decisions based on the financial statements.In performing the audit in accordance with the Auditing Standards, we applied professional judgment and maintainedprofessional skepticism. Meanwhile, we also perform the following duties:
(1) Identify and evaluate the risk of material misstatement of financial statements due to fraud or error; design and
implement audit procedures to cope with these risks, and obtain adequate and appropriate audit evidence as the basis
for expressing audit opinions. As fraud may involve collusion, forgery, willful omission, misrepresentation or
override of internal control, the risk of not discovering a material misstatement due to fraud is higher than the risk of
not discovering a material misstatement due to error.
(2) Understand the internal control related to auditing as a way to design appropriate audit procedures.
(3) Evaluate the properness of accounting policy selected by the management and the rationality of accounting estimate
and related disclosure.
(4) Reach a conclusion on whether the going concern assumption adopted by the management is appropriate. Meanwhile,
based on the audit evidence obtained, reach a conclusion on whether there are material uncertainties in the events or
conditions that may cast significant doubts on Hikvision's ability to continue as a going concern. If we reach a
conclusion that there is a material uncertainty, the Auditing Standards require us to call the attention of the users of
the report to the relevant disclosures in the financial statements in the audit report. If the disclosure is insufficient, we
should issue modified audit opinions. Our conclusion is based on the information available up to the date of the audit
report. However, future events or conditions may result in the failure of Hikvision to continue as a going concern.
(5) Evaluate the overall presentation (including the disclosure), structure and content of the financial statements and
evaluate whether the financial statements fairly reflect the related transactions and events.
(6) Obtain adequate and appropriate audit evidence on the financial information of entity or business activities of
Hikvision so as to express audit opinions on the financial statements. We are responsible for directing, supervising
and executing the audit on the Group, and assume full responsibility for the audit opinions.
We communicated with the governance about the scope of the audit, the schedule and major audit findings, includingthe notable shortcomings of internal control identified during the auditing.
We also provide statement to the governance on the independence-related work ethics we follow, and communicatewith the governance on all relations and other matters that might be reasonably deemed to influence our independence aswell as relevant precautionary measures (as applicable).
We determine which of the matters we communicated with the governance are of the greatest importance to the 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, 2023
Consolidated Balance Sheet
Unit: RMBItem NotesOn December 31, 2023 On December 31, 2022(Restated)Current Assets:
Cash and bank balances(V)1 49,629,469,654.46 40,011,863,999.94Held-for-trading financial assets(V)2 37,380.00 12,807,438.36Notes receivable(V)3 2,606,071,375.74 2,519,988,159.23Accounts receivable(V)4 35,815,173,511.44 29,906,294,410.40Receivables for financing(V)6 1,594,219,832.62 1,484,218,258.74Prepayments (V)7 508,151,405.92 534,780,120.52Other receivables (V)8 571,905,648.93 516,503,485.58Inventories (V)9 19,211,434,385.32 18,998,222,978.81Contract assets (V)5 1,173,312,415.20 2,118,223,370.98Non-current assets due within one year (V)10 1,079,721,006.23 996,902,343.27Other current assets (V)11 961,593,616.75 806,832,941.58Total Current Assets
113,151,090,232.61 97,906,637,507.41Non-current Assets:
Long-term receivables (V)12 538,698,618.76 540,647,965.30Long-term equity investment (V)13 1,151,104,887.85 1,252,033,513.41Other non-current financial assets (V)14 472,184,937.66 423,893,239.94Fixed assets(V)15 11,508,302,317.75 8,539,842,630.68Construction in progress(V)16 4,307,651,074.46 3,770,803,300.80Right-of-use assets(V)17 521,061,396.66 574,478,326.31Intangible assets (V)18 1,810,476,551.45 1,544,933,502.19Goodwill (V)19 311,353,640.88 217,386,531.28Long-term deferred expenses (V)20 177,361,533.93 177,277,742.41Deferred tax assets (V)21 1,978,373,012.15 1,471,197,578.26Other non-current assets (V)22 2,920,349,344.39 2,815,702,012.70Total Non-current Assets
25,696,917,315.94 21,328,196,343.28Total Assets
138,848,007,548.55 119,234,833,850.69
On December 31, 2023
Consolidated Balance Sheet-continued
Unit: RMBItem Notes On December 31, 2023 On December 31, 2022 (Restated)
| Current Liabilities: |
Short-term borrowings (V)24 2,118,952,026.06
3,343,071,972.89
| Held-for-trading financial liabilities | (V)25 | 38,079,755.04 | 68,299,685.57 |
Notes payable (V)26 1,163,687,279.58
1,207,756,963.94Accounts payable (V)27 19,163,485,888.09
16,025,563,802.99
| Contract liabilities | (V)28 | 2,977,990,775.40 | 2,644,496,508.36 |
Payroll payable (V)29 6,120,254,492.28
4,837,302,455.95Taxes payable (V)30 1,622,401,214.96
1,234,032,138.37Other payables (V)31 3,911,612,841.06
3,203,308,686.31Including: Dividends payables(V)31.2253,957,413.29 300,150,894.34Non-current liabilities due within one year (V)32 5,814,660,214.96
868,197,272.46
| Other current liabilities | (V)33 | 1,481,222,044.19 | 923,721,593.78 |
| Total Current Liabilities | 44,412,346,531.62 | 34,355,751,080.62 |
Non-current Liabilities:
Long-term borrowings (V)34 8,940,122,961.01
7,522,315,341.60Lease liabilities (V)35 344,005,866.13
277,255,924.83Long-term payables (V)365,776,599.85
7,569,934.67Provisions (V)37213,084,038.31
219,365,227.62
| Deferred income | (V)38 | 966,259,592.34 | 933,260,426.12 |
Deferred tax liabilities (V)21 129,866,978.18
116,479,475.98Other non-current liabilities (V)391,672,933,103.20
2,831,108,087.59Total Non-current Liabilities
| 12,272,049,139.02 | 11,907,354,418.41 |
Total Liabilities
56,684,395,670.64
46,263,105,499.03Owners’ Equity
Share capital
| Share capital | (V)40 |
9,330,600,931.00
| 9,430,920,624.00 | |||
| Capital reserves | (V)41 | 7,864,903,763.52 | 10,141,153,435.32 |
Less: Treasury shares (V)42 2,737,987,226.55
5,316,033,650.24Other comprehensive income (V)43 44,667,516.16
(42,587,158.81)Surplus reserves (V)444,715,460,312.00
4,715,460,312.00Retained earnings (V)45 57,136,620,244.01
49,460,423,962.05
76,354,265,540.14
| Total Owners' Equity Attributable to Owner of the Company |
68,389,337,524.32Minority equity 5,809,346,337.77
4,582,390,827.34Total Owners' Equity
82,163,611,877.91
72,971,728,351.66Total Liabilities and Owners' Equity
138,848,007,548.55
119,234,833,850.69
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, 2023
Balance Sheet of the Parent Company
Unit: RMBItem Notes On December 31, 2023
Current Assets:
Cash and bank balances
On December 31, 2022(Restated)
36,366,610,163.17
27,826,883,144.97Notes receivable
| 36,366,610,163.17 |
| 214,433,654.20 |
291,894,821.88Accounts receivable(XVI)1
24,375,815,151.52Receivables for financing
| 19,016,777,665.77 |
| 44,650,466.33 |
1,380,237.21Prepayments
78,220,424.69Other receivables (XVI)2 3,061,246,174.74 2,409,877,936.73Including: Dividend receivables
53,649,708.62(XVI)2.2
41,423,446.39 85,323,007.51Inventories
| (XVI)2.2 | |
| 199,049,157.84 |
287,356,998.22Contract assets
2,070,526.66Non-current assets due within one year
| 10,490,078.61 | ||
157,086,525.60
145,198,110.49Other current assets
| 1,676,541,190.03 |
10,325,583.58Total Current Assets
60,800,534,784.91
55,429,022,935.95Non-current Assets:
Long-term accounts receivable3,633,588,076.55
544,335,046.78Long-term equity investment (XVI)3
| 8,681,387,048.75 |
7,735,758,795.50Other non-current financial assets
336,896,766.52Fixed assets
| 338,767,764.24 |
| 3,392,288,906.32 |
3,632,220,781.28Construction in progress
31,536,529.55Right-of-use assets
| 17,377,463.50 |
| 124,744,108.19 |
106,886,641.18Intangible assets
108,027,048.91Long-term deferred expenses
| 96,021,508.25 |
| 39,437,083.99 |
44,756,196.08Deferred tax assets 322,869,398.52 170,615,439.85Other non-current assets
20,271,638.61Total Non-current Assets
16,792,698,298.25 12,731,304,884.26Total Assets
77,593,233,083.16
146,216,939.94
68,160,327,820.21
On December 31, 2023
Balance Sheet of the Parent Company - continued
Unit: RMBItem Notes On December 31, 2023
Current Liabilities:
Short-term borrowings - 371,761,513.12Accounts payable
On December 31, 2022
(Restated)1,050,518,329.53
871,899,603.98Contract liabilities
| 1,050,518,329.53 |
| 218,875,534.52 |
252,386,307.55Payroll payable3,644,152,847.04 2,751,925,304.64Taxes payable944,807,901.59
371,935,883.41Other payables
| 738,553,487.03 |
1,523,785,190.90Non-current liabilities due within one year
280,431,699.90Other current liabilities
| 1,523,328,743.28 |
| 1,134,059,460.70 |
504,448,226.96Total Current Liabilities
9,254,296,303.69
6,928,573,730.46Non-current Liabilities:
Long-term borrowings
5,887,380,000.00
1,674,051,800.00Lease liabilities
| 5,887,380,000.00 |
| 66,330,125.99 |
51,034,219.65Provisions
112,936,131.57Deferred Income
| 97,586,882.51 |
| 410,243,110.75 |
463,302,126.80Other non-current liabilities
2,806,169,050.05Total Non-current Liabilities
8,104,332,455.18 5,107,493,328.07Total Liabilities
17,358,628,758.87
1,642,792,335.93
12,036,067,058.53Owners’ Equity
Share capital
9,330,600,931.00
| 9,330,600,931.00 | 9,430,920,624.00 |
Capital reserves
| 5,776,371,174.04 | 8,264,384,780.30 |
Less: Treasury shares
| 2,737,987,226.55 | 5,316,033,650.24 |
Surplus reserves
| 4,715,460,312.00 | 4,715,460,312.00 |
Retained earnings 43,150,159,133.80
39,029,528,695.62Total Owners' Equity
60,234,604,324.29
56,124,260,761.68Total Liabilities and Owners' Equity
77,593,233,083.16
68,160,327,820.21
For the reporting period from January 1, 2023 to December 31, 2023
Consolidated Income Statement
Unit: RMBItem Notes
Amount for the current
period
Amount for the prior
period (Restated)I. Total Revenue(V)4689,339,856,855.68 83,166,321,681.14Less：Total operating costs
49,637,055,845.33 47,996,254,466.32Business taxes and surcharges (V)47
| (V)46 | |
| 704,641,378.69 |
581,896,696.51Selling expenses
10,842,500,778.25 9,773,457,336.23Administrative expenses
(V)49
2,769,731,410.40 2,642,113,372.00Research and Development (R&D) expenses
(V)48(V)50
11,392,948,404.47 9,814,444,260.55Financial expenses
(V)51
(749,780,213.12) (990,401,533.32)Including：Interest expenses
(V)50457,605,119.59
311,251,154.55Interest income
| 457,605,119.59 |
| 1,067,148,666.93 |
921,912,411.61Add: Other Income(V)52 2,559,522,840.33 2,482,467,855.97Investment income (V)53
218,396,306.44
| 63,302,304.25 | ||
| Including: Investment gains (Losses) in associated enterprise and joint-venture enterprise |
(29,966,477.85) 106,498,595.01Gains (losses) from changes in fair values (V)54
(155,567,520.89)Credit impairment gains (losses) (V)55 (879,922,773.25) (585,161,235.45)Impairment gains (losses) of assets (V)56 (463,382,275.12) (508,453,828.82)Asset disposal income (losses) (5,674,511.78) (17,578,905.00)II. Operating Profit
16,039,284,093.98 14,782,659,755.10Add: Non-operating income (V)5787,573,120.04 87,365,985.48Less: Non-operating expenses (V)58 27,933,016.91
22,679,257.8915,074,113.11
III. Total Profit16,098,924,197.11 14,854,951,627.47Less: Income tax expenses (V)59 943,241,010.15 1,296,821,531.79IV. Net Profit15,155,683,186.96 13,558,130,095.68
4.1 Classification by continuous operation
(a) Net profit on continuous operation
15,155,683,186.96 13,558,130,095.68(b) Net loss on terminated operation- -
4.2 Classification by attribution of ownership
(a) Net profit attributable to owners of parent company14,107,621,359.66 12,837,704,462.49(b) Profit or loss attributable to minority shareholders
1,048,061,827.30 720,425,633.19V. Other Comprehensive Income, Net of Income Tax(V)43183,798,707.05
15,074,113.11
88,691,088.90
| Other comprehensive income attributable to owners of the Company, net of tax |
87,254,674.97 34,596,966.48
- -
| (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 |
87,254,674.97 34,596,966.48
87,254,674.97 34,596,966.48Other comprehensive income attributable to minority interests,net of tax
96,544,032.08 54,094,122.42VI. Total Comprehensive Income15,339,481,894.01 13,646,821,184.58
Item Notes
Amount for the current
period
Amount for the priorperiod (Restated)
14,194,876,034.63 12,872,301,428.97
| Total comprehensive income attributable to owners of the parent company |
| Total comprehensive income attributable to minority shareholders |
1,144,605,859.38 774,519,755.61VII. Earnings per Share
(I) Basic earnings per share (RMB/share)(XVII)2 1.520 1.370(II) Diluted earnings per share (RMB/share)(XVII)2
1.520 1.370
For the reporting period from January 1, 2023 to December 31, 2023
Income Statement of the Parent Company
Unit: RMBItem Notes
Amount for thecurrent period
Amount for the priorperiod (Restated)I. Total Revenue(XV)4
24,284,505,338.35Less: Total operating Cost(XV)4
| 25,547,794,166.85 |
| 4,572,737,093.05 |
5,097,739,346.67
Business taxes and surcharges
| 315,430,824.67 |
282,765,774.49
Selling expenses
| 3,850,986,446.36 |
3,580,457,766.03
Administrative expenses
| 911,095,185.51 |
883,004,663.75
Research and Development (R&D) expenses
| 7,500,668,818.36 |
6,920,548,083.50
Financial expenses(642,865,974.82)
(654,027,587.29)
Including : Interest expenses
| 161,668,592.71 |
Interest income
| 103,549,530.55 | |
| 865,373,583.65 |
Add: Other income
| 765,252,513.50 | |
| 1,634,201,874.22 |
Investment income (XV)5499,611,155.15
| 1,747,068,413.89 | ||
| 387,283,344.13 | ||
| Including: Investment gains(Losses) in associated enterprise and joint-venture enterprise |
(36,401,170.84) 118,900,466.08Gains (losses) from changes in fair values
(74,432,284.58)Credit impairment gains (losses) (98,343,814.70)
| 2,475,310.72 |
(122,761,912.01)Impairment gains (losses) of assets
(1,195,518.35)Asset disposal income (losses)
| 2,652,989.00 |
| 1,072,329.19 |
(2,215,205.61)II. Operating profit11,081,411,617.30
Add: Non-operating income
| 10,107,764,128.67 | |
| 15,820,653.67 |
Less: Non-operating expenses
| 18,830,134.69 | |
| 1,821,528.02 |
III. Total profit11,095,410,742.95 10,125,388,352.86Less: Income tax expenses
1,205,910.50543,355,227.07
527,999,275.46IV. Net profit
10,552,055,515.88
| 543,355,227.07 |
9,597,389,077.40V. Other comprehensive income, net of income tax- -VI. Total comprehensive income10,552,055,515.88
9,597,389,077.40
For the reporting period from January 1, 2023 to December 31, 2023
Consolidated Cash Flow Statement
Unit: RMBItem Notes
Amount for thecurrent period
Amount for theprior periodI. Cash Flows from Operating Activities:
Cash receipts from sale of goods or rendering of services93,594,226,079.25 86,798,776,609.53Receipts of tax refunds3,991,363,246.02 3,767,899,232.43Other cash receipts relating to operating activities(V)60(1) 1,806,465,988.05 2,102,400,537.73Sub-total of ash inflows from operating activities
99,392,055,313.32 92,669,076,379.69Cash payments for goods purchased and services received52,008,656,087.35 54,179,038,046.40
Cash paid to and on behalf of employees17,977,652,521.22 16,397,768,429.86
Payments of various types of taxes 6,494,574,848.75 5,947,034,037.02Other cash payments relating to operating activities(V)60(1) 6,287,917,550.08 5,981,100,484.03Sub-total of cash outflows from operating activities
82,768,801,007.40 82,504,940,997.31Net Cash Flows from Operating Activities(V)61(1)16,623,254,305.92 10,164,135,382.38II. Cash Flows from Investing Activities:
Cash receipts from recovery of investments (V)60(2)4,688,412,447.257,309,732,287.10
Cash receipts from investment income 67,123,840.33 51,892,209.92
| Net cash receipts from disposals of fixed assets, intangible assets and other long-term assets |
30,738,410.30 12,978,200.27
Other cash receipts relating to investing activities(V)60(2)121,237,455.42 47,770,416.23Sub-total of cash inflows from investing activities
4,907,512,153.30 7,422,373,113.52
Cash payments to acquire or construct fixed assets, intangible assets
and other long-term assets
(V)60(2) 4,047,816,024.05 3,755,680,900.22
| Cash payments to acquire or construct fixed assets, intangible assets and other long-term assets |
Cash payments to acquire investments (V)60(2) 4,803,003,467.44 7,392,073,275.54
Net cash paid for obtaining subsidiaries and other business units (V)61(2) 43,992,651.82 -Sub-total of cash outflows from investing activities
8,894,812,143.31 11,147,754,175.76Net Cash Flows from Investing Activities
(3,987,299,990.01) (3,725,381,062.24)III. Cash Flows from Financing Activities:
Cash receipts from capital contributions72,570,000.006,015,196,647.38
| Including: cash receipts from capital contributions from minority owners of subsidiaries |
72,570,000.00 3,121,365,252.83Cash receipts from borrowings 11,032,367,859.61 8,360,333,394.08Other cash receipts from financing activities (V)60(3)5,000,000.00 -Sub-total of cash inflows from financing activities11,109,937,859.61 14,375,530,041.46Cash repayments of borrowings6,174,788,332.85 4,786,252,322.38
7,083,299,395.46 8,734,449,665.28
| Cash payments for distribution of dividends or profits or settlement of interest expenses |
| Including : Dividends and profits paid by subsidiaries to minority shareholders |
194,009,629.27 3,050,502.27Other cash payments relating to financing activities (V)60(3) 997,281,629.42 2,310,746,266.55Sub-total of cash outflows from financing activities14,255,369,357.73 15,831,448,254.21Net Cash Flows from Financing Activities
(3,145,431,498.12) (1,455,918,212.75)
113,365,015.34 228,609,977.98V. Net Increase in Cash and Cash Equivalents(V)61(1)9,603,887,833.13 5,211,446,085.37Add: Opening balance of Cash and Cash Equivalents (V)61(3) 39,815,390,514.57 34,603,944,429.20VI. Closing Balance of Cash and Cash Equivalents(V)61(3)49,419,278,347.70 39,815,390,514.57
For the reporting period from January 1, 2023 to December 31, 2023
Cash Flow Statements of the Parent Company
Unit: RMBItem Notes
Amount for thecurrent period
Amount for theprior periodI. Cash Flows from Operating Activities::
Cash receipts from the sale of goods and the rendering of services
33,798,989,613.5526,487,868,077.06
Receipts of tax refunds1,484,786,334.10 1,436,480,287.99
Other cash receipts relating to operating activities
1,003,715,734.811,532,865,664.26
Sub-total of cash inflows from operating activities36,287,491,682.4629,457,214,029.31
Cash payments for goods acquired and services received
5,141,659,409.025,493,671,074.35
Cash paid to and on behalf of employees7,743,837,239.02
| 7,512,557,371.10 |
Payments of various types of taxes
2,810,558,011.923,460,034,171.26
Other cash payments relating to operating activities4,018,574,345.87
| 3,467,533,481.78 |
Sub-total of cash outflows from operating activities
19,714,629,005.83 19,933,796,098.49Net Cash Flows from Operating Activities(XV)8(1)16,572,862,676.63 9,523,417,930.82II. Cash Flows from Investing Activities:
Cash receipts from recovery of investments876,506,386.63 433,936,760.50Cash receipts from investment income
559,285,378.22199,427,999.55
Net cash receipts from disposals of fixed assets, intangible assets andother long-term assets
59,072,378.14 70,976,304.99
Other cash receipts relating to investing activities
66,769,850,832.3173,174,669,493.77
Sub-total of cash inflows from investing activities
68,264,714,975.30
| 73,879,010,558.81 |
Cash payments to acquire or construct fixed assets, intangible assetsand other long-term assets
319,040,089.07 830,581,107.94Cash payments to acquire investments3,569,972,354.33 53,320,000.00Other cash payments relating to investing activities 70,028,455,422.77 74,151,979,147.50
Sub-total of cash outflows from investing activities73,917,467,866.17
| 75,035,880,255.44 |
Net Cash Flows from Investing Activities
(5,652,752,890.87) (1,156,869,696.63)III. Cash Flows from Financing Activities
Cash receipts from capital contributions- 2,893,831,394.55Cash receipts from borrowings 5,481,410,000.00 991,175,000.00Other cash receipts relating to financing activities 11,356,826,127.58 10,877,860,127.00Sub-total of cash inflows from financing activities16,838,236,127.58 14,762,866,521.55Cash repayments of borrowings473,648,200.00 389,788,200.00
6,590,228,195.38 8,466,387,329.97Other cash payments relating to financing activities 12,107,588,596.15 13,134,864,230.77Sub-total of cash outflows from financing activities19,171,464,991.53 21,991,039,760.74Net Cash Flows from Financing Activities
(2,333,228,863.95) (7,228,173,239.19)
Cash payments for distribution of dividends or profits or settlement of
interest expensesIV. Effect of Foreign Exchange Rate Changes on Cash and CashEquivalents
(3,379,613.83) (6,756,445.09)V. Net Increase in Cash and Cash Equivalents(XV)8(1)8,583,501,307.98 1,131,618,549.91Add: Opening balance of cash and cash equivalents(XV)8(2) 27,771,201,246.40 26,639,582,696.49VI. Closing Balance of Cash and Cash Equivalents(XV)8(2)36,354,702,554.38 27,771,201,246.40
For the reporting period from January 1, 2023 to December 31, 2023
Consolidated Statement of Changes in Owners' Equity
Unit: RMBItems
| 2023 | |
| Owner’s equity attributable to the parent company | |
Minorityinterests
Total owners'equityShare capital Capital reserves
Less: Treasury
share
comprehensive
| income |
Surplus reserve Retained profits
| I. Closing balance of the prior year | 9,430,920,624.00 |
10,141,153,435.32
(42,587,158.81) 4,715,460,312.00 49,460,240,986.49 4,580,999,418.82 72,970,153,967.58
| 5,316,033,650.24 | ||
| Due to the changes in accounting policies |
- - - - - 182,975.56 1,391,408.52
1,574,384.08
| II. Opening balance of current year |
| 9,430,920,624.00 | 10,141,153,435.32 |
(42,587,158.81)
| 5,316,033,650.24 | 4,715,460,312.00 |
49,460,423,962.05 4,582,390,827.34
72,971,728,351.66
| III. Increase or decrease in the current period |
(100,319,693.00)
(2,276,249,671.80) (2,578,046,423.69)
87,254,674.97 - 7,676,196,281.96 1,226,955,510.43 9,191,883,526.25
- - - 87,254,674.97 - 14,107,621,359.66 1,144,605,859.38 15,339,481,894.01
| (I) Total comprehensive income |
| (II) Owners’ contributions and reduction in capital |
(100,319,693.00)
(2,276,249,671.80) (2,609,860,174.19) - - - 243,095,948.04 476,386,757.43
| 1. Capital contribution from shareholders |
- - - - - - 72,570,000.00 72,570,000.00
recognized in owners’
| equity |
- 169,682,759.53
- - - - 37,934,118.40 207,616,877.93
| 3. Others | (100,319,693.00) | (2,445,932,431.33) | (2,609,860,174.19) | - | - | - | 132,591,829.64 | 196,199,879.50 |
| (III) Profit distribution | - | - | 31,813,750.50 | - | - | (6,431,425,077.70) | (160,746,296.99) | (6,623,985,125.19) |
| 1. Transfer to surplus reserves |
- - - - - - - -
- - (91,514,124.10)
| 2. Distributions to shareholders |
- - (6,554,752,952.30) (160,746,296.99) (6,623,985,125.19)
| 3. Others | - | - | 123,327,874.60 | - | - | 123,327,874.60 | - | - |
| III. Closing balance of the current period |
7,864,903,763.52
| 9,330,600,931.00 | 2,737,987,226.55 |
44,667,516.16
57,136,620,244.01 5,809,346,337.77 82,163,611,877.91
For the reporting period from January 1, 2023 to December 31, 2023
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMBItems
| 2022(Restated) | |
| Owner’s equity attributable to the parent company | |
Minorityinterests
Total owners'equityShare capital Capital reserves
Less: Treasuryshare
comprehensive
| income |
Surplus reserve Retained profits
| I. Closing balance of the prior year | 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 |
| Due to the changes in accounting policies |
- - - - - (179,425.86) 593,436.19 414,010.33
| II. Opening balance of current year | 9,335,806,114.00 | 5,404,070,600.07 | 1,023,188,723.04 | (77,184,125.29) | 4,672,505,348.00 | 45,148,698,025.66 | 1,934,349,046.81 | 65,395,056,286.21 |
| III. Increase or decrease in the current period |
4,737,082,835.25
| 95,114,510.00 | 4,292,844,927.20 |
34,596,966.48 42,954,964.00 4,311,725,936.39 2,648,041,780.53 7,576,672,065.45
| (I) Total comprehensive income | - | - | - | 34,596,966.48 | - | 12,837,704,462.49 | 774,519,755.61 | 13,646,821,184.58 |
| (II) Owners’ contributions and reduction in capital |
4,737,082,835.25
| 95,114,510.00 | 4,412,565,229.40 |
- - - 1,876,759,941.16 2,296,392,057.01
| 1. Capital contribution from shareholders | 97,402,605.00 |
2,796,428,789.55
- - - 58,500,000.00 58,500,000.00
| 2,893,831,394.55 | ||
| 2. Share-based payment recognized in owners’ equity |
- 601,605,075.24 - - - - 49,386,376.03 650,991,451.27
| 3. Others | (2,288,095.00) | 1,339,048,970.46 | 1,518,733,834.85 | - | - | - | 1,768,873,565.13 | 1,586,900,605.74 |
| (III) Profit distribution | - | - | (119,720,302.20) | - | 42,954,964.00 | (8,525,978,526.10) | (3,237,916.24) | (8,366,541,176.14) |
| 1. Transfer to surplus reserves | - | - | - | - | 42,954,964.00 | (42,954,964.00) | - | - |
| 2. Distributions to shareholders |
- - (119,720,302.20) - - (8,483,023,562.10) (3,237,916.24) (8,366,541,176.14)
| III. Closing balance of the current period | 9,430,920,624.00 |
10,141,153,435.32
(42,587,158.81) 4,715,460,312.00 49,460,423,962.05 4,582,390,827.34 72,971,728,351.66
For the reporting period from January 1, 2023 to December 31, 2023
Statement of Changes in Owners' Equity of the Parent Company
Unit: RMBItem
2023Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits Total owners' equity
| I. Closing balance of the prior year | 9,430,920,624.00 | 8,264,384,780.30 | 5,316,033,650.24 | 4,715,460,312.00 | 39,030,437,901.96 | 56,125,169,968.02 |
| Due to the changes in accounting policies | - | - | - | - | (909,206.34) | (909,206.34) |
II. Opening balance of current year
| 9,430,920,624.00 | 8,264,384,780.30 |
| 5,316,033,650.24 | 4,715,460,312.00 |
| 39,029,528,695.62 | 56,124,260,761.68 |
III. Increase or decrease in the current period(100,319,693.00) (2,488,013,606.26) (2,578,046,423.69) - 4,120,630,438.18
4,110,343,562.61
(I) Total comprehensive income- - - - 10,552,055,515.88
10,552,055,515.88
(II) Owners’ contributions and reduction in capital (100,319,693.00) (2,488,013,606.26) (2,609,860,174.19) - - 21,526,874.93
1. Capital contribution from shareholders - - - - - -
2. Share-based payment recognized in owners’ equity -
- - -
| 73,548,755.72 | 73,548,755.72 |
3. Others (100,319,693.00) (2,561,562,361.98) (2,609,860,174.19) - - (52,021,880.79)(III) Profit distribution - - 31,813,750.50 - (6,431,425,077.70) (6,463,238,828.20)
| 1. Transfer to surplus reserves | - | - | - | - | - | - |
| 2. Distributions to shareholders | - | - | (91,514,124.10) | - | (6,554,752,952.30) | (6,463,238,828.20) |
3. Others
123,327,874.60
123,327,874.60
III. Closing balance of the current period
| 9,330,600,931.00 |
5,776,371,174.04
| 2,737,987,226.55 |
43,150,159,133.80
| 4,715,460,312.00 |
60,234,604,324.29
Item
2022 (Restated)Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits Total owners' equity
I. Closing balance of the prior year
9,335,806,114.00 4,937,523,553.84 1,023,188,723.04 4,672,505,348.00 37,958,561,319.89 55,881,207,612.69Due to the changes in accounting policies - - - - (443,175.57) (443,175.57)II. Opening balance of current year9,335,806,114.00 4,937,523,553.84 1,023,188,723.04 4,672,505,348.00 37,958,118,144.32 55,880,764,437.12III. Increase or decrease in the current period
I. Closing balance of the prior year95,114,510.00
3,326,861,226.46
| 95,114,510.00 |
42,954,964.00
| 4,292,844,927.20 |
1,071,410,551.30
243,496,324.56
| (I) Total comprehensive income | - | - | - | - | 9,597,389,077.40 | 9,597,389,077.40 |
(II) Owners’ contributions and reduction in capital
3,326,861,226.46
| 95,114,510.00 | 4,412,565,229.40 |
- - (990,589,492.94)
1. Capital contribution from shareholders
2,796,428,789.55
| 97,402,605.00 | 2,893,831,394.55 |
- - -
2. Share-based payment recognized in owners’ equity - 507,562,719.42 - - - 507,562,719.42
3. Others
(2,288,095.00)
22,869,717.49
| 1,518,733,834.85 |
-
-
(1,498,152,212.36)
(III) Profit distribution
-
-
(119,720,302.20)
42,954,964.00
(8,525,978,526.10)
(8,363,303,259.90)
1. Transfer to surplus reserves - - - 42,954,964.00 (42,954,964.00) -
2. Distributions to shareholders - - (119,720,302.20) - (8,483,023,562.10) (8,363,303,259.90)
| III. Closing balance of the current period | 9,430,920,624.00 | 8,264,384,780.30 | 5,316,033,650.24 | 4,715,460,312.00 | 39,029,528,695.62 | 56,124,260,761.68 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
I. Basic Information about the Company
Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company" or"Hikvision"), is a Sino-foreign equity joint venture company, formerly known as "Hangzhou Hikvision Digital TechnologyLtd", established on November 30, 2001 in Hangzhou upon the approval letter of Hangzhou High-tech No. 604 [2001]issued by Hangzhou High-tech Industrial Development Zone Management Committee. On June 25, 2008, with approvalof document No. 598 [2008] issued by the MOFCOM (The Ministry of Commerce of the People's Republic of China),the Company was renamed as "Hangzhou Hikvision Digital Technology Co., Ltd.", headquartered in Hangzhou. On May28, 2010, the Company was listed on the Shenzhen Stock Exchange.The main business activities of the Company and its subsidiaries (hereinafter referred to as "the Group") include themanufacture and sale of security equipment, network equipment and intelligent equipment, the manufacture and wholesaleof auto parts and accessories, the sale of electronic products, the provision of construction projects, technical services,technology development, technical consulting, software development, information system integration services, dataprocessing and storage support services, etc.The Company’s consolidated financial reports were approved for issuance by the 20
th meeting of the 5
thsession ofthe Board of Directors of the Company on April 18, 2023.
II. Basis of Preparation of Financial StatementsBasis of preparation of financial statementsThe Group have adopted the Accounting Standards for Business Enterprises ("ASBE") and relevant provisions issued bythe Ministry of Finance ("MoF"). In addition, the Group has disclosed relevant financial information in accordance withInformation Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15－GeneralProvisions on Financial Reporting (revised in 2023).
Going concernThe Group has evaluated its going concern for 12 months going forward starting from December 31
st2023, 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.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
According to the historical cost measurement, the assets shall be measured as per the amount of cash or cash equivalentpaid at the time of purchase, or the fair value of consideration paid for the purchase of such assets. The liabilities shall bemeasured in accordance with the amount of funds or assets actually received when undertaking current obligations, or thecontract amount when undertaking the current obligations, or the amount of cash or cash equivalents required for payingback the debts in daily activities.
The fair value is a price received by the market participants from selling asset or transferring liability during orderlytransaction at the measurement date. No matter the fair value is observable or estimated by using valuation technique, themeasured and disclosed fair value in the financial statement shall be determined on this basis.
When measuring non-financial assets at fair value, the assets shall be measured considering the ability of marketparticipants to use the assets for optimal use to generate economic benefits, or to sell the assets to other market participantsto use the assets for optimal use to generate economic benefits.
For the financial assets measured with transaction price at the initial recognition, and the use of valuation techniquesinvolving unobservable inputs in the subsequent fair value measurement, the valuation technique is corrected in thevaluation process in order to make the initial recognition results confirmed by valuation techniques equal to the transactionprice.
Based on the observable extent of the input value of the fair value, and the importance of such input value to the fair valuemeasurement, the fair value measurement is divided into three levels:
? Level 1: The input value is the unadjusted offer of the same assets or liabilities on active market acquired on measurementdate;? Level 2: The input value is the input value of relevant assets or liabilities observable directly or indirectly in addition tolevel 1 input value;? Level 3: The input value is the non-observable input value of relevant assets or liabilities.III. Significant Accounting Policies and Accounting Estimates
Specific accounting policies and accounting estimates suggests:
The Group has formulated specific accounting policies and accounting estimates for the method of determining materiality standards
and the basis of selection, provision for credit losses on accounts receivable, provision for inventory depreciation, depreciation of fixedassets, revenue recognition andattribution of research and development expenses according to the actual production and operation
characteristics.The significant judgements and accounting estimates and their key assumptions applied by the Group in identifying significantaccounting policies are detailed in Notes (III), 34.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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, 2023; and the Company's and consolidated resultsof operations, and the Company's and consolidated changes in owners' equity, and the Company’s and consolidated cashflows for 2023.
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. The Group adopts RMB to prepare its financial statements.
5. Methodology for determining materiality criteria and basis for selection
| Item | Materiality Criteria |
Significant single-item receivabls with bad debt provision Single amount accounts for 10% of accounts receivable balanceSignificant single-item contract assets with bad debt provision Single amount accounts for 10% of contract asset balanceSignificant construction in progress
Single amount of investment of construction in progress accounts for2% of net assets balanceSignificant accounts payable and other payables aged over 1year
Accounts payable and other payables aged more than one year accountfor 5% of the balance of liabilitiesSignificant non-wholly owned subsidiaries
Minority interests representing 10% of consolidated shareholders'equity at the close of 2023Significant joint ventures or associates
10% of consolidated net profit or the year-end balance of long-termequity investment in the enterprise accounts for 10% of the totalconsolidated assetsCash received or paid in connection with significantinvestment activities
The amount of cash inflow or outflow from a single investing activityaccounts for 10% of cash inflow or outflow from investing activities
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
6. The Accounting Treatment of Business Combinations Involving Enterprises under Common Control and
Business 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.
6.1 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.
6.2 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in which all of thecombining enterprises are not ultimately controlled by the same party or parties before and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurredor assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. If a business combinationnot under the common control is realized step by step through multiple transactions, the cost of the combination is the sumof the consideration paid on the purchase date and the fair value of the equity of the 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.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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.
7. Criteria for determining control right and Preparation Method of Consolidated Financial Statements
7.1 Criteria for determining control right
Control right means that an investor may control an investee; the investor may participate in relevant activities of theinvestee to obtain variable rewards and also be able to use the control rights for the investee to influence its amount ofreturns. The Group will re-evaluate, if the change of the relevant facts and circumstances leading to the change of therelevant elements involved in the above definition of control.
7.2 Preparation method of consolidated financial statements
The scope of consolidated financial statements shall be confirmed based on the 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.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
No matter when the business combination occurs in the reporting period, subsidiaries acquired through a businesscombination involving enterprises under common control are included in the Group's scope of consolidation as if they hadbeen included in the scope of consolidation from the date when they first came under the common control of the ultimatecontrolling party. Their operating results and cash flows from the beginning of the earliest reporting period are includedin the consolidated income statement and consolidated statement of cash flows, as appropriate.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on theuniform accounting policies and accounting periods set out by the Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests and presented as"minority equity" in the consolidated balance sheet. The portion of net profits or losses of subsidiaries for the periodattributable to minority interests is presented as "minority interests" in the consolidated income statement below the "netprofit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minorityshareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount are still allocatedagainst minority interests.
Acquisition of minority interests or disposal of interest in a subsidiary that does not result in the loss of control over thesubsidiary is accounted for as equity transactions. The carrying amounts of the total owners' equity attributable to ownerof the Company and minority equity are adjusted to reflect the changes in their relative interests in the subsidiary. Thedifference between the amount by which the minority interests are adjusted and the fair value of the consideration paid orreceived is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference,the excess is adjusted against retained earnings.
In the case that the equity of the acquiree is obtained through multiple deals in stages 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 re-measured based on the fair value of the equity on the acquisition dateand the 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 other
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
owner's equity accounted by the equity method, then it is transferred to income for the period in which it belongs at thedate of purchase.
8. Joint Arrangement Classification and Joint Operation Accounting
Joint arrangements include joint operation and joint ventures. Such classification is defined based on the rights andobligations of the joint parties in the joint arrangement, taking into account the structure and legal form of sucharrangement and also the contractual provisions.
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".
9. 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.
10. Conversion of Transactions and Financial Statements Denominated in Foreign Currencies.
10.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying an exchange rate that approximates theactual spot exchange rate on the date of transaction; The exchange rate that approximates the actual spot exchange rate onthe date of transaction is calculated according to the middle price of market exchange rate at the beginning of the monthin which the transaction happened.
At the balance sheet date, foreign currency monetary items are translated into [RMB] using the spot exchange rates at thebalance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at thebalance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss forthe period, except for exchange differences related to a specific-purpose borrowing denominated in foreign currency thatqualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period.
When the consolidated financial statements include foreign operation(s), if there is foreign currency monetary itemconstituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates are
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
recognized 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.
10.2 Conversion of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation areconverted from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet aretranslated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items are converted at thespot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflectingthe distribution of profits are translated at exchange rates that approximate the actual spot exchange rates on the dates ofthe transactions; The difference between the converted assets and the aggregate of liabilities and shareholders' equity itemsis recognized into other comprehensive income and shareholders’ equity.
The foreign currency cash flows and cash flows of overseas subsidiaries adopt the exchange rate similar to the spot rate atthe date of cash flows for conversion. The affected amount of cash and cash equivalents due to the change of exchangerate, as an adjustment item, shall be separately listed as "the impact of cash and cash equivalents due to the change ofexchange rate" in the cash flow statement.
The closing balances of the prior year and the actual amount of the prior year are presented at the converted amounts ofthe prior year's financial statements.
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over a foreign operation due todisposal of certain interest in it or other reasons, the Group transfers the accumulated exchange differences arising onconversion of financial statements of this foreign operation attributable to the owners' equity of the Company and presentedunder shareholders' equity, to profit or loss in the period in which the disposal occurs.
In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, but only adecrease in proportion of overseas business interests, the proportionate share of accumulated exchange differences arisingon conversion of financial statements are re-attributed to minority interests and are not recognized in profit and loss undercurrent period. For partial disposals of equity interests in foreign operations, which are associates or joint ventures, theproportionate shares of the accumulated exchange differences arising on conversion of financial statements of foreignoperations is reclassified to profit or loss under current period.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
11. 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 (The method of determiningthe fair value of financial assets and financial liabilities is described in the related disclosure of the basis of accountingand valuation principles in note (ii). For financial assets and financial liabilities at fair value through profit and loss, therelevant trading costs will be directly charged to profit and loss of the current period. For other types of financial assetsand financial liabilities, the relevant trading costs will be booked into the initial recognition amount. Upon initialrecognition of accounts receivable which have no material financing components or have not taken into consideration thefinancing components in contracts with a term not exceeding one year according to Accounting Standards for BusinessEnterprise No. 14 – Revenue ("Revenue Standard"), such initial amount is measured by the transaction price as definedunder 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).
11.1 Classification, Confirmation and Measurement of Financial Assets
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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, long-term receivablesand other non-current assets.
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 notes receivable classified as fair value atthe time of acquisition and their changes are included in other comprehensive income are listed in the receivables forfinancing, and for those have acquisition period within one year (including one year) are listed in other 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.
Financial assets at fair value through profit and loss include financial assets which are classified as financial assets at fairvalue through profit and loss and financial assets designated at fair value through profit and loss:
? Financial assets which do not satisfy the conditions of being classified as financial assets measured at amortized costor as financial assets at fair value through other comprehensive income, they will be classified as financial assets at fair
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
value through profit and loss.? At the time of initial recognition, in order to eliminate or substantially reduce mismatch in accounting, the Groupmay irrevocably designate a financial asset as a financial asset measured at fair value with changes through profit 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.
11.1.1 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.
11.1.2 Financial asset at fair value through other comprehensive income
The impairment loss or profit, or interest income calculated by using the effective interest rate method, relating to financialasset at fair value through other comprehensive income should be accounted in the profit and loss of the current period,and other changes in fair value of such financial assets will be accounted in other comprehensive income. The amountcharged by such financial asset to the profit and loss of each period is deemed to be equal to the amount which has beenmeasured by amortized cost and charged to the profit and loss of each period. Upon derecognition of such financial asset,the accumulated profit or loss previously charged to other comprehensive income will be reversed from othercomprehensive income and charged to profit and loss of the current period.
For non-trading equity instrument investment designated at fair value through other comprehensive income, its changesin fair value will be recognized in other comprehensive income. Upon derecognition of such financial asset, the
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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.
11.1.3 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.
11.2 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, lease receivables and contract assets, the Group will handle impairment on the basis ofexpected credit loss and 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 lease receivables formed from transactionsthat are defined by the Accounting Standards for Business Enterprises No. 21-Leasing, the loss reserve shall be measuredbased 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 period
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
of the financial instrument in the preceding accounting period, but at the balance sheet date of the current period, suchfinancial instrument is no longer under the condition of significant increase in credit risk since initial recognition, theGroup calculates the loss provision for such financial instrument on the balance sheet date of the current period accordingto an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provision reversal amountwill be counted as impairment gain and booked into the profit and loss of the current period.
11.2.1 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.
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 cause
significant changes in the capability of the debtor to perform debt repayment obligations.
(5) Whether actual or expected significant changes have occurred in the operating results of the debtor.
(6) Whether significant adverse changes have occurred in the supervision, economic or technical environment in which
the debtor operates.
(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 is
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
considered as having a lower credit risk.
11.2.2 Financial assets which have incurred credit impairment already
When one or more events which will have adverse effect on the expected future cash flows from the financial asset of theGroup have occurred, such financial asset will become a financial asset which have incurred credit impairment already.The evidence of credit impairment occurred in a financial asset includes the following observable information:
(1) Material financial difficulties have occurred in the issuer or debtor;
(2) Breach of contract by the debtor, such as default or overdue for the payment of interest or repayment of principal;
(3) Due to economic or contractual considerations relating to financial difficulties of the debtor, the creditor has granted
concession 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 financial
asset;
(6) The purchase or generation of a financial asset at a large discount, such discount reflects the fact of occurrence of credit
loss.
11.2.3 Confirmation of expected credit loss
The Group confirms the expected credit loss of the relevant financial instrument according to the following method:
? In respect of financial asset and lease receivables, the credit loss is the present value of the difference between thecontractual cash flow that the group should receive and the cash flow that it expects to receive.? In respect of financial assets with credit impairment on the balance sheet date but they are not acquired or generated
financial assets with credit impairment, the credit loss represents the difference between the balance of the book valueof such financial asset and the present value of the estimated future cash flows discounted by the original effectiveinterest rate.
The factors reflected by the method used for calculating expected credit loss of financial instruments by the Group include:
an unbiased weighted average amount determined by assessing a series of probable outcomes; time value of currency;reasonable and justifiable information relating to past events, prevailing conditions and forecast of future economicconditions obtained on the balance sheet date without incurring unnecessary additional cost or effort.
11.2.4 Write-off on financial asset
When the Group ceases to have reasonable expectation on the possible collection of all or part of the contractual cashflows from the financial asset, the balance of book value of such financial asset will be written off directly. Such a write-
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
off constitutes a derecognition of the relevant financial asset.
11.3 Transfer of financial asset
A financial asset that fulfills one of the following conditions will be de-recognized: (1) termination of contractual rightsto receive cash flows from the financial asset; (2) upon transfer of such financial asset and transfer of substantially all therisks and rewards in respect of the ownership of such financial asset to the transferee; (3) upon transfer of such financialasset, though the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownershipof such financial asset, yet it has not retained the control over such financial asset.
If the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownership of suchfinancial asset, and has retained the control over such financial asset, then such transferred financial asset will continue tobe recognized, and the relevant liabilities will continue to be recognized, according to the level of the Group’s continuousinvolvement in such transferred financial asset. The relevant liabilities will be measured by the Group according to thefollowing method:
? If the transferred financial asset is measured by amortized cost, the book value of the relevant liabilities is equivalentto the book value of the transferred asset of continuous involvement less the amortized cost of the rights retained by theGroup (if the Group has retained the relevant rights due to transfer of the financial asset) and plus the amortized cost ofthe obligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of thefinancial asset), and the relevant liabilities are not designated as financial liabilities at fair value through profit and loss ofthe current period.? If the transferred financial asset is measured by fair value, the book value of the relevant liabilities is equivalent tothe book value of the transferred asset of continuous involvement less the fair value of the rights retained by the Group (ifthe Group has retained the relevant rights due to transfer of the financial asset) and plus the fair value of the obligationsundertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of the financial asset), andthe fair value of the rights and obligations shall be measured at the fair value on a separate basis.
For full transfer, which satisfies the conditions of derecognition, of the financial assets, the difference between the sum ofthe book value of the transferred financial assets as at the date of derecognition and the consideration received from suchtransfer and the accumulated amount of change in fair value originally included in other comprehensive income, whichcorresponds to the amount in respect of derecognition, shall be recognized in the profit and loss for the current period. Ifthe transfer of the financial assets by the Group is designated as investment in equity instrument held for non-tradingpurpose measured at fair value through other comprehensive income, the accumulated gains or losses previously includedin other comprehensive income shall be transferred out from other comprehensive income and be included in retainedearnings.
For transfer in part, which satisfies the conditions of derecognition, of the financial assets, the book value of the entire
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
financial 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.
11.4 Classification, confirmation and measurement of financial liabilities and equity instruments
Pursuant to the contractual terms of the issued financial instruments and the substantive economic condition as reflected,but not in legal terms only, combined with the definitions of financial liabilities and equity instruments, the Group hasclassified such financial instruments or the components thereof as financial liabilities or equity instruments upon initialrecognition.
11.4.1 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.
11.4.1.1 Financial liabilities at fair value through profit and loss of the current period
Financial liabilities at fair value through profit and loss of the current period comprise of financial liabilities held fortrading purpose (including derivatives of financial liabilities) and financial liabilities designated as measured at fair valuethrough profit and loss of the current period. Except for derivatives of financial liabilities, which are presented separately,financial liabilities at fair value through profit and loss of the current period are presented as financial liabilities held fortrading.
Financial liabilities that fulfill one of the following conditions suggest that the Group assumes such financial liabilities fortrading purpose:
? Assumption of the relevant financial liabilities is mainly for the purpose of the recent repurchases.? The relevant financial liabilities, upon initial recognition, are part of a portfolio of identifiable financial instruments
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
under centralized management, and available objective evidence shows the recent and actual existence of a short-term profit-making model.? The relevant financial liabilities are derivatives.
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.
11.4.1.2 Other financial liabilities
Excluding transfer of financial assets not complying with derecognition conditions, or financial liabilities as a result ofcontinuous involvement in transferred financial assets, as well as the financial guarantee contracts, the other financialliabilities will be classified as financial liabilities measured at amortized cost, subsequent measurement will be based onamortized cost, gains or losses on derecognition or amortization will be accounted in the profit and loss of the currentperiod.
If the Group and the counterparty have revised or renegotiated the contract, this has not resulted in the derecognition offinancial liabilities measured at amortized cost for subsequent measurement, but has caused changes in the contractualcash flows, then the Group should recalculate the book value of such financial liabilities, and the relevant gains or lossesshall be accounted in the profit and loss of the current period. The recalculated book value of such financial liabilities willbe determined by the Group by discounting the cash flows from the renegotiated or revised contract with the original effectinterest rate of the financial liabilities. All costs or expenses incurred in the revision or renegotiation of the contract willbe reflected in the adjusted book value of financial liabilities after such revision, and will be amortized during theremaining period of the revised financial liabilities.
11.4.2 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 undertake
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
new 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.
11.4.3 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.
11.5 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.
11.6 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.
11.7 Reclassification of financial instruments
When the Group changes its business model for managing financial assets, all affected underlying financial assets will bereclassified. All financial liabilities are not reclassified.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
The Group reclassifies financial assets and applies the prospective application method for relevant accounting treatmentfrom the date of reclassification (i.e., the first day of the first reporting period after the change in the business model thatled to the reclassification of financial assets).
If the Group reclassifies a financial asset measured at amortized cost to a financial asset at fair value through othercomprehensive income, it is measured at the fair value of the financial asset at the date of reclassification. The differencebetween the original carrying amount and the fair value is recognized in other comprehensive income.
12. Notes receivable
12.1 Method of determining expected credit losses on notes receivable and its accounting treatment
The Group separately assesses the credit risk of the notes receivable with a single significant amount and the debtor withsevere financial difficulties, and makes provision for credit losses on a portfolio basis for the remaining notes receivablebased on the credit risk characteristics.The increase or reversal of the provision for expected credit losses of notesreceivable is recognized in profit or loss as credit impairment gains or losses.
12.2 Combination category and determination basis of bad debt provision according to credit risk characteristics
The Group classifies notes receivable into different portfolios based on the nature of the acceptor.
| Portfolio Categories | Determination basis |
| Bank acceptance bill | Notes receivable with acceptors are banks |
| Non-bank acceptance bill | Notes receivable with acceptors are non-banks |
13. Accounts receivable, financial lease receivables and installment receivables in long-term receivables
13.1 Method of determining expected credit losses on accounts receivable/long-term receivables and their accounting
treatment
The Group assesses the credit risk of accounts receivable with significant individual amounts and significant financialdifficulties of debtors and financial lease receivables and installment receivables in long-term receivables individually,and determines the credit loss allowance on a portfolio basis using impairment matrix for the remaining parts. The increaseor reversal of the provision for expected credit losses of accounts receivable is recognized in profit or loss as creditimpairment gains or losses.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
13.2 Combination category and determination basis of bad debt provision according to credit risk characteristics
For accounts receivables, the Group categorizes accounts receivable into Portfolio A, Portfolio B and Portfolio C basedon shared risk characteristics. Common credit risk characteristics adopted by the Group include the geographical locationand business object.
For long-term receivables, the common credit risk profile adopted by the Group includes business objects.
13.3 Calculation of ageing based on age-based recognition of a portfolio of credit risk characteristics
The Group uses the ageing as a credit risk characteristics, and use impairment matrix to determine the credit losses of itsaccounts receivable and long-term receivables related to the financial lease and installment collection business. The ageingis calculated from the end of the credit period. The ageing is calculated on a continuous basis when the terms and conditionsof accounts receivablesand long-term receivables are modified but do not result in derecognition of them.
14. Receivables Financing
14.1 Method of determining expected credit losses on receivables financing and its accounting treatment
The Group measures bad debt provisions based on expected credit losses over the entire duration, recognizes credit lossprovisions for receivables financing in other comprehensive income, and recognizes credit impairment losses or gains inprofit or loss for the period, without reducing the carrying amount of receivables financing presented in the balance sheet.
14.2 Combination category and determination basis of bad debt provision according to credit risk characteristics
The Group considers that there is no significant credit risk for the bank acceptance bills held by the Group, which are allbank acceptance bills and the possibility of significant losses due to bank default is low.
15. Other receivables
15.1 Method of determining expected credit losses on other receivables and its accounting treatment
The Group determines credit losses for other receivables on a portfolio basis. The increase or reversal of the provision for
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
expected credit losses of other receivables is recognized in profit or loss as credit impairment losses or gains.
15.2 Combination category and determination basis of bad debt provision according to credit risk characteristics
The Group categorizes other receivables into different groups according to the nature of the amounts.
15.3 Calculation of ageing based on age-based recognition of a portfolio of credit risk characteristics
The Ageing is calculated from the end of the credit period.
16. Inventories
16.1 Categories of inventories, valuation method, count system, amortization method for low cost and short-lived
consumable items and packaging materials
16.1.1 Categories of inventories
The Group's inventory mainly includes finished products, products in process, raw materials and contract performancecosts. Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversionand other expenditures incurred in bringing the inventories to their present location and condition.
16.1.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the moving weighted average method.
16.1.3 Inventory count system
The perpetual inventory system is maintained for stock system.
16.1.4 Amortization method for low cost and short-lived consumable items and packaging materials
Packaging materials and low cost and short-lived consumable items are amortized using the immediate write-off method.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
16.2 The recognition standard and accounting method of inventory falling price reserves
At the balance sheet date, inventory is measured at the lower of cost or net realizable value. When the net realizablevalue is lower than the cost, the inventory falling price reserves is withdrawn.
Net realizable value is the amount of the estimated selling price of inventory in day-to-day activities less the estimatedcosts to be incurred at completion, estimated selling expenses and related taxes. The determination of net realizablevalue of inventories is based on firm evidence obtained, taking into account the purpose for which the inventories areheld and the effect of events after the balance sheet date.
After the provision for inventory depreciation, if the factors affecting the previous reduction of inventory value havedisappeared, resulting in the net realizable value of the inventory being higher than its carrying value, the amount of theoriginal provision for inventory depreciation shall be reversed, and the amount of the reversal shall be included in thecurrent profit or loss.
16.3 The combination category and the basis for determining the inventory falling price reserves, and the basis for
determining the net realizable value of different categories of inventories
The Group makes provision for inventory falling price reserves by inventory category for inventories with a largequantity and low unit price. For inventories manufactured and sold in the same region, having the same or similar use orpurpose, and difficult to measure separately from other items, provision for inventory depreciation shall be made on aconsolidated basis. The Group makes provision for inventory falling price reserves according to the nature and status ofinventories.
17. Contract Assets
17.1 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.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
17.2 Determination and accounting treatment methods of expected credit loss of contract assets
Consistent with accounts receivable, except for contract assets with significant individual amounts and significant financialdifficulties of debtors, the Group determines the credit loss for contract assets on a portfolio basis for other contract assets.The increase or reversal of expected credit loss provision for contract assets of this year is recognized as impairment lossor gain in current profit or loss.
17.3 Combination category and determination basis of bad debt provision according to credit risk characteristics
Consistent with accounts receivable, the Group provides for credit losses on a portfolio basis based on common riskcharacteristics. Common credit risk characteristics adopted by the Group include the geographical location and businessobject.
18. Long-term Equity Investment
18.1 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.
18.2 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 capital
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
share, the difference between the initial investment cost of long-term equity investments and total book value of issuedshares; In case the capital reserve is not enough for writing down, the retained earnings shall be adjusted.
For a long-term equity investment acquired through business combination not involving enterprises under common control,and the merging cost confirmed on the purchased date are regarded as the initial investment cost. In the case that the equityof the acquiree is obtained through multiple deals in stages to finally form the business combination not under the commoncontrol, the business combination shall be handled differently based on whether it is "package deal": where it is packagedeal, the Company accounts each deal as a deal to obtain the control. If the deal is not a "package deal", the sum of thecarrying amount of the equity investment of the acquiree plus the cost of the new investment shall be used as the initialinvestment cost of the long-term equity investment calculated according to the cost method. The equity originally held isaccounted for by the equity method, and the relevant other comprehensive income will not be accounted for the time being.
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.
18.3 Subsequent measurement and recognition of profit or loss
18.3.1 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.
18.3.2 Long-term equity investment accounted for using the equity method
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Except for investments in associates and joint ventures that are wholly or partly classified as holding assets for sale, theGroup accounts for investment in associates and joint ventures using the equity method. An associate is an entity overwhich the Group has significant influence and a joint venture is an entity over which the Group can only exercise jointcontrol along with other investors on the investee’s net assets.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group’s share ofthe fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment is made to the initialinvestment cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’sidentifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost ofthe long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income of theinvestee for the period as investment income or loss and comprehensive income for the period, meanwhile, the book valueof the long-term equity investment shall be adjusted; The Group shall accordingly reduce the book value of the long-termequity investment in terms of the part that shall be enjoyed according to the profit or cash dividends declared by theinvested unit to be distributed; For other changes in the owners' equity of the invested unit other than net profits and losses,other comprehensive incomes and the profit distribution, the book value of long-term equity investment shall be adjustedand be included into the capital reserves. The Group shall, on the ground of the fair value of all identifiable assets of theinvested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the investedentity after it adjusts the net profits of the invested entity. If the accounting policies and accounting periods adopted by theinvested unit are different from those adopted by the Group, the adjustment shall be made for the financial statements ofthe invested unit in accordance with the accounting policies and accounting periods of the Group to recognize theinvestment income and other comprehensive incomes. For the transaction incurred between the group and associatedenterprises and joint ventures, invested or sold assets don't constitute a business, the part that doesn't achieve internaltransaction profit or loss or belongs to the Group calculated according to the enjoyed ratio will be offset, and the profit orloss on investment will be confirmed on this basis. But for the unrealized loss arising from the internal transaction betweenthe Group and the invested unit, if such transaction loss is defined as the impairment loss of the transferred asset, theycannot be offset.
When the Group determines the net loss of the invested unit that shall be shared, it is necessary to write-down the bookvalue of the long-term equity investment and other long-term equities substantially constituting the net investment of theinvested unit to zero as a limit. Besides, if the Group is obliged to bear extra loss for the invested unit, it shall be necessaryto determine provisions and record them to current investment loss in compliance with obligations expected to be assumed.If the invested unit realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsetsits attributable share of the un-confirmed losses, resume recognizing its attributable share of profits.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
18.4 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.
19. Fixed Assets
19.1 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.
19.2 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 depreciation method, depreciation period, estimated residual value rate and annualdepreciation rate of each category of fixed assets are as follows:
Item
method
Depreciation period Residual value rate (%) Annual depreciation rate (%)Buildings and Constructions
| Depreciation |
| Straight-line |
depreciation
20 years 10 4.5General-purpose equipment
depreciation
3-5 years 10 18.0-30.0Special-purpose equipment
| Straight-line |
| Straight-line |
depreciation
3-5 years 10 18.0-30.0Transportation vehicles
depreciation
5 years 10 18.0
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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.
19.3 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.
20. 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. The standards and time points for carrying forward various types of projects under construction to fixedassets are as follows:
| Item | Standards and timing of carry-over as fixed assets |
Buildings and Constructions
reached a state of practical usability.
Equipments to be installed andcommissioned
| The main construction project and supporting projects have been substantially completed and |
| Relevant equipment and other supporting facilities have been installed; after debugging, the |
equipment can maintain normal and stable operation for a period of time.
21. 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 for
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
capitalization reach to expected conditions for use or marketing, capitalization shall be ceased. Other borrowing expensesare recognized as expenses in the current period.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interestexpense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds beforebeing used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowedunder general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings byapplying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over theamounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable tothe general-purpose borrowings. During the capitalization period, exchange differences related to a specific-purposeborrowing denominated in foreign currency are all capitalized. Exchange differences in connection with general-purposeborrowings are recognized in profit or loss in the period in which they are incurred.
22. Intangible Assets
22.1 Service life and its basis for determination, estimate, amortization method or review procedure
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 amortization method, servicelife and net residual value of various intangible assets are shown as follows:
Class
Service life (year)
| Amortization method | Determination basis | Salvage value |
rate (%)
| Land use right | Straight-line method | 40 or 50 years | Term of use of property rights | - |
| IP Right | Straight-line method | 5-10 Years | Expected economic benefit life | - |
| Application Software | Straight-line method | 5-10 years | Expected economic benefit life | - |
Franchise
| Straight-line method | 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.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of theyear, and makes adjustments when necessary.
For the impairment test of intangible assets, please refer to Note (III), 20. Long-term asset impairment.
22.2 The accounting treatment methods and the collection scope of research and development expenditure
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is recognized asintangible asset. Expenditure during development phase that does not meet the following conditions is recognized in profitor loss for the period.
(1) It is technically feasible to complete the intangible asset so that it will be available for use or sale;
(2) The Group has the intention to complete the intangible asset and use or sell it;
(3) The Group can demonstrate the ways in which the intangible asset will generate economic benefits, including the
evidence 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 use
or sell the intangible asset; and
(5) The expenditure attributable to the intangible asset during its development phase can be reliably measured.
If the expenditures cannot be distinguished between the research phase and development phase, the Group recognizes allof them in profit or loss for the period. 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.
The aggregate scope of the Group's R & D expenses includes employee compensation for personnel directly engaged inR & D activities, materials and service fees directly consumed by R & D activities, depreciation expenses and amortizationexpenses of intangible assets for equipment and equipment used in R & D activities, rental expenses for R & D sites,intermediate testing expenses for R & D activities, new product design expenses, and travel, transportation and
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
communication expenses required for research and test development. The Group uses the passing of feasibility studies andthe completion of R&D project projects after evaluation as the specific criteria for classifying R&D projects into researchand development phases.
23. Long-term Assets Impairment
The Group assesses at each balance sheet date whether there is any indication that the long-term equity investment, fixedassets, construction in process, and intangible assets with a finite useful life may be impaired. If there is any indicationthat such assets may be impaired, recoverable amounts are estimated for such assets. Intangible assets with indefiniteuseful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether thereis any indication that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of anindividual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverableamount is determined by the higher of 1) net amount of fair value of the asset or asset group deducted by the disposalexpenses; or 2) the present value of the expected future cash flows of the asset or asset group.
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted as animpairment provision and is recognized in profit or loss for the period.
Goodwill impairment test shall be conducted at the end of each year at least. Goodwill impairment test shall be conductedin accordance with the concerned asset group or asset portfolio. That is to allocate the book value of goodwill to the assetgroup or asset portfolio that is expected to benefit from the synergies of the combination in a reasonable way from the dateof purchasing. When recoverable amount of apportion-included asset group or asset portfolio of goodwill is less than bookvalue of goodwill, impairment loss shall be recognized. Firstly, amount of impairment loss shall be apportioned to thebook value of goodwill of the said asset group or asset portfolio, and then book value of other assets, except for goodwill,in asset group or asset portfolio shall be abated in proportion.
Once the impairment loss of such assets is recognized, it cannot be reversed in any subsequent period.
24. 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.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
25. 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.
26. Employee Compensation
26.1 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.
26.2 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.
26.3 Accountant Arrangement Method of the Termination Benefits
Where the Group provides termination benefits, the employee remuneration liabilities caused by such termination benefitswill be determined as the following date, whichever is earlier, and will be included in the current profit and loss: 1) Whenthe Group cannot unilaterally withdraw the termination benefits provided due to labor relation cancellation plan or
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
employee lay-off suggestion; or 2）when the Group determines costs or expenses in relation with the restructuring of thepaid termination benefits.
27. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency such as products qualityassurance, etc. And it is probable that an outflow of economic benefits will be required to settle the obligation, and theamount of the obligation can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation atthe balance sheet date, taking into account factors pertaining to a contingency such as the risks, uncertainties and timevalue of money. Where the effect of the time value of money is material, the amount of the provision is determined bydiscounting the related future cash outflows.
The Group estimates product quality guarantee deposits based on expected claim rates, maintenance and replacement costs,etc.
28. 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.
28.1 Equity-settled share-based payments
Equity-settled share-based payments in exchange for services rendered by employees are measured at the fair value of theequity instruments granted to employees at the grant date. Such amount is recognized as related costs or expenses on astraight-line basis over the vesting period, with a corresponding increase in capital reserve.
At each balance sheet date during the vesting period, the Group makes the best estimate according to the subsequent latestinformation of change in the number of employees who are granted with options that may vest, etc. and revises the numberof equity instruments expected to vest. The effect of the above estimate is recognized as related costs or expenses, with acorresponding adjustment to capital reserve.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
28.2. Accounting treatment related to implementation, modification and termination of share-based payment arrangement
In case the Group modifies a share-based payment arrangement, if the modification increases the fair value of the equityinstruments granted, the Group will include the incremental fair value of the equity instruments granted in the measurementof the amount recognized for services received. If the modification increases the number of the equity instruments granted,the Group will include the fair value of additional equity instruments granted in the measurement of the amount recognizedfor services received. The increase in the fair value of the equity instruments granted is the difference between fair valueof the equity instruments before and after the modification on the date of the modification. If the Group modifies the termsor conditions of the share-based payment arrangement in a manner that reduces the total fair value of the share-basedpayment arrangement, or is not otherwise beneficial to the employee, the Group will continue to account for the servicesreceived as if that modification had not occurred, other than a cancellation of some or all the equity instruments granted.
If cancellation of the equity instruments granted occurs during the vesting period, the Group will account for thecancellation of the equity instruments granted as an acceleration of vesting, and recognize immediately the amount thatotherwise would have been recognized over the remainder of the vesting period in profit or loss for the period, with acorresponding recognition in capital reserve. When the employee or counterparty can choose whether to meet the non-vesting condition but the condition is not met during the vesting period, the Group treats it as a cancellation of the equityinstruments granted.
29. Revenue
The Group's revenue consists of product sales revenue, engineering construction revenue and cloud services and otherservice revenue.
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 Group evaluates the contract on the commencement date of the contract, identifies the individual performanceobligations contained in the contract and determines whether each individual performance obligation is to be performedover a certain period of time or at a certain point in time. Revenue is recognized over time by reference to the progresstowards complete satisfaction of the relevant performance obligation if one of the following criteria is met: (1) the customersimultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs; (2) theGroup’s performance creates or enhances an asset that the customer controls as the Group performs; or (3) the Group’sperformance does not create an asset with an alternative use to the Group and the Group has an enforceable right to
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
payment for performance completed to date. Otherwise, revenue is recognized at a point in time when the customer obtainscontrol of the distinct good or service.
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.
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 acts as anagent and recognizes revenue based on the amount of commission or handling fee to which it is expected to be entitled,which is determined based on the net amount of the total consideration received or receivable less the consideration payableto other related parties, or based on a predetermined commission amount or proportion, etc.
29.1 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.
According to the contract, the Group recognizes revenue when the control of the product is transferred, that is, when theproduct is handed over to the agreed carrier or delivered to the place designated by the other party for receipt. As thedelivery of the products to the customer represents the right to receive the contract consideration unconditionally, and thematurity of the payment is only subject to the passage of time, the Group recognises a receivable when the product isdelivered to the customer. When a customer prepays for a purchase, the Group recognises the transaction amount receivedas a contractual liability until revenue is recognized when the product is delivered to the customer.
There is variable consideration in the product sales contracts between the Group and its distributors. The Group determinesthe best estimate of the variable consideration based on the expected delivery time, quantity and price of the products. Thetransaction price, including variable consideration, does not exceed the amount by which the accrued recognized revenueis unlikely to be materially reversed at the time the relevant uncertainty is eliminated. At each balance sheet date, theGroup re-estimates the amount of variable consideration that should be included in the transaction price.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
When the Group sells products to distributors, it provides an additional purchase option under sales incentives, i.e., theGroup's distributors can accumulate sales rebates when purchasing specific products from the Group and use them to offsetthe price of goods in future purchases. These sales rebates provide resellers with discounts on their future purchases thatare not available to similar customers. As a result, the commitment to provide the dealer with a credit for future purchasesis a separate performance obligation that is recognized as a contractual liability at the time of the sale transaction at thetransaction price apportioned to the fair value of the rebate, and revenue is recognized when the reseller uses the salesrebate offset.
The Group provides quality assurance for the products sold, and the quality assurance related to the products sold by theGroup cannot be purchased separately, but is to assure customers that the products sold meet the established standards, sothe Group carries out accounting treatment in accordance with the provisions of Accounting Standard for BusinessEnterprises No. 13 - Contingencies.
For product sales of the Group with sales return terms attached, as the customer obtains ownership of related products, theGroup recognizes revenue in accordance with the consideration (excluding expected refund amounts due to sales returns)that the Group is expected to receive due to the transfer of products or services to the customer, and recognizes expectedliabilities in accordance with expected refund amounts due to sales returns. The remaining amount, subsequent todeduction of expected costs from collecting the products (including the decrease in value of the returned products), isrecognized as an asset in accordance with the carrying amount during the expected transfer of returned products afterdeducting the costs of the above net assets carried forward.
Some of the Group's product sales contracts have instalment payment clauses, and there is a significant financingcomponent in the contract, the Group determines the transaction price based on the amount payable in cash when thecustomer assumes control of the products. The difference between the transaction price and the contract consideration isamortized using the effective interest rate method during the contract period. On the contract commencement date, theGroup does not consider the significant financing components in the contract if the interval between the customer obtainingcontrol of the products and the price being paid by the customer is not more than one year.
29.2 Project construction revenue
Project construction revenue is the revenue from constructions related to intelligent security solution projects and PPPProjects provided by the Group.
For project construction, the customer is able to control the assets under construction in the course of the Group'sperformance, and the Group regards them as a performance obligation to be performed within a certain period of time, andthe revenue is recognized according to the performance progress, unless the performance progress cannot be reasonablydetermined.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
The Group uses the output method to determine the progress of performance, which is to determine the progress ofperformance based on the value of engineering construction services transferred to customers. If the progress ofperformance cannot be reasonably determined and the costs incurred by the Group are expected to be compensated,revenue is recognized according to the amount of costs incurred until the progress of performance can be reasonablydetermined.
The Group's customers make milestone payments with the Group in respect of projects in accordance with the terms ofthe contract. The Group first recognizes the completed performance obligations as contract assets and reclassifies them asaccounts receivable when the payment milestone is reached; if the contract price received or receivable by the Groupexceeds the accumulated performance obligations completed, the excess part is recognized as a contract liability. TheGroup's contract assets and contractual liabilities under the same contract are presented on a net basis.
Some of the Group's construction contracts have long-term payment clauses, and there are significant financing elementsin the contracts. The Group determines the transaction price on the basis of the amount payable in cash on the assumptionthat the customer will take control of the asset-building. The difference between the transaction price and the contractconsideration is amortized over the life of the contract using the effective interest method. At the commencement date ofthe contract, the Group expects that the interval between the customer obtaining control of the service and the customerpaying the price will not exceed one year, regardless of the significant financing component existing in the contract.
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 construction services, operation services and maintenanceservices as individual performance obligations in the contract, and allocates the transaction price to each performanceobligation based on the relative proportion of the stand-alone selling price of each performance obligation. When providingconstruction services or outsourcing projects to other parties, The identity of the Group is the principal responsible person,and then accounting for construction revenue to confirm the contract assets is made. After the PPP project is ready for use,the Group recognizes revenue related to operation and maintenance services.
29.3 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.
For cloud services and other services, the economic benefits brought by the customer are obtained and consumed at thetime of the Group's performance, and the Group regards them as a performance obligation to be performed within a certainperiod, and the revenue is recognized according to the performance progress during the period of providing services. TheGroup adopts the output approach to determine the performance progress, i.e. the performance progress is determinedbased on the value of the services transferred to the customer to the customer. The customer paid for the cloud services inadvance at the time of purchase, so the Group recognized the cloud service payment received at the time of the transaction
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
as a contractual liability, and recognized the revenue according to the performance progress during the period of theprovision of the services. The Group presents contract assets and contract liabilities under the same contract on a net basis.
For the provision of operation and maintenance services to customers, the economic benefits obtained and consumed bythe customers at the same time as the performance of the contract by the Group shall be regarded as the performanceobligation to be performed within a certain period of time, and the revenue shall be recognized according to theperformance progress. The Group's customers make milestone payments with the Group for O&M services in accordancewith the terms of the contract. The Group first recognizes completed performance obligations as contract assets andreclassifies them as accounts receivable when payment milestones are reached, and if the contract price received orreceivable by the Group exceeds the accumulated performance obligations completed, the excess part is recognized as acontract liability. The Group's contract assets and contractual liabilities under the same contract are presented on a netbasis.
For the provision of operation and maintenance services to customers, the economic benefits obtained and consumed bythe customers at the same time as the performance of the contract by the Group shall be regarded as the performanceobligation to be performed within a certain period of time, and the revenue shall be recognized according to theperformance progress. The Group's customers make milestone payments with the Group for O&M services in accordancewith the terms of the contract. The part of the Group that has obtained the unconditional right to receive payment isrecognized as accounts receivable, and the remainder is recognized as contract assets, and if the contract price received orreceivable by the Group exceeds the accumulated performance obligations completed, the excess part is recognized as acontract liability. The Group's contract assets and contractual liabilities under the same contract are presented on a netbasis.
30. Cost of Contract
30.1 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.
30.2 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 a
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
current 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.
30.3 Impairment losses on assets related to contract costs
In determining impairment losses on assets related to contract costs, impairment losses are first determined for other assetsrecognized in accordance with other relevant ASBEs and related to the contract. Then, for assets related to contract costswhose carrying value is higher than the difference between the following two items, the Group makes provision forimpairment for the excess to be recognized as asset impairment losses: (1) the remaining amount of consideration 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 such relevant goods or services.
After provision for impairment is made for the asset related to contract costs, if the difference between the above two itemsis higher than the carrying value of the asset due to changes in the factors of impairment in previous periods, the originalprovision for impairment of the asset is reversed and included in the current profit or loss, but the carrying value of theasset after the reversal shall not exceed the carrying value of the asset on the reversal date assuming no provision forimpairment is made.
31. Governmental Subsidies
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.
31.1 Judgment basis and Accountant treatment of government subsidy related to assets
The government subsidies for some special subsidies and etc. are used for constructions and forms long-term assets, andtherefore 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.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
31.2 Judgment basis and accountant treatment of government subsidy related to income
The Group receives government subsidies including subsidies for special projects and Value-Added-Tax refund, etc. whichare used to compensate the group-related costs or losses, and therefore are categorized as government subsidy related toincome.
For a government grant related to income, if the subsidy is a compensation for related expenses or losses to be incurred insubsequent periods, it is recognized as deferred income, and recognized in profit or loss over the periods in which therelated costs or losses are recognized; If the subsidy, such as VAT refund, is a compensation for related expenses or lossesalready incurred, it is recognized immediately in profit or loss for the period.
For government subsidies related to the Group’s daily operations shall be booked into other income; for those not relatedto the Group’s daily operations, shall be booked into non-operating income/expense.
32. 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.
32.1 The Group as the lessee
32.1.1 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.
32.1.2 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;
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
? 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.
32.1.3 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;
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
? In the event of any change in the amount expected to be payable based on the residual value guarantees, the Group
remeasures the lease liability at the present value calculated based on the changed lease payments and the originaldiscount rate.
32.1.4 Basis for judgment and accounting treatment of the lessee's simplified treatment of short-term leases and leases
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.
32.1.5 Lease modification
In case of lease modification, the Group makes accounting treatment of such lease change as a separate lease if all of thefollowing conditions are met:
? Such lease modification increases the scope of the lease by adding the right to use one or more lease assets;? The increased consideration is commensurate with the stand-alone price for the increase in scope and any appropriateadjustments to reflect the circumstances of the particular contract.
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.
32.2 The Group as the lessor
32.2.1 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 of
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
transaction prices, based on the respective stand-alone prices of the lease component and the non-lease component.
32.2.2 Classification criteria and accounting treatment for leases as lessors
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.
32.2.2.1 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.
32.2.2.2 The Group records the finance lease business as the lessor
On the commencement date of the lease term, the Group uses the net lease investment as the carrying value of the financelease receivables and derecognizes the finance lease assets. Net lease investment is the sum of present value ofunguaranteed residual value and lease payments receivable discounted at the interest rate implicit in lease on thecommencement date of the lease term.
Lease payments receivable, which refer to amounts receivable by the Group from the lessee for conveying the right to usethe leased assets during the lease term, include:
? Fixed payment including in-substance fixed payments by the lessee, less any lease incentives payable;? The exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;? Payments for terminating the lease (if the lease term reflects the lessee exercising the option to terminate the lease;? Residual value guarantees provided to the Group by the lessee, a party related to the lessee, or a third party unrelated
to 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.
In financial leases in which the Group acts as a manufacturer or distributor as the lessor, on the commencement date ofthe lease term, the Group recognizes revenue based on the lower of the fair value of the leased assets and the present valueof the lease receipts discounted at the market rate, and carries forward the cost of sales based on the balance of the carryingamount of the leased assets after deducting the present value of the unsecured residual value.
The costs incurred by the Group acting as a manufacturer or distributor as a lessor to obtain a financial lease are recognizedin profit or loss for the current period on the commencement date of the lease term.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
32.2.3 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 Groupaccounts 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 financelease, 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.
33. Deferred Tax Assets / Deferred Tax Liabilities
The income tax expenses include current income tax and deferred income tax.
33.1. 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.
33.2 Deferred Tax Assets and Deferred Tax Liabilities
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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.
In general, all temporary differences are recognized as the relevant deferred income tax. However, for deductibletemporary differences, the Group recognizes the relevant deferred tax assets to the extent that it is likely to obtain thetaxable income to offset the deductible temporary differences. In addition, deferred tax assets or liabilities relating to theinitial recognition of goodwill, as well as those arising from transactions that are neither a business combination nor affectaccounting profits and taxable income (or deductible losses) and do not result in equal taxable and deductible temporarydifferences, are not recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it isprobable that future taxable profits will be available against which the deductible losses and tax credits can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, 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.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
33.3 Offset of Income Tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assetsand settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets anddeferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity ordifferent taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assetsand liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities areexpected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
34. Important Judgments while Applying Accounting Policy, and Key Assumptions and Uncertainty Factors
Applied 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 net realizable value is determined by the actual selling price of the most recent or post-period finishedproduct, less the estimated costs of the current similar type at the time of completion of the product, the estimated salesexpenses and related taxes; For finished products, the actual selling price of the latest or future finished product minus the
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
estimated selling expenses and related taxes will be incurred, is used as the basis for determining the net realizable value.The Group will regularly conduct a comprehensive stocktaking to review the impairment circumstances on defective,obsoleted or slow-moving inventory if any; in addition, the Group's management will regularly review the impairmentcircumstance of inventory with long storage time according to the inventory aging.. Based on the above procedure, theGroup's management deems that the full provision amounts have been withdrawn for inventory. For details, please referto Note (V) 9.
Impairment of accounts receivable
Except for accounts receivable whose credit losses are determined on the basis of individual basis, the Group adopts animpairment matrix on a portfolio basis to determine its expected credit loss of the relevant accounts receivable. The Groupdivides the risk characteristics according to the region and object of its business, and divides the relevant accountsreceivable into different portfolios. Based on the historical loss rate and consider reasonable and well-founded forward-looking information in the industry, the Group determines the proportion of corresponding loss reserves for differentportfolios of various types of accounts receivable. As of December 31, 2023, based on the historically loss rate and considerreasonable and well-founded forward-looking information in the industry, the Group determines the correspondingproportion of loss provision for accounts receivable. The amount of the provision for expected credit losses will changeas the estimation of the Group. The details on the provision for expected credit losses of the accounts receivable of theGroup are given in Note (V) 4.
Useful life and predicted net residual value of fixed asset
The Group's estimation of fixed assets useful life is based on the historical experience of actual usable term of fixed assetswith similar properties and functions, the estimation of predicted net residual value is the amount obtained currently bythe Group from the assets after deducting the anticipated disposal expense based on the anticipated status assuming theconditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. The Group shallconduct the review on the predicted service life and predicted net residual value of fixed assets at least annually. For thecurrent reporting period, the Group's management did not see signs either indicating a shortened or extended useful life ofthe Group’s fixed asset or indicating a change in predicted net residual value.
Accrued liabilities of product quality warranty
Accrued liabilities of product quality assurance are costs and expenses incurred to meet the established standards ofproduct quality assurance obligations to customers in accordance with the product contract; the Group made such anestimation according to the predicted claim rate, repair and replacement cost of relevant products. The management deems
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
that the current estimation on accrued liabilities of product quality warranty is reasonable, however, the Group willcontinue to review the conditions of product repairs, and will conduct adjustment if any sign indicating the need to makeadjustments on accounting estimates.
Deferred tax assets and deferred tax liabilities
Deferred income tax assets and deferred income tax liabilities are measured at the applicable income tax rate during theperiod when the relevant asset is expected to be recovered or the relevant debt is expected to be paid off. The expectedapplicable income tax rate is determined according to the relevant current tax regulations and the actual situation of theGroup. If the estimated income tax rate is different from the original estimate, the management of the Group will adjust it.
The realization of deferred income tax assets mainly depends on the actual future taxable income, taxable temporarydifferences, and the effective tax rate of temporary difference in the future applicable years. If the actual taxable incomeand taxable temporary differences in the future is less than the estimation, or actual tax rate is lower than the estimation,then the confirmed deferred income tax assets will be reversed and confirmed in the income statement during thecorresponding period. If the actual taxable income and taxable temporary differences in the future is more than theestimation, or actual tax rate is higher than the estimation, then the deferred tax assets that are partially unrecognizeddeductible losses and deductible temporary differences will be recognized and confirmed in the income statement duringthe corresponding period.
Goodwill impairment
When testing goodwill for impairment, a pre-tax interest discount rate that appropriately reflects the current market timevalue of money and asset-specific risk is determined and the present value of the projected future cash flows of the relevantasset group or combination of asset groups containing goodwill is calculated. When the future actual result is differentfrom the original estimation, the result of the goodwill impairment test will alter.
35. Significant Alternation in Accounting Policy and Accounting Estimations
Interpretation No. 16 of Accounting Standards for Business Enterprises
The Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for Business Enterprises (the"Interpretation No. 16") on November 30, 2022. It specifies the accounting treatment of the income tax effects on dividendsrelated to financial instruments classified as equity instruments by an issuer and the accounting treatment of the
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
modification of cash-settled share-based payments to equity-settled share-based payments by an enterprise. TheInterpretation No. 16 amends the scope of the initial recognition exemption for deferred income tax in ASBE No. 18 –Income Tax. It clarifies that for single transaction that are not business combinations, where neither accounting profits nortaxable income (or deductible losses) are affected at the time of the transaction, and the assets and liabilities initiallyrecognized result in equal taxable temporary differences and deductible temporary differences do not apply to theprovisions of ASBE No. 18 – Income Tax on exemption from initial recognition of deferred tax liabilities and deferred taxassets. This regulation is effective as of January 1, 2023, and can be implemented in advance. The Group implementedthis requirement on January 1, 2023, applied retrospective adjustment method for accounting treatment, and restated thefinancial statements for the comparative period. The specific impacts are listed below:
(1) The impact on the relevant items of the Group's consolidated balance sheet on January 1, 2022
Unit: RMBItem January 1, 2022 Adjustment January 1, 2022Deferred tax assets 1,210,877,575.24 461,934.26 1,211,339,509.50Deferred tax liabilities 93,315,151.17 47,923.93 93,363,075.10Retained earnings 45,148,877,451.52 (179,425.86) 45,148,698,025.66Minority equity 1,933,755,610.62 593,436.19 1,934,349,046.81
(2) The impact on the relevant items of the Group's consolidated balance sheet on December 31, 2022
Unit: RMBItem December 31, 2022 Adjustment December 31, 2022Deferred tax assets 1,469,646,489.04 1,551,089.22 1,471,197,578.26Deferred tax liabilities 116,502,770.84 (23,294.86) 116,479,475.98Retained earnings 49,460,240,986.49 182,975.56 49,460,423,962.05Minority equity 4,580,999,418.82 1,391,408.52 4,582,390,827.34
(3) The impact on the relevant items of the Group's 2022 consolidated income statement
Unit: RMBItem 2022 Adjustment 2022Income tax expenses 1,297,981,905.54 (1,160,373.75) 1,296,821,531.79
12,837,342,061.07 362,401.42 12,837,704,462.49
| Net profit attributable to owners of parent company |
| Profit or loss attributable to minority shareholders |
719,627,660.86 797,972.33 720,425,633.19
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
(4) The impact on the relevant items of the parent company's balance sheet on January 1, 2022
Unit: RMBItem January 1, 2022 Adjustment January 1, 2022Deferred tax assets 281,893,463.93 (443,175.57) 281,450,288.36Retained earnings 37,958,561,319.89 (443,175.57) 37,958,118,144.32
(5) The impact on the relevant items of the parent company's balance sheet on December 31, 2022
Unit: RMBItem December 31, 2022 Adjustment December 31, 2022Deferred tax assets 171,524,646.19 (909,206.34) 170,615,439.85Retained earnings 39,030,437,901.96 (909,206.34) 39,029,528,695.62
(6) The impact on the relevant items of the parent company's 2022 income statement
Unit: RMBItem 2022 Adjustment 2022Income tax expenses 527,533,244.69 466,030.77 527,999,275.46
IV. TaxesMajor Categories of Taxes and Tax Rates
Category of tax Basis of tax computation Tax rateEnterprise 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) |
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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's other subsidiaries in China are applicable to 25% of enterpriseincome tax rate, the overseas subsidiaries are applicable to corresponding 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 Enterprise Identification Management on December 29, 2020 and the list of High-tech Enterprises Identified and Reported by the ZhejiangProvincial Accreditation Agency in 2023 issued by the Leading Group Office of National High-tech Enterprise Identification Management on December 28, 2023, the Company wasidentified as the high-tech enterprise, and valid terms for both are 3 years, and the preferential tax period is from 2020 to 2022 and from 2023 to 2025. Therefore, the enterpriseincome tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2022:15%).
According to the Announcement on the Enterprise Income Tax Policies for Promoting the High-quality Development of Integrated Circuit Industry and Software Industry (Ministryof Finance, State Administration of Taxation, National Development and Reform Commission, Ministry of Industry and Information Technology Announcement [2020] No. 45)(hereinafter referred to as " Preferential Tax Policies for Integrated Circuit and Software Industries"), the Company was approved by the tax authorities in May 2023 to pay the 2022annual corporate income tax at the rate of 10%. As of the approval date of this report, the Company’s preferential income tax in 2023 has not been verified and approved. Therefore,the Company’s enterprise income tax in 2023 is still calculated and paid at the rate of 15% (2022: 10%).
(2) According to the Announcement on Continuation of the Corporate Income Tax Policy for the Western Development (Ministry of Finance, State Administration of Taxation, National
Development and Reform Commission Announcement [2020] No.23), the subsidiaries of the Company, Chongqing Hikvision Technology Co., Ltd. (hereinafter referred to as"Chongqing Technology"), Chongqing Hikvision System Technology Co., Ltd. (hereinafter referred to as "Chongqing System"), and Chongqing EZVIZ Electronics Ltd. have enjoyedpreferential tax policies for the development of the western region. Therefore, the current enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in thecurrent reporting period (2022:15%).
(3) According to the Recording List of the First Batch of identified High-tech Enterprises of Zhejiang Province in 2021 issued by the Leading Group Office of National High-tech
Enterprise Identification Management Work on January 24, 2022, Hangzhou Fuyang Haikang Baotai Surveillance Technology Service Ltd. (hereinafter referred to as "Fuyang Baotai")and Hangzhou Hikstorage Technology Ltd. ("Hikstorage Technology") , subsidiaries of the Company, are identified as high-tech enterprises, and the validity period of the identificationis 3 years and the preferential tax period is from 2021 to 2023. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the currentreporting period (2022:15%).
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
(4)In accordance with the List of High-tech Enterprises Identified by the Zhejiang Provincial Accreditation Agency in 2022 issued by the leading group office of Zhejiang high-techenterprise identification management work on January 17, 2022, the Company’s subsidiaries, Hangzhou Hikvision System Technology Ltd. (hereinafter referred to as "HangzhouSystem"), Hangzhou Kuangxin Technology Ltd. (hereinafter referred to as "Hangzhou Kuangxin"), Hangzhou Rayin Technology Co., Ltd. (hereinafter referred to as "HangzhouRayin Technology"), and Hangzhou Hikfire Technology Ltd. (hereinafter referred to as "HikFire Technology") were recognized as high-tech enterprises with a valid term of 3 yearsand the preferential tax period is from 2022 to 2024. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reportingperiod (2022:15%).
(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 EnterpriseIdentification Office on November 20, 2020 and the List of Second Batch of High-tech Enterprises Identified and Reported by Shanghai Accreditation Agency in 2023 issued byShanghai High-tech Enterprise Identification Office on January 4, 2024, the Company’s subsidiary, Shanghai Goldway Intelligent Transportation System Ltd. (hereinafter referred toas "Goldway Transportation") was identified as the high-tech enterprise, and valid term for both are 3 years, and the preferential tax period is from 2020 to 2022 and from 2023 to2025. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2022:15%).
(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 Enterprise Identification Management on December 29, 2020 and the list of High-tech Enterprises Identified and Reported by the ZhejiangProvincial Accreditation Agency in 2023 issued by the Leading Group Office of National High-tech Enterprise Identification Management on December 28, 2023, the Company’ssubsidiaries, Hangzhou Hikauto Software Ltd. (hereinafter referred to as "HikAuto Software") and Hangzhou Hikimaging Technology Ltd. (hereinafter referred to as "HikImagingTechnology") were identified as the high-tech enterprise, and valid term for both are 3 years, and the preferential tax period is from 2020 to 2022 and from 2023 to 2025. Therefore,the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2022:15%).
(7) In accordance with the Letter of Reply on Publishing the List of Identified High-tech Enterprises of Zhejiang Province in 2020 (Guo Ke Huo Zi [2020] No. 251) issued by the Leading
Group Office of National High-tech Enterprise Identification Management on December 29, 2020 and the list of High-tech Enterprises Identified and Reported by the ZhejiangProvincial Accreditation Agency in 2023 issued by the Leading Group Office of National High-tech Enterprise Identification Management on December 28, 2023, the Company’ssubsidiary, Hangzhou Hikrobot Technology Co., Ltd. (formerly known as Hangzhou Hikrobot Technology Ltd. and hereinafter referred to as "HikRobot") was identified as the high-tech enterprises, and valid term for both are 3 years, and the preferential tax period is from 2020 to 2022 and from 2023 to 2025.
According to the preferential tax policies for the integrated circuit industry and the software industry and the Announcement No. 10 of 2021 of the Ministry of Industry and InformationTechnology of the People's Republic of China, the National Development and Reform Commission, the Ministry of Finance and the State Administration of Taxation, Hikrobot is aqualified software enterprise., and is exempted from enterprise income tax in the first and second years after start of profiting and pays enterprise income tax at half of the 25%statutory tax rate in the third to fifth years. The year of 2023 is the first year of HikRobot making profits and is exempted from enterprise income tax (2022: 15%).
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
(8) In accordance with the Announcement on the Filing of High-tech Enterprises Recognized by Zhejiang Provincial Identification Institution in 2022 issued by the Leading Group Office
of National High-tech Enterprise Identification Management on January 17, 2023, the Company’s subsidiary, Hangzhou Hikmicro Sensing Technology Co., Ltd. (hereinafter referredto as "Hikmicro Sensing") was identified as the high-tech enterprise with a valid term of 3 years and the preferential tax period is from 2022 to 2024.
In accordance with the Preferential Tax Policies for Integrated Circuit and Software Industries, Hikmicro Sensing is a qualified intergrated circuit company, and is exempted fromenterprise income tax in the first and second years after start of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the third to fifth years. The year of2023 is the third year of Hikmicro Sensing making profits and enjoyed enterprise income tax at half of the 25% statutory tax rate (2022: tax-exempted).
(9) In accordance with the Announcement on the Filing of High-tech Enterprises Recognized by Zhejiang Provincial Identification Institution in 2022 issued by the Leading Group Office
of National High-tech Enterprise Identification Management on January 17, 2023, the Company’s subsidiary, Hangzhou Hikmicro Software Ltd. (hereinafter referred to as "HangzhouHikmicro Software") was identified as the high-tech enterprise with a valid term of 3 years and the preferential tax period is from 2022 to 2024.
In accordance with the Preferential Tax Policies for Integrated Circuit and Software Industries, Hangzhou Hikmicro Software is a qualified software enterprise, and is exempted fromcorporate income tax for the first year to the fifth year from the profitable year, and levied at a reduced rate of 10% in the subsequent years. The year of 2023 is the forth year ofHikmicro Sensing making profits and is exempted from enterprise income tax (2022: tax-exempted).
(10) In accordance with the Recording List of the Second Batch of identified High-tech Enterprises of Hebei Province in 2022 issued by the Leading Group Office of Hebei Province's
High-tech Enterprise Identification Management on December 26, 2022, the Company’s subsidiary, Sensortech Hebei Technology Ltd. (hereinafter referred to as " Sensortech Hebei")was identified as the high-tech enterprises with a valid term of 3 years and the preferential tax period is from 2022 to 2024. Therefore, the enterprise income tax is calculated and paidon the basis of a reduced tax rate of 15% in the current reporting period.
(11) 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 Enterprise Identification Management on December 29, 2020 and the list of High-tech Enterprises Identified and Reported by the ZhejiangProvincial Accreditation Agency in 2023 issued by the Leading Group Office of National High-tech Enterprise Identification Management on December 28, 2023, the Company'ssubsidiary, Hangzhou EZVIZ Software Ltd. (hereinafter referred to as "EZVIZ Software") was identified as the high-tech enterprise, and valid term for both are 3 years, and thepreferential tax period is from 2020 to 2022 and from 2023 to 2025.
According to the preferential tax policies for the integrated circuit industry and the software industry and the Announcement No. 10 of 2021 of the Ministry of Industry and InformationTechnology of the People's Republic of China, the National Development and Reform Commission, the Ministry of Finance and the State Administration of Taxation, EZVIZ Softwareis a qualified software enterprise, and is exempted from enterprise income tax in the first and second years after start of profiting and pays enterprise income tax at half of the 25%statutory tax rate in the third to fifth years. The year of 2023 is fourth year of EZVIZ Software making profits and enjoyed the preferential enterprise income tax at half of the 25%
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
statutory tax rate (2022: half of the 25% statutory tax rate).
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 StateAdministration of Taxation, as for self-developed software products sales of the Company, Hangzhou System, HikRobot, HikAuto Software, Hangzhou EZVIZ Software, HikstorageTechnology, Hikimaging Technology, HikFire Technology, Hangzhou Rayin Technology, Hangzhou Microimage Software, Henan Haikang Hua’An BaoQuan Electronics Co., Ltd.(hereinafter referred to as "Hua’An BaoQuan Electronics") , Hangzhou Kuangxin, Fuyang Baotai, Zhejiang Hailai Yunzhi Technology Co., Ltd., Sensortech Hebei, andWuhu SensortechIntelligent Technology Ltd., the VAT shall be calculated and paid with tax rate of 13% at first, then the portion with actual tax bearing excess 3% shall be refunded after State Administrationof Taxation reviews.
Note 3: In accordance with the Several Policies on Promoting the Recovery and Development of Difficult Industries in the Service Industry Fa Gai Cai Jin [2022] No. 271, in 2022,taxpayers in the production and life service industries will be deducted by 10% and 15% respectively according to the deductible input tax deductible for the current period (hereinafterreferred to as the "Additional Deduction Policy"). In accordance with the Announcement on clarifying policies such as VAT reduction and exemption for small-scale taxpayers (Ministryof Finance, State Administration of Taxation Announcement [2023] No. 1), In 2023, the current deductible input tax for production and living services taxpayers will continue to bededucted by 5% and 10% of the tax payable respectively.
The Company’s subsidiaries, a part of Hangzhou Hikvision Technology Ltd.’s branches , Chongqing System, Hangzhou Hikvision Security Equipment Leasing Service Co., Ltd., AnhuiHikvision Urban Operation Service Co., Ltd., a part of Hangzhou EZVIZ Network Co., Ltd.(hereinafter referred to as "EZVIZ Network")'s branches, Zhejiang Haikang City Service Co.,Ltd. Luliang Branch, Henan Hua’An Bao Quan Intelligent Development Co., Ltd. Luoyang Branch, Henan Hua’an Security Services Co., Ltd., and Guizhou Haikang Transportation BigData Co., Ltd. are complying with the provisions of the Additional Deduction Policy and were entitled to additional deduction preferential tax policy of input tax since 2022. Somebranches of the Company, subsidiaries such as Urumqi HaiShi Xin'An Electronic Technology Ltd., Chengdu Hikvision Digital Technology Ltd., Hangzhou EZVIZ Software, Hangzhoubranch of Zhejiang Hikfire Technology Ltd.,Henan Hua'An Bao Quan Intelligent Development Ltd, Wuhan Hikvision Technology Ltd., and some branches of Hangzhou Haikang
Intelligent Technology Ltd. met the provisions of the VAT Additional Deduction Policy and were entitled to additional deduction preferential tax policy of input tax since 2023.
Note 4: In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on the Additional VAT Deduction Policy for Integrated Circuit Enterprises(Finance and Taxation [2023] No. 17), from January 1, 2023 to December 31, 2027, enterprises in integrated circuit design, production, packaging and testing, equipment and materialsare allowed to deduct an additional 15% of the current deductible input tax to deduct the tax payable. The Company's subsidiary, Hikmicro Sensing complies with the provisions of thepolicy and additional deducts an additional 15% of the current deductible input tax to deduct the tax payable.
V. Notes to Items in the Consolidated Financial Statements
1. Cash and Bank Balances
Unit: RMB
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Item
Closing Balance Opening BalanceForeign currency amount
Exchange rate forconversion
RMB amount
Foreign currencyamount
Exchange rate for
conversion
RMB amountCash
RMB- -
| ： | ||
- -
| 1,678.63 |
1,710.03EUR147,128.30
7.8592
43,514.50 7.4229 323,003.75
| 1,156,310.77 | ||
| USD |
30,104.54
7.0827
32,583.86 6.9646 226,933.53Other currencies-
| 213,221.43 | ||
- 414,544.09 -
- 658,417.85
Bank balance
| ： |
| RMB |
- - 45,204,054,391.90
- - 35,604,295,321.02
| USD |
348,625,559.51
7.0827
2,469,210,250.34
369,237,191.93 6.9646 2,571,589,346.94EUR113,802,623.62 7.8592
116,323,339.53 7.4229 863,456,516.97
Other currencies- - 824,341,197.50 - - 568,425,909.28
Other currency funds:
RMB- - 179,985,499.57
894,397,579.52
- - 361,751,169.54
USD2,700,309.07
7.0827
19,125,479.05
1,623,544.38 6.9646 11,307,337.16EUR565,119.25
7.8592
713,664.81 7.4229 5,297,462.51
Other currencies- -
| 4,441,385.18 |
| 32,128,116.48 |
- - 24,530,871.36
Total
49,629,469,654.46
40,011,863,999.94
Including: deposited in overseas banks942,602,817.26
Details of other currency funds:
Unit: RMB
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
2. Held-for-trading Financial Assets
Unit: RMBItem Closing Balance Opening BalanceDerivative financial assets 37,380.00
Total 37,380.00
| 12,807,438.36 |
| 12,807,438.36 |
Closing Balance Opening BalanceItem
Foreign currency
amount
Exchange rate for
conversion
RMB amount Foreign currency amount
Exchange rate for
conversion
RMB amountCapitals with limitations
Deposits for letter of credit- -
| ： | ||
| 5,807,814.00 |
-
Bank acceptance bill- -
- -
| 5,729,976.08 |
9,477,411.92Deposits for letter of guarantee- -
- - 126,434,505.79
Other security deposits- -
| 150,406,759.09 |
| 17,821,752.36 |
- - 13,666,564.66
Other capitals with limitations- -
- - 46,895,003.00
Subtotal
| 30,425,005.23 |
| 210,191,306.76 |
196,473,485.37
Capitals without limitations:
Deposit in payment instrument provided by third-party andin securities account
- - 25,453,125.41 - - 205,579,877.47
Other currency funds in USD- - - 93,664.25 6.9646 652,334.03Other currency funds in EUR4,586.74 7.8592 36,048.11 24,403.36 7.4229 181,143.70
Subtotal
206,413,355.20
Total
235,680,480.28
25,489,173.52
402,886,840.57
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
On December 31, 2023, derivative financial assets are forward foreign exchange contracts, and they are not designated as hedging instruments, and the gains or losses arising from changesin their fair values are directly included in the current profit and loss.
3. Notes Receivable
1) Categories of notes receivable
Unit：RMBCategory Closing Balance Opening BalanceBank acceptance bill
2,047,876,364.66Finance company acceptance bill
| 2,199,710,776.69 |
| 123,274,741.72 |
136,900,226.65Commercial acceptance bill
335,211,567.92Total
| 283,085,857.33 |
| 2,606,071,375.74 |
2,519,988,159.23
2) As of December 31, 2023, notes receivable pledged by the Group
Unit：RMBItem Amount pledged as of December 31, 2023Bank acceptance bill
Total
| 14,755,434.94 |
| 14,755,434.94 |
3) At the end of the current reporting period, notes receivable endorsed or discounted by the Group but not yet due at the balance sheet day
Unit：RMBItem Amount not derecognized as of December 31, 2023
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Bank acceptance bill
Finance company acceptance bill
| 1,109,685,052.49 |
| 47,808,575.05 |
Commercial acceptance bill
Total
| 500,000.00 |
| 1,157,993,627.54 |
As of December 31, 2023, the Group gave RMB1, 075,118,808.52 (2022: RMB1,175,364,261.35) undue bank acceptance bills to suppliers for endorsement, RMB47,808,575.05 (2022:
RMB7,048,955.85) undueacceptance bill of the finance company to suppliers for endorsement, RMB500,000.00 (2022: nil) undue commercial acceptance bill to suppliers for endorsement.Discounted RMB34,566,243.97 (2022: 59,466,804.99) undue bank acceptance to banks. Since the Group has not transferred almost all the risks and rewards of ownership of financialassets, the Group has not terminated its confirmation. For details, please refer to Note (V) 24 and Note (V) 31.3.
4) Classified disclosure by method of provision for bad debts.
Unit：RMB
Category Closing balance
Carrying amount Credit loss provision Book valueAmount Proportion (%) Amount Proportion (%) AmountProvision for bad debts of notes receivables by portfolios
Including: Bank acceptance bill
84.33 - - 2,199,710,776.69
Non-bank acceptance bill408,852,989.70 15.67 2,492,390.65 0.61 406,360,599.05
Total2,608,563,766.39 100.00
2,199,710,776.692,492,390.65
0.10
| 2,492,390.65 | 2,606,071,375.74 |
Provision for bad debts of notes receivables by portfolios
Bank acceptance bill portfolio:
The Group believes that there is no significant credit risk tothe acceptors of bank acceptance bills held by the Group, so no loss provision is made.
Non-bank acceptance bill portfolio:
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Unit：RMBItem Expected average loss ratio (%)
| Closing balance | ||||
| Carrying amount | Carrying amount | Carrying amount | ||
| Non-bank acceptance bill portfolio | 0.61 | 408,852,989.70 | 2,492,390.65 | 406,360,599.05 |
| Total | 0.61 | 408,852,989.70 | 2,492,390.65 | 406,360,599.05 |
5) Provision for bad debts of notes receivables.
Provision for bad debts
(not incurred
| credit impairment) | Expected Credit loss for the entire duration |
(incurred
Total
| credit impairment) | |||
| Balance as of January 1, 2023 | - | - | - |
| Balance as of January 1, 2023 During 2023 |
：
| -- Expected credit losses carried over to the entire duration (credit impairment incurred) |
- - -
| Accrued for the current year | 2,492,390.65 | - | 2,492,390.65 |
| Balance as at December 31, 2023 | 2,492,390.65 | - | 2,492,390.65 |
6) Situation of provision
Category Opening balance
| Amount of changes changed in the current reporting period | Difference due to |
foreign currency
Closing balanceProvision /Recollect or Reverse Recover or write-off
| statement translation | |||||
| Notes receivable | - | 2,492,390.65 | - | - | 2,492,390.65 |
| Total | - | 2,492,390.65 | - | - | 2,492,390.65 |
4. Accounts Receivable
1) Disclosure by aging
Unit: RMB
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Aging Closing balance Opening balanceWithin credit period21,237,108,394.91 17,802,665,327.45
Within 1 year after exceeding credit period12,622,668,221.07 10,468,264,283.90
1-2 years after exceeding credit period 2,520,053,396.18 1,906,850,057.03
| 2-3 years after exceeding credit period | 1,029,311,890.05 | 907,553,767.72 |
3-4 years after exceeding credit period 579,297,343.23 762,308,314.38
Over 4 years after exceeding credit period 1,018,167,722.39 557,358,170.53
Total39,006,606,967.83 32,404,999,921.01Less: Credit impairment provision3,191,433,456.39 2,498,705,510.61Carrying amount 35,815,173,511.44 29,906,294,410.40
2) Classified disclosure of credit loss by provision methods
Unit: RMBCategory
Closing Balance
| 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 39,006,606,967.83 100.00 3,191,433,456.39 8.18 35,815,173,511.44Total 39,006,606,967.83 100.00 3,191,433,456.39 8.18 35,815,173,511.44
Unit: RMBCategory
| Beginning Balance | ||||
| Carrying amount | Credit loss provision | Book Value | ||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount |
Provision for credit loss on a single basis - - - - -Provision for credit loss by portfolios 32,404,999,921.01 100.00
2,498,705,510.61 7.71 29,906,294,410.40Total 32,404,999,921.01 100.00
2,498,705,510.61 7.71 29,906,294,410.40
Provision for credit loss by portfolios for accounts receivable
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Unit: RMBCustomer
Closing balanceCarrying amount Credit loss provision Proportion (%)Portfolio A 4,676,680,000.49 67,836,989.17 1.45Portfolio B 25,670,911,917.61 2,860,366,981.72 11.14Portfolio C 8,659,015,049.73 263,229,485.50 3.04Total 39,006,606,967.83 3,191,433,456.39 8.18
Description of credit loss provision by portfolios for accounts receivable
As part of the Group's credit risk management, the Group uses an impairment matrix to determine expected credit losses based on the ageing of accounts receivable beyond the creditperiod, and divides the risk characteristics account receivables into portfolio A, portfolio B and portfolio C according to the risk characteristics of business areas and objects. And theCompany uses an impairment matrix to determine expected credit losses of each portfolio based on the ageing of accounts receivable beyond the credit period. These three portfoliosinvolve a large number of customers with the same risk characteristics. Aging information is able to reflect the solvency of these three types of customers when the accounts receivableare due.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
As of December 31, 2023 and January 1, 2023, the credit risk and expected credit losses during the duration of accounts receivable from portfolio A are as follows:
Unit: RMBAge
Closing balance Beginning balanceExpected averageloss rate (%)
Carrying value
Bad debtprovision
Book value
Expected averageloss rate (%)
Carrying value
Bad debtprovision
Book valueWithin credit period
0.02 3,906,568,313.68 852,571.17 3,905,715,742.51
0.03 2,958,550,090.46 952,575.87 2,957,597,514.59
Within 1 year after exceeding credit period
| 1.90 | 676,630,538.84 |
| 12,829,329.20 | 663,801,209.64 |
2.02 672,866,835.07 13,604,729.18 659,262,105.89
1-2 years after exceeding credit period
30.36 50,103,162.12 15,213,054.67 34,890,107.45
48.47 27,091,133.84 13,129,835.35 13,961,298.49
2-3 years after exceeding credit period
63.25 12,070,966.60 7,635,014.88 4,435,951.72
77.48 23,880,801.35 18,503,703.14 5,377,098.21
3-4 years after exceeding credit period
20,084,869.22 20,084,869.22
| 100.00 |
-
100.00 13,340,404.86 13,340,404.86 -
Over 4 years after exceeding credit period
100.00 11,222,150.03 11,222,150.03 - 100.00 8,509,701.80 8,509,701.80 -
Total
1.45 4,676,680,000.49 67,836,989.17 4,608,843,011.32
1.84 3,704,238,967.38 68,040,950.20 3,636,198,017.18
As of December 31, 2023 and January 1, 2023, the credit risk and expected credit losses during the duration of accounts receivable from portfolio B are as follows:
Unit: RMBAge
Closing balance Beginning balanceExpected averageloss rate (%)
Carrying value
Bad debtprovision
Book value
Expected average
loss rate (%)
Carrying value
Bad debtprovision
Book valueWithin credit period
| 0.80 | 10,001,831,444.99 |
| 80,372,286.33 | 9,921,459,158.66 |
0.76 8,531,459,822.34 65,085,907.08 8,466,373,915.26
Within 1 year after exceeding credit period
4.69 10,816,276,812.71 506,914,857.87 10,309,361,954.84
5.30 9,133,051,848.20 484,083,420.12 8,648,968,428.08
1-2 years after exceeding credit period
23.34 2,416,434,272.21 564,052,271.46 1,852,382,000.75
18.66 1,841,980,392.51 343,623,789.72 1,498,356,602.79
2-3 years after exceeding credit period
42.77 993,475,956.99 424,940,431.68 568,535,525.31
38.19 835,970,994.09 319,296,676.54 516,674,317.55
3-4 years after exceeding credit period
| 69.63 | 522,837,171.09 |
| 364,030,874.76 | 158,806,296.33 |
72.52 702,886,673.06 509,743,109.66 193,143,563.40
Over 4 years after exceeding credit period
100.00 920,056,259.62 920,056,259.62 -
100.00 500,527,605.77 500,527,605.77 -Total
| 11.14 | 25,670,911,917.61 |
| 2,860,366,981.72 | 22,810,544,935.89 |
10.31 21,545,877,335.97 2,222,360,508.89 19,323,516,827.08
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
As of December 31, 2023 and January 1, 2023, the credit risk and expected credit losses during the duration of accounts receivable from portfolio C are as follows:
Unit: RMBAge
| Closing balance | Beginning balance | |
| Expected average | ||
loss rate (%)
Carrying value
provision
Book value
| Bad debt | Expected average |
loss rate (%)
Carrying value
Book valueWithin credit period
0.28
| Bad debt provision | ||
7,328,708,636.24 20,812,836.46 7,307,895,799.78
0.25 6,312,655,414.65 15,648,321.26 6,297,007,093.39
Within 1 year after exceeding credit period
1,129,760,869.52 69,879,355.77 1,059,881,513.75
5.72 662,345,600.63 37,905,044.12 624,440,556.51
1-2 years after exceeding credit period
| 6.19 | |
| 50.85 | 53,515,961.85 |
| 27,212,412.79 | 26,303,549.06 |
48.19 37,778,530.68 18,205,757.98 19,572,772.70
2-3 years after exceeding credit period
23,764,966.46 22,060,264.82 1,704,701.64
88.35 47,701,972.28 42,142,828.74 5,559,143.54
3-4 years after exceeding credit period
| 92.83 |
| 100.00 |
36,375,302.92 36,375,302.92 -
100.00 46,081,236.46 46,081,236.46 -Over 4 years after exceeding credit period
86,889,312.74 86,889,312.74 -
100.00 48,320,862.96 48,320,862.96 -
| 100.00 |
Total
3.04 8,659,015,049.73 263,229,485.50 8,395,785,564.23
2.91 7,154,883,617.66 208,304,051.52 6,946,579,566.14
3) Bad debt provision
Unit: RMBCategory Beginning balance
| Amount of changes changed in the current reporting period | Difference due to |
foreign currency
Closing balanceProvision Recollect or reverse Recover or write-off
| statement translation | ||||||
| Accounts receivable | 2,498,705,510.61 | 771,705,436.37 | (28,120,329.42) | (53,995,945.48) | 3,138,784.31 | 3,191,433,456.39 |
| Total | 2,498,705,510.61 | 771,705,436.37 | (28,120,329.42) | (53,995,945.48) | 3,138,784.31 | 3,191,433,456.39 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
4) Top five debtors based on corresponding closing balance of accounts receivable and contract assets (including
the part included in other non-current assets)At the end of the current period, the aggregate amount of the Group's accounts receivable and contract assets (includingthe part included in other non-current assets) of top five companies amounted to RMB2,211,990,742.07, accounting for
5.26% of the total year-end balance of accounts receivable and contract assets (including the part included in other non-
current assets), and the amount of provision for bad debts was RMB124,365,687.46.
5. Contract Assets
1) Details of contract assets:
Unit: RMBItems
| Closing Balance | Opening Balance |
Carrying amount
Book value Carrying amount
| Provisions for impairment | Provisions for impairment |
Book value
| Constructions | 2,847,993,321.71 | 21,993,021.25 | 2,826,000,300.46 | 4,088,650,761.92 | 26,189,172.06 | 4,062,461,589.86 |
| Maintenance services |
227,366,849.25 1,945,550.21 225,421,299.04 270,901,478.31 1,642,480.80 269,258,997.51
Contractassets that areincluded inother non-current assets
| (Note (V) 22) |
1,893,506,565.03 15,397,380.73 1,878,109,184.30 2,229,022,015.47 15,524,799.08 2,213,497,216.39
| Total | 1,181,853,605.93 | 8,541,190.73 | 1,173,312,415.20 | 2,130,530,224.76 | 12,306,853.78 | 2,118,223,370.98 |
2) The classification and disclosure of the method of provision for impairment of contract assets:
Unit: RMBItems
Closing BalanceCarrying amount Provisions for impairment Book valueAmount
(%)
Amount
| Proportion | Provision |
proportion (%)
AmountProvision for impairment on a single item - - - - -Provision for impairment by portfolio 3,075,360,170.96 100.00 23,938,571.46 0.78 3,051,421,599.50Total 3,075,360,170.96 100.00 23,938,571.46 0.78 3,051,421,599.50
Items
| Opening Balance | ||
| Carrying amount | Provisions for impairment | Book value |
Amount
Amount
| Proportion (%) | Provision proportion (%) |
Amount
| Provision for impairment on a single item | - | - | - | - | - |
| Provision for impairment by portfolio | 4,359,552,240.23 | 100.00 | 27,831,652.86 | 0.64 | 4,331,720,587.37 |
| Total | 4,359,552,240.23 | 100.00 | 27,831,652.86 | 0.64 | 4,331,720,587.37 |
3) Provision for bad debts of contract assets (including the part included in other non-current assets) in the current
period:
Unit: RMBCategory
| Opening balance | Amount of changes changed in the current reporting period | Difference due to foreign | Closing balance |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Provision /Recollect or Reverse
Recover orwrite-off
statement
| translation | |||||
| Contract assets | 27,831,652.86 | (3,893,081.40) | - | - | 23,938,571.46 |
| Total | 27,831,652.86 | (3,893,081.40) | - | - | 23,938,571.46 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
6. Receivables for Financing
1) Receivables for financing by categories
Unit: RMBItem Closing Balance Opening BalanceBank acceptance bill
| 1,594,219,832.62 | 1,484,218,258.74 |
Total
| 1,594,219,832.62 | 1,484,218,258.74 |
2) At the end of the reporting period, the Group’s pledged receivables for financing
Unit: RMBItem Amount pledged as of December 31, 2023Bank acceptance bill
Total
| 42,274,830.03 |
| 42,274,830.03 |
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 31, 2023 |
| Bank acceptance bill | 1,918,451,539.74 |
Total 1,918,451,539.74
4) The Group believes that the acceptance bank's credit rating of the bank acceptance bill held is high, and there is
no significant credit risk, so no loss provision is made.
7. Prepayment
1) Prepayments by aging analysis
Unit: RMBAging
Closing Balance Opening BalanceCarrying amount Proportion (%) Carrying amount Proportion (%)Within 1 year439,229,846.71 86.44467,175,741.37 87.361-2 years
| 54,598,580.98 | 10.74 |
60,041,088.41 11.23
2-3 years
9,132,956.08 1.80
4,732,310.18
0.88
Over 3 years
5,190,022.15 1.02
2,830,980.56
0.53
Total508,151,405.92 100.00
534,780,120.52 100.00
2) Closing balances of top five prepayments parties
As of December 31, 2023, the Group’s top five balances of prepayments amounted to RMB127,482,333.32, accountingfor 25.09% of total closing balance of prepayments.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
8. Other Receivables
1) Other receivables by aging
Unit: RMB
| Aging | Closing balance | Opening balance |
Within contract period 497,347,123.04 435,726,390.34Within 1 year 58,190,602.54 74,536,873.661-2 years20,606,423.68 6,501,889.622-3 years4,357,328.94 5,758,160.623-4 years 3,216,083.19 8,938,449.42Over 4 years 20,110,646.73 15,094,368.40Total 603,828,208.12 546,556,132.06Less: Credit impairment provision31,922,559.19 30,052,646.48
| Carrying amount | 571,905,648.93 | 516,503,485.58 |
2) Other receivables by nature of the payment
Unit: RMBItem Closing Balance Opening BalanceGuarantee deposits 217,477,539.62
262,305,393.59
Repurchase payments for restricted share 169,968,816.44 80,136,229.12
| Temporary payments for receivables | 109,935,025.72 | 73,826,738.90 |
Tax rebates 27,765,998.37 2,166,013.19Others 78,680,827.97 128,121,757.26Total 603,828,208.12 546,556,132.06
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
3) Accrual for bad debts of other receivables
Unit: RMBBad debts allowance
| Stage 1 | Stage 2 | Stage 3 |
TotalExpected credit losses in the
next 12 months
Expected credit loss for the entireduration (credit impairment has not
Expected credit loss for the entireduration (credit impairment has
occurred)Balance on January 1, 2023 2,647,306.22
| incurred) | |
4,248,324.22 23,157,016.04 30,052,646.48
--Transfer into stage 2(353,543.76) 353,543.76 - -
Balance on January 1, 2023In the current reporting period:
-- Transfer into stage 3
- (770,375.76) 770,375.76 -
| -- Transfer into stage 3 |
| --Accrual/(reverse) in the current reporting period |
(742,798.46) 1,878,354.49 318,419.47 1,453,975.50
- - (194,870.21) (194,870.21)Other changes610,807.42 - - 610,807.42Balance on December 31, 20232,161,771.42 5,709,846.71 24,050,941.06 31,922,559.19
4) Provision for bad debts of other receivables :
Unit: RMB
5) Top five debtors based on corresponding closing balance of other receivables
At the end of current period, the aggregate amount of other receivables of the top five debtors of the Group was RMB52,010,738.44, accounting for 8.61% of the total balance of otherreceivables at the end of the year, and the provision for bad debts amounted to RMB170,901.46.
Category Opening balance
Amount of changes in the current reporting period
Difference resulted from foreigncurrency statements conversion
Closing balanceProvision Recollect or reverse Recover write offOther receivables 30,052,646.48 4,492,138.91 (3,038,163.41) (194,870.21) 610,807.42 31,922,559.19Total 30,052,646.48 4,492,138.91 (3,038,163.41) (194,870.21) 610,807.42 31,922,559.19
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
9. Inventories
1) Categories of inventories
Unit: RMBCategory
| Closing Balance | Opening Balance |
Carrying amount
inventories/ Impairment provision
| for contract performance cost |
Book value Carrying amount
inventories/ Impairment provision
| for contract performance cost |
Book valueRaw materials7,912,250,689.30
368,431,917.68
7,543,818,771.62
8,590,579,068.82
405,402,336.01
8,185,176,732.81
| Work-in-progress |
561,630,556.81
-
561,630,556.81
413,355,134.81
-
413,355,134.81
| Finished goods |
11,653,209,829.25
950,498,742.24
10,702,711,087.01
10,955,174,807.28
839,876,008.09
10,115,298,799.19
Contract performance cost409,869,715.64
6,595,745.76 403,273,969.88
290,988,057.76 6,595,745.76 284,392,312.00Total20,536,960,791.00 1,325,526,405.68 19,211,434,385.32 20,250,097,068.67 1,251,874,089.86 18,998,222,978.81
2) Provision for decline in value of inventories
Unit: RMBCategory Opening balance
| The amount accrued in the current reporting period | The amount reversed or resold in the current reporting period | Effect on conversion of financial statements denominated in foreign currencies |
Closing BalanceRaw materials 405,402,336.01 150,471,908.41 187,442,326.74 - 368,431,917.68
Finished goods 839,876,008.09 337,092,072.44 260,187,047.99 33,717,709.70 950,498,742.24
Contract performance cost
| Contract performance cost | 6,595,745.76 | - | - | - | 6,595,745.76 |
| Subtotal | 1,251,874,089.86 | 487,563,980.85 | 447,629,374.73 | 33,717,709.70 | 1,325,526,405.68 |
The write-offs of provision for inventories in the current reporting period are due to use or sale of inventories.
3) Descriptions of the amortization amount of the contract performance cost for the current reporting period
For the contract performance cost recognized as an asset, the Group adopts the same basis as the recognition of revenue related to the asset, and includes it in the profit or loss for thecurrent period when the finished products of the project have been completed,installed and commissioned in accordance with the contract requirements and the acceptance certificate of
the other party has been obtained. The amount included in profit or loss for the current period in 2023 is RMB581,435,596.91.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
10. Non-current Assets Due within One Year
Unit: RMBItem Closing Balance Opening BalanceLong-term receivables due within one year (Note (V) 12) 1,079,721,006.23
996,902,343.27
Total 1,079,721,006.23
996,902,343.27
11. Other Current Assets
Unit: RMBItem Closing balance Opening balanceDeductible VAT input 733,273,484.32 670,250,077.42Prepaid corporate income tax 132,978,082.06 61,808,729.93Prepaid tariff 32,945,213.90 17,113,351.36Others 62,396,836.47 57,660,782.87Total 961,593,616.75 806,832,941.58
Hikvision 2023 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2023 to December 31, 2023
12. Long-term Receivables
1) Details of long-term receivables
Unit: RMBItem
Closing balance Opening balanceCarrying amount
Book value Carrying amount Provision for impairment Book valueFinancial leases receivables 265,985,187.99
| Provision for impairment | |
53,601,885.63
212,383,302.36
294,708,514.70
41,885,999.65
252,822,515.05
| Including: Unrealized income from financing | 7,730,078.24 | - | 7,730,078.24 | 8,548,939.32 | - | 8,548,939.32 |
| Installments business | 1,191,642,272.96 | 235,773,626.86 | 955,868,646.10 | 916,676,013.71 | 125,838,244.59 | 790,837,769.12 |
Including: Unrealized income from financing 26,937,454.05 - 26,937,454.05 32,175,399.92
- 32,175,399.92Employee housing loan 450,167,676.53
- 450,167,676.53
493,890,024.40
- 493,890,024.40Including: Unrealized income from financing42,598,988.47
- 42,598,988.47
44,084,149.81
- 44,084,149.81Subtotal1,907,795,137.48 289,375,512.49 1,618,419,624.99 1,705,274,552.81 167,724,244.24 1,537,550,308.57Less: Non-current assets due within one year (Note (V) 10) 1,367,395,229.26
287,674,223.03
1,079,721,006.23 1,163,050,529.25
166,148,185.98
996,902,343.27
Total 540,399,908.22
1,701,289.46 538,698,618.76
542,224,023.56
1,576,058.26
540,647,965.30
2) Disclosure by method of provision for bad debts
Item
| Closing balance | Opening balance |
Carrying amount
Book value Carrying amount
| Provision for impairment | Provision for impairment |
Book value
1,907,795,137.48 289,375,512.49 1,618,419,624.99 1,705,274,552.81 167,724,244.24 1,537,550,308.57
| Provision for bad debts by portfolio (including the portion due within one year) | ||||||
| Including: portfolio of employees | 450,167,676.53 | - | 450,167,676.53 | 493,890,024.40 | - | 493,890,024.40 |
| Portfolio of financial leasing and installment collection customers |
1,457,627,460.95 289,375,512.49 1,168,251,948.46 1,211,384,528.41 167,724,244.24 1,043,660,284.17
| Total | 1,907,795,137.48 | 289,375,512.49 | 1,618,419,624.99 | 1,705,274,552.81 | 167,724,244.24 | 1,537,550,308.57 |
Portfolio of employeesThe Group believes that the employees corresponding to the long-term receivable employee housing loans held by the Group all have labor relations with the Group and the Groupassesses that the relevant debtors have good credit records, and the Group believes that there is no significant credit risk and therefore loss of provision is made.
Hikvision 2023 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2023 to December 31, 2023
Portfolio of financial leasing and installment collection customers
As of December 31, 2023, the credit risk and expected credit losses of long-term receivables relevant to financial leasing and installment collection customers are as follows:
Unit: RMBAge
Closing balanceAmounts Credit loss provision Estimated average loss rate (%)Within credit period 586,838,996.39 4,056,119.29 0.69Within 1 year after exceeding credit period 223,289,798.92 10,152,377.89 4.551-2 years after exceeding credit period 282,764,655.38 54,045,829.10 19.112-3 years after exceeding credit period 171,566,519.28 67,692,233.18 39.463-4 years after exceeding credit period 126,919,635.75 87,181,097.80 68.69
| Over 4 years after exceeding credit period | 66,247,855.23 | 66,247,855.23 | 100.00 |
Total
| 1,457,627,460.95 | 289,375,512.49 | 19.85 |
3) Provision for bad debts
Unit: RMB
Category Opening balance
Amount of changes in the current reporting period
Difference resulted from foreigncurrency statements conversion
Closing balanceProvision Recollect or reverse write offLong term receivables 167,724,244.24 132,765,741.94 (374,441.79) (10,740,031.90) - 289,375,512.49
Total 167,724,244.24 132,765,741.94 (374,441.79) (10,740,031.90) - 289,375,512.49
Hikvision 2023 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2023 to December 31, 2023
13. Long-term Equity Investment
Unit: RMBThe invested entity
OpeningBalance
Increase/Decrease in the current reporting period
ClosingBalance
Closingbalance
forimpairmentprovisionAdditionalInvestments
Investmentreduction
Investment Profit(Loss) recognizedunder the equityMethod
other
| comprehensive |
income
OtherChangesin equity
Declaration of
cash dividendsor profitdistribution
Impairment
provision
others
| 1. | ||
Joint venture companies
Intelligent Industrial EquityInvestment Fund Partnership
| (L.P.) (Note 1) | 829,825,387.60 |
-
| - | (47,428,857.55) | - | 8,959,723.09 | - | - |
-
| 791,356,253.14 | - |
Zhejiang City DigitalTechnology Ltd.
-
| 26,341,510.80 | - | 3,293,974.81 | - | - | - | - |
-
| 29,635,485.61 | - |
Zhejiang Haishi HuayueDigital Technology Ltd.
-
| 13,382,016.23 | - | 685,265.42 | - | - | - | - |
-
| 14,067,281.65 | - |
Guangxi Haishi UrbanOperation Management Ltd.
| 13,059,993.97 |
-
| - | (609,658.09) | - | - | - | - |
-
| 12,450,335.88 | - | ||
| Xuzhou Kangbo Urban |
Operation Management
| Service Ltd. | 10,385,566.88 |
-
| - | 666,781.48 | - | - | - | - |
-
| 11,052,348.36 | - |
Others
-
| 6,752,804.77 | - | (1,580,417.62) | - | - | - | - |
-
| 5,172,387.15 | - |
Subtotal
-
| 899,747,280.25 | - | (44,972,911.55) | - | 8,959,723.09 | - | - |
-
| 863,734,091.79 | - | |
| 2. | ||
Associated companiesWuhu Sensortech IntelligentTechnology Ltd. (Note 2)
98,094,380.52
-
| - | (4,911,240.97) | - | - | - | - | (93,183,139.55) | - | - |
Beijing Taifang TechnologyCo. Ltd. (Note 1)
39,695,050.60
-
| - | (4,568,631.47) | - | 1,815,791.56 | - | - | - | 36,942,210.69 | - |
Hikvision 2023 Annual ReportNotes to Financial Statements arFor the reporting period from January 1, 2023 to December 31, 2023
The invested entity
OpeningBalance
Increase/Decrease in the current reporting period
ClosingBalance
ClosingbalanceforimpairmentprovisionAdditionalInvestments
Investmentreduction
Investment Profit(Loss) recognized
under the equity
Method
other
| comprehensive |
income
OtherChangesin equity
Declaration of
cash dividendsor profitdistribution
Impairment
provision
others
| Jiaxin Haishi JiaAn Zhicheng |
Technology Ltd.
24,348,699.37
-
| - |
| 4,792,796.03 | - | - | (1,200,000.00) | - | - | 27,941,495.40 | - |
Zhiguang Hailian Big DataTechnology Ltd.
22,425,370.08
-
| - | 820,002.92 | - | - | - | - | - | 23,245,373.00 | - |
Terapark (Nanjing) Ltd.19,603,125.69
-
| - | (1,345,340.17) | - | - | - | - | - | 18,257,785.52 | - |
Others (Note 1)148,119,606.90
-
| - | 20,218,847.36 | - | 12,645,477.19 | - | - | - | 180,983,931.45 | - |
Subtotal352,286,233.16
-
| - | 15,006,433.70 | 14,461,268.75 | (1,200,000.00) | - | (93,183,139.55) | 287,370,796.06 | - |
Total
1,252,033,513.4
-
| - | (29,966,477.85) | - | 23,420,991.84 | (1,200,000.00) | - | (93,183,139.55) | 1,151,104,887.85 | - |
Note 1: Changes in other equities during the reporting period was due to the changes in equity caused by increasing capital of the investee by other shareholders.Note 2:
During the reporting period, the Group acquired control of Wuhu Sensortech Intelligent Technology Ltd., which was included in the scope of the consolidated financial statementsand ceased to account for it as an associate. Please refer to Note (VI)(1) for details.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
14. Other Non-current Financial Assets
Unit: RMBItem Closing balance Opening balanceInvestments in equity instruments (Note) 472,184,937.66 423,893,239.94Total 472,184,937.66 423,893,239.94
Note: It refers to the Group’s equity investments of private companies. The Group has no control, joint control orsignificant influence over the invested companies. During the current reporting period, the Company received a cashdividend of RMB65,923,840.33 from the investees. (2022: RMB51,892,209.92) and recognized it as current profit andloss. Please refer to Note (V) 53 for details.
15. Fixed Assets
1) Details of fixed assets
Unit: RMBItem
| Buildings and constructions | General-purpose equipment | Special-purpose equipment | Transportation vehicles |
Total
| I. Total original carrying amount | |||||
| 1. Opening balance | 7,452,114,917.55 | 1,795,698,464.97 | 2,966,436,208.66 | 101,263,567.44 | 12,315,513,158.62 |
2. Increase in the current
3,261,282,926.30
| reporting period |
296,868,507.94
| 705,001,776.60 |
10,677,104.88
4,273,830,315.72
| 1) purchase |
17,608,212.61
289,377,081.84
| 497,497,368.94 |
8,493,541.10
812,976,204.49
| 2) transferred from construction in progress |
3,243,674,713.69
800,596.85
- 3,375,639,420.04
| 131,164,109.50 | ||||
| 3) Increase due to business combinations |
- 6,690,829.25
| 70,412,972.99 |
2,183,563.78
79,287,366.02
4) transferred from
- -
| inventory | 5,927,325.17 |
- 5,927,325.17
22,462,439.97 50,086,906.77
| 3. Decrease in the current reporting period | 53,392,631.11 |
6,681,905.52
132,623,883.37
| 1) disposal or write-off | 22,462,439.97 | 50,086,906.77 | 53,392,631.11 | 6,681,905.52 | 132,623,883.37 |
| 4. Effect on conversion of |
financial statementsdenominated in foreign
27,309,309.28
| currencies |
20,742,356.01
| 3,090,423.15 |
1,703,795.12 52,845,883.56
| 5. Closing Balance | 10,718,244,713.16 | 2,063,222,422.15 | 3,621,135,777.30 | 106,962,561.92 | 16,509,565,474.53 |
| II. Accumulated depreciation | |||||
| 1. Opening balance | 1,509,685,892.00 | 760,815,155.19 | 1,440,166,642.10 | 65,002,838.65 | 3,775,670,527.94 |
| 2. Increase in the current reporting period |
398,171,850.94
333,081,056.25
13,528,288.35
| 558,126,932.06 |
1,302,908,127.60
| (1) accrual |
398,171,850.94
333,081,056.25
13,528,288.35
| 558,126,932.06 |
1,302,908,127.60
| 3. Decrease in the current reporting period |
10,237,378.36 37,027,365.79
6,032,200.40 92,268,726.42
| 38,971,781.87 | |||||
| (1) disposal or write- off | 10,237,378.36 | 37,027,365.79 | 38,971,781.87 | 6,032,200.40 | 92,268,726.42 |
| 4. Effect on conversion of |
financial statementsdenominated in foreign
2,591,190.18
| currencies |
9,824,041.43
667,378.18 14,953,227.66
| 1,870,617.87 | |||||
| 5. Closing balance | 1,900,211,554.76 | 1,066,692,887.08 | 1,961,192,410.16 | 73,166,304.78 | 5,001,263,156.78 |
| III. Total book value |
| Closing balance on book value | 8,818,033,158.40 | 996,529,535.07 | 1,659,943,367.14 | 33,796,257.14 | 11,508,302,317.75 |
| Opening balance on book value | 5,942,429,025.55 | 1,034,883,309.78 | 1,526,269,566.56 | 36,260,728.79 | 8,539,842,630.68 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
2) As of December 31, 2023, the book value of the special-purpose equipment rent out through operating leasing
by the Group is RMB79,633,944.01.
3) Fixed assets of which certificates of title have not been granted as of December 31, 2023：
Unit: RMBItem
Reason for certificates of title not grantedOffice space for branch offices11,993,190.22In the process of obtaining the real estate certificates
CarryingamountWuhan Intelligence Industrial Park (Phase I)
952,872,640.65
| Wuhan Intelligence Industrial Park (Phase I) | In the process of obtaining the real estate certificates | |
| Shijiazhuang Science and Technology Park Project (Phase I) |
288,123,484.13
| In the process of obtaining the real estate certificates | ||
| Total |
1,252,989,315.00
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
16. Construction in Progress
1) Details of construction in progress
Unit: RMBItem
| Closing balance | Opening balance | |||||
| Carrying amount | Provision | Book value | Carrying amount | Provision | Book value | |
| Xi’an Science and Technology Park Project | 1,189,310,650.73 | - | 1,189,310,650.73 | 510,141,028.55 | - | 510,141,028.55 |
| EZVIZ Intelligent Manufacturing Chongqing Base Project(Infrastructure Part) | ||||||
628,214,692.80 - 628,214,692.80
-
| 72,173,018.20 |
72,173,018.20
276,247,602.73 - 276,247,602.73 122,700,460.71 - 122,700,460.71
| Shijiazhuang Science and Technology Park Project (Phase II) |
| Chongqing Science and Technology Park Project-Phase III |
257,682,402.52 - 257,682,402.52 88,837,517.21 -
88,837,517.21
| Infrared Thermal Imaging Complete Machine Products Industrial Base |
70,932,363.98
- 70,932,363.98
369,535.06
- 369,535.06
| HikRobot Product Industrial Base Construction Project |
61,417,606.81
- 61,417,606.81
375,915.30
- 375,915.30
| HikRobot Intelligent Manufacturing (Tonglu) Base Project |
20,299,490.56 - 20,299,490.56 658,673.77 - 658,673.77
5,671,116.16 - 5,671,116.16 3,972,553.78 - 3,972,553.78
| Wuhan Intelligence Industry Park Project Hangzhou Innovation Industry Park (Phase II) | ||||||
| Chengdu Science and Technology Park Project | - | - | - | 1,424,680,236.64 | - | 1,424,680,236.64 |
| Wuhan Intelligence Industrial Park (Phase I) | - | - | - | 362,495,271.16 | - | 362,495,271.16 |
| Shijiazhuang Science and Technology Park Project (Phase I) |
- - - 118,287,175.20 - 118,287,175.20
- - - 21,838,347.13 - 21,838,347.13
| Hikvision Global Warehousing Logistics Center (Phase I) | ||||||
| Others | 1,797,875,148.17 | - | 1,797,875,148.17 | 1,044,273,568.09 | - | 1,044,273,568.09 |
| Total | 4,307,651,074.46 | - | 4,307,651,074.46 | 3,770,803,300.80 | - | 3,770,803,300.80 |
2) Changes in significant construction in progress during the current reporting period
Unit: RMB
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Item
Budget
(RMB 0,000)
Opening balance
Increase in the current
reporting period
assets during the current
| reporting period |
Closing balance
a proportion of
| budget amount (%) | Construction |
in Progress
Source of funds
| (%) | ||
| Xi’an Science and Technology Park Project |
162,269.00
510,141,028.55 679,169,622.18 - 1,189,310,650.73
73.29% 73.29% Self-financing
ManufacturingChongqing Base Project
| (Infrastructure Part) |
117,011.00 72,173,018.20 556,041,674.60 - 628,214,692.80
53.69% 53.69%
Self-financing/
raised fund
| Shijiazhuang Science and |
Technology Park Project
44,868.00 122,700,460.71 153,547,142.02 - 276,247,602.73
| (Phase II) |
61.57% 61.57% Self-financing
Imaging CompleteMachine Products
| Industrial Base |
82,485.00 369,535.06 70,562,828.92 - 70,932,363.98
8.60% 8.60% Self-financing
| HikRobot Product |
Industrial Base
101,346.00 375,915.30 61,041,691.51 - 61,417,606.81
| Construction Project |
6.06% 6.06% Self-financing
Manufacturing (Tonglu)
| Base Project |
107,105.00 658,673.77 19,640,816.79 - 20,299,490.56
1.90% 1.90% Self-financing
| Wuhan Intelligence |
Industry Park ProjectHangzhou Innovation
154,009.00 3,972,553.78 1,698,562.38 - 5,671,116.16
| Industry Park (Phase II) |
0.37% 0.37% Self-financing
144,925.00 1,424,680,236.64 4,687,853.06 (1,429,368,089.70) -
| Chengdu Science and Technology Park Project |
98.63% 100.00% Self-financing
98,398.00
| Wuhan Intelligence Industrial Park (Phase I) |
362,495,271.16 597,753,883.32 (960,249,154.48) -
97.59% 100.00% Self-financing
| Shijiazhuang Science and |
Technology Park Project
28,813.00
| (Phase I) |
118,287,175.20 169,836,308.93 (288,123,484.13) -
100.00% 100.00% Self-financing
| Hikvision Global |
Warehousing Logistics
10,846.00 21,838,347.13 84,761,013.93 (106,599,361.06) -
| Center (Phase I) |
98.28% 100.00% Self-financing
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
17. Right-of-use Assets
Unit: RMB
Items
Building andconstruction
General-purpose
equipment
Special-purposeequipment
Transportationvehicles
TotalI.
Total original carrying amount
1. Opening balance
861,163,145.37 298,882.81
91,934,144.20
24,869,131.92
978,265,304.30
2. Increased
229,123,382.15
10,324,662.94
25,866,583.99
2,782,146.50
268,096,775.58
(1) New Lease
224,832,007.58
10,324,662.94
25,866,583.99
2,782,146.50
263,805,401.01
(2) Increase due to business
combination
4,291,374.57 - - - 4,291,374.57
3. Decreased
179,680,168.92 - - 5,137,402.08 184,817,571.00
(1) The lease contract
expires or terminates early
179,680,168.92 - - 5,137,402.08 184,817,571.00
4. Effect on conversion of
financial statements denominatedin foreign currencies
12,632,916.21
807,872.37
- 1,304,255.96
14,745,044.54
5. Closing balance
923,239,274.81
11,431,418.12
117,800,728.19
23,818,132.30
1,076,289,553.42
II. Accumulated depreciation
1. Opening balance
309,924,850.37 226,559.76
82,732,047.46
10,903,520.40
403,786,977.99
| 2. Increased |
302,131,960.00
70,935.87
7,264,590.65
7,298,295.74
316,765,782.26
(1) Provisions
302,131,960.00
70,935.87
7,264,590.65
7,298,295.74
316,765,782.26
3. Decreased
167,472,776.16
- -
4,909,882.86
172,382,659.02
| (1) The lease contract |
expires or terminates early
167,472,776.16
- - 4,909,882.86
172,382,659.02
4. Effect on conversion of
financial statements denominatedin foreign currencies
6,396,667.01
2,819.46
- 658,569.06
7,058,055.53
450,980,701.22
| 5. Closing balance |
300,315.09
89,996,638.11
13,950,502.34
555,228,156.76
III. Total book value
1. Closing balance on book value
472,258,573.59
11,131,103.03
27,804,090.08
9,867,629.96
521,061,396.66
2. Opening balance on book value
551,238,295.00
72,323.05
9,202,096.74
13,965,611.52
574,478,326.31
18. Intangible Assets
1) Details of construction in progress
Unit: RMBItem Land use right
Intellectual propertyright
Application Software Franchise TotalI.
| Intellectual property right | ||
Total original carrying
| amount |
1. Opening balance
70,012,763.87
| 1,582,307,939.63 | 397,648,996.73 | 103,241,971.57 |
2,153,211,671.80
2. Increased
204,053,373.52
| 133,103,621.97 |
| 20,394,567.15 | 7,025,910.47 |
364,577,473.11
(1) Purchase
| 133,103,621.97 |
653,373.52
| 16,673,506.15 | 7,025,910.47 |
157,456,412.11
| (2) Increase due to business combination | - |
203,400,000.00
| 3,721,061.00 | - |
207,121,061.00
3. Decreased
| - |
13,972.73
| 3,227,312.38 | - |
3,241,285.11
(1)Disposal or write-off
| - |
13,972.73
| 3,227,312.38 | - |
3,241,285.11
| 4. Effect on conversion of |
financial statementsdenominated in foreign
| currencies | - |
102,207.17
| 1,865,009.42 |
1,945,062.30
| (22,154.29) |
5. Closing balance
274,154,371.83
| 1,715,411,561.60 | 416,681,260.92 | 110,245,727.75 |
2,516,492,922.10
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Item Land use right
Application Software Franchise TotalII. Total accumulated
| Intellectual property right | ||
| amortization |
1. Opening balance
68,378,497.22
| 135,271,377.29 | 342,499,507.53 | 20,094,724.08 |
566,244,106.12
2. Increased
30,023,838.10
| 35,098,426.85 |
| 29,175,003.52 | 4,627,368.42 |
98,924,636.89
(1)Accrual
| 35,098,426.85 |
30,023,838.10
| 29,175,003.52 |
98,924,636.89
| 4,627,368.42 |
3. Decreased
3,027.46
| - | 3,133,019.98 | - |
3,136,047.44
(1)Disposal or write-off
| - |
3,027.46
| 3,133,019.98 | - |
3,136,047.44
| 4. Effect on conversion of |
financial statementsdenominated in foreign
| currencies | - |
91,869.03
| 1,873,106.67 |
1,949,611.59
| (15,364.11) |
5. Closing balance
98,491,176.89
| 170,369,804.14 | 370,414,597.74 | 24,706,728.39 |
663,982,307.16
III. loss provision
1. Opening balance
-
| - | - | 42,034,063.49 |
42,034,063.49
2. Closing balance
-
| - | - | 42,034,063.49 |
42,034,063.49
Ⅳ. Total book value
1. Closing balance on book
| value | 1,545,041,757.46 |
175,663,194.94
| 46,266,663.18 | 43,504,935.87 |
1,810,476,551.45
2. Opening balance on
| book value | 1,447,036,562.34 |
1,634,266.65
| 55,149,489.20 | 41,113,184.00 |
1,544,933,502.19
2) At the end of the current reporting period, the land use right of the Group that has not completed the title
certificate is nil.
19. Goodwill
1) Goodwill book value
Unit: RMBThe name of the investee or the matter
that forming a goodwill
Openingbalance
Increased Decreased
conversion of
financialstatementsdenominated in
foreign
| currencies |
Closing balance
not involvingenterprises undercommon control
Liquidation &
cancellation
| Business combination | ||
| Wuhu Sensortech Intelligent |
Technology Ltd. and its subsidiaries(hereinafter referred to as the
- 92,088,117.87 - - 92,088,117.87
| "Sensortech") (Note (VI), 1) |
| SISTEMAS Y SERVICIOS DE COMUNICACI?N, S.A. DE C.V. |
79,881,823.62 - - 1,354,570.74 81,236,394.36
61,322,871.63 - - - 61,322,871.63
| Henan HuaAn Baoquan Intelligence development Ltd. and its subsidiaries | |||||
| Hangzhou Kuangxin Technology Ltd. | 59,060,454.06 | - | - | - | 59,060,454.06 |
| Zhejiang Zhiyuan Fire Safety Engineering Ltd. |
8,199,253.77 - - - 8,199,253.77
| BK EESTI AKTSIASELTS | 4,464,161.60 | - | - | 262,392.56 | 4,726,554.16 |
| SIA "BK Latvia" | 4,457,966.60 | - | - | 262,028.43 | 4,719,995.03 |
| Total | 217,386,531.28 | 92,088,117.87 | - | 1,878,991.73 | 311,353,640.88 |
2) Information about the asset group or asset group combination to which the goodwill belongs
Name
| The composition and basis of the asset group or portfolio to which it belongs | Whether it is consistent with previous years | |
| Sensortech | Not Applicable |
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
The portfolio of the assets generates cash inflowsindependently.
Yes
| SISTEMAS Y SERVICIOS DE COMUNICACI?N, S.A. DE C.V. | ||
| Henan HuaAn Baoquan Intelligence development Ltd. and its subsidiaries | Yes | |
| Hangzhou Kuangxin Technology Ltd. | Yes | |
| Zhejiang Zhiyuan Fire Safety Engineering Ltd. | Yes | |
| BK EESTI AKTSIASELTS | Yes | |
| SIA "BK Latvia" | Yes |
3) 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 portfolios containing apportioned goodwill is determined according to the presentvalue of the estimated future cash flow of the relevant asset group portfolios. The forecast period for future cash flows is5 years.The projection of future cash flows is based on management's estimate of sales revenue, cost of sales and operatingexpenses for the expected period based on past performance and expectations of market developments. The cash flowgrowth rate over 5 years is 0-2%..
During the reporting period, the Group did not find that the recoverable amount of therelevant asset group portfolios
including the apportioned goodwill was lower than its book value, so it is considered that there is no need to accrueimpairment loss for goodwill.
20. Long-term Deferred Expenses
Unit: RMBInvested unit
OpeningBalance
Increased
Increased due
to businesscombination
Amortized
Otherdecreased
amount
Difference of
foreigncurrencytranslation
ClosingbalanceImprovement
fixed asset
133,193,592.60 67,697,478.05
| expenditure for leased | 2,215,794.17 |
69,681,091.67 - 1,336,772.31 134,762,545.46
Employee housingloan deferred interest
44,084,149.81 13,639,910.90
14,463,336.10 661,736.14 - 42,598,988.47
Total177,277,742.41 81,337,388.95
| - |
| 2,215,794.17 |
84,144,427.77 661,736.14 1,336,772.31 177,361,533.93
21. Deferred Tax Assets/Deferred Tax Liabilities
1) Deferred tax assets that are not presented on net off basis
Unit: RMBItem
| Closing balance | Opening balance (Restated) | |
| Deductible temporary differences | ||
Deferred tax assets
Deferred tax assets
| Deductible temporary differences | ||
| Provision for impairment losses of assets |
1,127,769,340.63 278,268,231.18 1,244,117,898.85 303,398,701.08
| Provision for credit loss | 3,364,947,416.28 | 704,178,085.23 | 2,592,933,147.29 | 539,409,348.22 |
| Share-based payments | 93,168,926.31 | 16,404,683.77 | 102,865,533.19 | 18,154,808.30 |
| Provisions | 135,644,054.99 | 24,189,557.95 | 159,335,457.04 | 26,406,150.70 |
| Accrued but unsettled liabilities |
2,515,576,691.84 426,431,441.31 1,283,025,501.82 216,296,041.04
2,578,365,430.99 367,414,352.61 2,407,578,813.30 361,136,821.99
| Unrealized profit from inter-group transactions | ||||
| Changes in the fair value of | 38,079,755.04 | 9,519,938.76 | 68,299,685.57 | 17,074,921.39 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Item
| Closing balance | Opening balance (Restated) | |
| Deductible temporary differences | ||
Deferred tax assets
Deferred tax assets
| Deductible temporary differences | ||||
| derivative financial instruments | ||||
| Deferred income | 940,537,242.40 | 127,045,105.84 | 913,846,162.56 | 108,383,170.93 |
| Changes in fair value of |
other non-current financial
32,396,750.76 4,859,512.61 32,701,261.48 4,905,189.22
| assets |
| Difference in depreciation of |
fixed assets and differencein amortization of intangible
199,086,488.75 32,012,352.33 305,795,669.55 13,305,393.19
| assets | ||||
| Tax deductible losses | 1,205,938,357.65 | 184,742,525.11 | 294,467,968.83 | 39,179,829.21 |
| Lease liabilities | 517,071,628.81 | 81,703,353.99 | 566,315,667.05 | 82,917,594.29 |
| Others | 79,735,281.12 | 23,121,972.50 | - | - |
| Total | 12,828,317,365.57 | 2,279,891,113.19 | 9,971,282,766.53 | 1,730,567,969.56 |
2) Deferred tax liabilities that are not presented on net off basis
Unit: RMBItem
| Closing balance | Opening balance (Restated) | |
| Taxable temporary differences | ||
Deferred tax liabilities
Deferred tax liabilities
| Taxable temporary differences | ||
| Difference in depreciation of |
fixed assets and difference inamortization of intangible
1,446,155,125.82 257,662,359.02 1,439,877,224.17 256,804,768.33
| assets |
| Long term investment – |
partnership accounted by the
191,356,253.14
| equity method |
28,703,437.97 230,000,194.33 34,500,029.15
derivative financial
| instruments |
37,380.00 9,345.00 12,807,438.36 3,201,859.59
other non-current financial
| assets |
19,420,700.00 4,855,175.00 - -Right-of-use assets521,061,396.6680,828,988.24 574,478,326.31 81,343,210.21
assets of businesscombinations not under
| common control |
174,342,857.16 43,585,714.29 - -Others47,107,004.4515,740,059.70 - -
Total 2,399,480,717.23 431,385,079.22 2,257,163,183.17 375,849,867.28
3) Deferred tax assets or deferred tax liabilities that are presented at the net amount after offset
Unit: RMBItem
| Closing balance | Opening balance (Restated) |
Offset amount at the end
of the reporting period
Deferred tax assets or
liabilities at the netamount after offset
beginning of the
| reporting period | Deferred tax assets or |
liabilities at the net
| amount after offset | ||
| Deferred tax assets |
301,518,101.04 1,978,373,012.15 259,370,391.30 1,471,197,578.26
301,518,101.04 129,866,978.18 259,370,391.30 116,479,475.98
4) Details of unrecognized deferred tax assets
Unit: RMB
Deferred tax liabilitiesItem
| Item | Closing balance | Opening balance |
Deductible temporary differences
| 342,665,221.23 | 896,347,987.05 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Deductible loss3,281,013,576.44 2,279,586,556.97Total3,623,678,797.67 3,175,934,544.02
5) Deductible losses for unrecognized deferred tax assets will expire in the following years
Unit: RMB
| Year | Closing balance | Opening balance |
2023- 23,615,749.832024
| 15,999,871.35 | 31,698,815.96 |
20256,519,258.67 16,588,829.27202624,119,133.46 49,208,121.54202738,699,273.23 99,525,057.16
2028 and beyond3,195,676,039.73 2,058,949,983.21
Total
| 3,281,013,576.44 | 2,279,586,556.97 |
22. Other Non-current Assets
Unit: RMBItem
| Closing balance | Opening balance | ||||
| Carrying amount | Provision | Book value | Carrying amount | Provision | Book value |
Contract assets 1,893,506,565.03 15,397,380.73 1,878,109,184.30 2,229,022,015.47 15,524,799.08 2,213,497,216.39
962,718,172.95 - 962,718,172.95 363,341,827.45 - 363,341,827.45
| Prepayments for real estate |
| Prepayments for |
acquisition of
1,049,973.59 - 1,049,973.59 127,079,348.02 - 127,079,348.02
| land |
| Prepayments for equipment |
68,421,659.50 - 68,421,659.50 70,134,950.70 - 70,134,950.70
8,032,635.16 - 8,032,635.16 39,467,612.18 - 39,467,612.18Others2,017,718.89 - 2,017,718.89 2,181,057.96 - 2,181,057.96Total2,935,746,725.12 15,397,380.73 2,920,349,344.39 2,831,226,811.78 15,524,799.08 2,815,702,012.70
23. Assets with Restriction in Ownership or Use Rights
Unit: RMBItem Book value at the end of the current reporting period Cause of restrictionCash and bank balances
210,191,306.76 Various guarantee deposits and other restricted fundsNotes receivable 1,172,749,062.48
Prepayments forinfrastructureEndorsed to the supplier, discounted to the bank, andpledged for issuing bank acceptance bills
Receivables for financing42,274,830.03Pledged for issuing bank acceptance billsAccounts receivable 320,648,995.89 Pledged for long-term borrowingsContract assets 129,223,004.39 Pledged for long-term borrowingsFixed assets79,633,944.01Fixed assets leased out under operating leasesIntangible assets 37,374,930.65 Pledged and mortgage for long-term borrowingsOther non-current assets 1,500,999,221.99 Pledge for long-term borrowingsTotal3,493,095,296.20
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Item
Cause of restrictionCash and bank balances
196,473,485.37 Various guarantee deposits and other restricted fundsNotes receivable1,241,880,022.19
Book value at the beginning of the current reporting
periodEndorsed to the supplier, discounted to the bank, andpledged for issuing bank acceptance bills
Receivables for financing 10,312.23 Pledged for issuing bank acceptance billsAccounts receivable344,585,345.01Pledged for long-term borrowingsContract assets 120,072,855.46 Pledged for long-term borrowingsFixed assets 81,627,645.88 Fixed assets leased out under operating leasesIntangible assets39,314,886.51Pledged and mortgage for long-term borrowingsOther non-current assets 1,607,546,382.61 Pledge for long-term debtsTotal 3,631,510,935.26
24. Short-term Borrowings
1) Categories of short-term borrowings
Unit: RMB
Endorsed to the supplier, discounted to the bank, andpledged for issuing bank acceptance billsItem
| Item | Closing balance | Opening balance |
| Credit loan | 2,084,385,782.09 | 3,283,605,167.90 |
| Discounted but not expired notes | 34,566,243.97 | 59,466,804.99 |
| Total | 2,118,952,026.06 | 3,343,071,972.89 |
2) As of December 31, 2023, the Group did not have any overdue short-term loans that were failed to repay.
25. Held-for-trading Financial Liabilities
Unit: RMB
| Item | Closing balance | Opening balance |
Derivative financial liabilities 38,079,755.04 68,299,685.57total38,079,755.04 68,299,685.57
As of December 31, 2023, derivative financial liabilities are forward foreign exchange contracts, which are not designatedas hedging instruments, measured at fair value and their changes are recognized in profit and loss for the current period.
26. Notes Payable
List of accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
Bank acceptance bill1,163,687,279.58 1,207,756,963.94Total 1,163,687,279.58 1,207,756,963.94
As of December 31, 2023, the Group did not have any unpaid matured notes payable.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
27. Accounts Payable
1) List of accounts payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Payments for goods | 18,669,058,955.74 | 15,803,616,247.96 |
| Payables on project equipment |
494,426,932.35 221,947,555.03
19,163,485,888.09 16,025,563,802.99
2) As of December 31, 2023, the Group did not have any significant accounts payable with aging above one year.
28. Contract Liabilities
1) List of contract liabilities
Unit: RMB
Total
Item
| Item | Closing balance | Opening balance |
| Advanced receipts from product sales | 2,411,948,613.09 | 2,177,001,350.72 |
| Advanced receipts from construction settlement payment | 267,231,078.24 | 216,246,689.72 |
| Advanced receipts from other services payment | 328,951,851.34 | 276,187,505.46 |
| Subtotal | 3,008,131,542.67 | 2,669,435,545.90 |
| Less |
：
30,140,767.27 24,939,037.54
| Contract liabilities included in other non-current liabilities (Note (V), 39) | ||
| Total | 2,977,990,775.40 | 2,644,496,508.36 |
2) Qualitative and Quantitative Analysis on the Above Contract Liabilities:
Advanced receipts from product sales are prepayments for goods by customers and sales rebates provided to distributors.Revenue will be recognized when the goods are shipped to or delivered to the customer, and sales rebates provided toresellers will be recognized when resellers use sales rebates to offset the price.
Advanced receipts from construction settlement payment are the part of the contract price received or receivable from thecustomer for the construction project according to the contract according to the contract provisions in excess of thecumulative completed performance obligations, and the revenue will be recognized according to the performance progressduring the contract period.
Advanced receipts from other services payment are the cloud service fees paid in advance by some customers and the partof the contract price received or receivable from customers for operation and maintenance according to the contractprovisions that exceeds the cumulative completed performance obligations, and the revenue will be recognized accordingto the performance progress during the service period.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
3) The carrying amount of contract liabilities amounted to RMB2,644,496,508.36 at the beginning of the period
has been recognized as revenue during the current period, and it is expected that RMB24,939,037.54 will berecognized as revenue in 2024 and beyond. The carrying amount of contract liabilities amountedRMB2,977,990,775.40 at the end of the period will be recognized as revenue in the coming year, and it isexpected that RMB30,140,767.27 will be recognized as revenue in 2025 and beyond.
29. Payroll Payable
1) Details of payroll payable
Unit: RMBItem Opening balance
current reporting
| period | Decrease in the |
current reporting
Closing balance
1. Short-term remuneration 4,709,892,590.60
| period | ||
18,001,049,804.45 16,679,876,818.99
6,031,065,576.06
| 2. Termination benefits – defined contribution scheme |
127,409,865.35 1,192,491,826.12
1,230,712,775.25 89,188,916.22Total4,837,302,455.95 19,193,541,630.57 17,910,589,594.24
6,120,254,492.28
2) List of Short-term remuneration
Unit: RMBItem Opening balance
Increase in the current
reporting period
| Increase in the current reporting period | Decrease in the current reporting period |
Closing balance
bonuses, allowances and
| subsidies |
4,364,544,911.02
15,583,272,827.79
14,384,319,619.39 5,563,498,119.42
2. Staff welfare -
388,419,203.15
387,806,211.19
612,991.96
| 3. Social insurance contributions |
67,666,467.66 667,823,973.44
696,729,006.77
38,761,434.33
| Including: Medical insurance |
64,600,517.79 637,023,906.26
664,815,124.67
36,809,299.38
Injury insurance2,577,031.7024,539,736.41
25,372,514.43
1,744,253.68
Maternity insurance488,918.176,260,330.77
6,541,367.67
207,881.27
4. Housing funds 3,892,614.17
1,072,855,370.62
1,076,747,984.79
-
| 5. Labor union and education fund |
273,788,597.75
288,678,429.45
134,273,996.85 428,193,030.35
Subtotal 4,709,892,590.60
18,001,049,804.45 16,679,876,818.99
6,031,065,576.06
3) List of defined contribution plan
Unit: RMBItem Opening balance
| Increase in the current period | Decrease in the current period |
Closing balance
1. Basic pension insurance
125,140,923.681,148,680,658.64
1,186,545,710.54 87,275,871.78
2. Unemployment insurance
2,268,941.6743,811,167.48
44,167,064.71 1,913,044.44
Subtotal 127,409,865.35
1,192,491,826.12
1,230,712,775.25 89,188,916.22
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.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
In 2023, the Group shall pay RMB1,148,680,658.64 and RMB43,811,167.48 to the pension insurance plan andunemployment insurance plan respectively (2022: RMB1,079,281,000.54 and RMB40,304,044.61). As of December 31,2023, the Group had fees payables of RMB87,275,871.78 and RMB1,913,044.44 (December 31, 2022:
RMB125,140,923.68 and RMB2,268,941.67), which were due but not paid during the reporting period for pension andunemployment insurance plans.
30. Taxes Payable
Unit: RMB
| Item | Closing balance | Opening balance |
| Corporate income tax |
990,162,395.70 648,624,680.00Value-added tax476,076,769.76 380,413,435.90City construction and maintenance tax 28,555,595.11 29,362,098.03Education surcharges 11,969,432.94 13,048,855.45Local education surcharges 8,314,407.76 9,328,597.02Others107,322,613.69 153,254,471.97Total1,622,401,214.96 1,234,032,138.37
31. Other Payables
1) Categories
Unit: RMBItem Closing balance Opening balanceDividend payable 253,957,413.29 300,150,894.34Other payables 3,657,655,427.77 2,903,157,791.97Total 3,911,612,841.06 3,203,308,686.31
2) Dividends payable
Unit: RMBItem Closing balance Opening balanceDividends of incentive restricted shares 155,844,168.00 187,657,918.50Dividends payable to minority shareholders 98,113,245.29 112,492,975.84Total253,957,413.29 300,150,894.34
3) Other payables
(1) List of other payables according to the nature of the payment
Unit: RMBItem Closing balance Opening balance
1,123,427,383.57 1,182,413,217.20Accrued expenses 1,682,496,005.40 988,937,734.54Guarantee and deposit fees 445,461,469.36 401,628,843.74Collection and payment on behalf 294,323,679.79 236,839,241.37Other expense payable 111,946,889.65 93,338,755.12Total 3,657,655,427.77 2,903,157,791.97
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
(2) As of December 31, 2023, the Group did not have any significant other payables aging over one year.
32. Non-current Liabilities Due within One Year
Unit：RMB
Item Closing balance Opening balanceLong-term borrowings due within one year (Note (V) 34) 5,627,525,836.16 562,906,197.43Lease liabilities due within one year (Note (V), 35) 184,722,447.43 303,328,658.06Long-term payables due within one year (Note (V) 36) 2,411,931.37 1,962,416.97Total 5,814,660,214.96 868,197,272.46
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
33. Other Current Liabilities
Unit: RMB
Item Closing balance Opening balanceSubscription payment of restricted shares 1,095,194,890.62 465,979,374.84Output VAT to be transferred386,027,153.57 457,742,218.94
| Total | 1,481,222,044.19 | 923,721,593.78 |
34. Long-term Borrowings
Unit: RMB
Item Closing balance Opening balancePledged loan (Note 1) 1,259,495,605.29 1,363,216,974.37Mortgage loan (Note 2) 320,694,296.02 229,070,200.25
| Credit loan (Note 3) | 12,959,458,895.86 | 6,315,934,364.41 |
| Other borrowing (Note 4) | 28,000,000.00 | 177,000,000.00 |
| Less |
：
| Long-term loans due within one year (Note (V) 33) | 5,627,525,836.16 | 562,906,197.43 |
| Total | 8,940,122,961.01 | 7,522,315,341.60 |
Note 1: As of December 31, 2023, the pledged loan was mainly obtained by the Group with all the rights and benefitspledged under relevant PPP Projects. The maturity period is from June 20, 2028 to March 26, 2040, the above annualinterest rate of the loan is variable interest rate, ranging from 3.795% to 4.90%.
Note 2: As of December 31, 2023, the mortgage loan was obtained by the Group with the use right of land as the mortgage.The maturity date is on August, 13, 2026 with the annual interest rate of 1-year LPR rate, which is adjusted each 12 months.
Note 3: At the end of the reporting period, the maturity period of credit loan is from June 27, 2024 to December 1, 2027,and the annual interest rate ranges from 1.75% to 3.70%
Note 4: During 2016, the Group and CDB Development Fund Ltd. (CDBDF) jointly injected capital into HikvisionElectronics Co., Ltd. ("Hangzhou Electronics"), a subsidiary of the Group. Pursuant to the capital injection agreement,CDBDF would not participate in senior management personnel such as directors, and it would either take part in decision-making or make significant influence on Hangzhou Electronics. The Group shall pay a 1.2% annualized return to CDBDFthrough dividends or interest payments, and the Group is required to redeem its equity holdings from CDBDF ininstallments each year from 2021 to 2024. Therefore, the capital injection by CDBDF is treated as a long-term loan. Asthe end of the reporting period, the cumulative amount of equity held by the Group in Hangzhou Electronics held by theGroup from CDBDF is RMB149 million, and the balance of the loan is 28 million (December 31, 2022: RMB 177 million).
35. Lease Liabilities
Unit: RMB
Item Closing balance Opening balanceLease liabilities 528,728,313.56 580,584,582.89Less ：Lease liabilities due within one year (Note (V), 32)184,722,447.43
303,328,658.06
| Total | 344,005,866.13 | 277,255,924.83 |
The Group's lease liabilities are analysed according to the maturity period of the remaining undiscounted contractualobligations as follows:
Unit: RMB
Item Closing balance Opening balance
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Within 1 year 197,066,597.67 329,108,201.981- 5 years 324,095,420.30 232,457,044.47Over 5 years 41,329,449.20 56,490,511.25Total 562,491,467.17 618,055,757.70
36. Long-term Payables
Unit: RMBItem Closing balance Opening balancePurchase goods in installments 8,188,531.22 9,532,351.64
2,411,931.37 1,962,416.97Total5,776,599.85 7,569,934.67
37. Provisions
Unit: RMBItem Closing balance Opening balanceProduct quality warranty197,386,826.08 205,095,341.94Return payment payable15,697,212.23 14,269,885.68Total 213,084,038.31 219,365,227.62
38. Deferred Income
Unit: RMBItem Opening balance
Less: Long-term payables due within one year (Note(V), 32)
Increase in current
reporting period
| Increase in current reporting period | Decrease in current reporting period |
Other changes Closing balance
933,260,426.12 267,425,591.35 263,561,416.75 29,134,991.62 966,259,592.34Total933,260,426.12 267,425,591.35 263,561,416.75 29,134,991.62966,259,592.34
39. Other Non-current Liabilities
Unit: RMBItem Closing balance Opening balanceSubscription for restricted stocks 1,642,792,335.93 2,806,169,050.05Contract liabilities (Note (V), 28) 30,140,767.27 24,939,037.54
Government Subsidies(Note (VIII), 1)
Total
| Total | 1,672,933,103.20 | 2,831,108,087.59 |
40. Share Capital
Unit: RMB
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Opening balance
Changes for the current reporting period
Closing balanceNew issue ofshares
usissue
| Bon | Transfer |
fromCapitalReserve
Others Subtotal
| Total shares | 9,430,920,624.00 |
| - | - |
| (100,319,693.00) | (100,319,693.00) | 9,330,600,931.00 |
Note: According to the Proposal on the Unfulfilled Unlocking Conditions for the Third Unlocking Period of the 2018Restricted Share Plan and the Repurchase of Restricted Shares Granted but Not Unlocked that is reviewed and approvedby the 17
th
meeting of the 5
th session of the Board of Directors, the 15
th
meeting of the 5
th
session of the Board ofSupervisors and 2022 Annual General Meeting, as the Company performance did not meet the unlocking conditions forthe third unlocking period of the 2018 Restricted Stock Plan (Revised Draft), 33,331,858 restricted shares granted but notunlocked in the current period for all grantees of the 2018 Restricted Stock Plan were agreed to be repurchased andcancelled. In 2023, the Company reduced its share capital by RMB33,331,858.00 and its capital reserve byRMB532,643,090.84. The Company completed the deregistration on July 5, 2023.
According to the resolutions of the 13
th
meeting of the 5
th
session of the Board of Directors of the Company and the secondExtraordinary General Meeting of shareholders in 2022 and the revised Articles of Association, the Company hasrepurchased a total of 66,987,835 outstanding shares of the Company through a centralized bidding transaction through aspecial securities account for share repurchase, reducing the share capital by RMB66,987,835.00 and the capital reserveby RMB1,976,897,390.35. The company completed the deregistration on January 13, 2023.
41. Capital Reserves
Unit: RMBItem Opening balance
reporting period
| (Note 1) | Decrease in the current |
reporting period
Closing balance
| (Note 2) | ||
| Share capital premium |
9,289,814,942.29
| 226,657,083.90 | 2,527,333,896.79 |
6,989,138,129.40
| Other capital reserves |
851,338,493.03
190,086,646.32
| 165,659,505.23 | 875,765,634.12 |
Total 10,141,153,435.32
| 416,743,730.22 | 2,692,993,402.02 |
7,864,903,763.52
Note 1: The increase of RMB165,659,505.23 in the share capital premium in the current period was due to the transfer ofother capital reserves to share capital premiums due to the exercise of equity-settled share-based payments.
The increase of RMB6,300,234.59 in share capital premium in the current period was due to the transfer of an assetportfolio of business held by the Company to its subsidiary, Micro Sensing.
During the current period, Hikrobot, a subsidiary of the Group, received a subsidy of RMB5,000,000.00 for the robotR&D and industrialization project from the parent company of the Company, CETHIK Group Co., Ltd. (hereinafterreferred to as " CETHIK"), increasing the Group's share capital premium by RMB3,000,000.00 and minority interests ofRMB2,000,000.00. Please refer to Note (XI), 5(4) for details.
The increase of RMB1,067,943.25 in the share capital premium in the current period was the portion of the equity-settledshare-based payment to be shared by minority shareholders during the current period.
The increase of RMB50,629,400.83 in share capital premium in the current period was due to the Group's additionalinvestments in Shijiazhuang Sensortech Intelligent Technology Co., Ltd. (hereinafter referred to as "ShijiazhuangSensortech"), a subsidiary of the Group, by using equities held by the Group of Hangzhou Hikauto Technology Co., Ltd.(hereinafter referred to as "Auto Technology") and its subsidiaries and Sensortech, Please refer to Note (VII), 2.
The increase in other capital reserves in the current reporting period of RMB168,614,816.28 is due to the equity-settledshare-based payment; RMB21,471,830.04 was due to changes in other equity of the investees in the long-term equityinvestments accounted for by the equity method. ..
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Note 2: The decrease of RMB1,976,897,390.35 in share capital premium in the current reporting period was due to therepurchase and cancellation of 66,987,835 outstanding shares by the Company; RMB532,643,090.84 was due to therepurchase and cancellation of 33,331,858 restricted shares by the Company. Please refer to Note (V), 40 for details.RMB17,793,415.60 was due to the change in the Group's shareholding ratio in Hangzhou Kuangxin, a subsidiary, from80% to 100.00%, as detailed in Note (VII), 2.
42. Treasury Shares
Unit: RMBItem Opening Balance
| Increase in the current reporting period | Decrease in the current reporting period |
Closing balance
3,272,148,424.89 - 534,161,198.34 2,737,987,226.55
| Restricted shares incentive scheme | ||||
| Outstanding shares | 2,043,885,225.35 | - | 2,043,885,225.35 | - |
| Total | 5,316,033,650.24 | - | 2,578,046,423.69 | 2,737,987,226.55 |
Note: Among the decrease in treasury shares during the current reporting period, the Company reduced treasury shares byRMB2,043,885,225.35 due to the repurchase and cancellation of 66,987,835 outstanding shares, and the total decrease intreasury shares by RMB534,161,198.34 due to the provision of cash dividends on restricted stocks, the repurchase andcancellation of 33,331,858 shares of restricted shares of restricted shares under the 2018 equity incentive plan and thereversal of the corresponding cash dividends of restricted stocks. For details, see Note (V), 40.
.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
43. Other Comprehensive Income
Unit: RMB
Item
Openingbalance
Closing balance
| Amounts occurred in the current reporting period | |
The before-income-taxamountincurredduring thecurrentreportingperiod
transfer tocurrentperiod P/Lfromprevious
othercomprehens
| ive income |
Less:
income
taxexpense
Attributable to
the parentcompany (after
tax)
Attributable to
minorityshareholders
(after tax)
that may bereclassifiedsubsequently to
| profit or loss |
(42,587,158.81)
| 183,798,707.05 |
-
-
87,254,674.97
96,544,032.08
44,667,516.16
| Including: Effect |
on conversion offinancialstatementsdenominated in
(42,587,158.81)
| foreign currencies | 183,798,707.05 |
-
-
87,254,674.97
96,544,032.08
44,667,516.16
| Other |
comprehensive
(42,587,158.81)
| income | 183,798,707.05 |
-
-
87,254,674.97
96,544,032.08
44,667,516.16
.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
44. Surplus Reserves
Unit: RMBItemOpening balance
Increase in thecurrentreporting
| period | Decrease in the |
currentreporting
Closing balanceStatutory surplus reserves 4,715,460,312.00 - - 4,715,460,312.00Total 4,715,460,312.00 - - 4,715,460,312.00
Note: According to the Company Law of the People's Republic of China and the Articles of Association of the Company, The Company shallwithdraw the statutory surplus reserve fund at 10% of the annual net profit of the parent company, and when the accumulated amount of thestatutory surplus reserve fund reaches more than 50% of the registered capital, it may not be withdrawn. The statutory surplus reserve can beused to make up for losses or increase the share capital after approval.
45. Retained Earnings
Unit: RMB
periodItem
| Item | 2023 | 2022 (Restated |
）
| Retained Earnings at the close of the prior reporting period before adjustments |
49,460,240,986.49 45,148,877,451.52
182,975.56 (179,425.86)
| Adjustments on retained earnings at the open of the current reporting period |
| Retained Earnings at the close of current he reporting period after adjustments |
49,460,423,962.05 45,148,698,025.66
14,107,621,359.66
| Add: Net profit attributable to the parent company for the reporting period |
12,837,704,462.49Less: withdraws on the statutory surplus reserve - 42,954,964.00Dividends payable on common shares (Note) 6,431,425,077.70 8,483,023,562.10Retained earnings at the end of the current reporting period 57,136,620,244.01 49,460,423,962.05
Note：According to the resolution of 2022 Annual General Meeting dated on May 10, 2023, based upon the total capital share of the Companyon the equity distribution date, for each 10 ordinary shares, the Company distributed cash dividends of RMB 7 (tax inclusive), the rest ofretained earnings were all carried forward for future distributions.
46. Revenue/cost of sales and services
46.1 Revenue and cost of sales and services
Unit: RMBItem
| 2023 | 2022 | |||
| Revenue | Cost | Revenue | Cost | |
| Major business | ||||
88,735,530,906.73 49,244,429,307.10 82,542,204,243.66 47,602,859,697.82
604,325,948.95 392,626,538.23 624,117,437.48 393,394,768.50Total 89,339,856,855.68 49,637,055,845.33 83,166,321,681.14 47,996,254,466.32
46.2 Revenue (By product or business type)
Unit: RMBItem 2023 2022Products and services for main business (Note) 68,779,757,950.20 65,873,570,961.21Constructions of main business 2,007,188,913.81 2,222,876,059.14Innovative businesses 18,552,909,991.67 15,069,874,660.79Including: Robotic business 4,940,495,688.57 3,916,176,952.59
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Smart home business 4,686,023,001.37 4,077,290,933.03Thermal imaging business 3,284,778,727.13 2,790,033,744.03Auto electronics business 2,706,680,020.16 1,905,289,927.53Storage business 1,931,387,706.41 1,616,267,518.08Other innovative businesses 1,003,544,848.03 764,815,585.53Total 89,339,856,855.68 83,166,321,681.14Note: Main business refers to the business parts other than the innovative businesses.
46.3 Major business (by business type)
Unit: RMBItem
2023Revenue CostProduct sales 84,971,000,242.56 47,055,941,178.02Construction contract 2,007,188,913.81 1,529,858,191.39Provide services 1,757,341,750.36 658,629,937.69Total 88,735,530,906.73 49,244,429,307.10
46.4 Major business (by the time of revenue recognition)
Unit: RMBItem
2023Revenue CostRecognized at a point in time 84,971,000,242.56 47,055,941,178.02Recognized over time 3,764,530,664.17 2,188,488,129.08Total 88,735,530,906.73 49,244,429,307.10
47. Business Taxes and Surcharges
Unit: RMB
48. Selling Expenses
Unit: RMB
| Items | 2023 | 2022 |
| City construction and maintenance tax | 314,257,068.06 | 261,890,379.68 |
| Education surcharges |
136,548,924.16
114,135,419.82Local education surcharges 91,032,619.45
76,090,687.28Stamp duty 83,472,191.23 69,797,920.71Real estate tax 68,387,163.53
50,840,111.92Tax on use of land 7,973,676.69
7,492,257.10Vehicle and vessel tax142,212.47
144,621.51Others2,827,523.10 1,505,298.49Total 704,641,378.69 581,896,696.51
Items 2023 2022
Payroll
| Payroll | 6,810,618,419.65 | 6,373,360,098.93 |
Marketing Expenses 1,547,002,657.18
1,327,140,202.21Shipping, transportation, and vehicle expense 399,732,317.41
397,419,186.30
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
49. Administrative Expenses
Unit: RMB
50. R&D Expenses
Unit: RMB
51. Financial Expenses
Unit: RMB
Travelling expenses535,865,115.05
392,884,475.16Office expenses 292,733,211.13
265,238,884.68
Business hospitality expenses 299,654,749.49
267,086,429.99Rental expenses 97,873,220.30
72,212,549.78Professional Intermediary expenses 204,146,036.74
202,590,077.82Depreciation and amortization expenses 278,842,930.03
262,935,078.67
| Others | 376,032,121.27 | 212,590,352.69 |
| Total | 10,842,500,778.25 | 9,773,457,336.23 |
Items2023 2022Payroll 1,694,010,419.43
1,621,419,524.98Office expenses 300,566,514.26
295,789,889.76
Depreciation and amortization expenses 331,431,645.25
237,858,482.96Professional Intermediary expenses 109,041,879.81
96,942,652.20Travelling expenses 48,698,135.31
36,736,435.95
Shipping, transportation, car expense 62,205,098.49
62,093,258.21
| Rental expenses | 11,603,089.54 | 5,262,993.41 |
| Business hospitality expenses | 12,101,649.04 | 8,369,231.08 |
Others 200,072,979.27
277,640,903.45Total 2,769,731,410.40
2,642,113,372.00
Items 2023 2022Payroll 9,106,625,103.96
7,813,245,802.96Consumables and service fees 827,535,055.34 786,747,111.47
Depreciation and amortization expenses
| Depreciation and amortization expenses | 396,521,961.36 | 318,021,624.81 |
Office expenses 294,212,819.79 251,800,832.86
Intermediate testing fees 279,447,277.60
264,433,773.09Travelling expenses 197,702,784.59
169,736,403.69New product design fees 186,837,407.75
132,053,314.05
Rental expenses 8,832,413.30
8,122,851.03Others 95,233,580.78
Total 11,392,948,404.47 9,814,444,260.55
70,282,546.59
Items
| Items | 2023 | 2022 |
Interest expenses443,682,056.79 296,404,671.30Interest expense on lease liabilities 20,277,211.42 20,907,764.05
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
52. Other Income
Unit: RMB
53. Investment Income
Unit: RMB
| Items | 2023 | 2022 |
Long-term equity investment gains (losses) based on the equitymethod
(29,966,477.85) 106,498,595.01
the holding period
| Investment income from other non-current financial assets during | 65,923,840.33 | 51,892,209.92 |
Investment income from disposal of non-current financial assets - 1,260,000.00
| Investment income (losses) from disposal of held-for-trading |
financial assets
| (90,195,333.19) | 55,194,649.80 |
Income (losses) from multi-transactions business combination ofenterprises not under the same control (Note (VI)1(4))
116,433,610.45 -Investment income from disposal of subsidiaries and other businessunits
- 3,550,851.71Others 1,106,664.51 -
Total63,302,304.25 218,396,306.44
54. Gains (Losses) from Changes in Fair Values
Unit: RMB
Less: Interest income1,067,148,666.93 921,912,411.61Foreign exchange losses (gains) (201,813,404.51) (428,082,371.67)
6,354,148.62
| Less: Capitalized specific loan interests and foreign exchange differences on specific loan |
(2,660,111.75)
| Others | 61,576,738.73 | 39,620,702.86 |
Total (749,780,213.12) (990,401,533.32)
Items 2023 2022VAT refund 1,905,727,477.36 1,753,740,330.32Special subsidies594,438,518.34 707,753,385.13Tax reduction 59,356,844.63 20,974,140.52Total 2,559,522,840.33 2,482,467,855.97
Sources of gains (losses) from changes in fair values2023 2022
Held-for-trading financial assets(12,770,058.36) (21,549,304.93)
(12,770,058.36) (21,549,304.93)
| Including: gains on the changes in fair value of derivative financial instruments |
| Gains (Losses) from changes in fair value of other non-current financial assets |
5,229,385.72 (69,793,177.28)
Held-for-trading financial liabilities30,219,930.53 (64,225,038.68)
Including: gains (losses) on the changes in fair value of derivativefinancial instruments
30,219,930.53 (64,225,038.68)Total22,679,257.89 (155,567,520.89)
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
55. Credit Impairment Gains (Losses)
Unit: RMB
56. Impairment Gains (Losses) of Assets
Unit: RMB
| Items | 2023 | 2022 |
Gains (losses) on inventory depreciation (467,275,356.52) (473,766,927.68)Gains (losses) on impairment of intangible assets - (42,034,063.49)Gains on contract assets impairment3,893,081.40 7,347,162.35Total(463,382,275.12) (508,453,828.82)
57. Non-operating Income
Unit: RMBItems
2023 2022
period non-recurring profits and
lossesFines and confiscations 71,548,457.58 65,172,834.46 71,548,457.58
The amount booked into currentGovernment subsidies
| Government subsidies | 630,722.79 | 884,540.66 | 630,722.79 |
| Others | 15,393,939.67 | 21,308,610.36 | 15,393,939.67 |
Total 87,573,120.04 87,365,985.48 87,573,120.04
58. Non-operating Expenses
Unit: RMB
59. Income Tax Expenses
59.1 Details of income tax expenses
| Items | 2023 | 2022 |
Credit impairment gains (losses) on notes receivable (2,492,390.65) -Credit impairment gains (losses) on accounts receivable (743,585,106.95) (532,337,205.31)Credit impairment reverses gains (losses) on other receivables (1,453,975.50) (4,552,362.71)Credit impairment gains (losses) on long-term receivables (132,391,300.15) (48,271,667.43)Total (879,922,773.25)
(585,161,235.45)
Items
20232022
The amount booked into current periodnon-recurring profits and losses
Losses on disposal of non-current assets
| The amount booked into current period non-recurring profits and losses | ||
| 4,832,681.02 | 1,038,677.10 | 4,832,681.02 |
Local water conservancy construction fund2,682,863.47 2,055,980.46
Donation expenses
2,078,792.44 1,575,092.28
| - |
| 2,078,792.44 |
Others18,338,679.98 10,404,363.27
Total
| 18,338,679.98 | ||
| 27,933,016.91 | 15,074,113.11 | 25,250,153.44 |
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Unit: RMB
2023 2022 (Restated)Income tax for the current reporting period 1,839,065,829.64 1,829,079,291.07Deferred income tax expenses (535,918,231.15) (243,141,372.78)
ItemsDifferences in filing and payment of income tax in previousreporting years
(359,906,588.34) (289,116,386.50)Total 943,241,010.15 1,296,821,531.79
59.2 Reconciliation of income tax expenses to the accounting profit
Unit: RMB
60. Notes to Consolidated Cash Flow Statement Items
60.1 Cash flow from operating activities
Other cash receipts relating to operating activities
Unit: RMBItems
Differences in filing and payment of income tax in previousreporting years
2023
| 2023 | 2022 |
Interest income 938,138,655.67 769,911,170.27Government subsidies 598,933,415.73 903,309,813.09Withdrawal of restricted currency funds 115,110,998.04 334,647,085.86Others 154,282,918.61 94,532,468.51Total1,806,465,988.05 2,102,400,537.73
Other cash payments relating to operating activities
Unit: RMBItem 2023 2022
| Advertising and Selling services | 1,100,850,473.21 | 1,094,845,870.81 |
| Office expenses and business expenses | 1,714,208,976.51 | 1,357,207,317.97 |
| Shipping and transportation expense | 461,937,415.90 | 459,512,444.51 |
R&D expense 1,310,339,918.88 1,276,697,213.62
Item2023 2022 (Restated)Total profit 16,098,924,197.11 14,854,951,627.47Income tax expenses calculated at applicable tax rates of15%
2,414,838,629.55 2,228,242,744.12Impact of non-deductible costs, expenses and losses 34,413,929.90 53,248,187.90Tax effect of non-taxable income (98,174,019.29) (2,963,187.15)Impact of deductible temporary differences or deductible
Unit: RMBlosses for which no deferred income tax assets is
recognized for the current period
172,197,460.01 105,389,667.58
| losses for which no deferred income tax assets is |
| Impact of using deductible temporary differences or |
deductible losses for which no deferred income tax assetswas recognized for the prior periods
(117,780,210.38) (127,946,065.51)Differences of income tax annual filing (359,906,588.34) (289,116,386.50)
subsidiaries
184,249,925.30 163,817,215.68
| Impact by different tax rates applicable to different | ||
| Impact of additional deduction of R&D expenses | (1,272,836,446.36) | (920,031,766.64) |
Others(
)
86,181,122.31Income tax expenses 943,241,010.15 1,296,821,531.79
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Item2023 2022Travelling expense 771,400,658.11 561,674,225.16Outsourcing service fees, fees for hiring intermediaries, etc. 457,158,581.72 473,912,644.83Rental expense 118,308,723.14 85,598,394.22Deposits to restricted monetary funds 123,808,399.08 256,100,102.65Others 229,904,403.53 415,552,270.26
| Total | 6,287,917,550.08 | 5,981,100,484.03 |
60.2 Cash flow from investing activities
Cash receipts relating to important investing activities
Unit: RMB
2023 2022Forward foreign exchange contract payments 4,687,808,134.25 7,278,782,403.07Total4,687,808,134.25 7,278,782,403.07
Cash payments relating to important investing activities
Unit: RMB
ItemItem
| Item | 2023 | 2022 |
| Forward foreign exchange contract payments | 4,778,003,467.44 | 7,223,587,753.27 |
Cash paid for the purchase and construction of fixed assets,intangible assets and other long-term assets
4,047,816,024.05
3,755,680,900.22Total 8,825,819,491.49 10,979,268,653.49
Other cash receipts relating to investing activities
Unit: RMB
2023 2022Receipts of financing lease payments 121,237,455.42 47,587,599.27Net cash receipts from acquiring subsidiaries and other businessunits
- 182,816.96Total121,237,455.42 47,770,416.23
60.3 Cash flow from financing activities
Other cash receipts relating to financing activities
Unit: RMBItem2023 2022Cash receipts from CETHIK’s project fund (refer to XI 5(4) fordetails)
5,000,000.00 -
Other cash payments relating to financing activities
Unit: RMB
Item2023 2022Repurchase of outstanding shares
Item
-
| - | 2,043,885,225.35 |
Repurchase of restricted shares 655,807,536.16 38,851,853.10Repayment of lease liabilities 285,474,093.26 228,009,188.10Consideration paid for the acquisition of minority shareholderequity
56,000,000.00 -
Total 997,281,629.42 2,310,746,266.55
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Influence of financing activities on liabilities
Unit: RMBItem 31 Dec. 2022 2023
| 31 Dec. 2023 | ||||
| Cash influence | Non-cash influence | |||
| Lease liabilities (including lease |
liabilities due within one year)
| 580,584,582.89 | (285,474,093.26) | 233,617,823.93 | 528,728,313.56 |
Long-term borrowings (includingloan due within one year) and short-term loan
11,428,293,511.92 4,431,528,588.77
| 826,778,722.54 | 16,686,600,823.23 |
Dividends payable 300,150,894.34 (6,657,248,457.47)
| 6,611,054,976.42 | 253,957,413.29 | ||
| Total |
12,309,028,989.15 (2,511,193,961.96)
| 7,671,451,522.89 | 17,469,286,550.08 |
61. Supplementary Information about Cash Flow Statement
61.1 Supplementary information about cash flow statement
Unit: RMBSupplementary information 2023 2022 (Restated)
Net profit 15,155,683,186.96
| 1. Reconciliation of net profit to cash flows from operating activities: | |
13,558,130,095.68
Add: Impairment of assets463,382,275.12 508,453,828.82Provision for credit losses879,922,773.25 585,161,235.45Fixed assets depreciation 1,302,908,127.60 928,114,412.10Amortization of right-of-use assets 316,765,782.26 246,373,656.24Amortization of intangible assets 98,924,636.89 79,676,213.21Long-term deferred expenses amortization 84,144,427.77 81,486,526.31
Losses on disposal of fixed assets, intangibleassets and other long-term assets
| Losses on disposal of fixed assets, intangible assets and other long-term assets | 5,674,511.78 | 17,578,905.00 |
Fixed asset scrapping losses 4,832,681.02 1,038,677.10Losses (gains) from changes in fair value (22,679,257.89) 155,567,520.89Financial expenses 325,040,311.15 165,311,194.01Investment income (63,302,304.25) (218,396,306.44)
207,616,877.93 620,309,681.65Decrease (increase) of restricted funds (8,697,401.04) (78,546,983.21)
Share-based payment based on equity
settlementDecrease (increase) in deferred income taxassets
(507,175,433.89) (259,857,130.93)
| Decrease (increase) in deferred income tax assets |
| Decrease (increase) in deferred income tax liabilities |
(54,853,902.30) 20,899,178.93
(365,476,343.55) (1,510,338,683.95)Decrease of other operating non-current assets340,718,688.36 560,599,677.46Decrease (increase) in operating receivables (6,131,432,357.74) (4,921,967,123.64)
Increase (decrease) in inventories
Increase (decrease) in operating payables 4,587,392,851.89 (570,133,160.37)Increase in deferred income 3,864,174.60 194,673,968.07Net cash flows from operating activities 16,623,254,305.92 10,164,135,382.38
2. Net changes in cash and cash equivalents:
Closing balance of cash
| Closing balance of cash | 49,419,278,347.70 | 39,815,390,514.57 |
Less: Opening balance of cash 39,815,390,514.57 34,603,944,429.20
| Add: Closing balance of cash equivalents | - | - |
Less: Opening balance of cash equivalents- -
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Supplementary information 2023 2022 (Restated)
9,603,887,833.13 5,211,446,085.37
61.2 Net cash paid for obtaining subsidiaries during the current year
Unit: RMB
Net Increase (decrease) in cash and cashequivalents
AmountsCash or cash equivalents paid for the business combination in this year 56,297,070.00
Including: Sensortech
| Including: Sensortech | 56,297,070.00 |
Less: Cash and cash equivalents held by subsidiaries of the Company on the acquisition date 12,304,418.18Including: Sensortech 12,304,418.18Net cash paid for obtaining the subsidiary 43,992,651.82
61.3 Constituents of cash and cash equivalents
Unit: RMBItem Closing balance Opening balanceCash
39,815,390,514.57
| 49,419,278,347.70 | |
Including: Cash on hand
| 1,785,754.92 |
1,210,065.16Bank deposit for payment at any time
39,607,767,094.21Other monetary capital for payment at any time
| 49,392,003,419.26 |
| 25,489,173.52 |
206,413,355.20Cash equivalents - -
| Closing balance of cash and cash equivalents | 49,419,278,347.70 | 39,815,390,514.57 |
62. Monetary Items of Foreign Currencies
Unit: RMBItems
| 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 | 345,102,648.21 | 7.0827 | 2,444,258,526.49 |
EUR
| 99,421,307.43 | 7.8592 | 781,371,939.39 |
Accounts receivable
| Including: EUR | 291,000,515.77 | 7.8592 | 2,287,031,253.54 |
USD
| 143,302,128.57 | 7.0827 | 1,014,965,986.02 |
Short-term borrowings
| Including: EUR | 100,118,494.44 | 7.8592 | 786,851,271.50 |
USD 9,104,951.02
7.0827
64,487,636.60
Accounts payable
Including: USD
36,895,825.04
| 36,895,825.04 | 7.0827 | 261,322,060.01 |
EUR
| 681,400.79 | 7.8592 | 5,355,265.09 |
| Non-current liabilities due within one year - Long-term borrowings |
Including: EUR
| 142,034,711.11 | 7.8592 | 1,116,279,201.56 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
63. Lease
63.1 As lessee
The company leases a number of assets, including houses and buildings, general equipment, special purpose equipment and transportvehicles, ranging from 1 month to 13 years. Such assets cannot be used for loan, mortgage, guarantee and other purposes.
The total amount of short-term lease expenses and lease expenses of low-value assets included in profit or loss for the period wasRMB133,767,688.72 (2022: RMB99,598,934.33).
Total lease-related cash outflows for the year is RMB 419,241,781.98 (2022: RMB 327,608,122.43)
63.2 As a lessor
Operating lease as a lessor
,Unit: RMBItem Lease income
| Among which: income related to variable lease payments not included in lease collections | ||
| Special equipment lease | 101,525,163.21 | |
| Total | 101,525,163.21 |
The company’s operating leases as a lessor relate to special equipment.
Financial lease as a lessor
,Unit: RMBItem Profit or loss on sales
Financing proceeds
| Income related to variable lease payments that are not included in net lease investments | |||
| Special equipment lease | 19,182,712.36 | 7,238,000.91 | |
| Total | 19,182,712.36 | 7,238,000.91 |
As a lessor, the Group entered into financial lease contracts with customers in relation to special equipment.
63.3 Gains and losses on finance lease as a manufacturer
,Unit: RMB
| Item | Sales | Costs | Gains or loss on finance lease |
| Special equipment finance lease | 50,557,589.47 | 31,374,877.11 | 19,182,712.36 |
| Total | 50,557,589.47 | 31,374,877.11 | 19,182,712.36 |
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
Sensortech
The company held 35% shares of Wuhu Sensortech Intelligent Technology Ltd., and accounted it as an associate. InJanuary 2023, the Company and the original shareholder of Wuhu Sensortech signed the Equity Acquisition Agreement,agreed to acquire 9.40% equity of Wuhu Sensortech held by the original shareholder for RMB56,297,070.00. On February28, 2023, the delivery of Sensortech Equity was completed and the Group has acquired 44.40% equity of Sensortech.Meanwhile, as some shareholders of Wuhu Sensortech Intelligent Technology Ltd. issued a waiver of voting rights, theCompany obtained more than half of Sensortec’s voting rights, and therefore included it in the scope of consolidation. Atthe close of 2023, the Company had completed the payment of equity transfer.
Unit: RMB
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Name of theacquiree
Time ofequityacquisition
Equity
acquisition cost
Equityacquisition ratio(%)
Equity
| acquisition |
method
Date of acquisition
Basis for
theacquisition
date
Income ofacquiree from
| determining | acquisition data to the end of the reporting period |
Net profit ofacquiree from
reporting period
Sensortec
February 28,2023
56,297,070.00 9.40
CashPayments
February 28, 2023
obtainedcontrol
589,748,080.19 15,559,734.36
1.2 Cost of business combination and goodwill
Unit: RMB
| Cost of business combination | Sensortec |
- Cash 56,297,070.00- Fair value of equity held prior to the purchase date at the purchase date 209,616,750.00Total cost of business combination 265,913,820.00Less: The fair value share of identifiable net assets obtained 173,825,702.13
92,088,117.87
1.3 The assets and liabilities of the acquiree can be identified on the date of purchase
Unit: RMB
Sensortech (Note)Fair value on the date of acquisition Fair value on the date of acquisitionAssets:
Cash and bank balances
Goodwill17,324,838.53
| 17,324,838.53 | 17,324,838.53 |
Accounts receivable
| 191,923,998.93 | 191,923,998.93 |
Inventories
| 354,659,691.82 | 303,058,398.74 |
Fixed assets
| 79,287,366.02 | 79,287,366.02 |
Intangible assets
| 207,121,061.00 | 3,721,061.00 | |
| Other assets | 100,292,827.66 | 100,292,827.66 |
Total assets
| 950,609,783.96 | 695,608,490.88 |
Liabilities:
Short-term borrowings
| 327,277,293.17 | 327,277,293.17 |
Accounts payable 86,533,455.87
86,533,455.87
Deferred tax payable 66,897,446.03
3,147,122.76
Other payables 78,402,259.76 78,402,259.76Total liabilities 559,110,454.83 495,360,131.56Net assets: 391,499,329.13 200,248,359.32
| Less: Minority equity | 217,673,627.00 |
| 111,338,087.78 | ||
| Net assets acquired | 173,825,702.13 | 88,910,271.54 |
Note: The fair value of intangible assets is valued using the income method and the fair value of other identifiable assets and liabilities is
valued using the asset basis method. The company has no contingent liabilities of the purchase to be assumed.
1.4 Fair value of the purchased equity prior to the purchase day
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Name of the acquiree
Book value of the
to the purchase day
Fair value of the
| purchased equity prior | purchased equity prior |
to the purchase day
Gain or loss of the
reassessment usingfair value
| purchased equity from | Methods of using fair |
value to assess the
to the purchase day
Other comprehensive
| purchased equity prior | income related to the purchased equity prior |
the purchase day that
investment incomeSensortec 93,183,139.55 209,616,750.00 116,433,610.45 Income approach
| can be transferred into |
| - |
2. Changes of Consolidation Scope due to Other Causes
The subsidiaries newly established and incorporated in the consolidation scope during the current reportingperiod as follows:
Company Name Time of establishment Registered capitalZhejiang Haishi Luyue Technology. Ltd. Auguest 2023 RMB 20 million
COMPANY LIMITED
Auguest 2023 USD 0.3 millionShijiazhuang Haishi Digital Technology. Ltd. November 2023 RMB 5 millionHikrobot Europe B.V. (Note) November 2023 USD 0.8 millionHikrobot Singapore Pte. Ltd. (Note) November 2023 USD 0.5 millionZhengzhou Hikvision Technology. Ltd. (Note) December 2023 RMB 300 million
Note: As of the end of this year, Hikrobot Europe B.V., Hikrobot Singapore Pte. Ltd., Zhengzhou Hikvision Technology.Ltd. have not yet completed their paid-in capital.
VII. Interest in Other Entities
1. Equity in Subsidiaries
(1) Composition of the corporate group
Name
Location of
operation
Place ofregistration
Nature of business
AcquisitionMethodHangzhou Hikvision System TechnologyLtd.
Hangzhou
Hangzhou,
Zhejiang
LLC VIETNAM HIKVISION TECHNOLOGYSystem integration,
Technology
| development |
Establishment
Hangzhou
| Hangzhou Hikvision Technology Co., Ltd. | Hangzhou, Zhejiang |
ManufactureEstablishmentHangzhou EZVIZ Network Co., Ltd. Hangzhou
| Hangzhou, Zhejiang | Technology development |
EstablishmentHangzhou EZVIZ Software Ltd. Hangzhou
| Hangzhou, Zhejiang | Technology development |
EstablishmentHangzhou Hikrobot Technology Co., Ltd. Hangzhou
| Hangzhou, Zhejiang | Technology development |
EstablishmentHangzhou Hikrobot Intelligence Ltd. Hangzhou
| Hangzhou, Zhejiang | Technology development |
Establishment
2. Changes in the share of owners' equity in subsidiaries and still controls the transactions of subsidiaries.
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
(1) Description of the change in the share of owners' equity in subsidiaries
Capital increase for Shijiazhuang SensortechOn March 28, 2023, the Company entered into the Capital Increase Agreement with external strategic investors. It is agreed that ShijiazhuangSensortech, a subsidiary of the Company, will increase the registered capital by RMB2,398,000,000, in which the Company will increase thecapital by RMB1,078,800,000 with 60.00% equity of HikAuto, a subsidiary of the Company, and RMB266,400,000 with 44.40% equity ofSensortech, a subsidiary of the Company, with a total equity price of RMB1,345,200,000. Upon completion of the capital increase, theCompany's direct shareholding in Shijiazhuang Sensortech was diluted from 100% to 56.0969%, the Company's direct shareholding inHikAuto was changed from direct holdings of 60.00% to indirect holdsing of 56.0969%, and the Company's direct holding of Sensortechchanged from 44.40% to indirect holding of 56.0969%.The Group's control over the three subsidiaries remains unchanged.
(2) The impact of the transaction on minority equity and owners' equity attributable to owner of the Company
Unit: RMBProject
| Shijiazhuang Sensortec | HikAuto | Sensortec | ||
| Share of the subsidiary's net assets as a percentage of increased equity |
/ / 44,867,715.32 44,867,715.32
(259,000.35) (5,502,685.16) / (5,761,685.51)Increase in capital reserves 259,000.35 5,502,685.16 44,867,715.32 50,629,400.83
Acquisition of a minority stake of Hangzhou Kuangxin.
On May 22, 2023, the Company and the former minority shareholders of its subsidiary, Hangzhou Kuangxin, signed theEquity Transfer Agreement in respect of Hangzhou Kuangxin Technology Co., Ltd. It is agreed to purchase 20.00%minority equity of Hangzhou Kuangxin held by the original shareholder at RMB56 million. After purchase, the Companyholds 100% shares of Hangzhou Kuangxin in total. On June 30, 2023, the equity delivery of Hangzhou Kuangxincompleted. At the close of 2023, the Company had completed the payment of equity transfer.
Unit: RMBCost of purchase Hangzhou KuangxinCash 56,000,000.00Total cost of purchase 56,000,000.00
Share of a subsidiary's net assets (netliabilities) as a percentage of reduced equityLess: net assets of subsidiaries according to the proportion of equity acquired
| Less: net assets of subsidiaries according to the proportion of equity acquired | 38,206,584.40 |
Decrease in capital reserves
3. Equity in Joint Ventures or Associates
(1) Aggregated financial information of insignificant joint-ventures and associates
Unit：RMB
17,793,415.60Closing balance / Amount for
2023
| Closing balance / Amount for 2023 | Opening balance / Amount for 2022 |
Associates
The aggregate carrying amount of investments in associates287,370,796.06 352,286,233.16
：
The aggregate amount of the following items calculated based on theCompany’s equity share percentage of the associates
| The aggregate amount of the following items calculated based on the Company’s equity share percentage of the associates |
- Net income (loss)
15,006,433.70 (11,985,343.35)- Other comprehensive income- ---Total comprehensive income (loss)
| 15,006,433.70 | (11,985,343.35) |
Joint Ventures:
Total investment book value
863,734,091.79 899,747,280.25
- Net income
(44,972,911.55) 118,483,938.36
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
| Closing balance / Amount for 2023 | Opening balance / Amount for 2022 |
- Other comprehensive income
- -- Total comprehensive losses(44,972,911.55) 118,483,938.36
(2) There are no significant restrictions on the ability of the joint ventures or associates to transfer funds to the Group.
(3) Unrecognized commitments relating to investments in joint ventures
Unit：1000 RMB
Note: The above capital commitments are the capital amounts that the Group has subscribed but not paid in to the abovejoint ventures.
(4) The Group has no contingent liabilities related to investments in joint ventures or associates.
VIII. Government subsidy
1. Liabilities relating to government subsidy
Unit: RMBLiabilities
| Amount at the open of 2023 | Increase in 2023 | Other income 2023 | Other changes | Amount at the close of 2023 | Asset-related /revenue-related |
Special subsidy 659,589,058.05 129,398,427.90 76,115,713.34 28,250,000.00 741,121,772.61
Special subsidy 273,671,368.07 138,027,163.45 187,445,703.41
| Asset-related | ||
884,991.62 225,137,819.73
Total 933,260,426.12 267,425,591.35 263,561,416.75
| Revenue-related | ||
29,134,991.62 966,259,592.34
2. Government subsidy recognized as gain or loss in the reporting period
Unit: RMBLiabilities 2023
VAT collected and refunded 1,905,727,477.36 1,753,740,330.32Special subsidy 595,069,241.13 708,635,845.02
tax refund -
2022
20,976,221.29Total 2,500,796,718.49 2,483,352,396.63
IX. Risks Associated with Financial InstrumentThe Company’s principal financial instruments include cash and bank balances, other non-current financial assets, notesreceivable, accounts receivable, receivables for financing, other receivables, long-term receivables, part of the other non-current assets, borrowings, notes payable, accounts payable, other payables, part of the other current liabilities, long-termpayables, part of other non-current liabilities, derivative financial instruments, etc. Details of these financial instrumentsare set out in Note (V). Below are the risks associated with such financial instruments and the risk management policies
Joint Venture
| Joint Venture | Capital Commitment (Note) |
Shenzhen Haishi Urban Service Operation Co., Ltd. 10,500.00
| Guangxi Haishi Urban Operation Management Co., Ltd. | 2,440.00 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
adopted by the Group to mitigate such risks. The management of the Group manages and monitors such risk exposures toensure such risks are contained within a prescribed scope.
Unit: RMBItems Closing balance of 2023 Closing balance of 2022Financial assets
Measured at fair value through current profit and loss
Held –for-trading financial assets 37,380.00 12,807,438.36Other non-current financial assets 472,184,937.66 423,893,239.94
：
Measured at fair value through other comprehensive
income
Receivables for financing 1,594,219,832.62 1,484,218,258.74
Measured at amortized cost
Cash and bank balances 49,629,469,654.46 40,011,863,999.94Notes receivable 2,606,071,375.74 2,519,988,159.23Accounts receivable 35,815,173,511.44 29,906,294,410.40Other receivables 571,905,648.93 516,503,485.58Other non-current assets 2,017,718.89
Measured at fair value through other comprehensive
2,181,057.96Long-term receivables (including those due within one year)
1,618,419,624.99 1,537,550,308.57
Financial liabilities
Measured at fair value through current profit and loss
Held-for-trading financial liabilities
38,079,755.04 68,299,685.57
Measured at amortized cost
Short-term borrowings
2,118,952,026.06 3,343,071,972.89Notes payable
1,163,687,279.58 1,207,756,963.94Accounts payable
19,163,485,888.09 16,025,563,802.99
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Other payables
3,911,612,841.06 3,203,308,686.31Other current liabilities
1,095,194,890.62 465,979,374.84Long-term borrowings (including those due within one year)
14,567,648,797.17 8,085,221,539.03Long-term payables (including those due within one year)
8,188,531.22 9,532,351.64Other non-current liabilities
1,642,792,335.93 2,806,169,050.05
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.
1. Objectives, Policies and Procedures of Risk Management, and changes in the reporting period
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.
1.1 Market risks
1.1.1 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 and etc.
As of December 31, 2023, 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: RMBCurrencies Assets Liabilities
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Closing balance Opening balance Closing balance Opening balanceUSD3,459,224,512.51
3,241,969,531.76
325,809,696.61
655,023,052.11
EUR3,068,403,192.93
2,951,284,991.71
1,908,485,738.15
2,200,890,176.03
The Group has been paying close attention to the effect of fluctuation in exchange rate on the foreign exchange risks ofthe Group, and has purchased various financial derivative instruments, such as forward foreign exchange contracts tomitigate the foreign exchange risk exposure.
Sensitivity analysis on exchange rate risk
The sensitivity analysis of the Group's foreign exchange risk includes only monetary items denominated in foreigncurrencies and does not consider the impact of the purchased derivative financial instruments.With other variables unchanged, the exchange rate might float within a reasonable range, and has the following before-tax effect on profit or loss and shareholders’ equity for the current period:
Unit: RMBChange in foreign exchange rates
2023 2022Effect on profit
Effect onshareholders’ equity
Effect on profit
Effect onshareholders’ equity
5% appreciation of USD against functional currency
| 156,670,740.8 | 156,670,740.80 | 129,347,323.98 | 129,347,323.98 |
5% depreciation of USD against functional currency
| (156,670,740. | (156,670,740.80) | (129,347,323.98) | (129,347,323.98) | |
| 5% appreciation of EUR against functional currency | 57,995,872.74 | 57,995,872.74 | 37,519,740.78 | 37,519,740.78 |
| 5% depreciation of EUR against functional currency | (57,995,872.7 | (57,995,872.74) | (37,519,740.78) | (37,519,740.78) |
1.1.2. Interest rate risk
The risk of changes in cash flow of financial instruments due to changes in interest rates exposed to the Group are primarilyrelated to bank borrowings bearing floating interest rate (please refer to Note (V) 34) and bank deposits bearing floatinginterest rate. The Group's risks of changes in the fair value of financial instruments due to changes in interest rates arerelated to fixed-rate bank borrowings (please refer to Note (V) 24 and Note (V) 34) and fixed-rate bank deposits.
The Group determines the relative proportion of fixed interest rate contracts and floating interest rate contracts based onthe prevailing market environment. On December 31, 2023, the Group’s total long-term and short-term interest-bearingdebts bearing fixed interest rates amounted to RMB 11,105,877,902.09 (December 31, 2022: RMB9,106,539,532.31)
(Note (V) 24 and Note (V) 34). The total amount of long-term and short-term interest-bearing debts bearing floatinginterest rates is RMB 5,546,156,677.17 (December 31, 2022: RMB2,262,287,174.62) (Note (V) 34).
At present, the Group does not have any interest rate swap arrangements and will continue to pay close attention to theimpact of changes in borrowing interest rates on the interest rate risk of the Group, and will make timely adjustmentsaccording to the latest market conditions.
The Group expects that the exposure to cash flow risk arising from floating-rate bank deposits and the exposure to changesin fair value arising from fixed-rate bank deposits are not significant.
1.1.3. 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 of
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
investment in held-for-trading equity instruments and derivative financial instruments is not significant, and the changesof the amount due to changes in price of financial instruments as a result of change in valuation assumptions is limited,accordingly, no sensitivity analysis is conducted.
1.2 Credit Risk
As of December 31, 2023, the largest credit risk exposure that may result in financial losses of the Group is mainly due tothe loss of the Group’s financial assets arising from the failure of the counterparty to perform its obligations, including:
cash and bank balances (Note (V) 1), notes receivable (Note (V) 3), accounts receivable (Note (V) 4), receivables forfinancing (Note (V) 6), other receivables (Note (V) 8), contract assets (Note (V) 5 and Note (V) 22), non-current assetsdue within one year (Note (V) 10), long-term receivables (Note (V) 12), etc., and derivative financial assets that are notincluded in the scope of impairment assessment and are measured at fair value through current profit or loss (Note (V) 2).As of the balance sheet date, the book value of the Group’s financial assets represents its maximum credit risk exposure.
In order to reduce credit risk, the Group has arranged 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 receivable,contract assets, and long-term receivables related to financial leasing and installment collection business, the Group usesa simplified method, that is, to measure the loss provision based on the amount equivalent to the expected credit loss forthe entire duration. For details of the relevant expected credit loss measurement, see (Note (V) 4 & Note (V) 5). Forremaining long-term receivables, the Group calculates the expected credit losses based on the expected credit loss rate inthe next 12 months or the entire duration based on the default risk exposure. For details of the related expected credit lossmeasurement, see (Note (V) 12).
With respect to bank acceptance bills and receivables financing, the Company believes that there is no significant creditrisk and will not incur any significant losses due to the default of the counterparty as the acceptors are mainly banks withhigher credit ratings.For financial company acceptance bills and commercial acceptance bills, the Company has set
relevant policies to control credit risk exposure. The Company evaluates the credit status of the acceptor based on itsfinancial position, credit history and other factors, such as current market conditions, and sets an internal credit rating forthe acceptor.The Company regularly monitors the credit records of the acceptors, and for the acceptors with bad creditrecords, the Company adopts written reminders and other means to ensure that the overall credit risk is within a controllablerange. For the acceptance bills and commercial acceptance bills receivable from financial companies, the Group calculatesthe expected credit loss based on the default risk exposure based on the expected credit loss ratio in the entire duration,and the relevant expected credit loss measurement is detailed in (Note (V) 3).
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) 8).
The Group’s risk exposure is distributed among multiple contractors and multiple customers, so the Group has nosignificant credit concentration risk.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
1.3. Liquidity risk
The Group maintains and monitors a level of cash and cash equivalents deemed adequate by the management to meet theoperation needs of the Group and to reduce the effect of cash flow movements when managing liquidity risk. Themanagement of the Group monitors the usage of bank borrowings, and ensures compliance with borrowing agreements.
According to the term to maturity of non-discounted and remaining contract obligations, the financial liabilities held bythe Group are analyzed as below:
Unit：RMBDecember 31, 2023Within one year 1-5 years More than 5 years TotalNon-derivative financial liabilitiesShort-term borrowings 2,143,916,039.71 - -
Notes payable 1,163,687,279.58 - -
| 2,143,916,039.71 |
| 1,163,687,279.58 |
Accounts payable 19,163,485,888.09 - - 19,163,485,888.09Other payables 3,911,612,841.06 - - 3,911,612,841.06Other current liabilities 1,095,194,890.62 - - 1,095,194,890.62Other non-current liabilities - 1,642,792,335.93 - 1,642,792,335.93Long-
those due within one year)
5,933,400,372.89 8,526,366,272.08 769,181,586.13
| term borrowings (including |
15,228,948,231.10Long-term payables (includingthose due within one year)
2,673,997.26 6,141,020.06 - 8,815,017.32Derivative financial instrumentsForward foreign exchange contracts- settled in the gross amount
- Cash inflow 1,761,339,224.80 - - 1,761,339,224.80- Cash outflow 1,799,381,599.84 - - 1,799,381,599.84- Net cash inflow 38,042,375.04 - - 38,042,375.04
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
X. Fair Value Disclosure
1. The Financial Assets and Financial Liabilities Measured at Fair Value at the end of the Reporting Period
Unit：RMBItems
Closing fair valueLevel 1 Level 2 Level 3 Total
| I. Continuous fair value measurement | - | 1,556,177,457.58 | 472,184,937.66 | 2,028,362,395.24 |
| (I) Financial Assets held-for-trading |
-
37,380.00
-
37,380.00
| 1. Financial Assets Financial assets |
measured at fair value through
-
| profit and loss |
37,380.00
-
37,380.00
| (II) Other non-current financial assets |
-
-
472,184,937.66
472,184,937.66
| 1. Financial assets at fair value through profit or loss |
-
472,184,937.66
472,184,937.66
(III) Receivables for financing
1,594,219,832.62
-
1,594,219,832.62
| 1. Financial assets at fair value |
through other comprehensive
-
| income |
1,594,257,212.62
-
2,066,442,150.28
| Total assets measured continuously at fair value |
-
1,594,257,212.62
472,184,937.66
2,066,442,150.28
| (IV) Held-for-trading Financial Liabilities |
-
38,079,755.04
-
38,079,755.04
| 1. Held-for-trading Financial |
LiabilitiesFinancial liabilitiesmeasured at fair value through
| profit and loss |
38,079,755.04
-
38,079,755.04
| Total liabilities measured continuously at fair value |
-
38,079,755.04
-
38,079,755.04
2. Information on the Estimation Technique and Important Parameters Adopted as for Continuous Level 2 Fair
Value Measurement Items
Unit: RMB
| 2023 |
Estimation technique InputsForward Foreign Exchange Contracts(Assets)
37,380.00
Discounted cash flowapproach
Discounted rate that reflects the credit risk
| of counterparty |
Forward Foreign Exchange Contracts(Liabilities)
(38,079,755.04)
Discounted cash flowapproach
Discounted rate that reflects the credit risk
| of counterparty |
Receivables for financing 1,594,219,832.62
Discounted cash flowapproach
Discounted rate that reflects the credit riskof counterparty
3. The Third Level of Fair Value Measurement Item, the Valuation Techniques and Important Parameters Used
Unit: RMBItems
Fair value onDecember 31, 2023
Valuation techniques InputsOther non-current financial assets--Investment in equity instruments ofprivate companies
472,184,937.66
Market approach/Income approach
Comparable public companies’ PB(price/book value) ratio within the same
industry
4. The Third Level of Fair Value Measurement Item, Adjustment Information between the Opening and Closing
Book Value
Unit: RMBOther non-current financial assets
/Future cash flows, Discount rateAmount
| Amount | |
| Book value on January 1, 2023 | 423,893,239.94 |
| Increase in the current reporting period | 25,000,000.00 |
| Increase in merge | 18,666,625.00 |
| Decrease in the current reporting period | 604,313.00 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
| Changes in fair value booked into profit and loss during the current reporting period | 5,229,385.72 |
| Book value on December 31, 2023 | 472,184,937.66 |
The total amount of profit or loss in 2023 includes unrealized gains related to financial assets measured at fair value at theend of the year is RMB 5,229,385.72(2022 unrealizied losses: RMB 69,793,177.28)and such gains or losses are includedin changes in fair value; the realized gains of financial assets measured at fair value at the end of the current reportingperiod which were included in investment income was RMB65,923,840.33 (2022: RMB 51,892,209.92).
5. Items Measured at Continuous Fair Value. There Were No Transfers between Levels for the Current
Reporting Period. There was No Estimation Technique Change for the Current Reporting Period
6. Fair Values of Financial Assets and Financial Liabilities that not Measured at Fair Value
The Group’s management team believes that financial assets and financial liabilities measured at amortized cost mainlyinclude cash and bank balances, notes receivable, accounts receivable, other receivables, some other non-current assets,non-current assets due within one year, long-term receivables, short-term borrowings, notes payable, accounts payable,other payables, part of other current liabilities, non-current liabilities due within one year, long-term borrowings, long-term payables and part of other non-current liabilities, etc., carrying value of which approximates to its fair value.
XI. Related Party Relationships and Transactions
1. Information on Parent Company of the Company
Name Place of registration Nature of business Registered capital
Shareholding ratioof parent companyin the Company (%)
voting rights ofparent company to
| the Company (%) | ||
| China Electronics |
Technology HIKGroup Co., Ltd.
Hangzhou, Zhejiang
Industrialinvestment
RMB 660 million 36.48 36.48
The ultimate controlling party of the Company is China Electronics Technology Group Co., Ltd. (hereinafter referred toas " CETC").
2. Information on the Subsidiaries of the Company
For details of the main subsidiaries of the Company, see Note ((VII)1).
3. Information on the Joint Ventures and Associated Companies of the Company
Joint 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 CompanySensortech (Note1) Associated companyMaxio Technology (Hangzhou) Co., Ltd. and its subsidiaries (Note2) Associated company
(CETHIK)Zhiguang Hailian Big Data Technology Ltd. and its subsidiaries (Note2)
| Zhiguang Hailian Big Data Technology Ltd. and its subsidiaries (Note2) | Associated company |
| Jiaxin Haishi JiaAn Zhicheng Technology Ltd. (Note2) | Associated company |
Sanmenxia Xiaoyun Vision Technology Ltd. (Note2) Associated companyBeijing Taifang Technology Ltd. (Note2) Associated companyGuangxi Haishi Operation Management Ltd. and its subsidiaries (Note3) Joint ventureShenzhen Haishi Urban Service Operation Ltd. and its subsidiaries (Note3) Joint ventureXuzhou Kangbo Operation Management Service Ltd. (Note3) Joint venture
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Yunnan Yinghai Parking Service Ltd. (Note3) Joint ventureZhejiang City Digital Technology Ltd. (Note3) Joint ventureZhejiang Haishi Huayue Digital Technology Ltd. (Note3) Joint venture
Note 1: During the period from December 2016 to February 2023, Sensortech was an associate of the Company. OnFebruary 28, 2023, the Company acquired control right of Senstech and included it in the scope of the consolidatedfinancial statements. The amount of the Company's transactions with the Group for the period from January 2023 toFebruary 2023 and in 2022, and the balance of transactions with the Group as at 31 December 2022 are summarized inthe following related party transactions and related party receivables and payables under "Associates".
Note 2:
Those companies are collectively referred to as "associated companies" in the following disclosures of relatedparty transactions, receivables from related parties, and payable from related parties.
Note 3: Those companies are collectively referred to as "joint ventures" in the following disclosures of related partytransactions, receivables from related parties, and payable from related parties.
4. Information on Other Related Parties
| Name (Note1) | Relationship |
Shanghai Fullhan Microelectronics Co., Ltd. and its subsidiaries
hold(s) more than 5% shares of the Company act in
| concert with the actual controller of the Company |
Shenzhen Guotengan Vocational Education Technology Ltd.
Confirmware Technology (Hangzhou) Co., Ltd.
| Shareholder(s) that hold(s) more than 5% shares of the Company was(were) the director(s) of this company | |
| The Group’s senior management serve(s) as director(s) of this company | |
| Zhejiang Fast Line data fusion Information Technology Co., Ltd. and its subsidiaries | The Group’s senior management serve(s) as director(s) of this company |
Chengdu Guoshengtianfeng Network Technology Ltd. and its subsidiaries
Ningbo Industrial Internet Research Institute Co., Ltd.
| The Group’s senior management serve(s) as director(s) of this company |
| The Group’s independent director(s) serve(s) as director(s) of this company |
INESA (Group) Ltd. and its subsidiaries
Shanghai Vico Precision Mold & Plastics Co.,Ltd.
| The Group’s supervisor(s) serve(s) as director(s) of this company |
| The Group’s supervisor(s) serve(s) as independent director(s) of this company |
Bank of Tianjin Co., Ltd. and its subsidiaries
Aurotek CORP. and its subsidiaries (Note2)
| The Group’s supervisor(s) serve(s) as independent director(s) of this company |
| The Group’s former independent director(s) serve(s) as director(s) of this company (Note 1) |
Shenzhen Zhongtu Instrument Co., Ltd. (Note3）
Suzhou Ximeng Technology Co., Ltd.
| The Group's chairman(chairmen) of Board of the Supervisors was(were) he director(s) of this company |
| The Group's chairman(chairmen) of Board of the Supervisors was(were) he director(s) of this company |
Subsidiaries of CETC (Note 4)
Note 1: Those companies (excluding subsidiaries of CETC) are collectively referred to as "other related parties" in thefollowing disclosures of related party transactions, receivables from related parties, and payable from related parties.
Note 2: Cheng Tianzong, a former independent director of the Company, once served as a director of the correspondingcompany. As he resigned as an independent director of the Company upon expiration of the term of the Company in March2021, the corresponding company was recognized as a related party of the Company during the period between January2022 and March 2022.
Note 3: Hong Tianfeng, the chairman of Board of the Supervisors of the Company, once served as a director of thecorresponding company. As he departed the Company in April 2022, the corresponding company was recognized as arelated party of the Company during 2022 and between January 2023 and April 2023.
Note 4: Subsidiaries and affiliated research institutes of CETC, excluding Hikvision and its subsidiaries.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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: RMBRelated party Transaction type Amount occurred in 2023 Amount occurred in 2022Subsidiaries of CETC
2,411,065,827.96 2,234,524,161.20Joint ventures
| Purchase of materials and receiving of services |
| Purchase of materials and receiving of services |
2,839,703.41 5,071,741.36Associated companies
271,039,815.54 417,989,556.67Other related parties
| Purchase of materials and receiving of services |
| Purchase of materials and receiving of services |
1,286,613,375.22 1,598,406,260.25Total 3,971,558,722.13 4,255,991,719.48
Sales of commodities / rendering of services:
Unit: RMBRelated party Transaction content Amount occurred in 2023 Amount occurred in 2022Subsidiaries of CETC
269,454,480.67447,186,616.90Joint ventures
| Sales of products and rendering of services |
| Sales of products and rendering of services |
69,056,009.4477,751,276.48Associated companies
66,706,135.6187,149,633.74Other related parties
| Sales of products and rendering of services |
| Sales of products and rendering of services |
24,122,066.4111,233,785.52Total429,338,692.13623,321,312.64
(2) Related party lease
Unit: RMBLessor Type of leased assets Rental fee confirmed in 2023 Rental fee confirmed in 2022Subsidiaries of CETC Equipment 10,375,908.82 13,913,056.77
Subsidiaries of CETC House 2,324,068.08 -
Joint ventures House -
542,554.11
Total 12,699,976.90 14,455,610.88
(
3) Compensation for key managers
Unit: RMBItem 2023 2022
Compensation for key managers
| Compensation for key managers | 42,555,350.07 | 38,836,690.44 |
(4) Other related party transactions
Statement of capital deposits:
Unit: RMBRelated Party
Content of relatedparty transaction
2023
Balance at the end of thecurrent reporting period
| Amount occurred in | Amount occurred in |
2022
Opening BalanceSubsidiaries of CETC
(withdraw from)current deposits
3,005,143,927.06
| Deposit into |
3,005,177,445.74
(499,973,215.52)
33,518.68Subsidiaries of CETC
Deposit into(withdraw from)fixed deposits
(3,000,000,000.00)
1,000,000,000.00
-
4,000,000,000.00Total 5,143,927.06
4,005,177,445.74
(499,973,215.52)
4,000,033,518.68
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Note: For the deposit deposited by the Group with China Electronics Technology Finance Co., Ltd., the deposit interestincome during the reporting period was RMB81,941,576.31 (2022: RMB 80,026,784.06).
Information on notes discounted:
In 2023, The Company had no bank acceptance discounted to China Electronics Technology Finance Co., Ltd. (2022:
RMB33,564,209.39),no bank acceptance matured at discount (2022: RMB33,564,209.39), no interest expense arisingfrom discounting bank acceptance (2022: RMB241,747.39).
Information on entrusted loans:
In 2023, the Company issued entrusted loans to its subsidiaries through China Electronics Technology Finance Co., Ltd.in the amount of RMB2,523,000,000.00, and the amount of handling fees confirmed to China Electronics TechnologyFinance Co., Ltd. was RMB277,300.00.
Others:
During the reporting year, Hikrobot, a subsidiary of the Company, received a subsidy of RMB5,000,000.00 fromCETHIK, the parent company of the Company. The subsidy was designated for robot R&D and industrialization projectsto be carried out by Hikrobot from 1 January 2022 to 31 December 2023.
6. Receivables from Related Parties and Payables to Related Parties
(1) Receivables from related parties
Unit: RMBItem Related Party
| Closing balance | Opening balance | ||
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision |
Accountsreceivable
Subsidiaries of CETC 640,493,055.77 220,124,781.15 703,246,712.68 226,247,765.93
receivable
Joint ventures 59,425,217.10 1,625,142.58 33,380,436.75 1,573,681.64
| Accounts |
| Accounts |
receivable
Associated companies 72,319,683.18 8,556,237.95 101,753,693.78 5,670,312.45Accountsreceivable
Other related parties7,442,685.65
154,865.50 3,849,485.72 79,488.44
| Total | 779,680,641.70 | 230,461,027.18 | 842,230,328.93 | 233,571,248.46 |
Unit: RMBItem Related Party
| Closing balance | Opening balance |
Carrying balance Credit loss provision Carrying balance Credit loss provision
receivable
Subsidiaries of CETC 176,267,380.85 1,197,255.34 170,543,239.65 -Notesreceivable
Joint ventures 400,000.00 - 2,500,000.00 -
NotesNotes
receivable
Associated companies 22,277,196.50 - 2,358,308.70 -Notesreceivable
Other related parties 1,215,030.00 - 281,113.19 -
NotesTotal
| Total | 200,159,607.35 | 1,197,255.34 | 175,682,661.54 | - |
Unit: RMBItem Related Party
| Closing balance | Opening balance |
Carrying balance Credit loss provision Carrying balance Credit loss provision
receivables
Subsidiaries of CETC 1,649,910.00 561,932.90 1,720,917.15 240,722.93Otherreceivables
Joint ventures 191,713.33 6,768.82 374,619.85 2,472.49
OtherOther
| Other | Associated companies | 4,387,500.00 | 30,273.75 | - | - |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
| receivables | |||||
| Total | 6,229,123.33 | 598,975.47 | 2,095,537.00 | 243,195.42 |
Unit: RMBItem Related Party
Closing balance Opening balance
| Carrying balance | Credit loss provision | Carrying balance | Credit loss provision | ||
| Long-term |
receivables(including those duewithin one year)
Subsidiaries of CETC
47,210.22 325.75 300,478.44 1,983.16
receivables(including those duewithin one year)
Joint ventures 35,381,700.20 1,144,327.88 43,800,876.33 973,106.36
| Long-term | |||||
| Total | 35,428,910.42 | 1,144,653.63 | 44,101,354.77 | 975,089.52 |
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
| Prepayments | Subsidiaries of CETC | 7,831,067.74 | 6,707,516.94 |
Prepayments Associated companies 118,402.50 -Total 7,949,470.24 6,707,516.94
(2) Payables to related parties
Unit: RMB
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
Notes Payable Subsidiaries of CETC 1,224,954.15 7,561,539.70
| Notes Payable | Other related parties | 4,390,639.49 | 31,994,311.07 |
Total 5,615,593.64 39,555,850.77
Unit: RMB
| Item | Related Party | Closing balance | Opening balance |
| Contract liabilities | Subsidiaries of CETC | 6,277,318.83 | 8,673,665.99 |
Contract liabilities Joint ventures 1,300,172.80 2,558,659.59
| Contract liabilities | Other related parties | 30,042.00 | - |
Total 7,607,533.63 11,232,325.58
Unit: RMB
Item Related Party Closing balance Opening balance
| Other payables | Subsidiaries of CETC | 8,230,611.43 | 56,652,471.09 |
| Other payables | Joint ventures | - | 10,000.00 |
Other payables Associated companies 20,527,386.00 236,000.00
| Other payables | Other related parties | 250,000.00 | 250,000.00 |
Item Related Party Closing balance Opening balanceAccounts payable Subsidiaries of CETC 877,667,364.69 759,760,264.93Accounts payable Joint ventures 4,068,366.04 966,037.73Accounts payable Associated companies43,869,241.50 88,750,828.96Accounts payableOther related parties410,242,953.80 240,030,055.22Total
1,089,507,186.84
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
| Total | 29,007,997.43 | 57,148,471.09 |
Unit: RMB
XII. Share-based Payments
1. Overview of Share-based Payments
Restrictive Share Incentive SchemeAccording to the Approval of the Implementation of the Restrictive Share Incentive Scheme of Hangzhou Hikvision DigitalTechnology Co., Ltd. (Guo Zi Fen Pei [2012] No. 426) issued by the State-owned Assets Supervision and AdministrationCommission of the State Council and the Opinion the Restrictive Share Incentive Scheme of Hangzhou Hikvision DigitalTechnology Co., Ltd. (Shang Shi Bu Han [2012] No. 353) issued by China Securities Regulatory Commission, theCompany convened the ninth meeting of the second session of the Board of Directors on July 25, 2012 and the firstextraordinary general meeting for 2012 on August 13, 2012, whereat the Proposal Relating to the Restrictive Share Scheme(Amendments to the Draft) of the Company and Highlights was reviewed and passed. The purpose of the Share IncentiveScheme is to: further improve the Company’s governance structure to establish a good and balanced value allocationsystem; establish a profit-sharing and restriction mechanism among shareholders, the Company and its employees, so asto provide shareholders with sustainable return; fully mobilize the positivity of core employees to support the Companyin realizing its strategies and long-term sustainable development; attract and retain core employees to ensure theCompany’s long-term development.
The Scheme shall be effective for a term of 10 years commencing from the date of approval by general meeting of theCompany, during which the Company may grant restricted shares to grantees under the Scheme. In principle, each grantshould be at an interval of two years. After the expiry of the Scheme, no restricted shares could be granted to granteesunder the Scheme. However, all the provisions of the Scheme remain valid to the restricted shares granted under theScheme.
Each batch of restricted shares shall not be unlocked unless fulfilling, each time, by the Company its unlock performancecriteria (including net asset yield, revenue growth rate, and economic value added), and by grantees’ individualperformance criteria simultaneously. Where, during the unlocking period, any one or more unlock criteria for the Companyor individuals is or are not fulfilled, such portion of subject shares shall be cancelled. The cancelled restricted shares willbe repurchased by the Company based on the relevant regulations under the scheme.
On December 20, 2018, authorized by the 2
ndextraordinary general meeting of 2018 and reviewed by the Board ofDirectors, the Company granted 121,195,458 restricted shares to grantees at a grant price of RMB 16.98 per share ("2018Share Incentive Scheme"). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing onthe grant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up and arenot transferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares (includingLock-up Period), during which grantees may, subject to unlocking conditions stipulated by the scheme being satisfied,apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months following the grant date and thenumber of shares to be unlocked shall be 40% of the aggregate number of the Subject Shares granted; the second unlockingperiod shall be the 36 to 48 months following the grant date and the number of shares to be unlocked shall be 30% of theaggregate number of the Subject Shares granted; the third unlocking period shall be the 48 to 60 months following thegrant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted.The Company has completed the equity registration work in January 2019.
In accordance with the authorization by the Company’s second Extraordinary General Meeting in 2018, approved by the
th
meeting of the 5
thsession of the Board of Directors on April 13, 2023 and the 2022 Annual General Meeting, and alsoin accordance with the revised Articles of Association, the Company repurchased in cash and cancelled the granted
| Item | Related Party | Closing balance | Opening balance |
Lease liabilities (including thosedue within one year)
Subsidiaries of CETC 5,215,883.84 16,863,126.87
| Total | 5,215,883.84 | 16,863,126.87 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
33,331,858 restricted RMB treasury shares that have not been unlocked. The Company completed the deregistration onJuly 5, 2023, and thus the implementation of the 2018 Restricted Stock Plan was completed.
On January 18, 2022, authorized by the 1
st
extraordinary general meeting of 2022 and reviewed by the Board of Directors,the Company granted 97,402,605 restricted shares to grantees at a grant price of RMB29.71 per share ("2021 ShareIncentive Scheme"). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing on thegrant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up and are nottransferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares (including Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by the scheme being satisfied, apply forunlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months following the grant date and the numberof shares to be unlocked shall be 40% of the aggregate number of the Subject Shares granted; the second unlocking periodshall be the 36 to 48 months following the grant date and the number of shares to be unlocked shall be 30% of the aggregatenumber of the Subject Shares granted; the third unlocking period shall be the 48 to 60 months following the grant date andthe number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted. The Companyhas completed the equity registration work in February 2022.
Unit: share2018 Share Incentive Scheme2023 2022
- 68,762,683
| Total of equity instruments outstanding at the beginning of the reporting period |
| Total of equity instruments granted (share dividend) during the current reporting period |
- -
- 33,142,730
| Total of equity instruments vested during the current reporting period |
| Total of equity instruments forfeited during the current reporting period (Note) |
- 35,619,953
- -
| Total of equity instruments outstanding at the end of the reporting period |
| The exercise price (ex-rights) of the outstanding Share-based payments of the Company at |
the end of the reporting period and the remaining
Inapplicable Inapplicable
2021 Share Incentive Scheme 2023 2022
period of the contractTotal of equity instruments outstanding at the beginning of thereporting period
97,402,605 -
| Total of equity instruments outstanding at the beginning of the reporting period | |
| Total of equity instruments granted (share dividend) during the current reporting period | - |
97,402,605
| Total of equity instruments vested during the current reporting period | - |
-
| Total of equity instruments forfeited during the current reporting period (Note) | 38,961,042 |
-
58,441,563
| Total of equity instruments outstanding at the end of the reporting period |
97,402,605
RMB29.71 /share and 36 months
| The exercise price (ex-rights) of the outstanding Share-based payments of the Company at the end of the reporting period and the remaining period of the contract |
RMB29.71 /share and 48 months
According to the relevant provisions of the 2021 Restricted Stock Plan (Revised Draft), the unlocking conditions for thefirst unlocking period of restricted shares in 2021 did not meet the goal, and the corresponding number of restricted sharesgranted but not unlocked totaled 38,961,042 shares became invalid during the year.
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
On October 22, 2015, the Company considered and approved Management Measures for Core Staff Co-Investment inInnovative Businesses (Draft) (hereafter referred to as "Management Measures") at the 2
nd
extraordinary general meeting.On March 7, 2016, representative congress of labor union of Hikvision passed Implementation Provisions for ManagementMeasures for Core Staff Investment in Innovative Businesses (hereafter referred to as "Provisions"), to initiate andimplement the incentive mechanism of staff co-investment (hereafter referred to as "Staff Co-Investment Plan") ininnovative business subsidiaries. Staff who participate in the Staff Co-Investment Plan (hereafter referred to as "Co-Investment Staff") signed an Entrusted Investment Agreement with the labor union committee of Hikvision (hereafterreferred to as "Hikvision Labor Union"), to entrust Hikvision Labor Union to make investments. Hikvision Labor Union,
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
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 the Company and its subsidiaries areable to invest in all innovative businesses. Grantees of plan B are comprised of core and full-time staff from innovativebusiness subsidiaries, and could participate in investment on innovative business subsidiaries and their subsidiaries wherethey serve. The Co-Investment Platform will increase capitals annually, the corresponding increased equity of which willbe distributed to core staff who meets investment conditions pursuant to particular rules. The waiting period shall be fiveyears after equity of Co-Investment Platform is held by the staff. Within the waiting period, if the labor relationshipbetween the grantees and the Company or its subsidiaries is released or terminated, equity of Co-Investment Platform heldby the grantees shall be refunded and settled by the labor union at an agreed price pursuant to the Provisions.
The Co-Investment Platform grants Co-Investment Staff additional equity annually. The Company determines whethershare-based payment shall be constituted based on the fair value of equity instruments newly obtained by the Group’s staffin Co-Investment Platform on each granting date. On December 25, 2020, the Company held the 20
th meetings of 4
th
session of the Board of Directors, which reviewed and approved the Proposal on Revising Management Measures for CoreStaff Co-Investment in Innovative Businesses. The updated version of Management Measures for Core Staff Co-Investmentin Innovative Businesses (hereinafter referred to as "updated version of Management Measures"), The new version addsrules relating to the confirmation of shares held directly by employees under Staff Co-Investment Plan and equities ofinnovative business subsidiaries held indirectly by employees, clarifies the treatment of shares under Co-Investment Planafter the disqualification about co-investment of employees, adds rules of management committee.
On December 31, 2020, the Executive management committee of the Co-Investment Plan approved the Provisions forManagement Measures for Core Staff Investment in Innovative Businesses (hereafter referred to as "New Provisions". Inaccordance of the New Provisions, for the confirmed Plan A shares, the waiting period is five years since the employeehas worked for the Company or its subsidiaries and for the confirmed share of Plan B, the waiting period is five yearssince the employee has worked for the innovative business subsidiary corresponding to the Plan B or its subsidiaries.
2. Information of the Share-based Payment through Equity Settlements
Restrictive Share Incentive Scheme
Unit: RMB2021 Share Incentive SchemeMethod 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 | |
| Recognition basis of the number of the equity instruments qualified for vesting | Determined based on the results estimation of each |
vesting period and turnover rate
| Reasons of the significant difference between the estimates of the current reporting period with that of the prior year | None |
| Accumulative amount of share-based payment through equity settlement and further included in the capital reserve |
584,850,306.40
| Total amount of the expenses recognized according to share-based payment through equity settlement in the current reporting period |
(44,951,095.37)
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
Unit：RMB
Share Incentive Scheme of Staff Co-Investment in
Innovative BusinessesMethod 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
Accumulative amount of share-based payment through equity settlement andfurther included in the capital reserve
695,972,415.25
| Estimated based on the turnover rate of each vesting period | |
| Total amount of the expenses recognized according to share-based payment |
252,567,973.30
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
RMB37,934,118.40 of the total expenses of paid and confirmed by equity settlements was shared by 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.
XIII. Commitments and Contingencies
1. Significant Commitments
(1) Capital commitments
Unit: RMB’000
through equity settlement in the current reporting period
| Closing balance | Opening balance |
Contracted but not yet recognized in financial statements- Commitment on construction of long-term assets 12,527,408 16,521,850
| - Commitment on external investments | 12,940 | 12,940 |
Total12,540,348
16,534,790
2. Contingencies
There are no material contingencies that need to be disclosed by the Group.
XIV. Events after the Balance Sheet Date
1. Significant Unadjusted Events
Restricted Stock Incentive Plan
The Company’s 20
th
meeting of the 5
thsession of the board of directors held on April 18, 2024, deliberated and approvedthe Proposal on Terminating the Implementation of the 2021 Restricted Stock Plan and Repurchasing and CancelingRelevant Restricted Shares, which intends to repurchase and cancel all the restricted shares granted but not unlocked inthe 2021Restricted Stock Plan. After the completion of this repurchase and cancellation, the Company's 2021RestrictedStock Plan will be terminated. The proposal is subject to the approval of the Company's general meeting of shareholders.
2. Profit Distribution
Pursuant to the proposal of the 20
th meeting of the 5
thsession of the Board of Directors on April 18, 2024, the Companyproposed to distribute cash dividend of RMB9 (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.
XV. 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 ofAIoT products andservices.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
External revenue by geographical area & non-current assets by geographical location
Unit: RMBItem2023 2022
| External revenue generated in domestic area | 60,372,251,251.28 | 56,890,890,769.45 |
External revenue generated in overseas area
| 28,967,605,604.40 | 26,275,430,911.69 |
Total
| 89,339,856,855.68 | 83,166,321,681.14 |
Unit: RMB
| Item (Note) | On December 31, 2023 | On January 1, 2023 |
| Non-current assets in domestic area | 20,706,528,578.27 | 16,808,935,279.10 |
| Non-current assets in overseas area | 850,027,281.25 | 831,488,767.27 |
| Total |
| 21,556,555,859.52 | 17,640,424,046.37 |
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 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
XVI. Notes to Major Items of Financial Statements of the Parent Company
1. Accounts Receivable
(1) Disclosure by age
Unit: RMB
| Book balance on December 31, 2023 | Book balance on January 1, 2023 |
Within credit period 9,090,405,506.46 7,024,926,501.10
| Within 1 year after exceeding credit period | 9,384,300,440.80 | 16,771,801,690.71 |
1-2 years after exceeding credit period 508,157,816.90 513,230,879.822-3 years after exceeding credit period311,172,302.13 312,592,580.103-4 years after exceeding credit period177,209,156.93 180,224,406.31Over 4 years after exceeding credit period 215,593,619.38 164,982,539.08Subtotal 19,686,838,842.60 24,967,758,597.12Less: bad debts provisions 670,061,176.83 591,943,445.60Book value 19,016,777,665.77 24,375,815,151.52
(2) Classification and disclosure of by bad debts provision methods
Unit: RMBCategory
| Closing balance | Opening balance | ||||
| Carrying balance | Credit loss provision | Book value | Carrying balance | Credit loss provision | Book value |
Amount
Amount
| Percentage (%) | Percentage (%) |
AmountAmount
Amount
| Percentage (%) | Percentage (%) |
Amount
bad debts on a
| single basis |
- - - - - - - - - -
bad debts by
| portfolios |
19,686,838,842.60 100.00 670,061,176.83 3.40 19,016,777,665.77 24,967,758,597.12 100.00
591,943,445.60
2.37
24,375,815,151.52Total 19,686,838,842.60 100.00 670,061,176.83 3.40 19,016,777,665.77 24,967,758,597.12 100.00
591,943,445.60
2.37
24,375,815,151.52
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Accounts receivable provision for bad debts by portfolios
Unit: RMBCustomer
Closing balanceCarrying balance Bad debts provision Proportion (%)Subsidiaries in the Group 15,710,430,253.38 - -Portfolio A 376,849.67
179,867.03 47.73Portfolio B 3,975,808,542.43 669,658,112.68 16.84Portfolio C 223,197.12 223,197.12 100.00
Total 19,686,838,842.60 670,061,176.83
| 3.40 |
Description of accounts receivable for bad debts provision by portfolios
As part of the Company's credit risk management, the Company's accounts receivable are divided into portfolio A, portfolio B and portfolio C according to the regional and object riskcharacteristics of the business, and the impairment matrix is used to determine the expected credit loss of each portfolio based on the aging of accounts receivable over credit period. Forthe accounts receivable generated by the Group’s related parties, because the payment time is arranged by the Group according to the cash flow of the companies in the Group, theCompany believes that the credit risk is low and no provision for bad debts is required. The aging information can reflect the solvency of these three types of customers when the accountsreceivable are due.
(3) Bad debts provision
Unit: RMBItem
Amount at the opening
balance
Changes in the year
Translation differences forforeign currency statements
Amount at the closing
balanceAccrual
Provision /Recollect or
Reverse
Recover or write-offAccount receivables 591,943,445.60 99,200,771.50 - (21,083,040.27) - 670,061,176.83
Total 591,943,445.60 99,200,771.50 - (21,083,040.27) - 670,061,176.83
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
(4) Top five debtors and contract assets (including those included in other non-current assets) based on corresponding closing balance of accounts receivable
At the end of the year, the aggregate amount of the Company's top five accounts receivable and contract assets was RMB15,759,511,992.08, accounting for 79.92%of the total balance of accounts receivable and contract assets at the end of the year, and the provision for bad debts amounted to RMB65,926,097.62.
2. Other Receivables
2.1 By ccategories
Unit：RMBCategory Closing balance Opening balanceDividends receivable 41,423,446.39 85,323,007.51Other receivables 3,019,822,728.35 2,324,554,929.22Total 3,061,246,174.74 2,409,877,936.73
2.2 Dividends receivable
Unit：RMBInvestees Closing balance Opening balanceSubsidiaries of Hikvision 41,423,446.39 85,323,007.51Total 41,423,446.39 85,323,007.51
2.3 Other receivables
(1) Other receivables by aging
Unit: RMBAge
Closing balance
Other receivables Credit loss provisionWithin contract period2,989,035,526.46 2,291,096,654.42Within 1 year24,581,596.42 33,503,835.611-2 years8,955,049.99 2,112,945.32
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
2-3 years1,282,544.62 341,396.883-4 years120,699.57 946,880.46Over 4 years961,843.47 646,571.70Subtotal3,024,937,260.53 2,328,648,284.39Less: bad debts provision5,114,532.18 4,093,355.17Book value3,019,822,728.35 2,324,554,929.22
(2) Other receivables by nature of the payment
Unit: RMBNature Closing balance Opening balancePayments of subsidiaries within the Group2,761,272,567.36 2,137,185,066.96Restricted stock repurchase payments169,968,816.44 80,136,229.12Temporary payments for receivables24,622,620.38
29,809,325.81Guarantee deposit54,134,994.62 69,392,171.01Others14,938,261.73 12,125,491.49Total3,024,937,260.53
2,328,648,284.39
(3) Provision for bad debts of other receivables
Unit:
RMBItem
Amount at the opening
balance
Changes in the year
Translation differences
for foreign currency
Amount at the closing
balanceAccrualProvision /RecollectRecover or write-off
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
or Reverse k statementsOther receivables 4,093,355.17 1,041,177.01 - (20,000.00) - 5,114,532.18
total 4,093,355.17 1,041,177.01 - (20,000.00) - 5,114,532.18The actual write-off of other receivables in the current reporting period was RMB 20,000.00.
(4) Top 5 debtors of other receivables in terms of closing balance
At the end of the year, the total amount of the top five other receivables of the Company was RMB2,154,682,457.36, accounting for 71.23% of the total balance of other receivables at the end ofthe year, without provision for bad debts.
3. Long-term Equity Investment
Unit: RMBItem
Closing balance Opening balanceCarrying balance Provisions Book value Carrying balance Provisions Book valueInvestment in subsidiaries 7,687,757,432.17 - 7,687,757,432.17 6,629,092,230.54 - 6,629,092,230.54Investments in associated enterprises and joint ventures 993,629,616.58 - 993,629,616.58 1,106,666,564.96 - 1,106,666,564.96Total 8,681,387,048.75 - 8,681,387,048.75 7,735,758,795.50 - 7,735,758,795.50
(1) Investment in main subsidiaries
Unit：RMBName of investee Opening balance
Increase during
the currentreporting period
Decrease during
the currentreporting period
Closing balance
Write-off of impairmentprovision during the currentreporting period
Balance of impairment lossprovision at the end of thecurrent reporting periodHangzhou Hikvision System873,470,130.37
-
2,460,087.09
871,010,043.28
-
-
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Name of investee Opening balance
Increase during
the currentreporting period
Decrease duringthe currentreporting period
Closing balance
Write-off of impairmentprovision during the currentreporting period
Balance of impairment lossprovision at the end of thecurrent reporting periodTechnology Ltd.Hangzhou HikvisionTechnology Ltd.
1,099,649,009.63
-
5,253,484.62
1,094,395,525.01
-
-
Hangzhou EZVIZ NetworkCo., Ltd.
60,631,166.55
70,991.92
-
60,702,158.47
-
-
Hangzhou EZVIZ SoftwareLtd.
32,365,508.28
-
2,378.24
32,363,130.04
-
-
Hangzhou HikrobotTechnology Co., Ltd.
137,606,813.93
148,095.01
-
137,754,908.94
-
-
Hangzhou HaikangIntelligence Ltd.
8,398,458.69
147,909.39
-
8,546,368.08
-
-
(2) Investments in associated enterprises and joint ventures
Unit：RMB
Name of investee
Openingbalance
Closing balance
Balance ofimpairmentloss provisionat the end ofthe currentreporting
periodAdditionalinvestments
Reducedinvestments
Investmentincome (losses)
recognized
under theequity method
Othercomprehensive
incomeadjustment
Otherchanges in
equity
Declared cashdividends or
profitdistribution
Provision forimpairment
Others
1. Joint Ventures
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Name of investee
Openingbalance
Closing balance
Balance ofimpairmentloss provisionat the end ofthe currentreportingperiodAdditionalinvestments
Reducedinvestments
Investmentincome (losses)recognizedunder theequity method
Othercomprehensiveincomeadjustment
Otherchanges inequity
Declared cashdividends orprofitdistribution
Provision forimpairment
Others
Hangzhou HaikangIntelligent IndustrialEquity Investment FundPartnership (L.P.)
829,825,387.60 - - (47,428,857.55) - 8,959,723.09 - - - 791,356,253.14
-Zhejiang City DigitalTechnology Ltd.
26,341,510.80 - - 3,293,974.81 - - - - - 29,635,485.61
-Zhejiang Haishi HuayueDigital Technology Ltd.
13,382,016.23 - - 685,265.42 - - - - - 14,067,281.65
-Guangxi Haishi OperationManagement Ltd.
13,059,993.97 - - (609,658.09) - - - - - 12,450,335.88
-Xuzhou Kangbo OperationManagement Service Ltd.
10,385,566.88 - - 666,781.48 - - - - - 11,052,348.36
-Others 6,752,804.77 (1,580,417.62) 5,172,387.15Subtotal 899,747,280.25 - - (44,972,911.55) - 8,959,723.09 - - - 863,734,091.79 -
2. Associated Companies
Wuhu SensortechIntelligent Technology
98,094,380.52 - - (4,911,240.97) - - - - (93,183,139.55) -
-
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Name of investee
Openingbalance
Closing balance
Balance ofimpairmentloss provisionat the end ofthe currentreportingperiodAdditionalinvestments
Reducedinvestments
Investmentincome (losses)recognizedunder theequity method
Othercomprehensiveincomeadjustment
Otherchanges inequity
Declared cashdividends or
profitdistribution
Provision forimpairment
Others
Co., Ltd (Note(V)13 note2)Zhiguang Hailian Big DataTechnology Ltd.
22,425,370.08 - - 820,002.92 - - - - - 23,245,373.00
-Others 86,399,534.11 12,662,978.76 7,587,638.92 -
-
| - | - |
106,650,151.79Subtotal 206,919,284.71 - - 8,571,740.71 - 7,587,638.92 - - (93,183,139.55) 129,895,524.79 -Total 1,106,666,564.96 - - (36,401,170.84) - 16,547,362.01 - - (93,183,139.55) 993,629,616.58 -
(3) As of December 31, 2023, there were no restrictions on the capability of transferring fund to the Company from investees in which the Company held long-term
equity investment.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
4. Revenue/cost of sales and services
Unit：RMBItem
2023 2022Revenue Cost Revenue CostMajor business21,953,642,926.65
4,405,677,506.76
21,018,811,109.28
| 4,405,677,506.76 |
4,962,133,305.77Other business3,594,151,240.20
3,265,694,229.07 135,606,040.90Total25,547,794,166.85
| 167,059,586.29 | |
24,284,505,338.35 5,097,739,346.67
5. Investment Income
Unit：RMBItem2023 2022
4,572,737,093.05Long-term equity investment income calculated by the costmethod
424,509,196.39 205,293,907.63
| Long-term equity investment income calculated by the cost method | ||
| Long-term equity investment income(losses) measured by the equity method |
(36,401,170.84) 118,900,466.08
| Investment income from disposal of long-term equity investments |
- 1,709,563.80
| Investment income of other non-current financial assets during the holding period |
65,923,840.33 51,892,209.92
Investment income from disposal of trading financial assets- 8,227,196.70
| Investment income from disposal of other non-current financial assets |
-
Investment income from debt investments30,076,287.42 -
| 1,260,000.00 | ||
| Investment income from the disposal of the business asset group |
15,902,073.63 -
Others(399,071.78) -
Total499,611,155.15
6. Related Party Transactions
(1) Sales and purchase of goods, provision of services and receiving services
Purchase of goods/receiving of services:
Unit：RMBRelated party Transaction type 2023 2022
387,283,344.13Subsidiaries of Hikvision(Note)
| Subsidiaries of Hikvision (Note) | Purchase of materials and receiving of services | 5,307,205,803.18 | 6,144,557,450.80 |
Subsidiaries of CETC
| Purchase of materials and receiving of services | 51,579,706.89 | 115,654,935.67 |
Joint ventures
receiving of services
| Purchase of materials and | 547,169.80 | - |
Associated companies
Purchase of materials andreceiving of services
| 71,939,278.00 | 76,150,000.00 |
Other related parties
Purchase of materials andreceiving of services
| 20,000,000.00 | 20,744,901.95 |
Total
| 5,451,271,957.87 | 6,357,107,288.42 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Note: Subsidiaries of Hikvision are subsidiaries of the Company.
Sales of goods/rendering of services:
Unit：RMBRelated party Transaction type 2023 2022Subsidiaries of Hikvision
Sales of products andrendering of services
20,445,938,282.22 18,556,146,320.10Subsidiaries of CETC
Sales of products andrendering of services
53,550,416.34 39,345,286.87Joint ventures
Sales of products andrendering of services
7,910,493.83 6,434,024.76Associated companies
Sales of products andrendering of services
- 250,870.35Other related parties
Sales of products andrendering of services
5,660,404.06 4,824,922.37Total
Sales of products andrendering of services
20,513,059,596.45 18,607,001,424.45
(2) Related party lease
Lessor Lease type Lease fee recognized in 2023 Lease fee recognized in 2022Subsidiaries of CETC House2,324,068.08 -Total2,324,068.08 -
(3) Guarantees with related parties
In the current reporting period, the Company has provided guarantees for its 31 subsidiaries in an amount notexceeding an equivalent of RMB21.742 billion (2022: RMB17.90 billion), including the joint liability guarantee forthe payment obligations on purchase from suppliers in an amount not exceeding an equivalent of RMB250 million(2022: RMB320 million), and the joint liability guarantee for the general credit limit applied from commercial banksand other financial institutions or other financing methods through agreed methods in an amount not exceeding anequivalent of RMB21.492billion (2022: RMB17.58 billion).
(4) Funding to related parties
In April 2023, the Company held the 17th Meeting of the 5th Session of the Board of Directors, which consideredand approved the Proposal on Providing Financial Assistance to Subsidiaries. Under this proposal, the Companywill offer a loan of up to RMB600 million, RMB600 million, RMB400 million, RMB200 million, and RMB500million, to Hikvision Imaging Technology, Hangzhou Rayin Technology, HikFire Technology, Zhejiang HikfireTechnology Ltd., Wuhu Sensortech Intelligence Technology Co., Ltd., respectively. It will be used for eachinnovative business subsidiary to supplement the operating capital needs, and the specific loan amount will be
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
provided according to the actual business needs of each innovative business subsidiary. The proposal wasdeliberated and approved by the Company's General Meeting of Shareholders on April 15, 2023, and the validityperiod of the related party loan limit is 3 years from the date of deliberation and approval by the Company's GeneralMeeting of Shareholders, and the amount (balance) can be recycled in batches during the validity period. The annualborrowing interest rate of financial assistance shall be determined through negotiation between the parties to theagreement without violating relevant laws and regulations, and the borrowing interest rate shall be determined inaccordance with the principle of marketization, and the specific contract shall prevail. When the above proposaltook effect, the unused amount of the 2022 related party borrowing quota for Hikvision Imaging Technology,Hangzhou Rayin Technology, and HikFire Technology, automatically become invalid. In 2023, the Company lenta total of RMB2,371,482,198.39 for various innovation business subsidiaries, recovered RMB3,247,963,256.59,and received a total interest income of RMB17,756,318.06.
In April 2022, the Company held the 9
thMeeting of the 5th Session of the Board of Directors, which consideredand approved the Proposal on Providing Financial Assistance to Innovative Subsidiaries. Under this proposal, theCompany will offer a loan of up to RMB1200 million, RMB1500 million, RMB300 million, RMB700 million,RMB200 million, RMB300 million, and RMB300 million, to HikAuto Technology, Wuhan HikSemi TechnologyCo., Ltd., HikFire Technology, HikMicro Sensing, HikImaging Technology, Rayin Technology and HikAutoSoftware, respectively. The loans are intended to meet the operating capital needs of these innovative subsidiariesand the specific amount of a loan will be provided based on the actual business needs of each subsidiary. Theproposal was considered and approved by the shareholders' meeting of the Company on May 13, 2022. The validityperiod of the loan is 3 years from the date of proposal consideration and approval by the shareholders' meeting ofthe Company, and the loan (balance) can be taken out several times during the validity period. The annual loaninterest rate shall be determined by the parties to the agreement in accordance with the market-based principleswithout violating the relevant laws and regulations, and shall be subject to the specific contract. In 2022, theCompany lent a total of RMB4,058,597,035.23 to these innovative subsidiaries, and recoveredRMB3,969,815,977.03 with interest income totaling RMB31,573,270.34.
In order to meet the R&D funding needs et al., the Company along with its subsidiaries, including HangzhouSystems, Hangzhou Rayin Technology, HikStorage Technology, HikMicro Sensing, HikRobot and HikAutoSoftware (hereinafter referred to as "loan recipient"), signed long-term loan-and-repayment contracts with somebanks. Under these loan-and-repayment contracts, the Company is regard as the borrower, a loan recipient is regardas the recipient, and these banks are regard as lenders. Associated with the loan recipient’s R&D project progressand funding needs, the loan recipients will apply for the loan via the Company. After approval by the correspondingbank, the loan will be allocated to the loan recipient via the Company. The contract period is from December 31,2021 to December 2, 2026. RMB3,427,994,954.00 (2022: RMB287,020,000.00) of the Company's long-term
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
receivables represented the actual borrowings applied by the loan recipients as of December 31, 2023, and interestincome of RMB75,642,852.46 was recognized in 2023 (2022: RMB5,118,686.47).
(5) Other related party transactions
Statement of capital deposits
Unit: RMB
Note: For the deposit that the Company deposited into China Electronics Technology Finance Co., Ltd., the depositinterest income was RMB 81,941,288.77 in 2023 (2022: RMB 80,026,784.06).
Statement of discounted note
Please refer to note (XI), 5(4) Statement of discounted note
In 2023, the Company issued entrusted loans to its subsidiaries through China Electronics Technology Finance Co.,Ltd. in the amount of RMB 2,523,000,000.00, recognized investment income for entrusted loans in the amount ofRMB 30,076,287.42, and confirmed the fee for China Electronics Technology Finance Co., Ltd. in the amount ofRMB 277,300.00.At the end of the year, the Company granted entrusted loans of RMB1,663,000,000.00 to its
subsidiaries through China Electronics Technology Finance Co., Ltd
Purchase of business asset groupIn May 2023, the Company and its subsidiary, Hikrobot, entered into an acquisition agreement for the business assetgroup, stipulating that the Company would purchase a business asset group of Hikrobot for RMB77,431,660.60,including but not limited to assets and corresponding personnel, business, contractual rights and interests, etc., andthe transaction would be completed on May 31, 2023.As of the end of the year, the Company has completed thepayment for the transfer of the business asset group.
Related Party (Note)
Content of related partytransaction
Amount occurredduring the currentreporting period
Closing balance at
the end of thecurrent reporting
period
Amount occurredduring the priorreporting period
Opening Balance at thebeginning of the current
reporting periodSubsidiaries of CETC
Deposit into (withdrawfrom) current deposits
3,004,985,831.20
| Opening Balance at the beginning of the current | ||
3,005,019,349.88
(499,973,215.52)
33,518.68Subsidiaries of CETC
Deposit (withdraw from)into fixed deposits
(3,000,000,000.00)
1,000,000,000.00
-
4,000,000,000.00
Total4,985,831.20
4,005,019,349.88
(499,973,215.52)
4,000,033,518.68
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Disposition of business asset groupOn March 31, 2023, the Company and its subsidiary, HikSensor, signed a business asset group transfer agreement,stipulating that the subsidiary, HikSensor, would purchase a business asset group held by the Company forRMB16,845,844.15, including but not limited to assets and corresponding personnel, business, contractual rightsand interests, etc., and the transaction was completed on March 31, 2023. The Company recognized an investmentincome of RMB15,902,073.63 As of the end of the year, the Company has received the payment for the disposalof the business asset group.
7. Receivables from Related Parties and Payables to Related Parties
(1) Receivables from related parties
Unit：RMB
Item Related party
Closing balance Opening balanceCarrying balance
Bad debtsprovision
Carrying balance
Bad debtsprovisionAccounts receivable
Subsidiaries ofHikvision
15,710,430,253.38 - 20,790,257,807.56-
Accounts receivable Subsidiaries of CETC 239,193,519.53 93,713,214.14 245,305,306.90 98,031,982.92Accounts receivable Joint ventures 8,035,455.55 368,023.86 2,379,952.00 101,147.96Accounts receivable Associated companies 8,012,788.72 4,626,280.98 8,072,547.52 2,436,481.82Accounts receivable Other related parties 2,789,778.82 54,524.86 1,902,966.26 44,955.65
Total 15,968,461,796.00 98,762,043.84 21,047,918,580.24 100,614,568.35
Unit：RMBItem Related party
Closing balanceOpening balanceCarrying balance
Bad debtsprovision
Carrying balance
Bad debtsprovisionNotes receivable
Subsidiaries ofHikvision
78,686,478.44 - 35,619,298.47 -Notes receivable Subsidiaries of CETC 30,036,696.08 207,253.20 1,681,429.40 -
Total 108,723,174.52 207,253.20 37,300,727.87 -
Unit：RMBItem Related party
Closing balanceOpening balanceCarrying balance
Bad debtsprovision
Carrying balance
Bad debtsprovision
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Other receivables
Subsidiaries ofHikvision
2,761,272,567.36 - 2,137,185,066.96 -
Other receivables Subsidiaries of CETC 1,149,910.00 218,482.90 1,190,907.15 49,197.51Other receivables Joint ventures 16,837.13 116.18 228,543.65 1,508.39Other receivables Associates 1,012,500.00 6,986.25 - -
Total 2,763,451,814.49 225,585.33 2,138,604,517.76 50,705.90
Unit：RMB
Item Related party
Closing balance Opening balancePrepayments Subsidiaries of Hikvision 1,849,870.06 772,949.48Prepayments Subsidiaries of CETC 2,023,660.38 625,681.13
Total 3,873,530.44 1,398,630.61
Unit：RMBItem Related party
Closing balanceOpening balanceCarrying balance
Bad debtsprovision
Carrying balance
Bad debtsprovisionLong-termreceivables(including those duewithin one year)
Subsidiaries ofHikvision
3,427,994,954.00 - 287,020,000.00 -
Long-termreceivables(including those duewithin one year)
Subsidiaries of CETC
47,210.22 325.75 300,478.44 1,983.16
Total 3,428,042,164.22 325.75 287,320,478.44 1,983.16
Unit：RMB
Item Related party
Closing balanceOpening balanceCarrying balance
Bad debtsprovision
Carrying balance
Bad debtsprovisionDividendsreceivable
Subsidiaries ofHikvision
41,423,446.39 - 85,323,007.51-
Total 41,423,446.39 - 85,323,007.51 -
Unit：RMBItem Related partyClosing balance Opening balance
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Other current assets Subsidiaries of Hikvision 1,663,000,000.00 -
Total 1,663,000,000.00 -
(2) Payables to related parties
Unit：RMBItem Related party Closing balance Opening balanceAccounts payable Subsidiaries of Hikvision723,182,432.60 516,915,904.84Accounts payable Subsidiaries of CETC9,360,219.51 6,494,664.60Total732,542,652.11 523,410,569.44
Unit：RMB
Item Related party Closing balance Opening balanceContract liabilities Subsidiaries of Hikvision6,294,170.87 8,000,394.52Contract liabilities Subsidiaries of CETC382,321.75 273,933.15Contract liabilities Other related parties2,052.00 -Total6,678,544.62 8,274,327.67
Unit：RMB
Item Related party Closing balance Opening balanceOther payables Subsidiaries of Hikvision105,286,603.62 667,461,756.46Other payables Subsidiaries of CETC640,040.00 278,540.00Other payables Joint ventures- 10,000.00Other payables Associates19,996,880.00 2,040.00Other payables Other related parties
100,000.00
100,000.00Total126,023,523.62 667,852,336.46
Unit：RMB
Item Related party Closing balance Opening balance
100,000.00Lease liabilities (includingthose due within one year)
Subsidiaries of CETC5,215,883.84 7,379,632.09Total5,215,883.84 7,379,632.09
8. Supplementary Information to the Cash Flow Statement
(1) Supplementary information to the cash flow statement
Unit：RMB
Lease liabilities (includingthose due within one year)Supplementary information
| Supplementary information | 2023 | 2022(Restated) |
| 1. Reconciliation of net profit to cash flows from operating activities: |
Net profit10,552,055,515.889,597,389,077.40
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Supplementary information 2023 2022(Restated)Add: Assets impairment provision(2,652,989.00)1,195,518.35
Credit loss provision98,343,814.70 122,761,912.01Depreciation of fixed assets394,552,937.63 352,312,160.94Amortization of intangible assets19,203,854.89 30,908,858.01Depreciation of right of use assets60,032,344.15 51,303,066.27Amortization of long-term deferred expenses18,328,579.31 33,629,517.18
Losses (gains) on disposal of fixed assets,
intangible assets and other long-term assets
(1,072,329.19) 2,215,205.61Financial expenses113,727,235.45 49,308,908.32Losses（gains）from change in fair value (2,475,310.72) 74,432,284.58Investment losses（gains） (499,611,155.15)
Losses (gains) on disposal of fixed assets,
intangible assets and other long-term assets
(387,283,344.13)Share-based payment through equity settlement87,813,763.64 334,727,555.19Decrease (increase) in restricted funds43,774,289.78 (38,774,781.68)Decrease (increase) in deferred income tax assets(152,253,958.67)
108,618,564.42Decrease of inventories91,007,632.42 58,285,769.30Decrease (increase) in operating receivables4,966,174,990.63 (676,508,556.07)Increase (decrease) in operating payables838,972,476.93 (288,706,205.97)Increase (decrease) in deferred income(53,059,016.05) 97,602,421.09Net cash flow from operating activities16,572,862,676.63 9,523,417,930.82
2. Net change in cash and cash equivalents:
Closing balance of cash36,354,702,554.3827,771,201,246.40
Less: Opening balance of cash27,771,201,246.40 26,639,582,696.49Add: Closing balance of cash equivalents- -Less: Opening balance of cash equivalents- -Net increase in cash and cash equivalents8,583,501,307.98 1,131,618,549.91
(2) Composition of cash and cash equivalents
Unit：RMB
Item
| Item | Closing balance | Opening balance |
I. Cash36,354,702,554.38
Including: Cash on hand
| 27,771,201,246.40 | |
| 311,652.18 |
360,563.22
Bank deposit for payment at any time
| 36,354,378,020.77 | 27,609,458,740.05 | |
| Other currency funds for payment at any time | 12,881.43 | 161,381,943.13 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Item Closing balance Opening balanceII. Cash equivalents- -III. Closing balance of cash and cash equivalents
36,354,702,554.38
| 36,354,702,554.38 | 27,771,201,246.40 |
On December 31, 2023, the Company’s closing balance of other currency funds was RMB 11,920,490.22(December 31, 2022: RMB 217,063,841.70), of which RMB 11,907,608.79 were various guarantee deposits(December 31, 2022: RMB 55,681,898.57), not cash or cash equivalents.
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
XVII. Supplementary Information
1. Details of Non-Recurring Profit or Loss
Unit：RMB
Item Amount
DescriptionProfit or loss from disposal of non-current assets
(10,507,192.80)
/
| (10,507,192.80) | |
| The government subsidies included in the current profits and |
losses (Except for government subsidies that are closely relatedto the normal business of the enterprise, comply with nationalpolicies and regulations, and enjoy the quota or quota inaccordance with the standards determined by the state, and have
| a continuous impact on the Company's profit and loss ) | 518,953,527.79 |
/
effective hedging business, gains and losses on changes in fairvalue arising from holding derivative financial assets, derivativefinancial liabilities, other non-
| current financial assets, and |
investment gains from the disposal of the above-mentionedfinancial assets/financial liabi
(67,516,075.30)
/
| lities and receivables financing (losses) |
| Profit from business combinations not under common control and that are realized by multiple transactions |
116,433,610.45/
69,942,462.96/
| Other non-operating income and expense except the items mentioned above |
| Other profit or loss items that meet the definition of non-recurring profit or loss |
1,106,664.51/Impact of income tax(64,745,616.43)/The impact of minority equity(122,008,347.17)/Total441,659,034.01/
Note: according to the Explanatory Announcement No. 1 on Information Disclosure of Companies Offering Securitiesto the Public - Non-recurring Gains and Losses, as amended in 2023, the government subsidy of RMB61,397,772.47 in2022 that is closely related to the Company's normal business and complies with national policies and regulations, andwhich has a continuous impact on the Company's profit and loss, is not included in non-recurring gains and losses.
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：RMBProfit for the reporting period
Weightedaverage return on
net assets (%)
Earnings per share
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the Company |
19.64 1.520 1.520
19.02 1.472 1.472
Notes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
3. Supplementary information related to retrospective application of accounting policies/retrospective
restatement/reclassification of financial statement items
Unit: RMB
items
| items | 31, December, 2023 | 31, December, 2022 | 1, January, 2022 |
Current assets
Cash and bank balances49,629,469,654.46 40,011,863,999.94
| 34,721,870,931.36 |
Held-for-trading financial assets37,380.00 12,807,438.36
Notes receivables2,606,071,375.74 2,519,988,159.23
| 34,320,010.83 |
| 1,522,760,905.30 |
Accounts receivables35,815,173,511.44 29,906,294,410.40
Receivables for financing1,594,219,832.62 1,484,218,258.74
| 26,174,773,100.42 |
| 1,316,035,122.06 |
Prepayments508,151,405.92 534,780,120.52
Other receivables571,905,648.93 516,503,485.58
| 505,798,253.35 |
| 359,620,445.88 |
Inventories19,211,434,385.32 18,998,222,978.81
Contract assets1,173,312,415.20 2,118,223,370.98
| 17,974,112,407.60 | ||
| 1,411,372,624.91 | ||
| Non-current assets due within one year |
1,079,721,006.23 996,902,343.27
Other current assets961,593,616.75 806,832,941.58
| 975,960,437.14 |
| 1,022,600,377.78 |
Total Current Assets113,151,090,232.61 97,906,637,507.41
Non-current assets
| 86,019,224,616.63 |
Long-term receivables538,698,618.76 540,647,965.30
Long-term equity investments1,151,104,887.85 1,252,033,513.41
| 613,067,944.97 |
| 982,165,546.45 |
Other non-current financial assets472,184,937.66 423,893,239.94
Fixed assets11,508,302,317.75 8,539,842,630.68
| 438,724,172.22 |
| 6,695,590,671.27 |
Construction in progress4,307,651,074.46 3,770,803,300.80
Right-of-use assets521,061,396.66 574,478,326.31
| 2,323,336,098.68 |
| 566,393,672.75 |
Intangible assets1,810,476,551.45 1,544,933,502.19
Goodwill311,353,640.88 217,386,531.28
| 1,304,247,415.07 |
| 202,381,895.37 |
Long-term amortized expenses177,361,533.93 177,277,742.41
Deferred tax assets1,978,373,012.15 1,471,197,578.26
| 158,007,174.90 |
| 1,211,339,509.50 |
Other non-current assets2,920,349,344.39 2,815,702,012.70
Total Non-Current Assets25,696,917,315.94 21,328,196,343.28
| 3,350,526,411.63 |
| 17,845,780,512.81 |
Total Assets138,848,007,548.55 119,234,833,850.69
Unit: RMB
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Items 31, December, 2023 31, December, 2022
1, January, 2022
Current liabilities
| 1, January, 2022 |
Short-term borrowing2,118,952,026.06 3,343,071,972.89
Held-for-trading financial liabilities38,079,755.04 68,299,685.57
| 4,074,962,469.97 |
| 4,062,317.57 |
Notes payables1,163,687,279.58 1,207,756,963.94
Accounts payables19,163,485,888.09 16,025,563,802.99
| 1,339,998,383.34 |
| 15,889,694,981.12 |
Contract liabilities2,977,990,775.40 2,644,496,508.36
Payroll Payable6,120,254,492.28 4,837,302,455.95
| 2,580,894,226.59 |
| 4,595,552,073.12 |
Taxes payables1,622,401,214.96 1,234,032,138.37
Other payables3,911,612,841.06 3,203,308,686.31
| 1,461,470,029.69 | ||
| 1,830,626,583.03 | ||
| Non-current liabilities due within one year |
5,814,660,214.96 868,197,272.46
Other current liabilities1,481,222,044.19 923,721,593.78
| 596,915,360.58 |
| 917,479,922.61 |
Total Current Liabilities44,412,346,531.62 34,355,751,080.62
Non-current liabilities
| 33,291,656,347.62 |
Long-term borrowings8,940,122,961.01 7,522,315,341.60
Lease liabilities344,005,866.13 277,255,924.83
| 3,284,371,642.52 |
| 317,951,879.21 |
Long-term payables5,776,599.85 7,569,934.67
Provisions213,084,038.31 219,365,227.62
| 9,009,331.50 |
| 200,675,950.96 |
Deferred income966,259,592.34 933,260,426.12
Deferred tax liabilities129,866,978.18 116,479,475.98
| 738,586,458.05 |
| 93,363,075.10 |
Other non-current liabilities1,672,933,103.20 2,831,108,087.59
Total Non-current Liabilities12,272,049,139.02 11,907,354,418.41
| 534,334,158.27 |
| 5,178,292,495.61 |
Total Liabilities56,684,395,670.64 46,263,105,499.03
Shareholders' equity
| 38,469,948,843.23 |
Owners’ Equity9,330,600,931.00 9,430,920,624.00
Capital reserves7,864,903,763.52 10,141,153,435.32
| 9,335,806,114.00 |
| 5,404,070,600.07 |
Less: Treasury shares2,737,987,226.55 5,316,033,650.24
Other comprehensive income44,667,516.16 (42,587,158.81)
| 1,023,188,723.04 |
| (77,184,125.29) |
Surplus Reserves4,715,460,312.00 4,715,460,312.00
Retained earnings57,136,620,244.01 49,460,423,962.05
| 4,672,505,348.00 | ||
| 45,148,698,025.66 | ||
| Total Owners' Equity Attributable to Owner of the Company |
76,354,265,540.14 68,389,337,524.32
Minority equity5,809,346,337.77 4,582,390,827.34
| 63,460,707,239.40 |
| 1,934,349,046.81 |
Hikvision 2023 Annual ReportNotes to Financial StatementsFor the reporting period from January 1, 2023 to December 31, 2023
Items 31, December, 2023 31, December, 2022
1, January, 2022
| 1, January, 2022 | ||
| Total Owners' Equity |
82,163,611,877.91 72,971,728,351.66
| 65,395,056,286.21 | ||
| Total Liabilities and Owners' Equity |
138,848,007,548.55 119,234,833,850.69
Section XI Documents Available for Reference
1. The financial report was signed and sealed by the person in charge of the Company, the person in
charge 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 of
the certified public accountant;
3. Original versions and copies of all the Company's documents and announcements that were
publicly 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 20, 2024
Note:
This document is a translated version of the Chinese version 2023 Annual Report ("2023年年度报告"), and the published announcements in the Chinese version shall prevail. The complete publishedChinese 2023 Annual Report may be obtained at www.cninfo.com.cn.