Zhejiang Dahua Technology Co., Ltd.
2020 Annual Report
Stock code: 002236Stock Abbreviation: DahuaDate of Disclosure: March 2020
Section I Important Notes, Contents And DefinitionsThe Board of Directors, Board of Supervisors, Directors, Supervisors and SeniorManagement of Zhejiang Dahua Technology Co., Ltd. (hereinafter referred to as the"Company") hereby guarantee that the information presented in this report shall beauthentic, accurate and complete and free of any false records, misleading statements ormaterial omissions, and they will bear joint and several liability for such information.Fu Liquan, the Company's legal representative, Xu Qiaofen, chief accountant, and ZhuZhuling, person in charge of accounting institution (Accounting Officer) hereby declare andwarrant that the financial statements in the annual report are authentic, accurate, andcomplete.All directors attended the meeting of the Board of Directors for deliberation of thisannual report.During the reporting period, there was no significant change in the risks faced by theCompany. The Company has been trying to identify all kinds of risks and actively takecountermeasures to avoid and reduce the risks:
1. Risk of technology upgrading: the video surveillance industry is a typicaltechnology-intensive industry, which is upgraded extremely fast. If the Company is unableto keep up with development trends in the industry's technology, to pay full attention tocustomers' diversified individual needs, and to be followed by sufficient R&D investments, itwill still face the risk of losing market competitiveness due to discontinuous innovation.
2. Risk of business model change: with the development of network communications,cloud computing, big data, AI and other technologies, as well as the upgrades of smartphone applications, the business model in the IoT era may have an impact on the traditionalindustry development. If an enterprise cannot grasp opportunities brought about by thebusiness model transformation in a timely manner, it may face the risk that the originalmarket structure might be upended.
3. Risk of product safety: the Company attaches great importance to and continuouslystrengthens resource investment to ensure safe and reliable operations of the securitysystem so as to respond to the product security risks on the Internet. However, hackersattacks, computer viruses, physical security vulnerabilities, natural disasters, accidents,power interruptions, telecommunications failures, terrorism, and warfare events may stilloccur from time to time, resulting in security vulnerabilities, system failures, or serviceinterruptions.
4. Intellectual property risk: the promotion of the company's globalization andself-owned brand strategy will likely bring about intellectual property risks and patentinfringement, which may cause fluctuation in business relations and public opinions,increasing lawsuits and rising costs.
5. Exchange rate risk: The Company's export transactions are mostly settled in UnitedStates Dollars ("USD"), while overseas sales have increased continuously. Therefore,fluctuations in the foreign exchange rate have the potential to affect the profits of theCompany.
6. Risk of decline in local fiscal solvency: at present, some local governments havehigh level of fiscal debts. If the solvency declines, it may lead to the slowdown in the growthof some industry demands, prolonged construction projects, extended corporate capitalreturn cycles, and delays in customers payments.
7. Risk of international operation: the Company's products and solutions cover over100 countries and regions overseas, and its international business operation may face therisk of trade protection in those countries and regions.
8. Supply chain security risk: in terms of supply security, the Company hascomprehensively reviewed all types of potential supply risks through dedicated operations,and has strengthened its ability to continuously supply key materials safely by means ofdeveloping backup solutions and diversifying supply sources to ensure supply chainsecurity.
The above points might not be all-inclusive of all other potential risks, please pay
attention to the potential investment risk.
The profit distribution proposal approved by the board of directors is: Taking2,995,579,590 as the basis, RMB 2.68 (tax included) of cash dividend and 0 bonus share(tax included) for every 10 shares will be distributed to all shareholders, instead of commonreserve capitalizing.
Contents
Section I Important Notes, Contents And Definitions ...... 2
Section II Company Profile and Key Financial Indicators ...... 10
Section III Corporate Business Overview ...... 15
Section IV Discussion and Analysis on Business Circumstance ...... 78
Section V Significant Events ...... 113
Section VI Changes in Shares and Information about Shareholders ...... 142
Section VII Information of Preferred Shares ...... 152
Section VIII Convertible Corporate Bonds ...... 153
Section IX Directors, Supervisors, Senior Managers and Employees ...... 154
Section X Corporate Governance ...... 169
Section XI Corporate Bonds ...... 179
Section XII Financial Report ...... 180
Section XIII Documents Available for Reference ...... 359
Definitions
| Item | Refers To | Definitions |
| Reporting Period | Refers To | From January 1, 2020 to December 31, 2020 |
| Dahua, company, the company | Refers To | Zhejiang Dahua Technology Co., Ltd. |
| Dahua System Engineering, System Engineering Company | Refers To | Zhejiang Dahua System Engineering Co., Ltd. |
| Dahua Vision Technology | Refers To | Zhejiang Dahua Vision Technology Co., Ltd. |
| Dahua Zhilian | Refers To | Zhejiang Dahua Zhilian Co., Ltd. |
| Dahua Security Network, Operation Company | Refers To | Zhejiang Dahua Security Network Operation Service Co., Ltd. |
| Dahua Storage | Refers To | Zhejiang Dahua Storage Technology Co., Ltd. |
| Vision Technology | Refers To | Zhejiang Fengshi Technology Co., Ltd. |
| Huachuang Vision | Refers To | Zhejiang Huachuang Vision Technology Co., Ltd. |
| Huafei Intelligent | Refers To | Zhejiang Huafei Intelligent Technology CO., LTD. |
| HuaRay Technology | Refers To | Zhejiang HuaRay Technology Co., Ltd. |
| Huaxiao Technology | Refers To | Zhejiang Huaxiao Technology Co., Ltd. |
| Dahua Automobile, Huaruijie Technology | Refers To | Zhejiang Dahua Automobile Technology Co., Ltd. (renamed Zhejiang Huaruijie Technology Co., Ltd.) |
| Dahua Robot, Huaxuan Technology | Refers To | Zhejiang Dahua Robot Technology Co., Ltd. (renamed Zhejiang Huaxuan Technology Co., Ltd.) |
| Huakong Software | Refers To | Zhejiang Huakong Software Co., Ltd. |
| Huajuan Technology | Refers To | Hangzhou Huajuan Technology Co., Ltd. |
| Dahua Jinzhi | Refers To | Zhejiang Dahua Jinzhi Technology Co., Ltd. |
| Dahua Ju'an | Refers To | Zhejiang Dahua Ju'an Technology Co., Ltd. |
| Dahua Security | Refers To | Zhejiang Dahua Security Service Co., Ltd. |
| Dahua Investment, Dahua Investment Management | Refers To | Zhejiang Dahua Investment Management Co., Ltd. |
| Hangzhou Huacheng, Huacheng Network | Refers To | Hangzhou Huacheng Network Technology Co., Ltd. |
| Huacheng Software | Refers To | Hangzhou Huacheng Software Technology Co., Ltd. |
| Xiaohua Technology, Hangzhou Xiaohua | Refers To | Hangzhou Xiaohua Technology CO., LTD. |
| Fuyang Hua'ao | Refers To | Hangzhou Fuyang Hua'ao Technology Co., Ltd. |
| Beijing Huayue | Refers To | Beijing Huayue Shangcheng Information Technology Service Co., Ltd. |
| Chengdu Zhian | Refers To | Chengdu Dahua Zhian Information Technology Service Co., Ltd. |
| Chengdu Zhilian | Refers To | Chengdu Dahua Zhilian Information Technology Co., Ltd. |
| Chengdu Zhishu | Refers To | Chengdu Dahua Zhishu Information Technology Service Co., Ltd. |
| Chengdu Smart | Refers To | Chengdu Huishan Smart Network Technology Co., Ltd. |
| Chengdu Zhichuang | Refers To | Chengdu Zhichuang Yunshu Technology Co., Ltd. |
| Zhongcheng Technology | Refers To | Dahua Zhongcheng (Beijing) Technology Co., Ltd. |
| Guangxi Security | Refers To | Guangxi Dahua Security Service Co., Ltd. |
| Guangxi Dahua Technology | Refers To | Guangxi Dahua Technology Co., Ltd. |
| Guangxi Dahua Information | Refers To | Guangxi Dahua Information Technology Co., Ltd. |
| Guangxi Zhicheng, Dahua Zhicheng | Refers To | Guangxi Dahua Zhicheng Co., Ltd. |
| Dahua Zhongzhi | Refers To | Guangxi Dahua Zhongzhi Technology Co., Ltd. |
| Guangxi Huacheng | Refers To | Guangxi Huacheng Technology Co., Ltd. |
| Guizhou Dahua | Refers To | Guizhou Dahua Information Technology Co., Ltd. |
| Guizhou Huayi | Refers To | Guizhou Huayi Shixin Technology Co., Ltd. |
| Meitan Dahua Technology | Refers To | Guizhou Meitan Dahua Information Technology Co., Ltd. |
| Henan Dahua | Refers To | Henan Dahua Zhilian Information Technology Co., Ltd. |
| Hunan Dahua Zhilong, Dahua Zhilong | Refers To | Hunan Dahua Zhilong Information Technology Co., Ltd. |
| Inner Mongolia Zhimeng | Refers To | Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. |
| Shanghai Huashang | Refers To | Shanghai Huashang Chengyue Information Technology Service Co., Ltd. |
| Dahua Guangxun | Refers To | Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. |
| Tianjin Dahua Information, Tianjin Dahua | Refers To | Tianjin Dahua Information Technology Co., Ltd. |
| Wuxi Ruipin | Refers To | Wuxi Dahua Ruipin Technology Co., Ltd. |
| Xi'an Dahua Zhilian, Xi'an Dahua | Refers To | Xi'an Dahua Zhilian Technology Co., Ltd. |
| Xinjiang Huayue | Refers To | Xinjiang Dahua Huayue Information Technology Co., Ltd. |
| Xinjiang Xinzhi | Refers To | Xinjiang Dahua Xinzhi Information Technology Co., Ltd. |
| Xinjiang Zhihe | Refers To | Xinjiang Dahua Zhihe Information Technology Co., Ltd. |
| Xinjiang Zhitian | Refers To | Xinjiang Dahua Zhitian Information Technology Co., Ltd. |
| Xinjiang Information | Refers To | Xinjiang Dahua Zhixin Information Technology Co., Ltd. |
| Yunnan Zhili | Refers To | Yunnan Zhili Technology Co., Ltd |
| Zhoushan Operation | Refers To | Zhejiang Zhoushan Digital Development Operation Co., Ltd |
| China Standard Intelligent Security | Refers To | China Standard Intelligent Security Technology Co., Ltd. |
| Leapmotor Technology | Refers To | Zhejiang Leapmotor Technology Co., Ltd. |
| Leapmotor | Refers To | Leapmotor Automobile Co., Ltd. |
| Dahua Hong Kong, Dahua (HK) Limited | Refers To | Dahua Technology (HK) Limited |
| Dahua Argentina | Refers To | Dahua Argentina S.A. |
| Dahua Europe | Refers To | Dahua Europe B.V. |
| Dahua Turkey | Refers To | Dahua Guvenlik Teknolojileri Sanayi Ve Ticaret A.S. |
| Dahua Spain | Refers To | Dahua Iberia, S.L. |
| Dahua Malaysia | Refers To | Dahua Security Malaysia Sdn. Bhd. |
| Dahua Australia | Refers To | Dahua Technology Australia Pty Ltd |
| Dahua Brazil | Refers To | Dahua Technology Brasil Comércio E Servi?os Em Seguran?a Eletr?nica |
| Ltda | ||
| Dahua Bulgaria | Refers To | Dahua Technology Bulgaria Eood |
| Dahua Canada | Refers To | Dahua Technology Canada Inc. |
| Dahua Chile | Refers To | Dahua Technology Chile Spa |
| Dahua Sri Lanka | Refers To | Dahua Technology China (Pvt) Ltd |
| Dahua Colombia | Refers To | Dahua Technology Colombia S.A.S |
| Dahua Czech | Refers To | Dahua Technology Czech S.R.O. |
| Dahua Denmark | Refers To | Dahua Technology Denmark Aps. |
| Dahua France | Refers To | Dahua Technology France |
| Dahua Germany | Refers To | Dahua Technology Gmbh |
| Dahua Technology Holdings | Refers To | Dahua Technology Holdings Limited |
| Dahua Hungary | Refers To | Dahua Technology Hungary Kft |
| Dahua India | Refers To | Dahua Technology India Private Limited |
| Dahua Israel | Refers To | Dahua Technology Israel Ltd. |
| Dahua Technology Italy | Refers To | Dahua Technology Italy S.R.L. |
| Dahua Japan | Refers To | Dahua Technology Japan |
| Dahua Kazakhstan | Refers To | Dahua Technology Kazakhstan Llp |
| Dahua Kenya | Refers To | Dahua Technology Kenya Limited |
| Dahua Korea | Refers To | Dahua Technology Korea Company Limited |
| Dahua Mexico | Refers To | Dahua Technology Mexico S.A. De C.V |
| Dahua Middle East | Refers To | Dahua Technology Middle East Fze |
| Dahua Morocco | Refers To | Dahua Technology Morocco Sarl |
| Dahua Netherlands | Refers To | Dahua Technology Netherlands B.V. |
| Dahua New Zealand | Refers To | Dahua Technology New Zealand Limited |
| Dahua Nigeria | Refers To | Dahua Technology Nigeria Representative Ltd |
| Dahua Pakistan | Refers To | Dahua Technology Pakistan (Private) Limited |
| Dahua Panama | Refers To | Dahua Technology Panama S.A. |
| Dahua Peru | Refers To | Dahua Technology Per? S.A.C |
| Dahua Poland | Refers To | Dahua Technology Poland Sp. ZO.O. |
| Dahua Russia | Refers To | Dahua Technology Rus Limited Liability Company |
| Dahua Romania | Refers To | Dahua Technology S.R.L |
| Dahua Singapore | Refers To | Dahua Technology Singapore Pte. Ltd. |
| Dahua South Africa | Refers To | Dahua Technology South Africa Proprietary Limited |
| Dahua Serbia | Refers To | Dahua Technology SRB D.O.O. |
| Dahua Tunisia | Refers To | Dahua Technology Tunisia |
| Dahua UK | Refers To | Dahua Technology Uk Limited |
| Dahua USA | Refers To | Dahua Technology USA Inc. |
| Dahua Thailand | Refers To | Dahua Technology(Thailand) Co.,Ltd. |
| Dahua Uzbekistan | Refers To | Dahua Vision Llc |
| Huacheng Netherlands | Refers To | Imou Network Technology Netherlands B.V. |
| Dahua Lorex (US) Corporation | Refers To | Lorex Corporation |
| Dahua Lorex (Canada) Corporation | Refers To | Lorex Technology Inc. |
| Dahua Lorex (UK) Corporation | Refers To | Lorex Technology Uk Limited |
| Dahua Indonesia | Refers To | Pt. Dahua Vision Technology Indonesia |
| UOB Mexico Service | Refers To | Vismextech Dhm Servicios, S.A. De C.V. |
| Huatu Microchip | Refers To | Zhejiang Huatu Microchip Technology Co., Ltd. |
| Xinsheng Electronic | Refers To | Zhejiang Xinsheng Electronic Technology Co., Ltd. |
| Guizhou Intelligence | Refers To | Guizhou Dahua Intelligence Technology Co., Ltd. |
| Tecomore Technology | Refers To | Hangzhou Tecomore Technology Co., Ltd. |
| South North United | Refers To | South-North United Information Technology Co., Ltd. |
| Xinjiang Dahua Information | Refers To | Xinjiang Dahua Information Technology Co., Ltd. |
| Xinjiang Intelligence | Refers To | Xinjiang Dahua Intelligence Technology Co., Ltd. |
Section II Company Profile and Key Financial Indicators
I. Company Information
| Stock Abbreviation | DAHUA | Stock Code | 002236 |
| Stock Exchange | Shenzhen Stock Exchange | ||
| Company Name in Chinese | 浙江大华技术股份有限公司 | ||
| Company Abbreviation in Chinese | 大华股份 | ||
| Company Name in Foreign Language (If any) | ZHEJIANG DAHUA TECHNOLOGY CO., LTD. | ||
| Legal Representative | Fu Liquan | ||
| Registered Address | 1187 Bin'an Road, Binjiang District, Hangzhou City, Zhejiang Province, China | ||
| Post Code of Registered Address | 310053 | ||
| Office Address | No. 1199 Binan Road, Binjiang District, Hangzhou City, Zhejiang Province | ||
| Post Code of Office Address | 310053 | ||
| Website | www.dahuatech.com | ||
| zqsw@dahuatech.com | |||
II. Contact Person and Contact Information
| Secretary of the Board | Representative of Securities Affairs | |
| Name | Wu Jian | Zhu Leiqian |
| Contact Address | No. 1199 Binan Road, Binjiang District, Hangzhou City, Zhejiang Province | No. 1199 Binan Road, Binjiang District, Hangzhou City, Zhejiang Province |
| Tel. | 0571-28939522 | 0571-28939522 |
| Fax | 0571-28051737 | 0571-28051737 |
| zqsw@dahuatech.com | zqsw@dahuatech.com |
III. Information Disclosure and Location
| The Media Selected by the Company for Disclosure | Securities Times |
| Website Designated by CSRC for Publishing Annual Report | http://www.cninfo.com.cn |
| Location for Annual Report of the Company | Securities Investment Department |
IV. Registration Change
| Organization Code | 91330000727215176K |
| Changes in Main Business Since Listing (If any) | No Change |
| Change of Controlling Shareholders (If any) | No Change |
V. Other Related Information
Accounting Firm Hired by the Company
| Name of the Accounting Firm | BDO China Shu Lun Pan CPAs (special general partnership) |
| Office Address of the Accounting Firm | 4/F, New Huangpu Financial Plaza, No.61, Nanjing East Road, Shanghai |
| Name of Certified Public Accountant | Zhong Jiandong, Zhang Junhui |
The sponsor institution hired by the company to perform the continuous supervision in the reporting period
□ Applicable √ Not applicable
The financial adviser hired by the company to perform the continuous supervision in the reporting period
□ Applicable √ Not applicable
VI. Key Accounting Data and Financial IndicatorsWhether the Company needs performed retroactive adjustment or restatement of accounting data in prior years or not
□ Yes √ No
| 2020 | 2019 | Increase/decrease compared with previous year | 2018 | |
| Operating income (RMB) | 26,465,968,181.10 | 26,149,430,652.42 | 1.21% | 23,665,688,106.22 |
| Net profit attributable to shareholders of the listed Company (RMB) | 3,902,778,775.35 | 3,188,144,692.55 | 22.42% | 2,529,426,468.61 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB) | 2,735,061,861.04 | 3,016,953,888.25 | -9.34% | 2,495,121,029.76 |
| Net cash flow generated by operational activities (RMB) | 4,401,533,068.39 | 1,600,604,287.70 | 174.99% | 955,315,978.17 |
| Basic Earnings per Share (RMB/Share) | 1.34 | 1.10 | 21.82% | 0.87 |
| Diluted Earnings per Share (RMB/Share) | 1.33 | 1.10 | 20.91% | 0.87 |
| Weighted Average ROE | 22.09% | 22.74% | -0.65% | 22.16% |
| End of 2020 | End of 2019 | Increase/Decrease at the end of the current year compared with the end of the previous year | End of 2018 | |
| Total assets (RMB) | 36,595,034,080.75 | 29,564,650,212.93 | 23.78% | 26,350,599,778.15 |
| Net assets attributable to shareholders of the listed company (RMB) | 19,773,030,426.40 | 15,643,007,027.91 | 26.40% | 12,618,758,918.48 |
The lower of the Company's net profit before and after deduction of non-recurring profit and loss for the last three fiscalyears is negative, and the audit report for the latest year shows that there is uncertainty about the Company's ability tocontinue operating
□ Yes √ No
The lower of net profit before and after deduction of non-recurring profit and loss is negative
□ Yes √ No
Ⅶ. Differences in Accounting Data under Domestic and Foreign AccountingStandards
1. Differences of net profits and net assets in the financial reports disclosed according to theinternational accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
During the reporting period of the company, there is no difference between the net profits and net assets in the financialreports disclosed according to international accounting standards and Chinese accounting standards.
(2) Differences between the net profits and net assets in the financial reports disclosedaccording to the overseas accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
(2) During the reporting period of the company, there is no difference between the net profits and net assets in thefinancial reports disclosed according to overseas accounting standards and Chinese accounting standards.
Ⅷ. Key Financial Indicators by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating income | 3,501,562,275.80 | 6,336,766,577.82 | 6,327,875,819.49 | 10,299,763,507.99 |
| Net profit attributable to shareholders of the listed company | 317,916,471.89 | 1,051,057,892.55 | 1,456,149,999.41 | 1,077,654,411.50 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 300,408,224.85 | 989,850,560.25 | 446,072,294.69 | 998,730,781.25 |
| Net cash flow generated by operating activities | -1,190,517,598.97 | 1,083,589,635.02 | 1,374,884,709.97 | 3,133,576,322.37 |
Whether the above financial indicators or their totals are significantly different from the financial indicators disclosed in theCompany’s quarterly and semi-annual reports
□ Yes √ No
Ⅸ. Non-recurring Gains and Losses Items and Their Amounts
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount in 2020 | Amount in 2019 | Amount in 2018 | Note |
| Profits or losses from disposal of non-current assets (including the write-off for the accrued impairment of assets) | 1,136,183,266.58 | 10,755,526.46 | -257,185.57 | |
| The government subsidies included in the current profits and losses (excluding the government subsidies closely related to regular businesses of the Company and issued in the quota or quantity based on the national standards) | 207,848,405.50 | 164,079,473.51 | 78,342,817.78 | |
| Gains or losses from investment or asset management entrusted to others | 9,327,707.25 | |||
| Profits and losses resulting from the changes in fair value for holding trading financial assets, derivative financial assets and trading financial liabilities, derivative financial liabilities and investment income from disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities, | 196,450,796.20 | 51,518,752.09 | -83,285,344.55 |
| and other obligatory right investment, excluding the effective hedging businesses related to the regular business operation of the Company | ||||
| Reversal of the receivables and contract assets depreciation reserves for separate impairment test | 2,384,082.35 | 3,383,257.76 | ||
| Non-Operating Revenue and expenses other than the above | -9,645,488.43 | -2,958,714.67 | 68,947,139.26 | |
| Other gains and losses items that fit the definition of non-recurring gains and losses | -92,017,627.11 | 308,838.52 | 733,001.58 | |
| Less: Impact of income tax | 254,721,170.78 | 35,447,376.02 | 13,376,532.24 | |
| Impact of minority equity (after tax) | 28,093,057.25 | 20,448,953.35 | 16,798,457.41 | |
| Total | 1,167,716,914.31 | 171,190,804.30 | 34,305,438.85 | -- |
For items defined as non-recurring gains and losses according to the No. 1 Explanatory Announcement on InformationDisclosure for Companies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gainsand losses items listed in the said document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
In the reporting period, the Company did not define any non-recurring gains and losses items defined and listed in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to Public - Non-recurringGains and Losses, as recurring gains and losses items.
Section III Corporate Business OverviewI. The Principal Business of the Company during the Reporting Period
1. Main business and products
1.1 Main business
The spread of the Covid-19 pandemic in 2020 had a broad and far-reaching impact on the global economy andsociety, the digital economy, and the development of the smart IoT industry, with accelerated digital transformation andupgrading, and rapid increase in business complexity and differentiation.In this context, the Company has further strengthened and deepened its strategy of being a video-centric smart IoTsolution provider and service provider. Relying on the "one system and two platforms" architecture, the Company hasconsolidated its digital base and data center capabilities to meet the business characteristics and development needs ofthe digital transformation of the whole industry, accelerated the establishment of an agile, efficient and replicable businessdevelopment model, continued to build a full-chain technology open system around customer service, andcomprehensively expanded the application and depth of IoT data in the city-level and enterprise-level markets, providingone-stop smart IoT services and solutions for the digital transformation of cities, enterprises, and families."One system" refers to the integrated technical support system built for digital transformation, "from the basic IoTsensing, end-edge intelligent collaboration and integration, intelligent data processing, to full-chain information securityprotection". Comprehensively build a unified, massive, and open IoT access system, establish an intelligent algorithmecology from "software-hardware integration" to "software-hardware decoupling", and help customers develop the flexibleand advanced sensing capability "from online sensing to online and offline data integration" and "from single-dimensionaldata and feature sensing to scenario integrated situational research and judgment".The Company continues to upgrade and iterate the "Smart View Engine" and "Smart Data Engine" to drive thecollaboration and harmonious distribution of algorithms, computing power, data, and tasks of cloud-edge-end and achievethe maximum utilization of digital resources. The Company strengthens the construction and reuse of the industry's basiccommon capability set, so as to provide users with unified data management, governance, and applicationdecision-making services, realize the maximum mining of data value, and promote the industry's advance from the"perceptual intelligence" of digitalization-intelligence integration to the "cognitive intelligence".
"Two platforms" refer to the construction of a component-based and modular application platform for cities and
enterprises by comprehensively implementing the idea of unified software base and module reuse in the face of thesignificantly increased business complexity, so as to enhance the agility and user experience of the integrated service ofsolutions, and comprehensively release IoT data application capability. Fully decouple the software framework to realizethe flexible modular assembly of subsystems, enhance the maintainability and scalability of platforms, and improve theagility of service response. Based on business understanding, continuously accumulate common value business, realizethe productization and reusability of industry paradigm applications, and build application software platforms for urban andenterprise business.The Company accelerates the building of the digital industry cooperation ecology, continues to build an open systemaround business values, accelerates the full-chain opening up design of IoT sensing access and integration, dataprocessing, data application, and scenario solution implementation, and joins hands with partners to provide customerswith richer and more efficient closed-loop service of IoT infrastructure and solutions, creating new value for services.
In the field of intelligent hardware, the Company takes video sensing as the core, and maintains its industryleadership in products through continuous upgrading of video sensing capability; relying on multidimensional sensingcapability and all-round multimodal sensing data, it thus realizes data fusion application innovation. Take advantage ofscenario-defined products to accelerate the industrial application and popularization of artificial intelligence. Providesensing data collection, connection, aggregation, computing, and application capabilities for various industry solutions,build smart IoT sensing devices with rich forms and end-edge-cloud systematization, and lead the development trends ofproducts, technologies, and applications of the industry.
2. Software platforms and solutions
Following the "business-driven, scenario-based, demonstration first" principle, the Company accelerates thelarge-scale integrated application of new technologies such as IoT, AI, big data, and 5G in various industries, and buildsan all-factor, all-process solution system of IoT sensing, real-time analysis, automatic execution, and decision optimizationfor urban governance and services, as well as corporate production and operation, so as to promote the comprehensiveapplication of new technologies such as AI, and facilitate the digital transformation of various industries.
2.1 Technical capability support
2.1.1 Scenario-based AI capability
AI is one of the Company's core strategic investments. Currently, the Company has an AI R&D team of over 1,000people, over 98% of whom have master's or doctoral degrees. It also has national enterprise technology centers, nationalpostdoctoral research stations, Zhejiang Provincial Enterprise Research Institute, and Zhejiang Provincial EngineeringResearch Center. The Company has carried out A multi-faceted layout in the research of AI technology, includingalgorithms such as intelligent view detection analysis and recognition, intelligent audio algorithms, multidimensionalsensing analysis and fusion algorithms, 3D analysis algorithms, data mining, and intelligent coding and decoding.
In 2020, the Company's AI R&D team, committed to the world's leading AI technology research and innovation, wonmore than 10 prizes in major algorithm competitions and awards at home and abroad, including the first prize in the TrafficSensing AI Algorithm Competition of the Smart Highway Innovation Competition, 13 first prizes in various AI algorithmperformance rankings around the world, the first prize in scene parsing by ADE20K (MIT Scene Parsing Benchmark), andthe first prize in semantic parsing by Cityscapes. In the field of face recognition technology, it was ranked second globallyby NIST (National Institute of Standards and Technology) FRVT 1:1 in 2019. By continuously increasing the investment inthe research and development of AI technology, the Company ensures its industry leadership in AI technology. With thecontinuous development of intelligent chips, the Company accelerates the industrialization of AI for applications innumerous scenarios in the process of the digital intelligence upgrading for various industries, thus further enhancing thecompetitiveness of the Company's intelligent products and solutions.
In 2020, facing the opportunities of global digital transformation, the Company continuously expanded and furtherrefined its industry business in the field of AI. It has developed algorithm solutions for more than 20 industry segments andmore than 100 scenario-based algorithm functions. Together with customers, the Company works to establish a leadingedge in intelligent applications, which not only strengthens customer stickiness, but also taps into new market
opportunities in such directions as smart manufacturing, smart petrochemical, smart agriculture, and smart education,thus breaking through the traditional security business to better explore customers' operational processes and needs indepth so as to deliver profound and comprehensive industry solutions.To expand the industrial application, the Company continued to make AI-enabled innovations combined withindustrial application scenarios, and further broadened its AI scenario-based capabilities to achieve coverage of industrialapplications, such as retail customer flow statistics, pig quantity statistics in the agriculture and animal husbandry industry,tourist density warnings in the tourism industry, vessel counting in the water conservancy industry, chef dress compliancein the catering industry, transparent maintenance in the retail automobile industry, security compliance in the real estateindustry, rat invasion monitoring in the catering industry, aircraft control in airports, and engineering vehicle control in thepower industry.In terms of in-depth refinement of the industry business, the Company continued to optimize management efficiencyby deeply integrating the customer's production management process with AI technology. Taking the intelligent applicationin the power industry as an example, the digital business has been loaded with a large number of AI technologies tosignificantly save management costs and improve digital management capability and efficiency, including meter readingrecognition, equipment status identification, equipment defect detection, appearance recognition, and equipmentintelligent diagnosis, thus realizing remote digital inspection and equipment diagnosis. From equipment digitization tooperation and maintenance (O&M) digitization, and further to business digitization, it empowers the digital transformationof the Company.In terms of AI infrastructure capacity building, the Company developed the industry-leading "Genius" AI open platform,and completed a comprehensive upgrade of the "Genius" platform in 2020, realizing one-stop algorithm and solutiondevelopment and delivery. The "Genius" platform adopts an integrated cloud computing platform for training, inference,calculation, and storage, integrates a high-precision real-world algorithm warehouse with a modular visual algorithmdevelopment kit, supports cross-platform one-click payment of mainstream smart chips and online simulation andverification of real scenarios, and comprehensively implements the full-chain technical R&D and closed-loop managementin data management, algorithm training, AI application development, cross-platform deployment, product simulation andverification, and release and delivery, ensuring agile and high-quality delivery of algorithms and effectively improving theefficiency of algorithm industrialization.
In the future, the Company will continue to ramp up investment in AI, focus on technology research and innovation,enhance AI technology capabilities, explore broader industry application scenarios in a deeper and more detailed manner,
and speed up the industrialization of intelligent applications, so as to strengthen the core competitiveness of theCompany's intelligent products and solutions.
2.1.2 Cloud computing and big data
Based on cloud computing and big data technology, the Company focuses on video IoT scenarios with business atthe center to build up data storage, calculation, analysis, modeling, and sharing capabilities with the goal to achieve onlinedata, value calculation, and business enabling. With the big data research institute as the carrier, the Company keeps upits investment into R&D of cloud computing and big data technology and product to drive the closed loop of data valuechain.The Company's cloud computing and big data product system builds a video-centered intelligent IoT big data platform,including the IaaS layer, general PaaS layer, industry PaaS layer, and DaaS layer. The Company integrates the technicaladvantages of cloud computing and big data, componentized and flexible architecture and deep insight into video IoTbusiness, and also takes into consideration the layered decoupling and vertical closed-loop capabilities of the software
architecture. Centering around the three key processes for realizing the value of data, namely, online data, valuecalculation, and business application, the video-centric smart IoT big data platform is constructed.
The Company continues to invest more resources in the research and development of big data technology. It has builta new big data experiment center for large-scale data testing and verification, focusing on the research of city-levellarge-scale storage, computing, analysis, mining, and other related products and technologies, continuing to solidify the
base of the big data platform, and accelerating the progress towards value computing.
In 2020, the big data business of the Company achieved outstanding results in both technology breakthroughs andmarket performance:
1) Online data network, building a collaborative architecture for agile edge and central computing and storage
The Company improved agile edge computing and view offsite multi-domain storage, built the agile edge computingand central computing platform to provide cloud-edge computing resources with container cloud as the core, and realizedonline and flexible application of computing resources through a unified resource management platform. A data networkwas developed featuring a wide range of connections, highly reliable storage, and high-performance access through aunified and flexible architecture, realizing efficient aggregation of IoT sensed data, improving network compatibility, andreducing management difficulty.
Dahua accumulated the connection and convergence capabilities of over 100 kinds of IoT sensing devices, 10 milliondevices, and EB-level data, with unified architecture and converged space-time characteristics, built the industry-leading,ultra-large, four-level reliable data storage capability, and further improved capabilities in terms of multi-cloud, proximitystorage, heterogeneous compatibility, and unified management, laying a solid foundation for data fusion applications.
2) Smart view engine, injecting new power for the era of digital intelligence
In 2020, Dahua released a series of cloud computing full network architecture products to realize decoupling ofsoftware and hardware, decoupling of algorithm and computing power, and decoupling of algorithm business by buildingan intelligent cloud with multidimensional collaboration of algorithm, computing power, and data in the cloud, edge, andend.
Through scenario-oriented algorithm iteration and intelligent scheduling, the algorithm capability is more suitable forbusiness scenarios. Manage multiple algorithms in a unified way through the algorithm warehouse and enrich thealgorithm ecology to realize the advantage complementarity of multiple algorithm ecologies. Through cloud-edge-end datacollaboration, the calculation results at the edge-end can be directly reused by the center, avoiding secondary analysis,bringing into play the cloud-edge synergy effect, and protecting customers' investment value.
Through cloud-edge-end algorithm and task synergy, Dahua provides scenario-oriented intelligent analysis andcollaborative applications, enabling flexible and diverse scenario-based analysis capabilities. The scenario-based,networked and ecological smart view engine makes full use of the full intelligent cloud-edge-end computing power, breaksthrough the shortcomings of traditional intelligent construction, builds a four-in-one synergy of algorithm, computing power,data, and task in cloud, edge, and end, and forms an intelligent cloud. The computing efficiency, algorithm utility, and
investment conversion rate have been effectively improved, further promoting the intelligent development of the industry.
3) Smart data engine, a full-fledged integration architecture of intelligent computing and data computingThe smart data engine solution is a digitalization-intelligence fusion computing engine of smart computing and datacomputing, including one-stop data development and operation platform, exploration platform, and computing storageengine.The one-stop data development and operation platform can accommodate the life cycle management system of dataincluding data collection, governance, computing, service, and asset operation. The exploration platform enables theexploration of mysteries of heterogeneous data in real time by visual scheduling of unstructured and structured data ofvideos and pictures, and expresses users' complete business logic reasoning process. The computing and storage engineenables large-scale storage, real-time fusion computing and offline computing of large-scale spatio-temporal data andinformation data, and interactive analysis.The smart data engine has achieved over 1,500 data standards, over 10,000 data tags, and over 1,300 professionalmodels through the accumulation of projects in government related fields such as smart city, municipal governance, andsmart public security, and digital transformation of enterprises.
4) Business enablement platform, featuring open base capabilities to boost industry digitalization and intelligenttransformation
In 2020, Dahua launched the digital-intelligent enablement platform, featuring a comprehensive open capabilitysystem from resources to video IoT basic applications, which mainly includes open video capability, open AI capability,open data development capability, open data resources, open computing resources, and open storage resources.Generally based on the business practice accumulation of the video industry, the deep understanding and practice ofCloud Native and the whole ecological concept of open sharing, the enablement platform builds a "digital-intelligentcentral system", providing more comprehensive ecological capabilities for agile business iteration and boosting theindustry's transformation to digitalization and intelligence.
The business enablement platform empowers industry partners in industries such as smart city, smart police, andsmart transportation to boost customers' digital and intelligent transformation, enrich their application ecology, andgradually accumulate application ecology partners in each industry.
Based on the video IoT big data platform architecture, Dahua continues to launch products and services withtechnical competitiveness and product differentiation advantages, and has achieved significant practical business resultsin the global market. The Company facilitates industry digitalization and intelligence in terms of smart city, smart police,
smart transportation, smart justice, emergency management, and smart buildings. Up to now this architecture platformhas been successfully delivered in over 3,000 projects.
2.1.3 Data security and privacy protection
The Company pays high attention to data security and privacy protection and takes it as one of its guiding principles.Dahua has always been keeping positive and practical attitude and strategies in response to the Cyber Security Law ofthe People's Republic of China, GB/T 35273 Information Security Technology – Personal Information SecuritySpecification, and General Data Protection Regulation (EU GDPR). The Company has established a dedicated cybersecurity and privacy protection committee responsible for closely following global laws and regulations, conductingcompliance audit, and positively promoting compliance construction.After being the first batch passing the protected privacy IoT product certification and the protected privacy IoT servicecertification of German T?V Rheinland, Dahua also passed the ETSI 103645 certification (IoT Cyber Security and DataSecurity Standard), ISO 27701 privacy information management system certification, and ISO 27018 cloud privacyprotection certification, successively, in 2020. In December 2020, Dahua was awarded the BSI Privacy StrategyContribution Award for its outstanding contribution to data security and privacy protection.In addition to actively achieving such certificates, to further enhance the privacy protection level of products andservices and better help customers observe compliance, Dahua has formulated the Personal Data and Privacy ProtectionStandard based on product privacy requirements, privacy design principles, personal information security specifications,and GDPR rules, and introduced the privacy baseline at the stage of product demand and design to provide overallspecification and guidance on data processing in terms of privacy policy, privacy preference setting, data acquisition, datatransmission, data storage, and data deletion. It promotes the in-depth integration of the STRIDE threat model and PIArisk assessment, and continues to practice "Privacy by Design" and "Privacy by Default". Dahua also integrates datadesensitization, data encryption, trusted computing and other privacy protection technologies and applications into theproducts.Under the guidance of the cyber security and data protection committee and data protection officer (DPO), theCompany has established a data security incident response handling mechanism to realize timely protection and decisivehandling. Dahua has also established a special contact-responsibility mechanism to provide professional answers to anyquestions or suggestions on personal data processing from customers. Data Protection Incident Response Team (DPIRT),as the only outlet for disclosure of data security incidents, is responsible for receiving, handling and reporting data securityincidents.
2.1.4 Open cooperation ecology
Adhering to the concept of customer value as the core, the Company has fully initiated the intelligent IoT strategy.With full sensing, full connectivity, full intelligence, full computing, and full ecology as the guide, we seek development andbuild ecology with the whole industry, join hands with customers, and dedicated ourselves to exploring the value of theindustry.The solutions and technology system of the Company have been upgraded comprehensively, taking security video asthe seed and open cooperation as the nutrition to grow fully towards the intelligent IoT ecology. For the ToG industry, weinternalize the advantages of subdivision areas through in-depth industry understanding, and provide high-value solutionproducts for the industry by forming complementary advantages with partners. For the ToB industry, we broaden thebusiness of subdivision areas and allow more partners to integrate into the ToB industry to form a richer solution ecology.For the SMB industry, we push for the variation of subdivision industries and boost the rapid adaptation capability ofstandard solutions to hot scenarios.
The open product platform forms four layers of capability opening from the bottom up. At the first layer, intelligenthardware products provide rich access to IoT sensing devices and flexible loading of intelligent algorithms, enablingsoftware and hardware decoupling to provide infrastructure-level computing, storage, and network cooperation. At thesecond layer, AI and data services provide perceptual data processing capabilities to achieve rich view data analysis andpowerful IoT data analysis and computing capabilities, and, together with data vendors, extract data value for users andcreate business data models for various businesses. At the third layer, the basic capability set provides processing andapplication capabilities based on specific kinds of IoT data, and hundreds of IoT SaaS API are available for partners to fillthe capability gap including view for application partners and achieve rapid launch of new capabilities. At the fourth layer,industry scenario solutions provide the understanding and system implementation capability of closed-loop industryparadigms based on typical scenarios to help partners accomplish closed-loop scenario solutions.
The open product platform features a rich pool of ecological resources from industry applications, subsystems, to IoTdevices in the whole domain, so as to cut into scenarios with the best combination and quickly meet customer demands.We provide an open foundation platform with the ability to load industry-specific applications, combining with customerscenarios to load characteristic services such as segmentation characteristics and private data; provide access toinformation systems such as ERP, OA, and Mes, and integrate into the original information systems of partners, becominga bridge to connect data silos and enabling them to integrate data between systems; provide service module accesscapability for rapid access to 3D visualization views in place of the original 2D raster maps; provide access and
management capabilities for massive IoT devices, strengthen system sensing capabilities through multiple IoT devices,and refine data of subdivision industries to ensure business accuracy.Centered on the construction of the open algorithm capability, the Company completed the development of onlinetraining platform and stand-alone training server in 2020; established AI data warehouse for the unified management ofalgorithm models, training models, scene data, and intelligent business APPs; realized the implementation of "end andedge" products in the intelligent algorithm dynamic loading function. Through the industry SDT platform, the training, data,and sensing end are organically combined to establish a robust AI open intelligent IoT solution from training, scheduling,and deployment, forming rapid intelligent business customization capabilities, providing customers with effective technicalsupport of on-site customization, on-site optimization, and on-site verification, quickly realizing and solving customers'differentiated needs in intelligent security, and promoting the realization of customer value.Relying on the DHOP technology of the Company's open product platform, the intelligent hardware productscomplete the full-chain product open support from front-end acquisition to back-end storage and central intelligent security,satisfying the customized development needs of customers in each link of the security chain in the form of developmentand installation of APP extension, achieving 500% growth in the number of cooperative customers. The Company hasjoined hands with integration customers, and higher research institutes and universities to take DHOP technology as ablueprint and lead the establishment of an open standard for IoT view intelligence, to build a unified order for thevideo-centric smart IoT market and promote maximum social benefits.
2.2 Software platform
2.2.1 Unified technical architecture
The Company has established an integrated technology support system to empower the digital transformation of theindustry and provide two basic platform technology systems at the city level and enterprise level for customers'applications. The Company's big data and AI capabilities support intelligent IoT sensing and computational analysiscapabilities at the cloud-edge-end; meanwhile, the Company attaches great importance to data security and privacyprotection to ensure business compliance.
The government sector provides a city-level platform based on an integrated and shared technical architecture,including an urban resource service center to provide key technical foundation support, to unify resource portals, andachieve holistic management of all data, capabilities, and application resources.
The urban incident center features core businesses such as public services, market supervision, social governance,
and ecological and environmental protection, setting up a unified incident flow platform, and building a hierarchicalclassification and warning mechanism to make incident perception intelligent, incident reporting regular, and incidentcenter standardized, establish incident linkages, and facilitate closed-loop businesses.The urban operation center, as a management unit, has the core businesses of urban situation analysis, efficiencysupervision, emergency management, and livelihood services, creating an intelligent digital government systemarchitecture that communicates, makes decisions, and manages based on data.The enterprise sector provides an enterprise-level platform that integrates AI, IoT, and big data, among otherresources from the top down, and opens standard API interfaces from the bottom up, to accumulate and reuse thecommon industry knowledge kit, and rapidly support the development and expansion of N types of industry applicationsthrough the three core capabilities of the enterprise-level platform (comprehensive security, scenario-based AI, and bigdata analysis).
The comprehensive security capability achieves full IoT access to the center, enabling enterprises to connect thedigital tags of scattered devices, sense the massive amount of data, and increase revenue and improve efficiency. Thescenario-based AI capability center and its end-edge-cloud intelligence capability enable enterprises to expand the scopeof intelligent deployment, reduce labor operation costs, and improve operational efficiency. The big data analysis andprocessing center and the open data platform help enterprises effectively integrate business data, extract data value, andfacilitate business decisions.
The enterprise-level platform provides a common, scalable, and integrated core business and system integrationframework for enterprises so that they can quickly respond to market changes and achieve industry scenario coverage.
2.2.2 Organizational restructuring with agile services
Strategic adjustments, with customer orientation and front-end deployment of capabilities, are made to support thefront line and reshape the business front platform and middle platform organization of capabilities. The middle platformorganization is responsible for technology evolution and business accumulation, building industry IoT cloud base, andformulating industry strategies to direct national campaign operations. The business front platform organizes multi-facetgroup operations to face customers directly and respond quickly, offering agile services that are flexible and effective. Themiddle platform organization summarizes and extracts the successful practice of the front platform, formulates strategicand tactical plans, and completes the intelligent scheduling combination of middle platform capabilities of differentbusinesses, so as to provide rapid solutions and intelligence services to the front platform teams and form a virtuouscycle.
In order to align with the corporate strategy, the Company's software business has been restructured simultaneouslywith the unification of software architecture, and the software business is divided into three parts: public softwaredevelopment, industry platform software development, and provincial software development. The public softwaredevelopment focuses on continuous technology evolution and the construction of a stable software base; the industryplatform software development focuses on the competitiveness of the industry platform and module reuse for customers;and the provincial software development is rooted in first-tier provinces and regions to provide agile and customizedservices. In 2020, hundreds of R&D personnel was deployed to the front lines based on the business characteristics ofeach province and region.Through the restructuring of organizational capabilities, the Company has rapidly improved its ability to quickly meetcustomers' software needs, enabling more accurate and efficient overall collaboration and smoother businessadvancement.
2.2.3 Large module reusability building
With a unified technology middle platform in the Company, protocols are unified and business modules can beefficiently accumulated and reused. Through the building of large module reusability, reduce development costs, improveproduct ease of use, ensure rapid incubation of baseline products, complete regional empowerment, and facilitateregional R&D centers to quickly realize customer business based on headquarters capabilities, while supporting the fastdelivery of large projects and accelerating customers' information construction.
1) Efficient replication of software business modules
To build end-to-end customer-facing software service capabilities, the Company allocates R&D resources to the frontlines that can respond to customer needs the fastest. Several provincial and regional software development centers havebeen established, with the ability to develop business layer software modules and complete module customization,subsystem development, and project delivery in combination with the basic functional components provided by theheadquarters to quickly respond to the scenario-based business needs of customers. The industry product team hascontinuously accumulated the common requirements of industry business into the product baselines, and has nowaccumulated nearly 1,000 small-scene industry modules. Meanwhile, it has made hundreds of advanced API protocolsavailable to provincial and regional development centers and partners to form the digital accumulation of customerbusiness understanding.
2． Modular assembly of industry platform products to enable rapid product iteration and release
Based on a unified intelligent IoT cloud base, the industry platform software shields the technical differences of the
underlying IoT devices and builds a technical middle platform that supports rich industry data calculation and application.The software products of various industries summarize the successful practice of the front platform into highlystandardized, modeled business modules, providing a rich and effective library of common modules, unifying front-endinteraction and back-end frameworks, strengthening reuse of common service components, developing agile products,and increasing release efficiency by more than 40%.For example, in the traffic police sector, we have built business modules such as multi-map integrated scenes,holographic intersection scenes, traffic incident detection scenes, police marking scenes, traffic prediction scenes,information release scenes, signal optimization scenes, adaptive scenes, and green parking scenes. In the transportationsector, we have built business modules such as staff channel scenes, traffic flow analysis scenes, passenger flow analysisscenes, and control center scenes. In the enterprise sector, the Company have built business modules such as visualintercom scenes, AR panoramic scenes, 3D visualization scenes, integrated communication scenes, emergencycommand scenes, and power environment monitoring scenes.With the huge business volume and R&D workforce, the Company has accumulated rich resources of reusablebusiness modules in a short period of time. A large number of new projects can fully polish and verify the existing businessmodules, enhance the module reuse efficiency, and reduce the marginal cost of products.
3) Cross-provincial reuse of custom provincial software to reduce the marginal cost of softwareFor the practical enhancement of customer service capabilities, the Company has established provincial and regionalsoftware centers, optimized the customization process, allocated R&D resources to front lines, shortened the averagedevelopment cycle by 5 days, and improved customer response timeliness by 42%. The software customization modulesof each province and region form a shared shelf mall, and the software customization modules of different users areshared and reused nationwide, enabling new projects to make full use of the existing custom components, and thus forma virtuous cycle.
2.2.4 Digital applications in various industries
The digital twin of cities is everywhere, from digital government to digital retail. With insightful view data, Dahuacreates data value for its users. The software platform has been widely applied in various industries, with its businessscope extended from traditional security monitoring to all aspects of customer business application and productionoperation.
Take the following fields for examples:
1) Smart public security
Based on video networking, and combined with IoT data aggregation, and police data docking and governance, theCompany extract practical data from massive view data by using increasingly mature AI recognition algorithms formulti-algorithm multi-dimensional fusion means, to provide information fusion search, relationship mapping, taggingsystem, and big data collision and fusion for police applications, thus solving the existing pain points of inadequate fusion,insufficient intensity, data dispersion, and poor real-time management of the existing public security system. For example,the intelligent project on city order management has significantly reduced the manual inspection workload and improvedmanagement efficiency through big data and intelligent technology.
2) Smart traffic management
Build a city-level comprehensive traffic management system centered on the three major areas of "safety, smoothflow, and convenience".
In the field of security, police data are docked and aggregated to establish a three-color code file for each trafficparticipant that has appeared in the city, while the five-color map is assigned to the management of enterprises, villagesand communities, and streets and towns in the city based on the three-color code. Through a map and a code, the trafficsafety big data system is constructed to achieve precise management of key objects and reduce the scope of policecontrol. For each traffic accident, traceability analysis is conducted to achieve precise detection of road hazards, improvethe capital input-output ratio, and make every penny invested more valuable.
In the field of smooth flow, the integrated equipment of law enforcement, guidance, and induction is adopted, and thefour technological means of signal machine phase optimization, intelligent reversible lanes, artery green wave/red wavebelts, and intelligent induction are used as carriers to employ devices at technological intersections and technological roadsections, and achieve technological law enforcement and technological congestion control, thus ensuring smooth travel ofthe public.
In the area of convenience, the "Green Parking" application, which integrates on-site parking, timing, and online cellphone reminder, has been launched to effectively alleviate the difficulty in temporary parking for the public and allowpeople traveling by car to enjoy more convenient services.
3) Smart park
The Company has achieved intelligent upgrade of park management relying on AI, IoT, and big data technologies,and build private IoT sensing networks through local networks and IoT sensing devices, so as to realize localizedintegrated security management, fire management, and closed-loop park energy consumption management and parkbusiness management, and thus meeting the needs of parks for video intelligence, active fire protection, data application,
and energy consumption control. We have successfully built smart systems for major factories in a number of productionpark projects, including smart parking systems, smart access control systems, smart visitor systems, smart consumersystems, smart fire systems, and smart energy management systems, realizing the safe management of employees andvisitors in and out, and reducing labor management costs by nearly 50%. Meanwhile, we have unlocked the data flow ofhuman resources systems, realizing the synchronization of information on incoming and outgoing personnel, and greatlyimproving the office efficiency of HR departments. Equipped with a fire IoT platform for operation and maintenancemanagement, front-end devices can be monitored in real time for timely early alerts, enabling the upgrade of passive fireprotection of parks to active fire protection mode.
4) Smart energy
The Company has built a smart energy security technology protection system from three dimensions, namely,three-dimensional intelligent IoT perception, business management and expert model, and intelligent decision-making, tofacilitate smart and safe energy production and realize online and efficient data operation. Among them, smart productionincludes the patrol inspection of major energy production equipment, and expert diagnostic models and forecasting.Examples include visual state modeling, analysis, and expert diagnosis of major equipment such as power equipment, oilpipelines, and refineries; monitoring of blast furnace coal combustion efficiency for refineries and steel; intelligent qualityinspection of digital chemical fiber polyester DTY; intelligent assistance for one-key smooth control of power; andautomatic adjustment of coal transportation belt transmission load and abnormalities. In a southern power grid project,intelligent reconstructions such as intelligent patrol inspection of substations, infrared temperature diagnosis, and remoteoperation confirmation and judgment have been carried out to achieve quality and efficiency improvement in the energyproduction process and reduce operational risks by replacing people with machines.
5) Smart breeding
Centered on the business scenarios of pig (cattle and sheep) breeding, the video intelligent algorithm capability hasbeen combined for the management of pig houses, pens, and pigs to reduce the cost of human management inputs. Bytaking into account of the safety management of people and vehicles in pig farms, the production safety managementsystem such as red zone isolation process, spraying disinfection process, and vehicle decontamination process has beenestablished. The platform integrates a variety of data such as pig farm distribution, number of pig farms, sow resources,fattening and inventory, epidemic detection, and market information to provide all-round and scenario data-basedsupervision of farms, and provide managers with accurate information and the basis for decision making.
6) Smart water conservancy
According to China's three-year action plan for water conservancy, and supported by IoT sensing devices such asdrones, robots, cameras, and moving rings, build an integrated air, sky, and ground water conservancy sensing network,including engineering construction, flood and drought disaster management, water environment supervision, andecological supervision of rivers and lakes, at rivers, lakes, reservoirs, hydropower stations, water gates, inspectionstations, and water intakes, among others, so as to enable business capabilities such as 3D simulation maps, human andvehicle management, video inspection, event handling, and emergency command, and build a smart water conservancybrain. For example, in a project in Jiangsu, the inspection list can be automatically generated through the inspection planand work tasks, and the on-site inspection work can be carried out through intelligent analysis assistance, therebyreducing the workload of inspectors, quickly and accurately locating violations, and providing warnings of safety riskevents in advance. In the supervision of river sand mining, the AI technology enables the identification of illegal vessels atthe sand mining stage and illegal vehicles at the sand transportation stage, realizing 24-hour all-weather online real-timewarning, creating integrated air, sky, and ground scheduling and enforcement, and solving the supervision problem ofillegal sand mining.
7) Smart finance
Through the multi-dimensional financial big data integration and application, the Company aggregates the securitydata of each subordinate branch, data of other bank business systems, and non-bank third-party data (public securityorgans, procuratorate organs, and courts) for multi-dimensional data collision analysis. Through the analysis, it generatesnew warnings to enhance banks' security risk prevention and control capability, produce visual charts for decision makingreference, and analyze and generate personnel portraits to provide data services for business. For example, in a project inSichuan, the Company has been responsible for the construction of intelligent devices in 213 branches in four citiesacross the province, providing data support for branch operations and realizing consumer-focused data insights.
2.3 City-level business solutions: enabling digital and intellectual urban governance
2.3.1 Business overview
With the undergoing modernization of government governance and the rise of the technological revolutionrepresented by a new generation of information technology, the use of big data, IoT, cloud computing, and AI, amongother cutting-edge technologies, to advance the means of urban management, management mode, and managementconcept innovation, from digitalization to intelligence to intellectualization, is the only way to boost the modernization ofthe urban governance system and governance capacity.
The Company's government business continues to cultivate insight into business scenarios in the government
industry, facilitating the comprehensive upgrade of the government from informationization to digitalization. It joins handswith government customers to promote innovation, boost the matching of products with scenarios, and solutions withvalues, and provide intelligent solution capabilities in various business areas such as market supervision, socialgovernance, public services, and environmental protection, so as to enable the wise government urban governance.
2.3.2 Core strategy
We actively respond to the industry market opportunity of government digital transformation, and continue to explorethe application of new technologies in government business scenarios based on government digital transformation, andbuild a city-level holistic solution of "one network, two engines, three centers, one platform, and N applications".
The government business adheres to the main course while emphasizing the diversity of demands. It has builtsolutions for various industries around different business fields such as intelligent public security, intelligent transportation,social governance, and intelligent emergency, and constructed a rapid closed-loop business operation system. Meanwhile,it continues to empower various industries by expanding the scope of accessible capabilities and deepening the
ecological open strategy targeting government customers, industry vendors, and partners, and always practices the valueproposition of "full sensing, full connectivity, full intelligence, full computing, and full ecology".
? One network - Full coverage of scenarios
Through the accumulation of actual operations around the world, and deep insight into more than 5,000 urbanscenarios, key points such as the characteristics of each scenario, operational objectives, operational sites, operationalobjects and operational processes have been extracted and summarized, resulting in 6 major categories, 26 minorcategories and 147 sub-categories of scenarios. In each scenario, suitable multi-dimensional sensing devices areadapted to maximize the value of products and complete the meticulous coverage of scenarios.
? Two engines - Full integration of data
With data as the foundation and business as the traction, we drive the upgrade from sensing to cognition through theintegration of digitalization and intelligence.
The smart view engine mainly improves the data availability index with the help of AI, provides capabilities such asintelligent algorithm warehouse and task scheduling management, carries out harmonious distribution and reasonableallocation of computing power, and thus maximizes the utilization of resources.
The smart data engine mainly completes data intelligence transformation with the help of big data, provides datamanagement, data governance and data intelligence services for users, integrates view sensing data, registration data,and business data, among others, to deeply extract the facts and logic behind the data and thus maximize data value.
? Three centers - Full management
The intelligent decision-making hub is built to provide comprehensive supervision, auxiliary decision-making,command and dispatch, public services and other applications through the operation center, event center and servicecenter, to complete centralized dispatching and efficient operation.
? One platform - Full opening-up of capabilities
Through the capability precipitation and experience opening-up, we build a unified capability opening-up componentto facilitate the rapid implementation of closed-loop business.
The platform provides functions such as standardized development interface, process-oriented resource application,refined permission management and standardized behavior supervision to simplify the application development andachieve rapid iteration and agile development of applications.
? N applications - Full online business
With scenarios as the carrier and data as the basis, business is made online to make management more focused andsolid, so as to strengthen business implementation and closed loop.
With services and management objects as the center, business online creates solutions for various industries aroundsuch business fields as smart public security, smart transportation, social governance, smart applications, and publiclivelihood, to boost digitalization and intelligence upgrading, and accomplish load reduction, quality improvement and
efficiency enhancement.
2.3.3 Industrial value practices
Dahua is committed to the continuous implementation of business fields including public safety, traffic andtransportation, urban governance, and natural resources, building solutions for different scenarios in various industries onthe government side, and always practicing the social mission of "making cities safer, transportation smoother,governance more efficient, and life better".Make cities safer"The safety of people's lives and property comes before everything else." Bearing in mind the mission to enhancesocial security, the Company provides comprehensive public safety solutions and services for public safety, traffic safety,production safety, fire safety, and natural disaster emergency response, so as to make cities safer.
Through data police and machine police, the industry solutions for public security can improve the combat andprevention capabilities of public security organs and create the safest cities by decreasing the number of police cases andincreasing the number of "cases solved and violators punished". Build district ecological checkpoints for people andvehicles and security checkpoints verification systems, and set up solid urban security moats. Provide control systems forstreet patrol, social units, districts, and rental houses, with refined unit security protection. Equipped with systemsincluding a comprehensive video application platform, multi-dimensional integration combat platform, intelligencecommand integration platform, and large-scale event security system, the precision element management closed-looptakes shape to contribute to the maintenance of social security and stability, and ensure that people live and work in peaceand happiness.
The industry solution for traffic safety focuses on the two major directions of "source control" and "risk warning", andmakes full use of AI, IoT sensing and other new technical means for the three major scenarios of cities, highways andrural areas, providing more than 30 kinds of precise crackdown functions on violations such as running red lights, notwearing seat belts, using phones while driving, not letting pedestrians go first, not using lights according to regulations,and management of people with non-compliant driving behaviors, as well as more than ten active risk warning functionsincluding the warning and reminding of incoming traffic on curves, reminding of non-motorized vehicles crossing the line,reminding of blind spots of large trucks turning right, monitoring and warning of bad weather, and warning of pedestrianson overheads, helping improve the urban traffic safety index and securing the smooth travel of the public.
The solution for the monitoring and early warning of production safety risks focuses on the safety risks in key areassuch as hazardous chemical enterprises, major hazard sources, non-coal mining enterprises, and industrial and trade
enterprises, forming a hierarchical control and dynamic monitoring and early warning from enterprises and parks to localemergency management departments. By providing intelligent video analysis functions such as wearing compliancemonitoring, smoke/flame identification, dangerous area call/smoking detection, personnel on and off duty monitoring, andfire truck channel occupancy detection, we continuously improve the informationization, networking, and intelligence levelof safety supervision, promote the accountability within enterprises, effectively resolve major safety risks, curb majoraccidents, and protect people's lives and property.The solution for comprehensive emergency command of natural disasters focuses on "monitoring and earlywarning" and "command and rescue" of natural disaster scenarios, and realizes monitoring and early warning throughresource integration, IoT online monitoring of natural disaster risks, and video AI intelligent assistance. In case ofemergency, cross-departmental coordination and cooperation are realized by means of integrated communication, andonline visual command is enabled through an emergency map. Meanwhile, via mobile audio and video equipment such asdrones/individual devices/surveillance balls, we can achieve full coverage of rescue site sensing, improve the ability ofearly warning and control of risks and hazards, and enhance the capability of disaster emergency rescue and handling,thus facilitating the development of "urban resilience".
The integrated solution for fire safety is closely oriented to the fire safety management requirements of governmentsat all levels, fire rescue agencies, social units, small places, and so forth. Relying on the Company's technical advantagesin videos, closed-loop management of early warning sensing visualization, security and firefighting integration, eventhandling, and industry supervision are realized, which provides cities with a map of the security situation of firefighting bigdata supervision, achieves full sensing of the hidden danger situation, and provides effective decision support for preciselaw enforcement.Make transportation smootherThe Company contributes to the construction of intelligent transportation and provides urban transportation wisdomsolutions and services such as traffic management, integrated road networks, and integrated hubs, making transportationsmoother.
Based on the concept of "safety, smooth flow, and convenience", the industry system construction solutions fortraffic management provides system solution capabilities for dangerous driving, signal management, roadway eventwarning, green belt, and key roadway control capabilities; enable networking front-to-end system building capabilities fortraffic operation analysis and key operating vehicles management, including urban operating vehicle status monitoring,real-time passenger flow, dangerous driving behavior analysis, and other vehicle control capabilities.
The solutions for building comprehensive road network systems offer overall solution support capabilities for"dynamic traffic" and "static traffic" information construction for highways, roads, railroads, railroads, airlines, ports andshipping scenarios, as well as the front-to-end system construction capabilities for smart road networks, smart vehicles,and cloud control platforms, including traffic situational sensing, traffic event warning analysis, intelligent front-end dataanalysis, holiday traffic flow and congestion prediction, intelligent traffic emergency guide, overweight and over-limitdetection, advanced assisted driving systems, driver status monitoring systems, and cloud control platforms. Focusing onthe four goals of "all-weather security protection, all-round travel services, all-digital operation and maintenance, andall-life green construction and management", the Company builds intelligent transportation networks for highways, roads,urban transportation, ports and shipping. Guided by the development concept of integration, security, sharing,standardization and efficiency, the Company integrates new technologies of cloud computing, 5G, big data, IoT andmobile Internet, and incorporates data resources and application resources of the transportation industry, effectivelyenhancing traffic supervision, disposal and service capabilities.The solutions for integrated transportation hubs feature comprehensive control capabilities including pedestrianguidance, vehicle guidance, parking management, transfer guidance, business management, abnormal behavior analysis,AR panoramic command, emergency disposal, intelligent security inspection, and control of hazardous vehicles, to ensureefficient operation of integrated transportation hubs around the goal of "intelligence, convenience, and safety control".Make governance more efficient"Empowered by technology, shape a new pattern of intelligent governance." The Company provides intelligentsensing and fine management service capabilities for urban governance, street and town governance innovation, andcommunity management services, to help make social governance more efficient.Relying on the view IoT sensing capability and big data analysis technology, the solution for comprehensive urbangovernance builds a smart IoT sensing network to realize real-time early warning of people, vehicles and other objects,and enhance the intelligent monitoring and dynamic sensing capability of urban governance. Through AI-enabled urbangovernance, it realizes automatic monitoring and early warning of governance events such as store operation, mobilevendors, illegal parking, littering, spilling and dripping, so as to "replace people with machines" and facilitate the fine urbangovernance.
By actively exploring the new mode of grassroots governance of "sensing, intelligence and governance", thesolution for street and town governance innovation is to create a comprehensive platform of comprehensive sensing,intelligent early warning, collaborative linkage and multi-dimensional visualization of street and town-level intelligent
governance, realizing real-time sensing of street and town operation, global scheduling of grassroots forces, predictionand early warning of abnormal situations and rapid intervention in emergencies, solving the prominent problems of weakinformatization construction of grassroots governance and lack of governance means, improving the managementefficiency of streets and towns, and boosting the modernization of grassroots social governance.
The solutions oriented to community governance are dedicated to improving community management services andenhancing the quality of life of residents. With the continuous exploration into "public security, public management, andpublic services", and centering on the construction of IoT sensing and big data analysis, the Company fully utilizesinformation technology and intelligent means to help communities realize the collaborative and innovative application ofpersonnel, vehicles, and houses, and realize the intelligent prediction and early warning of abnormal behaviors, events,and situations in communities, so as to boost the level of fine and comprehensive management of communities.Make life better
We provide intelligent solutions and services related to livelihood-related and ecological-related fields such asnatural resources, water conservancy, ecological environment, agriculture and rural areas, and intelligent marketsupervision to make nature more harmonious and life better.
For the natural resources sector, we provide comprehensive forest fire prevention solutions such as fire risk sourcesupervision, fire early warning and positioning, fire early warning research and judgment, fire spread analysis, andcommand and scheduling, to realize the close-loop business process. We have fully participated in the national forest fireprevention pilot, to build a sky-tower-ground integrated forest fire prevention monitoring and sensing system, and realizethe "early response, reduction and elimination" of forest fire risks. We provide intelligent supervision solutions for plant andanimal monitoring, rare species detection and identification, vegetation disease and pest control, ecological factormonitoring, field patrol management, biodiversity protection, and human activities supervision to help build a new forestand grass ecological network sensing system. We provide intelligent land solutions with the capabilities of intelligent earlywarning of illegal constructions, construction supervision of farmland, detection and collection of irregularities, and videosupervision of comprehensive law enforcement to guard permanent basic farmland. We also provide top-level planningand design of national parks and big data analysis services such as investigation, evaluation and monitoring, constructionof regulatory systems, disaster emergency command, popular science education and publicity, and industrial upgradingand auxiliary energy to preserve the ecological red line and promote the harmonious development of man and nature.
For the water conservancy business sector, we provide intelligent river and lake supervision solutions such as riverand lake visualization supervision, intelligent river patrol, sand mining control, river cleaning, and water shoreline safety
management to achieve efficient and normal management of rivers and lakes. We have already implemented typicalapplications such as embankment fine management, water irregularities supervision, and personnel safety protection inthe Yangtze River protection project.We provide intelligent construction and operation management solutions for waterconservancy projects, such as safety supervision of water conservancy projects under construction, intelligent visualsupervision of water conservancy project operation, and dam safety monitoring, to improve intelligent and finemanagement of water conservancy projects and reduce management costs. We also provide water and drought disasterprevention and management solutions such as water and rain monitoring and early warning, ecological flow monitoring ofsmall and medium-sized reservoirs, early warning and forecasting of urban flooding, and water conservation managementof irrigation districts to enhance disaster emergency management capabilities, promote the improvement of the waterinformation framework, and advance the construction of intelligent water conservancy.For the ecological environment business field, we provide air environment monitoring and protection capabilitiessuch as the key vehicles control in heavily polluted weather, site dust and noise control, open-air burning control, andblack smoky vehicles road monitoring; water environment monitoring and protection capabilities such as drinking watersource monitoring and protection and floating waste monitoring; enterprise pollution source control capabilities such aswastewater and waste gas emissions, compliance operations of pollution source monitoring stations, hazardous solidwaste supervision, pandemic-related medical hazardous waste supervision, and key link control of major pollutionenterprises; as well as capabilities and services for ecological and environmental video IoT, intelligent analysis ofprofessional scenarios, data governance research and judgment for provinces, cities, counties, enterprises and pollutionsources. Ultimately, we promote the construction of ecological and environmental data and the continuous optimizationand improvement of the habitat and natural environment. The Company has assisted the ecological and environmentaldepartments of Fujian and Henan provinces to build an ecological and environmental video capability platform withintelligent interconnection, information sharing, and business collaboration, which brings together video IoT sensing data,deeply explores data value, promotes business coordination and handling, better addresses the long-lasting pollutionproblem, and improves the efficiency of pollution prevention and control supervision and "Qinqing Service, or Pro-CleanService" capability.
For the agricultural and rural business sector, we provide intelligent supervision solutions for the 10-year fishing banon the Yangtze River to achieve all-weather intelligent visual supervision of illegal behaviors such as illegal fishingoperations and non-recreational fishing. In key sections of the Yangtze River, we have worked with local authorities tocreate a multi-dimensional fishing ban monitoring system and carry out joint fisheries enforcement. By adopting the fishingban solution provided by the Company, the fine management of fishing ban areas has yielded good results and provided a
robust technical guarantee system to promote the implementation of the 10-year fishing ban on the Yangtze River.
For the market supervision and management business field, the livelihood project for the "Shopping Basket"provides efficient and accurate ability for the normalized pandemic prevention and control such as human bodytemperature measurement and mask wear check; intelligent sanitary environment detection capability such asunauthorized vehicle parking at the entrance, and garbage scattering and overflowing; standardized managementcapabilities such as three preventions and three protections, and stall operation; security risk prevention capabilities suchas smoking detection and fire prevention, and operational efficiency enhancement capabilities such as passenger flowstatistical analysis and live information propaganda. We have also assisted in the construction and implementation ofintelligent supervision systems in Hangzhou, Ningbo, Huzhou and other key farmers' markets to speed up the intelligentconstruction and upgrading of farmers' markets, as well as safe and efficient operation, to ensure the safe and stablesupply of "shopping baskets" and better service to people's livelihood.
2.4 Industry-level business solutions: Enabling enterprises to increase revenue and improveefficiencyIn the business cycle of the new digital economy, enterprises have started to develop from extensive management to
fine management, from labor-intensive industry to technology-intensive industry, and to acquire higher productivity andbenefits by applying technological innovations. Dahua has exploited customer value demands through the insights intothe industry trend, and entered the enterprise digital transformation market by taking video IoT and scenario intelligenceas the opportunity to provide one-stop solutions for manufacturing, logistics, energy, construction, culture, education and
health, finance and other industries, and realize the closed-loop of enterprise customer value chain.
2.4.1 Industry value
With customer demand as the guide and business value as the yardstick, facing the enterprise market and focusingon manufacturing, logistics, energy, construction, culture, education and health, finance, and other subdivided industries,Dahua has cultivated industry business in depth and created a value business system oriented by "improvingmanagement level, improving production capacity, optimizing safety system" around enterprise safety, production,operation, and management to promote enterprises to realize digital transformation.
2.4.2 Technical capabilities
There are many subdivided industries of enterprises with different production processes and management modes.Digital transformation is technically complicated and difficult. Dahua provides technical support of digital transformation fora large number of enterprises with its scenario perception capability, IoT integration capability, data service capability, andbusiness service capability.
(1) Scenario perception capability
Facing a large number of fragmented scenario demands of enterprises, Dahua focuses on the core business ofcustomers, goes deep into the nerve endings of enterprise scenarios, makes use of Dahua's industrialization capability,provides a large number of industry-exclusive perception devices, and is capable of loading customized industryalgorithms.
For example, in the coal industry, there are underground scenarios characterized by a lot of gas, heavy dust, andweak light. Dahua has launched intrinsically safe intelligent perception equipment which integrates high-precisiontemperature measurement, belt deviation detection, operator headcount and other intelligent algorithms to realize remotemonitoring of mining equipment, main conveying belt abnormality, and regulation violations by operators.
For example, in the industries of manufacturing, energy, and construction, in response to a lot of operation scenarioscharacterized by instable network access and frequent power blackout, Dahua has rolled out with a purpose-made mobiletracking camera solution which integrates intelligent algorithms of safety helmet detection, single-person operationinspection, and operation sign inspection to realize the recording of operation process and supervision of operationbehaviors and safety measures.
(2)IoT integration capability
Dahua has gained access to various industry segments of enterprises relying on the IoT integrated management
platform and multi-scenario perception equipment such as human perception, behavior perception, fire perception,environment perception, defect perception, and hidden danger perception to retrieve business scenario data of variousindustries to realize the collection, aggregation and integration of IoT perception. At the same time, Dahua provides open,flexible, and plug-and-play intelligent IoT capability to achieve real-time and dynamic presentation of perception data,business applications and loop closing.
The platform is based on the advanced concept of "unified software technology structure", adopts businesscomponent technology to meet the needs of elastic expansion of the platform in the business, provides middle platformservices to achieve flexible business expansion. Application integration, process integration, and information integrationcan be expanded on demand. The platform is also an open IoT framework compatible with the data platforms of othermanufacturers with standard/non-standard docking protocols and interfaces to achieve data sharing and operation,respond to the future information system platform docking (such as OA system, financial system, WMS system, MESsystem, etc), avoiding the repeated cost investment resulted from the closed construction platform of enterprises in thefuture, and reducing their digital transformation cost.
Dahua always adheres to the concept of openness, integration and ecological cooperation, takes the intelligent IoTintegrated management platform as the core of IoT integration capability, provides abundant interface services to realizeoverall open-up of intelligent IoT perception integration capability, help ecological partners to integrate fast, conveniently,and safely, integrates intelligent IoT data and applications to enable more enterprises to provide comprehensive anddifferentiated software services according to the actual business scenario demands of different customer groups on thisplatform.
(3) Data service capability
Data service capability refers to cloud computing storage capability required by the growing business scale ofenterprises, intelligent service capability of customers in multiple formats and scenarios, and big data analysis capabilitywhich meets the management of all business fields and innovation business of enterprises. Dahua applies itsself-developed cloud storage technology to provide massive data storage for enterprises and realize equipment-level faulttolerance and high security.
Based on the intelligent algorithms of application scenario research and the training engine which integrates theoverall development elements of artificial intelligence, Dahua builds the lightweight AI training platform for enterprises,improves the development efficiency and quality of AI algorithms in the subdivided scenarios to safeguard data securityunder the information security management of enterprises and give full play to the intelligent application value of data.
By deploying big data computing system for enterprises, providing big data computing engines and big dataapplication service capabilities, Dahua collects and gathers all kinds of data and to conduct in-depth integration analysison rule engines to maximize the data value and provide data analysis results for enterprise customers to achieve businessapplications.
(4) Business service capability
Dahua helps consolidate the foundation of basic business of enterprises, empower enterprises to deepen theirbusiness, and provide deployment service capabilities of private and cloud business.
Dahua Intelligent IoT Integrated Management Platform serves as the fundamental business base for enterpriseservices, provides open, flexible, plug-and-play intelligent IoT services and assumes the responsibility for data access andtransmission of IoT devices. The intelligent IoT integrated management platform is an important infrastructure built byDahua for digital transformation of enterprise customers.
Dahua provides business service capabilities of enterprise privatization and lightweight cloud deployment to adapt tomultiple development modes of enterprise localization and collectivization. In response to the deployment demand ofenterprise privatization, on the base of intelligent IOT integrated management platform, Dahua has created businessapplications which meet the demands of all industries, such as safe production management application of energy,industrial Internet application of manufacturing, digital campus application of education, etc., by continuously improvinginterfaces. In response to the cloud deployment demand of enterprise light-weight business, Dahua provides Yunruiplatform which integrates AIoT capability, AI capability and big data analysis capability to unify the construction ofenterprises business cloud middle platform, and quickly incubates enterprise business applications through the powerfulcloud middle platform capability to realize the rapid cloud deployment of enterprise light-weight business. At present,Yunrui has served tens of thousands of enterprises and millions of users.
Dahua adheres to the concept of openness and integration, provides abundant interface services, realizes thecomplete opening of capabilities, helps ecological partners quickly, conveniently and safely to integrate intelligent IoTapplications, and allows more enterprises to use Dahua's perception, data, intelligence and business capabilities to formtheir own business applications, and jointly empower the digital transformation of enterprises.Improving the management level
(1) Operation management
Dahua has made full use of video-centric scenario perception capability and IoT integration capability in combinationwith data service and business service capabilities to provide managers at all levels with "visualization", "sand table",
"online" and other technical methods of management and assist enterprise operation and management.
For managers at all levels, Dahua provides 3D visualization management and magic data wall to achieve the overallcontrol of enterprise operation status. For example, in a production park, the magic data wall can intuitively display allkinds of indicators including the energy consumption trend, number of workers, production reports, warehouse status, soas to realize full online enterprise management, and full control of operation data. The magic data wall also enableshierarchical classification, different granularity and business dimensions of different managers to realize finemanagement.For the management of specific affairs, Dahua applies video AI and all kinds of IoT technologies to realize theautomation, standardization, and online management of production equipment, environment, process, quality and otheraspects. For example, in the power industry, the integration of equipment intelligent inspection, thermal imaging onlinetemperature measurement, and personnel operation supervision leads to early detection of defects and hidden dangers,supervision of operation process, well-grasped personnel distribution, and decision-making and command based oneffective means and solid basis. In the catering chain industry, through the sunshine kitchen scheme, various kinds ofabnormalities in the kitchen scene, such as people's wearing (masks, cooks' hats, etc.), behaviors (smoking, leaving thefire unattended, etc.), environment (refrigerated temperature, rodents, etc.), health (temperature measurement, etc.) canbe detected, and a visual online management system is created through data aggregation, so as to improve thesupervision capability and protect food safety.
(2) Personnel management
Based on artificial intelligence, IoT, and other technologies, Dahua integrates information management systems toachieve visual online management of personnel through overall management of personnel access, attendance,positioning, abnormal behaviors, etc. For example, in the school dormitory scenario, automatic management of teachersand students in the dormitory, visitors from outside, and strangers is realized through the smart dormitory managementsystem, and all kinds of data applications such as no return for days and warnings of no access are also provided toimprove the management of school dormitory. In addition, within the enterprise, face recognition attendance machine andpassage equipment are deployed to solve daily administrative management problems such as check-in/out for othersemployees and forgetting check-in/out, improving the efficiency of enterprise personnel management and convenience ofemployees' work.
(3) Compliance management
Video AI and other technologies are applied to realize the automatic compliance detection of production operation.
For example, in response to the hierarchical management operation requirements in the production area of breedingenterprises, intelligent access control, entrance and exit barrier gate, intelligent camera and other functions are applied torealize the washing and disinfection process management of people, vehicles, and objects in the production area,compliance inspection of personnel dressing, cross-area operation supervision, and other functions, so as to standardizethe operation process and ensure the compliance and safety of production operation. In addition, in response to a largenumber of subdivided scenarios in the production workshop such as smoking against the rule, electrostatic clothingwearing, elevator operation, dedicated solutions are provided to help enterprises realize automation and visualization ofcompliance management.Improve production capability
In response to the production business demand and digital transformation objectives of enterprises, Dahua has beenprofoundly engaged in the core areas of enterprise production and promoted the upgrading of the enterprise's coreproduction competitiveness from multiple value dimensions of production quality, production efficiency, production cost,and production service by means of intelligent operation, intelligent detection, intelligent logistics, and intelligentmanagement.
(1) Production quality: reduce missed inspections, improve quality and efficiency, promote high-end manufacturing ofproductsIn terms of production quality improvement, Dahua has been profoundly engaged in 3C, automobile, energy, food andbeverage, logistics, agricultural and other industries. In response to the quality pain points of false and missed inspectionsof product appearance defects, structural defects and assembly defects in the process of production, Dahua regardsintelligent detection as the core to realize automatic intelligent detection by replacing human with machine, keep qualityrisk under control in the production link, provide better products of better quality to customers, greatly reduce the customercomplaint risk, and continuously build the high-end manufacturing image. Taking the chemical fiber defect detectionsystem for textile and garment enterprises for example, the detection rate of chemical fiber defect reaches 99.5%, with 9people's work load reduced for a single line, significantly reducing the detection cost.
(2) Production efficiency: Automatic means such as visual inspections are applied to promote operation automation andimprove production efficiencyIn terms of production efficiency improvement, Dahua takes the integration of robot and vision as the core andimplements overall intelligent upgrading for many production operation links including warehouse inspection, logisticsautomatic sorting, digital platform scheduling, high-speed code reading from six sides to greatly reduce the workload of
personnel and improve the operation efficiency in production. For example, the logistics industry applies high-speed codereading from six sides and automatic sorting to greatly improve the efficiency of parcel sorting in the logistics industry, andimprove the logistics operation efficiency.
(3)Production cost: Through the coordination of vision and AGV, reduction of production and logistics cost is promotedand enterprise expenditure is savedFor production cost reduction, Dahua regards AGV system and vision as the core and has been profoundly engaged in3C, clothing and textiles, automobile, mechanical equipment, household appliances, pharmaceutical and logistics, andpromoted multiple scenario-based intelligent operation applications from production workshop, semi-finished productwarehouse, finished product warehouse, and logistics warehouse, which has greatly reduced production cost ofcustomers and won the trust of users. Taking a textile industry project as an example, when customers were confrontedwith the problem of high labor intensity, high labor cost and inventory cost in printing and dyeing cloth transfer, 34 sets ofwaterproof hand hydraulic carrier AGVs were deployed to complete the indoor and outdoor mixed intelligent transfer ofprinting and dyeing cloth in three workshops based on the AGV intelligent scheduling platform and docking with MES,which reduced the labor cost of 54 workers and 2/3 of inventory. At the same time, the high-end manufacturing applicationhas driven the order growth and created annual revenue of more than 5 million yuan for the customer. Taking theautomobile industry as an example, it is easy for the oxygen pipe of welding robot to overheat and get damaged whileworking at high frequency. Based on the dynamic identification of thermal imaging temperature sensing, the welding robotoperation can be optimized and scheduled, which can greatly reduce in-process loss.
(4) Production service: Promote the upgrading of production service based on intelligent managementIn terms of intelligent management, Dahua has promoted businesses of video intelligent tracking, face verification of keyprocess, labor management, smart dormitory management, and smart retail around the links of production process,marketing, logistics management service, continuously serves enterprises and has gradually developed fromperson-to-person management into digital management and humanized service stage to improve the managementefficiency and sense of responsibility and belonging of employees. Taking the pharmaceutical industry as an example.Because the whole decocting process of traditional Chinese medicine cannot be traced visually, some customers areworried when purchasing prescript traditional Chinese medicine, which brings market pressure. Intelligent video slicingtechnology is applied to connect with the enterprise order management system and bind the operation process with theorder one by one. Public cloud is applied to share the information in the mobile terminal for customers to trace the wholeproduction process of traditional Chinese medicine order, leading to the assurance for the purchase and use andassistance in promoting the upgrade of market consumption.
Dahua has been deeply involved in the whole production process of enterprise customers. In addition to empoweringenterprises from the production process, Dahua has fully penetrated into the intelligent empowerment of terminal productsand intelligent terminal empowerment of retail to promote the full upgrading of enterprise customers from production to thedigital transformation of terminal services and assist in promoting enterprises to complete the upgrading of digitaltransformation with value drive as the core.Optimize the safety systemSafety, the cornerstone to ensure the stable operation and production of enterprises, is related to the harmoniousdevelopment of social economy. In response to different security situation requirements of various enterprises, Dahuaapplies intelligent and digital technological means combined with its own decades of precipitation and accumulation in thefield of security protection to create a comprehensive security technology system around the personnel, devices,operations, etc., of enterprises.
(1) Personnel safety
Combing with the safety requirements of production process in depth, Dahua provides technical means of earlywarning for standard personnel dress code, standard use of tools, and the behaviors of personnel crossing the border andfalling to the ground to realize the process supervision planning, remote safety supervision and intelligent operationsupervision. For example, in the scenario of construction site, intelligent algorithm is used to identify the wearing of safetyhelmet give early warning when necessary, and the personnel under the tower crane to improve the personnel safety leveland ensure the production process safety under control.
(2) Device safety
Based on the multi-dimensional application of machine vision, identification of device operation status, fault/defectdiagnosis and equipment life cycle control are completed around the whole process of device operation. In the powerindustry, inspection robot and other means are applied to accurately monitor the equipment operation status, and realizeautomatic early warnings of equipment failures; in the petrochemical industry, real-time monitoring of running, falling,dripping and leaking defects is implemented to realize the remote operation and build a new line of defense for equipmentsafety.
(3) Biological safety
In the breeding industry, based on AI temperature measurement, livestock and poultry detection, breeding operationcompliance detection and other technical solutions, intelligent means of breeding are improved for a number of leadingenterprises to load biological safety prevention and control schemes, standardize the operation process, prevent disease
occurrence and reduce losses of enterprises.
(4) Public safety
In the enterprise park, the ± 0.3 ℃ high-precision human body temperature measurement scheme is applied torealize accurate control of epidemic prevention in the park; smart fire IOT solution is applied to realize the real-time firemonitoring of enterprises; man-and-vehicle entrance and exit system and the perimeter acoustic-optic warning system areapplied to achieve the hierarchical management of people and vehicles in the park. Dahua provides all-round protection ofpublic security for enterprise operation, management, and security through a complete technical system to enhance theemergency response capability.
2.4.3 Major resolutions
Based on the demand of digital transformation of enterprise industry business, Dahua has specially built an intelligentIoT management platform with unified technical architecture, which has fully opened up a set of platforms ofcross-industry business, rapidly reused the solution capabilities of various industries, greatly reduced the repeatedconstruction cost of enterprise digitalization, and improved the deployment efficiency and quality of Dahua for customerservice. In the face of trillion-yuan worth of intelligent IoT market of enterprise business, Dahua has seized thedevelopment opportunity of enterprise digital transformation, built expert teams and industrial solutions, continuouslyaccumulated and served the differentiated demands of thousands of industries, and continued to provide high-qualityintelligent IOT solution service for customers. Take the following industries for example:
Smart manufacturing——From low-end processing and production to high-end smart manufacturing
With visual IoT as the core, the robot and machine vision have been developed in a coordinated way. Dahua hasbeen deeply involved in the industries of manufacturing 3C, mechanical equipment, automobile, clothing and textile, foodand beverage, household appliances, pharmaceutical, medical devices to help customers improve their capabilities ofsafety protection, production efficiency and operation management, and help manufacturing enterprises carry out digitaltransformation centering on the core business of safety, production and operation.
In the basic security business of enterprises, AI intelligent active defense capability is applied to help customersupgrade their security management. In addition to traditional security such as intelligent perimeter and video networking,large-scale intelligent attendance and video cloud storage projects have been built to help customers pass through safelyand efficiently, improve attendance management and ensure centralized, safe, and efficient management of video data.Meanwhile, 5G technology is also integrated to complete the layout of 5G smart industrial park construction.
In terms of enterprise production business, Dahua has been profoundly engaged into the production business
scenarios, made breakthroughs and layout around production operation, production detection, process logistics,production management, etc., reshaping the core competitiveness of enterprises. 3C, clothing and textile, automobile,machinery and equipment, household appliances and other industries have been explored in depth and applications havebeen implemented. For example, the application of visual management of household appliance industry has greatlyimproved the efficiency of abnormal response and backtracking; the application of robot welding temperature abnormalityperception in the automobile industry has reduced robot welding fault and maintenance cost; the application of 3Cindustry LCD defect detection has reduced the occurrence of missed detection and improved the quality of LCD panel; theapplication of intelligent logistics in the printing and dyeing workshop in the clothing and textile industry has reduced thelabor cost and on-site inventory, saved a lot of cost for enterprises every year, and meanwhile driven the order growth ofcustomers; moreover, the anti-static detection business has been arranged in the 3C industry to drive further opening ofindustrial products and scenarios of solutions.In terms of business operation, business development of smart office, smart retail, product traceability and industrialtourism have been promoted. For example, visualization of the production process is applied in the automobile industrytourism project to promote the marketing growth; one-to-one backtracking of users' prescriptions of Chinese medicine hasbeen realized by binding video clips with Chinese medicine order in the traditional Chinese medicine decocting project toimprove the service quality for users, promote drug safety management and drive the order growth.Dahua's smart manufacturing business revenue has increased by more than 60% by continuously penetrating intocustomers and promoting industry applications. At the same time, in response to the deepening of digital transformation ofmanufacturing enterprises, Dahua has carried out the construction layout of industrial Internet platform, and been selectedas a service provider for the key construction project of industrial Internet platform in Zhejiang Province in 2021. In thefuture, Dahua will continue to cultivate the manufacturing industry, strengthen the capability construction of industrysolutions, and help enterprises realize the integration of production data, flexible manufacturing, product personalization,and intelligent management.Smart logistics——From manual handling to "digital and intelligent" logisticsAiming at four major links of logistics transportation, storage, transfer, and distribution, scenario-based end-to-endsolutions are provided by means of automation, intelligence, and visualization around three major aspects of safety,production, and operation to realize the management of four objects including people, vehicles, goods and yards, improvethe time efficiency of goods transfer in the distribution center, and build intelligent logistics digital operation managementsystem.
Smart logistics solutions are committed to improving the operation and transfer efficiency of customers in the logisticsindustry. For example, a leading enterprise in the logistics industry has created digital distribution through the applicationof intelligent logistics solutions, effectively solved the disorder and congestion of loading and unloading vehicles in thepark, improved the traffic efficiency of vehicles in the park, and reduced the waiting time of vehicles.
Dahua continuously focuses on the operation quality improvement and safety management of users in the logisticsindustry. Intelligent AI applications are applied to effectively manage violations and abnormal situations such as violentsorting, crossing conveyor belts and assembly line congestion, so as to ensure the safety of packages and operators.Smart power——From basic power supply to power IoT
Guided by users' demand of improving quality and efficiency, based on the five major links of production businessscenario including power generation, power transmission, power transformation, power distribution and consumption,Dahua applies artificial intelligence technologies of innovative machine vision and AI recognition to realize the fullperception of power equipment status, full online enterprise management and full control of operation data, and improvethe operation risk control capability, production command penetration capability and emergency response capability, andhelp the construction of power IoT.
Generally, "substations" are widely distributed and relatively remote with high voltage level, long manual inspectioncycle and low efficiency. In order to ensure the stable operation of the substation equipment, the intelligent inspectionscheme of intelligent substation can detect in time the abnormal switch opening and closing state, excessive current,unstable voltage, respirator discoloration, bird's nest on the tower, kite hanging and other abnormalities in the substation,so as to ensure the normal power supply of the city.Smart petrochemical——From traditional production capacity to "smart" petroleum
In the petrochemical industry, Dahua will continue to enrich solutions for smart oil fields, smart pipelines, smartrefining and chemical industry, and intelligent gas stations to further expand the fields of natural gas, gas, clean energyand new energy. Based on the IoT technology with video as the core, combined with AI technologies such as intelligentbehavior analysis, Dahua provides effective personnel management, operation management and control, equipmentinspection, hazard detection, safety supervision, process quality inspection and other solutions to effectively preventaccidents, ensure personal safety and reduce the damage of equipment and facilities. At the same time, Dahua paysattention to environmental emissions, and strives to build a sensitive and efficient pollution detection system to assistmanagement and decision-making. In terms of assembly line automation, Dahua has increased the in-depth application ofintelligent warehousing and defect detection to help the development of "intelligent factory".
For example, in the smart gas station projects in Jiangsu, Zhejiang, and other places, Dahua has provided theone-stop license plate recognition technology, and provided car owners with "license plate payment" experience withoutgetting off the car from vehicle guidance to parking to refuel. In an oilfield project in Shaanxi Province, the intelligentinspection scheme provided by Dahua imitates the external operators to inspect the equipment regularly to detectabnormal pressure, flow and liquid level in time, improving the working environment of inspectors and reducing theirworkload.Smart coal——From comprehensive mechanized mining to intelligent mining
Dahua makes full use of the advantages of visualization and intelligence to implement the time-space and real-timeperception of coal mines up and down to achieve the closed-loop management and control of potential safety hazards,realize the intelligence of the whole production process of cola mining, excavation, machinery, transportation, andcommunication, and improve the level of safety production.
For example, in Anhui, Shanxi, Shandong, and other places, many coal mines are underground from 500 meters to1000 meters. Dahua provides the aurora low-illuminance technology and thermal imaging technology which are integratedinto the coal mine explosion-proof products, which provides bright eyes for remote operation under the coal mines. Forexample, in response to the phenomenon of "three violations" in the coal mines, in the past, the personnel in a video officehad to manage hundreds of videos, and the average time for a person to stay in one picture was only a few minutes.Dahua's intelligent solution for "three violations" in the underground coal mines can intelligently identify the "threeviolations" in 24 hours for the video personnel of "anti-three violations" to audit, which has greatly improved the workefficiency and built a barrier for safety production.Smart metallurgy——From rough production to collective intelligent manufacturing
Dahua has been deeply involved in the iron and steel production business, and adopted scenario-based solutions ofoperation supervision, equipment inspection, and defect identification relying on the advanced technologies of Internet,big data and machine vision to help metallurgical enterprises reduce production accidents, improve production efficiencyand product quality, and enhance core competitiveness. The standardization of enterprise operation, digital supervisionand intelligent production have been promoted, and intelligent transformation of the industry has been accelerated torealize sustainable development.
In the iron and steel enterprises, there are a lot of high-temperature places in the workshops of blast furnace,converter, and hot rolling. The temperature of molten iron exceeds 1,000 degrees and the air temperature at short range ismore than 100 degrees. The working environment is horrible for personnel to approach. Dahua has specially developed a
"refrigerated" high-definition video camera exclusively for the iron and steel. On the one hand, the camera can resist hightemperature, and on the other hand, it can see the key production process of hot steel, which provides great help forremote operations.Smart medical care——From informatized hospital to smart hospital
Dahua takes new medical infrastructure and smart hospital construction as the opportunity to cultivate the medicalindustry. Through the rapid intelligent transformation of security inspection at the entrance and exit of hospitals, Dahuaapplies AI artificial assistance and automatic identification of contraband to realize the safety detection of the personnel inhospitals, and improve the safety level and intelligent prevention and control level of hospitals.Dahua has strengthened the cooperation with medical institutions to explore AI + medical applications, such as painanalysis, HRV (heart rate variability) analysis, etc. Dahua applies AI algorithms to assist patients in the "perioperativeperiod" and "nursing period" in medical diagnosis, and provides decision-making reference, which has played a positiverole in improving medical treatment quality and nursing rehabilitation.Smart architecture——From intelligent buildings to digital operationDahua has been profoundly engaged in the scenarios of construction sites, residential real estate, and commercialreal estate. Dahua helps the supervision units or other construction enterprises change the traditional supervision modesthrough the real name of labor services, environmental monitoring and special equipment supervision at the constructionsite to reduce the allocation of inspectors at the site and improve the management efficiency. In residential real estatescenarios, Dahua has reduced operating costs, promoted brand value and empowered the digital upgrading ofenterprises through One Face, AI intelligent management and Yunrui video networking. In commercial real estatescenarios, passenger flow statistics and heat analysis, parking lot operation, commercial display, visitor management, AIelevator control and other solutions have been applied to improve the operation level, attract passenger flow, and improvecustomer satisfaction.The construction site environmental monitoring project has implemented the guidance of the Central EnvironmentalProtection Supervision Group on the local and municipal environmental governance, and built the dust and noisemonitoring and video monitoring system on the construction site to carry out real-time monitoring and supervision onconstruction site environment. In an intelligent construction site project in Hunan, Dahua created intelligent AI monitoring,labor real-name system, environmental monitoring, special equipment management, personnel positioning, vehiclemanagement, fire prevention and other businesses to improve the efficiency of construction site operation supervision,enhance the lean management level of engineering projects, and enhance the industry supervision and service
capabilities.Smart community or smart neighborhood with visual intercom, smart access control, parking management, visitorsystem and community cloud included creates safe, intelligent and convenient residential life experience and high-qualityproperty services for customers.In terms of commercial real estate, taking a large square project as an example, Dahua built a shopping mallpassenger flow statistics system to provide real-time passenger flow statistics, trend analysis and visual reports, whichprovided rich data analysis results for business management and management decision-making and business adjustmentfor operation departments.Smart cultural tourism——From the informatization of scenic spots to the digital intelligence of scenic spotsWith its own video IoT and AI algorithm technology as the core, around the business scenarios of "food, housing,transportation, tourism, shopping and entertainment", combined with the business needs of intelligent marketing,intelligent management and intelligent service of scenic spots, Dahua applies intelligent ticketing, intelligent accesscontrol, live broadcast of scenic spots, intelligent parking, passenger flow statistics, crowd density analysis, informationrelease, smoking monitoring, forest fire prevention and intelligent public toilets, tour guides, big data analysis and otherapplications to assist in the digital transformation of scenic spots, make the operation of scenic spots more efficient andmore convenient and the services to tourists more considerate.
Taking a domestic 5A scenic spot as an example. With the help of Dahua, the scenic spot has intelligently upgradedthe management of people, vehicles, objects and events. The detection of the elderly and children's loss, illegal stopdetection of the tour line, lake water level overrun, and forest fire warning have been realized. The inspection burden ofscenic spot management personnel has been reduced, so has the cost of human resources. The efficiency of emergencyhandling has been improved by making full prevention in advance, timely handling of the incidents and tracing effectivelyafterwards.Smart agriculture——From agriculture visualization to agriculture digitizationRelying on the capabilities of video perception and environmental data collection in multiple scenarios such asgreenhouse, farmland planting, livestock and poultry breeding, and aquaculture, Dahua makes use of new technologiessuch as IoT, big data, artificial intelligence to improve the intelligent perception algorithm applications in variousagricultural planting and breeding scenarios. In terms of digital business of smart agriculture, Dahua has deeply cultivatedthe livestock breeding business. Based on the AI temperature measurement, livestock and poultry detection, breedingoperation compliance detection and other technologies and solutions, intelligent means of breeding can be improved to
help breeding enterprises improve production efficiency, save breeding costs, improve biological safety, enhance diseaseprevention ability, and promote the rapid development of breeding industry. Dahua has cooperated with breedingenterprises in Henan, Sichuan, Jiangxi and many other provinces and regions, horizontally focused on the digitaltransformation of agricultural production and operation, expanded the business of planting informatization, animalhusbandry intelligence, fishery intelligence, and digital farmland, and provided the capability of video and IoT scenarioscheme of the whole agricultural industry chain.Dahua has launched a pilot project of AI temperature measurement and biological safety for the leading customers inthe breeding industry. Thermal imaging technology is applied to measure the temperature of pigs so that sick pigs can befound in time and effective prevention and control can be achieved; the rail robot inspection is applied to improve theinspection efficiency effectively; by monitoring the length of the washing and decontamination process of people andvehicles and the clothing of the operation, cross regional operation can be realized, and the supervision of illegaloperation can effectively improve the operation standard of operators.Smart retail——From online retail to online and offline integrationIn recent years, the total sales of global retail has been growing. With offline scenarios as the starting point, Dahuaapplies the integration of intelligent perception and cloud edge to realize the data insight of "people", "goods" and "fields";each isolated data island in the offline physical scenarios is connected and converged to the cloud "data brain". Focusingon the automobile 4S industry, supermarket and department store, brand chain, catering, pharmaceutical, communitygroup purchase, beauty and hairdressing, home furniture, cinema and other industries, Dahua has expanded keybusinesses. Based on three directions of safety and loss prevention, store management and precision marketing, Dahuahas carried out in-depth business exploration to help chain enterprises realize "opening up resources, reducing costs andimproving efficiency".
For example, in the 8,000 stores of a leading electric vehicle enterprise in China, Dahua has completed theconstruction of remote shop inspection management and safety and fire protection linkage, which has improved themanagement efficiency of chain stores and reduced potential safety hazards. For a leading food chain enterprise,transparent kitchen construction has been carried out by Dahua in more than 800 stores across the country to protect thehealth and safety of the branded food. In the automobile 4S shops, Dahua built digital exhibition halls and transparentworkshops (station detection and station utilization) to improve the quality of sales service and customer satisfaction onexperiences.
Smart education——From digital campus to smart campus
Adhering to the vision of "ensuring safety, providing service and promoting teaching", Dahua has formed a "3+1+X"business system based on three major business sectors of security, logistics and teaching with the middle platform of dataas the direction to help with the integration of production, education and talent cultivation, and to form a business systembased on the campus scenarios of "people, vehicles, subjects, food, housing, transportation, teaching, studying andresearch". In terms of security, intelligent business or integration applications of all kinds of scenarios such as campus AR,safety and fire fighting interaction, emergency command, risk management have been built to provide correspondingproducts and solutions for a large number of education authorities and safe campus projects. In terms of logisticsmanagement, Dahua has created bright kitchen, smart dormitory, school bus management and other businesses to helpthe campus service upgrade in all aspects of traffic, diet, consumption and accommodation, and improve the sense ofsafety and happiness of teachers and students. In terms of education and teaching, the "three classrooms" business withsmart classroom as the core has been created to serve teachers, students and education administrators, and promote theimprovement of teaching environment, teaching management and teaching quality.In terms of security, the emergency command business has been implemented in the education committee of first-tiercities and the top 985 universities, which has greatly improved the response and processing speed of the securitydepartment for emergencies. In addition, in the field of general education networking, district- and county-level networkingof lots of education bureaus has been covered. For example, in the epidemic control project of an Education Bureau inZhejiang Province, Dahua carried out temperature measurement data networking for the primary and secondary schoolsunder its jurisdiction to help schools resume its work and schooling. At the same time, a temperature monitoring systemwas established to effectively control the influenza and other trends.In terms of logistics management, in some colleges and universities, the application of artificial intelligence and IoTtechnology has effectively controlled the entrance and exit of dormitory personnel, greatly reduced dormitory theft andother incidents, and improved dormitory security control. At the same time, combined with the data of entrance and exit,early warning of abnormal situations can be provided to assist the school management.In terms of education and teaching, Dahua has deployed teaching video and corresponding resource managementplatforms in many colleges and universities. At the same time, combined with high-quality classroom resources in thecolleges and universities, online learning, review and other functions have been provided for students to help them withtheir daily study.
Smart finance——From offline marketing to digital marketing
In recent years, emerging technologies such as mobile Internet, AI artificial intelligence, machine learning, facerecognition, voice recognition, image recognition, VR / AR, IOT and blockchain, etc., have been continuously integratedinto the financial scenarios to innovate financial products and services by using various technological means. Through thedeep integration of financial technology and banking business scenarios, commercial banks have been promoted toaccelerate the digital, intelligent and ecological development.Dahua has profoundly cultivated the financial security business. Based on the technologies and solutions of softwareplatform, end-to-end cloud intelligence and big data analysis, the level of financial security management has beenimproved, the probability of risk occurrence has been reduced, and the timeliness of case detection has been improved.Dahua has expanded its financial technology business horizontally, continuously explored the implementation scenariosof financial technology in the direction of smart IOT, smart marketing, smart management and smart risk control, andprovided intelligent analysis solutions for IOT terminals and centers. Dahua has used scientific and technological meansto reduce costs and improve efficiency for banking business operation and site operation, and provide comprehensivedata support for business risk control and compliance risk management.
For example, in the construction project of national networking platform of a joint-stock bank, the target recognition,license plate recognition, behavior analysis algorithm, mobile application and other advanced technologies and productshave covered every bank branch by relying on the software platform. The prediction of abnormal personnel, vehicles andbehaviors at the earliest time in the bank branches and self-service banks has been realized, and so has thetransformation from notification of abnormal events afterwards to warning in advance. In a state-owned bank branchbusiness compliance intelligent project, Dahua was considerably engaged in the risk control process of banking business,getting through the banking business system. Combining with artificial intelligence algorithm to alert and record themultiple risk business events in a real-time or after-the-event manner, Dahua helped the bank further improve businessrisk control.
2.5 Small and medium-sized business (SMB): Empower with digital intelligence to build a win-wincooperation ecosystem
With the continuous increase of labor costs, cost reduction and efficiency improvement have become the rigiddemands of enterprises, and digital transformation of small and medium-sized enterprises has been acceleratingcontinuously. When SMBs are confronted with the long tail market of thousands of industries, the scale effect is obvious.Dahua has cooperated with the majority of partners to complete a wide coverage of the long tail market and achieve
mutual construction, sharing, and a win-win situation.
(1) SMB product solution service system shaping
Under the impact of the epidemic, the investment budget and project construction of small and medium-sizedenterprises tend to be steady. The cloud and modular construction modes can reduce the one-time purchasing capitalpressure of small and medium-sized enterprises and improve their capabilities to resist risks. Relying on the deepaccumulation in AIoT, intelligent hardware, cloud and big data, Dahua has built a solution system of "combination,integration, cloud, wisdom, ease" around the demands of users to provide customers with one-stop products and solutionservices, effectively helping small and medium-sized enterprises in digital transformation to achieve cost reduction andefficiency.
(2) Digital win-win ecological construction of cloud commerce
With the further development of the Internet, the purchasing habits of SMB users tend to be flat, and the businessmodels of channel customers are constantly changing from the tradesman to itinerant trader, and from product retailer toretail +service provider, Dahua cloud commerce emerges as the times require. Cloud commerce digital marketing serviceplatform has created business segments such as information center, product center, solution center, training center,trading center, service center, operation and maintenance center, joint ecological construction, etc., to help partnerenterprises improve operation efficiency, promote industry collaborative progress, establish symbiotic industrialenvironment and win-win business ecosystem, and realize win-win of social values and business values.
3. Core hardware products
In 2020, Dahua kept focusing on the video IoT business, explored the needs of the industry in depth, achieved furtherAI applications, comprehensively upgraded the capabilities of perception, intelligence and computing, and establishedserialized product layout. The multidimensional perception layer plays particular emphasis on the collection ofmulti-dimensional perception data and intelligent processing, the edge processing layer plays particular emphasis on dataaggregation, storage, processing and application, and the cloud center layer plays particular emphasis on centralizedstorage, intelligent integrated computing and multidimensional data application exploration. The rich and sound productseries provide strong support for the rapid implementation of video IOT solutions.
3.1 Multidimensional perception products
Dahua's multidimensional perception products focus on the improvement of perceived adaptability and perceivedintegration, and the product intelligence is stratified and graded according to the subdivided requirements of differentindustries and scenarios. The ability of full computing and full intelligence of multidimensional perception products hasbeen continuously evolving and deepening. In terms of perceptual adaptability, Dahua focuses on improving capabilities inspace adaptation, mobile target adaptation and low light environment adaptation, which can help accurately obtain theinformation of three-dimensional world in different environments and climate conditions. The improvement of perceptualfusion capability has expanded the range of perception through multi-camera fusion linkage, multi-spectrum datacollection and three-dimensional information perception. Intelligent layering includes combined intelligence, fullintelligence, integrated intelligence, easy intelligence and professional intelligence, which can better adapt to fragmentedmarket applications, meet the needs of customers in different industries, and accelerate the implementation andpopularization of AI.
? Front camera
Dahua scene-defined camera 2.0 has been continuously evolving, and the serialized layout and technical upgradinghave been completed. The Hubble Watcher ultra-high-pixel panoramic mosaic has realized full-scene coverage, andintegrated multi-algorithm applications such as passenger flow situation, traffic flow situation and traffic incidents; 8K 5GTianying has realized ultra-high-pixel full-scene intelligent application to achieve more convenient deployment andcomplete the implementation of 5G+AI+8K; the supreme version of Tianque relies on Dahua's original patent technologyof hyperfocal scene to realize the clear capture of people and vehicles in the whole scene; the high-end series of Lingxiadopts three-layer body structure design equipped with the upper layer of 120 to multi-point camera, the middle layer of
180-phase or 360-phase panoramic mosaic, and the lower layer of 360 connected with high-rate dome camera, which canbe combined to adapt to the most suitable product type of customer value; the middle and low end of Lingxi are equippedwith innovative soft light compensation system and built-in double PTZ circular control system combined with the designof panoramic and detail double-zoom lens to effectively increase the coverage; Aurora 3.0 and Eco 2.0 products continueto innovate in technology, break through the low light limit, and provide full-color high-definition images at night; cityparking, high-altitude parabolic aerial, detection of electromobile access to the elevator, and other products have beenthoroughly engaged in the subdivided applications of the industry. Dahua makes innovation of technology research anddevelopment, and the layout of serialized product solutions to help the industry continuously iterate and upgrade andrealize the leading technology, multi-scene adaptation, and application in diversified industries.
The coaxial products have extensively applied HDCVI 6.0 technology and made full use of the technical advantagesof coaxial high-definition transmission to launch 4K real-time, full-color and TIOC products. 4K products provide HDreal-time and smooth video stream, full-color products realize all-day high-quality full-color monitoring, and TIOC productssupport the accurate identification and early warning of events.
? Thermal imaging
At the beginning of 2020, COVID-19 broke out all around the world. The thermal imaging thermometer as animportant primary screening device for temperature has been extensively applied worldwide. Dahua launched hundreds ofstyles of human temperature measuring devices in a short time with the accuracy of ±0.3℃. Based on innovativetechnologies and excellent performance, Dahua's products have won the recognition of global customers and contributedto the global anti-epidemic efforts. Dahua's products have won a number of major awards, such as "Zhejiang ComputerFederation, Zhejiang Computer Industrial Association 2020 Outstanding Product Award", "First Prize of Zhejiang Top TenInnovative Achievements of Annual Outstanding Enabling Epidemic Prevention and Control", "Innovative Product Award
of the Shenzhen AI Anti-pandemic Symposium & Scientific and Technological Achievements Exhibition 2020", etc. Dahualed or participated in the formulation of a number of standards related to human temperature measurement, such as"T/ZJAF 3 Technical Specifications for Thermal Imaging Human Body Temperature Measurement and Alarm System","Technical Review Requirements for Medical Infrared Human Body Temperature Measurement and Imaging Equipment(Trial)", "T/CESA 1108 Technical Requirements and Testing and Evaluation Methods for Intelligent Human BodyTemperature Detection and Identification System", "T/VSTR 004 Technical Requirements of Infrared IntelligentTemperature Measuring System for Rail Transit Station", and "T/SZSSIA 002 Technical Specification for Access ControlSystem of Body Temperature Measurement", etc.
? Intelligent Traffic
In the field of intelligent transportation, Dahua integrates video and multidimensional perception technology, andcontinues to launch edge computing fusion product package composed of intelligent transportation cameras and roadintelligent terminals. Ecological family products, such as ecological electric police, ecological mount, ecological lighttruck/intelligent monitoring, are committed to solving the problem of light pollution.
In terms of comprehensive management of road traffic, Dahua has developed new business applications such as themanagement and control of non-motor vehicle illegal performance, "sentry" camera of binocular mount, whistle capturesystem, "sentry" integrated intelligent pedestrian light, warning for pedestrian running red light, reminder of giving way topedestrians, etc. to deeply integrate into the construction of urban civilization. Through the deep integration ofmillimeter-wave radar technology and video technology, the "sentry" radar-and-video integrated machine breaks thetechnical bottleneck of traditional video technology single-dimensional data, realizes all-day, full-scene, multi-objective,multi-lane, high-precision and high-speed traffic information detection, and effectively empowers traffic safety warning,
traffic event detection, traffic flow detection and other services, which has further improved the road capacity.
In the field of static transportation, the technical advantages of AI, RF technology and cloud are integrated to launch anew generation of parking product solution, improve the efficiency of parking management and user experience. Thetraditional barrier and license plate recognition technology are deeply integrated to launch serialized barrier integratedmachines, which has effectively reduced the construction cost and improved the image of the entrance and exit; themillimeter-wave radar technology is applied to realize "decoilization" to reduce the construction difficulty and maintenancecost; the sentry box level parking management terminal is launched to improve the stability and ease of using parkingmanagement system and ensure the business continuity of the owners.
? Intelligent building
COVID-19 has swept the world, and Dahua has rapidly launched a series of anti-pandemic intelligent access controltemperature measurement products to achieve non-contact temperature measurement. This series of products integrates
the advantages of video and algorithm providing intelligent identification of high accuracy and fast speed. At the sametime, it supports human body temperature measurement, health code authentication, ID card verification, maskrecognition, call intercom, attendance check, access control authority verification and other functions. It is widely used atthe entrance and exit of crowded schools, communities, hospitals, enterprises, governments to effectively protect people'slives and property, and sells well all over the world.Intelligent building products provide users with a full range of service support from products, product portfoliosolutions to system solutions, and meet the needs of customers from all walks of life for access control products.Intelligent building products have been successfully applied in the scenarios of new intelligent communities, accesscontrol transformation in the old residential communities, campus face-to-access upgrade, digital transformation ofenterprise parks, intelligent office buildings, hospital "epidemic prevention" safe passage, and safe passage of rail transit.
? 5G products
5G is the core technology in the field of video IoT. Dahua has completed further layout to improve 5G series products,and launched serialized innovative solutions and application innovations. In 2020, Dahua made breakthroughs in manytechnical problems such as efficient transmission, broadband antenna and adaptive transmission, and launched variousproducts such as 5G + 4K ultra-high-definition network camera, 5G tracking camera, 5G UAV and 5G inspection robot,
which had been widely applied in different industries such as smart policing, smart storage, smart finance and smartenergy.
3.2 Edge processing products
? Edge intelligent computing products
Edge-side intelligent products continue to promote the implementation of various industries, improve productperformance and enhance product competitiveness. Dahua has launched "Ruisi" series IVSS, EVs, intelligent analysisbox, intelligent coaxial high-definition XVR, intelligent security server, face recognition metal detection door, intelligenttraffic products, intelligent integrated vehicle recorder and other products.
IVSS series products continue to upgrade the performance of deep learning algorithm, realize the highlight functions
of single-card multi-intelligence, intelligent round inspection, secondary extraction, tidal intelligence, face & human bodycorrelation, promote the comprehensive construction of intelligent solutions; many kinds of industrial intelligence includingAI coding, animal, instrument, fireworks, behavior have been explored, thousands of industries have been empoweredthrough AI to help enterprises reduce costs and increase efficiency. EVS series products are based on the brand newRAID, high-density storage, unified cluster and other technologies to ensure safe and reliable data storage; combined withthe technologies of intelligent analysis of major routes, rapid data structuring, integration of storage and intelligencemanagement, the EVS series products can realize fast retrieval of target data, long-term storage of valued data,closed-loop of edge data business, and give new value to centralized data storage.Dahua coaxial HD hard disk video recorder XVR, equipped with self-developed AD chip and self-developed deeplearning algorithm, supports audio and video composite stream preview, hard disk storage and video playback, realizesacousto-optic linkage alarm in advance and accurate search of people and vehicles afterwards, and supports 4K HDreal-time preview, AI intelligent coding and SMD intelligent dynamic inspection. NVR can meet the intelligent applicationsof perimeter active perimeter prevention, intelligent recognition and video structure in various scenarios of monitoring. Theedge computing analysis box IVD provides various customized intelligent services for customers, realizes the docking ofdevices in the whole industry chain, and provides the capabilities of intelligent transformation, computing powersupplement and business expansion.
? Network transmission and security products
In the node of "edge", a series of Dahua's products such as wireless bridge, professional PoE switch andquasi-industrial-level aggregation switch realize end-to-end full-scene coverage to ensure high-speed and reliable datatransmission in various harsh environments. In the "cloud" center, the new generation of ultra-10,000 route level and datacenter level core switching and security access gateway products thoroughly integrate data transmission and cyber
security to provide customers with high-speed and reliable data transmission and comprehensive data and video securityprotection.
3.3 Cloud center products
Dahua intelligent computing unifies software architecture, and constructs the open architecture based on smart view
engine through modular architecture. Dahua intelligent computing supports the virtual deployment of video cloud andcloud container, quickly realizes the full compatibility of high-performance computing resources, adapts to all kinds of CPU,GPU and NPU, and provides stronger, faster, safe and reliable computing power support for multiple fields.Central intelligent full resolution products cover the mainstream X86, ARM platforms and high-performance AIcomputing platforms. The independent research and development of intelligent resolution card expands the ecologicalcompatibility in the field of cloud computing and provides faster computing power. Central intelligence full comparisonproducts combine with high-performance computing chips and storage-calculation integrated technology. Smartcomparison card has been independently developed , data processing algorithm has been optimized, and second-levelcomparison capability of 100 billion data is provided to provide extremely fast computing capability for the large-scale dataprocessing business, which can comprehensively improve the intelligence of perceptual data, and serve big dataapplications at the city level and in various industries.
The video cloud storage system supports protocol access and streaming media processing of more than 100 kinds ofIoT devices, supports online storage of tens of millions of devices and EB-scale storage, and provides online and fusionretrieval capabilities of data for large-scale IoT sensing devices. Through the one-stop intelligent data operation and
development platform, Dahua provides a complete set of big data base and data operation capabilities of data integration,data governance, data development, data service, data sharing and exchange, data exploration, calculation and storageengine, and meanwhile provides systematic data governance service to realize integrated data warehouse architecturewhich regards all resources, resource cataloging, catalog globalization and global standardization as the guiding principle,extracts higher data value according to the demands of business scenarios, adheres to the concept of full ecology, opensdata and computing power, and realizes the data application ecology of customers.
4. Innovative Business
4.1 Industrial Internet
In the field of industrial Internet, Dahua focuses on intelligent manufacturing and materials handling with two majorbusinesses: machine vision and AGV robots. Relying on independent research and development capability, a solutionsystem with software algorithm and scheduling platform as the core, including industrial cameras, intelligent cameras,AGV robots and other product series, has been formed. The application of product solutions is as follows:
In 2020, 600-megapixel industrial cameras were released and applied in testing projects of mainstream panelmanufacturers; embedded intelligent line-scan cameras of 8,000 pixels and code readers with a reading accuracy of 0.2mm DPM further enriched the product series of intelligent cameras. Industrial cameras have added Gigabit Ethernetinterface products, and introduced high-speed portable scanners used at logistics stations and transceiving outlets.
With algorithm platform software as the core, industrial cameras, smart cameras, line-scan cameras, smart sensors,
3D cameras, lenses and other products are added to provide customers with one-stop shopping and segmented industryvision solutions, which are widely used in panels, food packaging, 3C, chemical fiber and logistics industries. Thesingle-piece separator vision solution and six-sided code reader based on deep learning are widely used in logisticssorting centers for automation; Robot positioning and guidance system helps automate the factory assembly and loadingand unloading, making production more flexible; The visual inspection solution of DTY/FDY based on AOI deep learningwas deployed in batches to continuously provide end-to-end industrial vision solutions for "Industrial AI +".Introduction to Characteristics and Functions of Algorithm Platform:
The Whole Family of Product Series:
AGV robots focus on the development and implementation of scheduling algorithm platform on automatic navigation,
AGV products, and relevant accessories, providing robot scheduling solutions for intelligent factory automation.
AGV robots, such as tour-inspection robots, latent robots, hand hydraulic carrier robots, forklift robots, transfer robots,traction robots and sorting robots, have been equipped with independently developed AGV dispatching systems andintelligent charging systems. Such robots can be widely used in warehouse management systems. The tour-inspectionrobot works with an intelligent scheduling platform to realize visual inspection in fields of electric power and animalhusbandry; Latent robots have gears of 300kg, 600kg and 1 ton, and integrate navigation technologies such astwo-dimensional code, laser, and texture recognition; 5G-communication dispatching forklifts widely used in the textileindustry feature small control delay, and provide services from indoor to outdoor; AGV robot products are more abundantwith more mature technology. They have been widely used in auto parts, 3C, panel, lithium battery, photovoltaic and otherindustries.
4.2 Video Collaboration
In 2020, Dahua launched a cloud communication and collaboration platform, which supports online interaction andcollaboration of up to 5,000 parties in a single conference, and is open to all sectors of society free of charge during theepidemic. In this way, it has facilitated the remote communication and information transmission for many localgovernments, health care commissions, and enterprise users, and improved the efficiency of their resumption of work andeconomic recovery.
The integrated 4K PTZ conference collaboration terminal greatly simplified the deployment and implementation of 4Kcommunication and collaboration. Through deep optimization of human voice, the self-developed audio 3A algorithm hasenabled new industry-leading products such as 4K integrated, 4K split, 4K mini conference collaboration terminals, minipickup speaker, and interactive intelligent tablet. SFU and MCU architecture hardware servers deployed based on theprivatization of the cloud conference collaboration platform further enriched the product line of conference collaboration,and 5G technology was loaded to popularize 4K conference collaboration applications.
Collaborative communication products and solutions centered on advanced audio and video technologies are widelyused in the fields of city governance, security and stability, law-based society, reform and efficiency improvement,improvement of people's livelihood, beautiful countryside, big data service, intelligent education, etc. With quality productsand convenient and easy-to-use experience, they have won a good reputation in the market.
4.3 Imou Household
IMOU for civil consumption provides global users with intelligent IoT services around the scenes of homes, shops andsmall and micro enterprises. A trinity of "Imou, Intelligent Hardware and Intelligent Technology" business ecology was built
to continuously combine released products with ecology, providing users with better and safer civil IoT security solutions.
Continuously expand the intelligent security IoT ecology around civil scenesIn recent years, the growth of home security cameras and smart door locks is particularly prominent amid theexplosive growth of smart home IoT products. In 2020, Dahua released a number of smart cameras for home use with thepixel increased from 1080P to 2K, black-and-white night vision upgraded to full-color night vision, and AI algorithm added.Pocket camera, PTZ camera, outdoor bullet camera, outdoor PTZ, and battery camera are included. In addition, productsare connected with users based on Imou, so that users can perform remote audio and video monitoring, and experiencecloud services such as video cloud storage and telephone alarm.
A full range of intelligent lock products based on video technology and face recognition technology were successivelyintroduced based on the rich products and diversified technical research on the category of intelligent door locks. Dahua isthe first in the industry to introduce the intelligent video lock centered on video. As the mainstream direction, video lockswill greatly improve the user experience. By loading video technology and connecting with IoT platform, local interaction ischanged to remote visual interaction.Imou Cloud: AIoT Cloud with Both Internal and External ConsiderationsImou Cloud is an open video-centric IoT cloud platform built by integrating cloud computing, big data, cloud storage,software and hardware platforms, IoT, and many other resources. Imou Cloud has set up 20 data center nodes around theworld with access to 60 million devices, providing secure, stable, and fast AIoT cloud services for 23 million usersworldwide. Imou Cloud provides security and care services for global end consumers through the access to massive IoTdevices, transmission, storage, AI and big data analysis, and combines the AI capability of "cloud edge" to make civilapplications more intelligent.
In terms of cloud ecology, Imou Cloud provides third-party partners with video-centric VPaaS capabilities, and openscloud access, cloud storage, and cloud forwarding, cloud livestream, cloud intercom, cloud sharing, cloud analysis andother core functions. In addition, to better meet fragmented application needs of user scenarios such as homes, shops,small and micro enterprises, Imou Cloud further opens the cloud AI algorithm, and AI algorithms for face detection, facecomparison, face search, and human shape, human attributes, vehicle attributes, and traffic attribute recognition. In 2020,the Imou Cloud platform and industry cloud solutions were implemented to improve a number of lightweight Internetindustry clouds. At present, the Imou Cloud business ecology has more than 40,000 third-party partners settled in theworld and more than 1,100 active applications. It has initially established an open, shared, and cooperative video networkecosystem.In the information security field, data security and privacy compliance are core strategic objectives. In 2020, afterobtaining GDPR certification, Imou Cloud successively won international certifications such as CSA STAR Cloud Security,ISO/IEC 27701, ISO/IEC 27017, and ISO/IEC 27018, and also obtained ITSS Cloud Service Certification and Level 3Certification of Ministry of Public Security. This means that Imou Cloud has once again been recognized by domestic andforeign authorities in terms of security, accuracy, transparency and compliance in handling personal information, and willprovide safe, stable, and high-quality cloud services to customers around the world.In terms of data operation, Imou Cloud further enriched and improved five core functions, i.e. data statistics, growthmodel, layered operation, key business analysis, and business operation of the OMS data operation platform. In this way,it drives the reshaping of sales pipelines by data, improves product competitiveness, and optimizes end productexperience.
4.4 Smart Fire Control
Dahua is committed to providing customers in the industry with a series of fire control products and solutions in allfields, and investing deeply in fire control products, core technologies and industry application systems. Relying ontechnological advantages of intelligent perception of fire control, video analysis, cloud computing, big data, IoT, it providesintelligent fire-control products and high-quality services for the government, small and micro enterprises, and familycustomers.
Solutions
On the To G solution side, Dahua continues to build a top-level business system for smart fire control, including asmart fire operation solution for city-level fire operation, a smart fire supervision solution for district and county’s IoTsupervision and law enforcement, a big data fire control solution for city-level fire prevention, a digital intelligence station
(fire data asset warehouse) solution for city-level data services, and an intelligent rescue and command solution forcity-level fire fighting. The projects have been successfully implemented in many fire rescue corps, detachments andbrigades across the country.In terms of To B solutions, Dahua has surveyed industry scenarios such as finance, schools, hospitals, cultural relicsand ancient buildings, real estate, energy, etc., developing and releasing corresponding solutions. With the focus on smartelectricity solutions, Dahua empowers the whole-scene fire control business through thermal imaging and video AItechnology. In addition, it integrates with the industry business, and ensures fire safety without ignoring energyconservation and efficiency improvement. In the field of enterprise’s hazard management and control, intelligentperception through videos and intelligent perception of fire are combined to establish a multi-dimensional andfull-coverage prevention and control network integrating safety and consumption. This reduces the false alarm rate,technically innovates fire control means, relieves the pressure of fire safety management personnel, and effectivelyimproves the fire control management level of enterprises.In terms of To SMB/C solutions, Dahua provides SMB and C-end customers with an integrated cloud service platform,and creates lightweight fire safety solutions, reducing the cost of fire services, and extensively covering small places,commercial chains and fire services for home use.Software platformDahua built an open platform for fire protection, shares intelligent fire protection perception with partners, and createsa win-win ecology for the fire protection industry. At present, two open platforms, privatization deployment and public cloud,have been completed. By providing standardized application layer interfaces, the unified configuration, release andmanagement of data service interfaces are realized, and multiple common interfaces are preset for third-party developersto directly call, thus continuously sharing business opportunities for developers and ecological partners.In the process of building software products, Dahua adheres to the component-based development mode,establishes a unified software R&D system and technical framework for multiple industry platforms, supporting the rapiddevelopment and iteration of industry applications, and giving full play to the value of software reuse.
Hardware productsDahua made in-depth development in smart fire control and smart electricity solutions, and completed businessplanning and long-term deployment in industrial and traditional fire control. Dahua has made major breakthroughs in manycore technologies, such as new maze detection technology, false alarm prevention algorithm technology, fault arcdetection technology, two-busbar communication (high speed, lower power consumption), greatly improving the core
competitiveness of products.
4.5 Smart Storage
With the goal of "leader of secure storage" and relying on independent R&D and innovation capabilities, and strictquality control system, Dahua provides solid-state hard disks, memory cards, PSSD, U disks, DRAM and other products,which can be widely used in high-tech fields such as intelligent monitoring, consumer electronics, industrial electronics,cloud computing, unmanned driving, robots, and artificial intelligence to meet the needs of application scenarios.In terms of solid-state drives, SATA M.2 SSD products with high reliability and wide temperature are introduced tovehicle-mounted applications in harsh environments, such as -20-85℃; In terms of consumer SSD, C800 and C800ASATA products, and C900 and C900PRO series PCIe consumer products have been launched successively; Forcommercial SSD, E800 SATA and E900 PCIe products are available. The SSD product line with rich interfaces, completecapacities and high quality can meet various market demands and is widely used in desktop computers, notebookcomputers, and all-in-one machines.
In terms of memory cards, domestic monitoring cards and wide temperature memory cards have been introduced tomonitoring scenes and electronic products with high read and write requirements; At the same time, consumer cards withhigh cost performance are introduced and applied to digital products; Special cards for driving recorder are introduced toexpand the application scenarios of driving recorder. In terms of U disk products, a number of mainstream in-line U disksand U disks for Android mobile phones have been introduced one after another to the USB product market. In terms of the
PSSD product line, entry-level products are introduced with a capacity range of 120GB/240GB/500GB/1T.
4.6 Automotive Electronics
The automotive electronics business is aimed at OEM and related operators of passenger cars and commercial
vehicles. We actively expand vehicle markets before and after delivery, and can provide a full range of vehicle-mountedcameras, vehicle-mounted terminal hosts, active safety products, auxiliary driving products, automatic parking systems,and panoramic 360 scanning systems. We have been certified by the IATF16949 quality management system,empowering industries such as "tourist bus, Class C or above passenger car, and special vehicle for the transport ofhazardous chemicals, fireworks and crackers and civil explosives", freight logistics, public transportation, public security,school bus, slag car, and sanitation.
Facing the vehicle-mounted product market, many intelligent vehicle-mounted products and auxiliary driving systemshave been released for vehicle-mounted monitoring, forward collision warning, lane departure warning, blind zonedetection, driving behavior analysis, driver attendance by face recognition, passenger flow statistics and other
technologies. The intelligent video equipment for vehicle-mounted products has been widely used in many domesticindustries, including intelligent vehicle electronic products centered on video and comprehensive solutions forvehicle-mounted products subdivided into intelligent analysis of various scenarios. In this way, we provide customers withsolutions featuring independent technical advantages and meeting personalized needs of various industries.
4.7 UAV
With the focus on the field of public security, we independently research and develop intelligent quad-rotor UAV,six-rotor UAV and a variety of mounting systems with thermal imaging and visible light, including multi-rotor and compositefixed wing. They feature long endurance, heavy load, high altitude, strong wind resistance, etc. Many core technologiessuch as advanced navigation flight control, pan/tilt stability augmentation, power system, air-ground communication,display and control integration, active safety, are integrated. Dahua has applied for a number of related patents such asadaptive strong robustness control algorithm and high-precision loosely coupled navigation algorithm. Dahua providessolutions for public security, urban management, traffic police, emergency and other industries.
5. Major sales model and performance driving factors
With marketing and service networks around the world, Dahua offers products and solutions to different end userslike governments, enterprises, and consumers. With the increasing coverage of smart IoT technologies and applications inall walks of life and consumer groups, Dahua has also strengthened the channel construction for enterprises andconsumers. In 2020, its enterprise business and innovative business recorded a rapid growth rate.
Major performance driving factors include:
After years of development in overseas markets, Dahua has established a global sales and service network,contributing to increasing brand recognition and product reputation. Dahua will always be open, transparent andcooperative in the face of complicated and volatile international situation in politics and economy. During the epidemic,relevant solutions and products for epidemic prevention and control were launched in time to help the global fight againstthe epidemic. At the same time, through rapid response and assuming social responsibility, the understanding and mutualtrust with customers were enhanced, securing cooperation with new valued overseas customers. Dahua will continue tohelp overseas employees to work according to the laws, policies, and customs of various countries and regions. To meetthe requirements of global compliance, Dahua will also strengthen the construction of a global compliance system,managing compliance risks according to the policy of the host country. Globalization and continuous increase in overseasmarkets are also vital factors for future revenue increase.
Dahua is customer-oriented, and actively responds to the industry trends. In the application of AI, Dahua dedicatesdeeply to sub-sectors, understands their fragmentation requirements, and consolidates the know-how abilities in the form
of software. Dahua attaches importance to and mines the value of data. The massive real data applied in actual businesshelps upgrade Dahua's AI capability continuously, creating practical values for customers. With the implementation of AIand the continuous mining of data value, Dahua has gradually expanded its business from traditional security toenterprise operation and management, and the proportion of project added value and value-added business has beenincreasing. Dahua's intensive work on its business, contributing to the continuous improvement of customer value, is animportant factor driving the growth of its performance.
In addition, with the continuous extension of the business to sub-sectors and the deepening of its application, Dahuahas further targeted front-line customers, accelerating the process of software SaaS and PaaS. Through thestandardization of software, the improvement of reuse rate of functional modules, and the rapid implementation ofsolutions brought about by software cloud, Dahua meets the needs of increasing industry customers, so that they areincreasingly connected. At the same time, Dahua reduces the running-in cost of cooperation through standardizedinterfaces and data formats. Dahua has obtained more customers together with partners through complementaryadvantages and benefit sharing. Through the cloud of software and the construction of ecological cooperation chain,Dahua can serve customers in all walks of life faster and better. The ability to quickly enter new value industries and fieldsis an important factor driving performance growth.
6. Industry development trends and industry position
At present, video capability has penetrated into business applications in all walks of life in addition to monitoring andsecurity. With the growth of AI products’ hashrate and the decrease of the hashrate cost, AI products have been more andmore used in the video IoT industry. At the same time, the access to the intelligent IoT is growing rapidly, and the accessand perception in turn help generate more and more data. The ability to empower all walks of life with AI technology, andto efficiently manage massive data and mine data value will become an important development trend of the industry in thefuture.
During the development, Dahua has always kept a watchful eye on the industry trends and focused on fields withvalue. Dahua is a world-leading provider and operator of video-centric smart IoT solutions. With AI, big data, and cloudcomputing integrated in the products and solutions, its position in smart IoT industry has been constantly elevated.
II. Material Changes to Major Assets
1. Major changes in main assets
| Major Assets | Explanation Of Material Changes |
| Equity assets | 46.26% higher than that at the beginning of the year, mainly due to increased investment in foreign equity acquisition . |
| Fixed Assets | No Significant Change |
| Intangible Assets | No Significant Change |
| Projects under Construction | 167.15% higher than that at the beginning of the year, mainly due to increased investment in the R&D and industrialization of the intelligent IoT solution, the Phase II construction of the smart manufacturing base in Hangzhou and the construction of the R&D center in Xi’an. |
| Cash and Bank Balances | 142.24% higher than that at the beginning of the year, mainly due to the increased collection of payment from sales this year. |
| Other Receivables | 137.40% higher than that at the beginning of the year, mainly due to the increase of equity transfer receivables this year. |
| Other Non-current Assets | 904.23% higher than that at the beginning of the year, mainly due to the prepayment for land purchases. |
2. Major overseas assets
□ Applicable √ Not applicable
III. Core Competitiveness Analysis
Dahua has always insisted on taking video as the core to expand the smart IoT business. We continue to improve theresearch and development investment, product development, marketing and service network, supply and delivery, andcompliance management, consolidates competitive advantages, and meets the changing needs of customers and buildscore competitiveness.
1. Targeted investment in R&D to constantly improve technological innovations
With the development of technology and customer needs, the video surveillance industry has entered thedevelopment stage of video-centric smart IoT, that is, breaking through the traditional pattern of video surveillance industrythrough multi-dimensional perception and application. Multi-dimensional perception increases types of informationcollection, including spatial information, dynamics information, and biological characteristics. Multi-dimensionalapplications output more video data value and support a wider range of business applications.
Dahua attaches importance to R&D investment, and has profound technological accumulation in optical technology,image acquisition, data transmission, storage, and image display. At the same time, Dahua continuously explores thefrontier of advanced technologies such as multi-dimensional perception and application, including AI, big data, cloudcomputing, and software development, leading the development of the industry.
2. Constant optimization to promote the global supply operation with safety priority
Facing the epidemic and frequent trade frictions, the importance of supply security has risen to a new height.Meanwhile, different from basic products of mass production, there are many kinds of customized solutions and differentproduct models based on personalized needs of customers, which pose challenges to the timely delivery of products.Dahua has established a safe, stable and multi-source flexible production system, including material risk managementand control, supplier risk management, refined classification and inventory, and multi-source supply. Based on specializedorganization and operation, Dahua systematically ensures supply safety. In addition, Dahua optimizes the global supplylayout, reconstructs the capacity of the construction base, and strengthens the informatization construction of the globalplanned supply system. In this way, Dahua can manage and predict the whole process of product prediction, production,shipment, and delivery in an efficient and accurate manner.
In China, Dahua now has a production and manufacturing base in Fuyang. With automation technologies, robots, andmachine vision, Dahua has improved the intelligence level of the supply chain system and built Fuyang production andmanufacturing base into a model of "smart factory". Dahua has established regional supply centers in India and Hungary,and regional HUB warehouses in core logistics distribution centers such as Netherlands, Dubai and Panama to ensure thesteady and rapid development of its global business.
3. Constantly optimize the global marketing and service network, and build organization capabilities suitable forbusiness
Dahua has established a global marketing and service network. By the end of 2020, Dahua has 32 provincial officesin China. Dahua constantly expands the small and medium enterprise business to frontline markets by strengtheningcustomer coverage and development, and introducing ecological partners to build a business ecology. We activelyembrace the Internet/IoT model and comprehensively conduct e-commerce, cloud-commerce and Yunrui businesses.With the penetration of smart IoT into all walks of life, in order to meet the increasing demand for customized software anddelivery complexity, Dahua has set up software capability centers in major provinces and autonomous regions in China,covering software research and development in this province and neighboring provinces and autonomous regions, andflexibly and quickly meeting personalized customization needs of customers.
Overseas markets are key to Dahua's rapid growth. Dahua opened hundreds of image stores and more than 3,000element stores overseas throughout the year. During the epidemic, overseas teams maintained a steady businessdevelopment strategy, and adopted innovative business models such as virtual exhibition halls and auto shows, furtherimproving the brand image and expanding the international market. Among them, thermal imaging products contribute toensuring the normal social production and life of countries and regions in the world, and the health of citizens.
By the end of 2020, Dahua has established 58 branches around the world to provide customers with fast andhigh-quality end-to-end services. Dahua has a vast distribution network overseas, and also serve overseas medium andhigh-end city customers and industry customers. Relying on the technical strength and active overseas expansionstrategy, Dahua will copy the application mode of domestic government business and enterprise business to overseasmarkets and gradually increase the proportion of solutions in overseas market revenue. Meanwhile, Dahua also set upsoftware R&D branches in Europe and America respectively, attracting excellent local software talents to forminternational R&D teams and staying close to customers. Software platforms were localized to significantly accelerate theresponse to customer needs. Dahua further seized the international market through establishing an internationalmarketing and management team, and local marketing and service centers.
4. Adhering to Customer-oriented and Employee-based Principle to Achieve Sustainable Development
Corporate culture construction is the cornerstone of Dahua’s sustainable development. "Customer-orientation" isplaced at the core of the corporate culture. Through “customer-oriented” business flows and organization, the companyhas taken value creation as the guide and performance evaluation standard for every employee. At the same time, Dahuaalways adheres to the value of "employee-oriented" to continuously optimize the performance evaluation andcompensation allocation system and promote diversified incentive measures including both short-term and long-termones, so that sustainable compensation and morale motivation are available for high-performing talents.
Dahua has closely combined talent development with business development, forming an efficient careerdevelopment system for management talents and professionals such as research and development, technology andmarketing talents. Through succession planning of management talents and circulation of professionals, a sustainabletalent supply system is established for Dahua's development.
5. Constantly build norms and improve digital operation support capabilities
Dahua attaches great importance to business compliance operations, strengthens cyber security and data protection,optimizes the management of the product quality system. Therefore, it has established and improved a compliancesystem that complies with the export control regulations of major economies in the world. To ensure the healthy and
sustainable business development, Dahua has always maintained a sound management strategy and managed thecompliance risks according to the policies in each country. In addition, Dahua creates an open and transparentenvironment, accepts the supervision of all parties, and constantly improves itself.
Section IV Discussion and Analysis on Business CircumstanceI. OverviewIn 2020, the economic growth of the major economies generally slowed down and the overall growth rate ofinvestment was low as the global economy was impacted by COVID-19. However, along with the development andapplication of AI, IoT, cloud computing, big data, and other technologies and the constant iteration and updating of videotechnologies, the value of smart products and solutions increased rapidly. Video functions have been applied to thebusiness applications of all industries. The market space of the video-centric smart IoT field was further expanded.In the reporting period, the Company has insisted on the operation principle of sub-divided management andhigh-quality development. It realized operating revenue of RMB 26.466 billion, with an increase of 1.21% compared withthe same period of last year and realized a net profit attributable to the shareholders of the listed company amounting toRMB3,903 million with an increase of 22.42% compared with the same period of last year, which was stable growth.Main business strategies of the Company include:
1. Carry out targeted investments in R&D, and improve the core technical strengthThe Company insisted on taking technological innovation as the core and investing heavily in R&D. In 2020, theCompany invested RMB 2.998 billion in R&D, registering an increase of 7.28% year-on-year, and accounting for 11.33%of the operating income. Apart from maintaining the investments in the traditional video technologies, the Companyconstantly enhanced research, development, and productization of technical fields, such as multi-dimensional sensing, AI,cloud computing and big data, software platforms, machine vision and robots, 5G, network security, etc., and madeconstant innovation in response to customers’ demands.
2. Constantly improve the operation efficiency and quality based on the first line
The Company targeted the pain points of businesses to realize the implementation of the business values based onthe first line, led by the market and driven by R&D. The Company reshaped the technical marketing system in the regionand enhanced the coordination between the technology and the businesses. The domestic SMB businesses werecontinuously sunk to activate the market; in overseas countries, the businesses were continuously sunk and deepenedand great efforts were made to expand overseas partners to enhance brand coverage with the country as the center. TheCompany went on exploring the fine management by focusing on the established strategic orientation to fully guaranteethe implementation of the business values.
3. Sink the software and delivery ability and meet the individualized customer needs in a quick and flexiblemanner
The Company developed the software and development organizations oriented to the customer businesses, andrealized efficient management and resource coordination through organization transformation and first-line ability loading,comprehensively improving the business operation ability. The 8 domestic regional software development centers put intouse in 2020 provided sensitive front desk organizations for customized services to realize the overall industry coordination.The Company conducted tests on delivery of business under its direct management in the provinces such as Guangxi andGuizhou to ensure quick delivery of projects, and promoted and reproduced such integrated delivery ability in otherprovinces through ability accumulation.
4. Boost the innovative business development and develop the cooperation ecosystem
Based on the in-depth understanding of customers' diversified demands, the Company developed the emergingbusinesses including machine vision, video collaboration, Imou, smart fire control, smart storage, smart securityinspection, automobile electronics and drones, adequately stimulated the talent vitality and constantly extended newhigh-speed growth points for the Company. The Company also attached great importance to development of externalecological partners, created the ecological chain in the concept of complementary advantages and shared benefits, andjoined hands with the ecological partners to achieve greater value for the customers.
5. Build a safe supply chain to cope with the uncertainty in the supply system
To cope with the risks in the supply chain, the Company comprehensively sorted out the supply chain, increased thestock of key materials, designed potential and alternative plans for the key nodes, safeguarded the supply chaindiversification, achieved diversification and independent control of the products and solutions, and significantly loweredreliance on the particular materials, thus effectively guaranteeing the supply safety.
II. Main Business Analysis
1. Overview
See "I. Overview" in "Discussion and Analysis on Business Circumstance".
2. Income and Costs
(1) Operating income structure
Unit: RMB
| 2020 | 2019 | Year-on-year increase or decrease | |||
| Amount | Proportion in Operating Revenue | Amount | Proportion in Operating Revenue | ||
| Total Revenue | 26,465,968,181.10 | 100% | 26,149,430,652.42 | 100% | 1.21% |
| By Industry | |||||
| Video IoT industry | 26,465,968,181.10 | 100.00% | 26,149,430,652.42 | 100.00% | 1.21% |
| By Product | |||||
| Product | 10,236,157,625.57 | 38.68% | 10,259,311,668.32 | 39.23% | -0.23% |
| Solutions | 12,800,135,421.65 | 48.36% | 12,788,289,763.76 | 48.90% | 0.09% |
| Innovative business (note) | 1,760,985,972.72 | 6.65% | 1,217,467,047.21 | 4.66% | 44.64% |
| Others | 1,668,689,161.16 | 6.31% | 1,884,362,173.13 | 7.21% | -11.45% |
| By Region | |||||
| Domestic | 15,979,394,846.89 | 60.38% | 16,473,728,183.00 | 63.00% | -3.00% |
| Overseas | 10,486,573,334.21 | 39.62% | 9,675,702,469.42 | 37.00% | 8.38% |
Domestic business segments
| 2020 | 2019 | Year-on-year increase or decrease | |||
| Amount | Proportion in Domestic Operating Revenue | Amount | Proportion in Domestic Operating Revenue | ||
| To G | 5,672,069,290.86 | 35.50% | 5,925,352,700.37 | 35.97% | -4.27% |
| To B | 6,756,647,948.94 | 42.28% | 5,465,409,146.39 | 33.18% | 23.63% |
| Others | 3,550,677,607.09 | 22.22% | 5,082,966,336.24 | 30.85% | -30.15% |
| Total | 15,979,394,846.89 | 100.00% | 16,473,728,183.00 | 100.00% | -3.00% |
Note: Innovative businesses are mainly in businesses of industrial internet area, video collaboration, Imou householdappliances, intelligent firefighting and drones. Same for the following
(2) Industry, product, or region accounting for more than 10% of the company's operatingrevenue or profit
√ Applicable □ Not applicable
Unit: RMB
| Operating income | Operating Cost | Gross margin | Increase or decrease of operating income compared with the same period of last year | Increase and decrease of operating cost over the same period of last year | Increase or decrease of gross profit compared with the same period of last year | |
| By Industry | ||||||
| Video IoT industry | 26,465,968,181.10 | 15,164,331,155.66 | 42.70% | 1.21% | -1.51% | 1.58% |
| By Product | ||||||
| Product | 10,236,157,625.57 | 5,296,463,922.73 | 48.26% | -0.23% | -9.95% | 5.59% |
| Solutions | 12,800,135,421.65 | 7,587,954,310.54 | 40.72% | 0.09% | 7.09% | -3.87% |
| By Region | ||||||
| Domestic | 15,979,394,846.89 | 9,929,618,506.93 | 37.86% | -3.00% | -2.82% | -0.12% |
| Overseas | 10,486,573,334.21 | 5,234,712,648.73 | 50.08% | 8.38% | 1.08% | 3.60% |
| Domestic business segments | ||||||
| To G | 5,672,069,290.86 | 3,363,660,978.20 | 40.70% | -4.27% | -3.56% | -0.44% |
| To B | 6,756,647,948.94 | 3,934,436,543.82 | 41.77% | 23.63% | 23.57% | 0.03% |
| Others | 3,550,677,607.09 | 2,631,520,984.91 | 25.89% | -30.15% | -25.78% | -4.35% |
When the statistical caliber of the company's main business data is adjusted in the reporting period, the company's mainbusiness data should be subject to the one after the statistical caliber at the end of the reporting period is adjusted in themost recent year.
√ Applicable □ Not applicable
Unit: RMB
| Operating income | Operating Cost | Gross margin | Increase or decrease of operating income compared with the same period of last year | Increase and decrease of operating cost over the same period of last year | Increase or decrease of gross profit compared with the same period of last year | |
| By Product | ||||||
| Product | 10,259,311,668.32 | 5,881,666,520.72 | 42.67% | 13.53% | 3.98% | 5.27% |
| Solutions | 12,788,289,763.76 | 7,085,711,224.53 | 44.59% | 7.65% | 0.81% | 3.76% |
| Innovative business | 1,217,467,047.21 | 691,089,957.52 | 43.24% | 14.62% | 7.12% | 3.98% |
| Others | 1,884,362,173.13 | 1,737,726,237.67 | 7.78% | 11.64% | 12.80% | -0.95% |
| Domestic business segments | ||||||
| To G | 5,925,352,700.37 | 3,487,721,156.97 | 41.14% | 9.57% | 1.67% | 4.57% |
| To B | 5,465,409,146.39 | 3,184,017,744.00 | 41.74% | 21.79% | 21.47% | 0.15% |
| Others | 5,082,966,336.24 | 3,545,786,430.61 | 30.24% | -2.10% | -5.98% | 2.87% |
Reasons for changing the statementAs the world-leading provider and operator of intelligent IoT solutions with video as the core, the changed statement canmore clearly reflect the Company's development direction, more intuitively present the Company's business model, andmore accurately reflect the Company's operating results, which facilitates investors and other interested parties tounderstand the Company's development trend.
(3) Is the company's physical sales income greater than the labor income?
√ Yes □ No
| Industry Classification | Item | Unit | 2020 | 2019 | Year-on-year increase or decrease |
| Video IoT industry | Sales volume | Unit/set | 61,487,755 | 55,096,437 | 11.60% |
| Production output | Unit/set | 61,798,084 | 56,227,073 | 9.91% |
Reasons for over 30% changes in related data on year-on-year basis
□ Applicable √ Not applicable
(4) Performance of major sales contracts signed by the Company as of the reporting period
□ Applicable √ Not applicable
(5) Operating Cost Structure
Industry Classification
Unit: RMB
| Industry Classification | Item | 2020 | 2019 | Year-on-year increase or decrease | ||
| Amount | Proportion to Operating Cost | Amount | Proportion to Operating Cost | |||
| Video IoT industry | Operating Cost | 15,164,331,155.66 | 100.00% | 15,396,193,940.44 | 100.00% | -1.51% |
Product Classification
Unit: RMB
| Product Classification | Item | 2020 | 2019 | Year-on-year increase or decrease | ||
| Amount | Proportion to Operating Cost | Amount | Proportion to Operating Cost | |||
| Product | Operating Cost | 5,296,463,922.73 | 34.93% | 5,881,666,520.72 | 38.20% | -9.95% |
| Solutions | Operating Cost | 7,587,954,310.54 | 50.04% | 7,085,711,224.53 | 46.02% | 7.09% |
| Innovative business | Operating Cost | 1,113,066,781.05 | 7.34% | 691,089,957.52 | 4.49% | 61.06% |
| Others | Operating Cost | 1,166,846,141.34 | 7.69% | 1,737,726,237.67 | 11.29% | -32.85% |
Has the scope of consolidation changed during the reporting period?
√ Yes □ No
1) In this period, the Company invested in and established twelve domestic subsidiaries, namely, Zhejiang DahuaStorage Technology Co., Ltd., Zhejiang Dahua Automotive Technology Co., Ltd., Chengdu Dahua Zhilian InformationTechnology Co., Ltd., Chengdu Dahua Zhian Information Technology Service Co., Ltd., Chengdu Dahua ZhishuInformation Technology Service Co., Ltd., Chengdu Zhichuang Yunshu Technology Co., Ltd., Chengdu Huishan SmartNetwork Technology Co., Ltd., Zhejiang Huakong Software Co., Ltd., Zhejiang Xinsheng Electronic Technology Co., Ltd.(which has been transferred this year together with its parent company Huatu Microchip), Hangzhou Huacheng SoftwareTechnology Co., Ltd., Guizhou Dahua Information Technology Co., Ltd. and Henan Dahua Zhilian Information Technology
Co., Ltd., as well as six overseas subsidiaries, namely, Dahua Technology Nigeria Representative Ltd., Dahua TechnologyIsrael Ltd., VISMEXTECH DHM SERVICIOS, S.A. DE C.V., Imou Network Technology Netherlands B.V., LOREXTechnology UK Limited and Dahua Technology Japan LLC. The above subsidiaries have been incorporated in the scopeof consolidation since the date of establishment.
2) The Company's subsidiaries Guizhou Dahua Intelligence Technology Co., Ltd., Xinjiang Dahua InformationTechnology Co., Ltd., and Xinjiang Dahua Intelligence Technology Co., Ltd. were canceled in this period, and will not beincluded in the scope of consolidation since the date of cancellation.
3) In this period, the Company transferred its original 51% of the equity of South-North United Information TechnologyCo., Ltd., 51% of the equity of Hangzhou Tecomore Technology Co., Ltd., and 100% of the equity of Huatu MicrochipTechnology Co., Ltd and its subsidiary Zhejiang Xinsheng Electronic Technology Co., Ltd. After the transfer, the Companyholds 0% of their equity, and no longer has control over the above subsidiaries which are hence no longer included in thescope of consolidation in this period.
(7) Major changes or adjustments to the company's business, products, or services during thereporting period
□ Applicable √ Not applicable
(8) Major Clients and Suppliers
The Company's Major Clients
| Total sales amount of the top five customers | 1,718,898,587.06 |
| Proportion of the total sales amount of the top five customers to the total annual sales | 6.51% |
| Proportion of the total sales amount of the related parties in the top five customers to the total annual sales | 1.67% |
Profiles of the Company's top five customers
| No. | Name of customer | Sales amount (yuan) | Proportion to the annual sales |
| 1 | Company 1 | 440,704,672.41 | 1.67% |
| 2 | Company 2 | 430,080,265.93 | 1.63% |
| 3 | Company 3 | 329,599,318.70 | 1.25% |
| 4 | Company 4 | 280,351,537.09 | 1.06% |
| 5 | Company 5 | 238,162,792.93 | 0.90% |
| Total | -- | 1,718,898,587.06 | 6.51% |
Other Information Notes for Major Clients
□ Applicable √ Not applicable
(8) Major suppliers
| Total Purchase Amount of Top Five Suppliers (yuan) | 3,686,130,812.65 |
| Proportion of the total purchase amount of top five suppliers to the total annual purchase amount | 21.73% |
| Proportion of the total purchase amount of the related parties in top five suppliers to the total annual purchase amount | 0.00% |
Profiles of the Company's top five suppliers
| No. | Supplier Name | Purchase amount (yuan) | Proportion to the total annual purchase amount |
| 1 | Company 1 | 1,650,324,452.51 | 9.73% |
| 2 | Company 2 | 614,485,194.25 | 3.62% |
| 3 | Company 3 | 487,998,114.40 | 2.88% |
| 4 | Company 4 | 478,083,311.43 | 2.82% |
| 5 | Company 5 | 455,239,740.06 | 2.68% |
| Total | -- | 3,686,130,812.65 | 21.73% |
Other Information Notes for Major Suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: RMB
| 2020 | 2019 | Year-on-year increase or decrease | Statement on Significant Changes | |
| Sales Expenses | 4,291,121,362.75 | 3,952,947,275.82 | 8.55% | |
| Administration expenses | 785,101,729.55 | 740,880,944.67 | 5.97% | |
| Financial Expenses | 300,409,810.24 | -70,077,580.11 | 528.68% | Mainly due to the exchange losses |
| Research and development expense | 2,997,545,666.82 | 2,794,219,504.28 | 7.28% |
4. R&D Investment
√ Applicable □ Not applicable
Company's R&D investment
| 2020 | 2019 | Change Ratio | |
| Number of R&D personnel | 8,998 | 7,161 | 25.65% |
| Percentage of R&D personnel | 52.16% | 52.43% | -0.27% |
| R&D investment (yuan) | 2,997,545,666.82 | 2,794,219,504.28 | 7.28% |
| The proportion of R&D investment to operating income | 11.33% | 10.69% | 0.64% |
| Capitalized R&D investment | 0.00 | 0.00 | 0.00% |
| Proportion of capitalized R&D investment to R&D investment | 0.00% | 0.00% | 0.00% |
The reason for the significant change in the proportion of the total amount of R&D investment to operating incomecompared with last year
□ Applicable √ Not applicable
Reasons and rational explanations on the substantial change in capitalization rate of R&D investment
□ Applicable √ Not applicable
5. Cash Flow
Unit: RMB
| Item | 2020 | 2019 | Year-on-year increase or decrease |
| Subtotal of cash inflow from operational activities | 31,438,931,251.07 | 27,289,772,534.99 | 15.20% |
| Subtotal of cash outflow from operational activities | 27,037,398,182.68 | 25,689,168,247.29 | 5.25% |
| Net cash flow generated by operating activities | 4,401,533,068.39 | 1,600,604,287.70 | 174.99% |
| Subtotal of cash inflow from investment activities | 2,341,316,710.71 | 3,543,722,034.42 | -33.93% |
| Subtotal of Cash Outflow from Investment Activities | 2,531,230,650.38 | 4,383,517,340.45 | -42.26% |
| Net amount of cash flow generated by investment activities | -189,913,939.67 | -839,795,306.03 | 77.39% |
| Subtotal of cash inflow from financing activities | 8,477,969,273.06 | 6,449,889,488.41 | 31.44% |
| Subtotal of cash outflow from financing activities | 7,872,352,016.69 | 8,223,765,887.21 | -4.27% |
| Net cash flow generated by financing activities | 605,617,256.37 | -1,773,876,398.80 | 134.14% |
| Net additions to balance of equivalents | 4,624,266,793.12 | -968,097,827.13 | 577.67% |
Description of the main factors affecting the significant changes in related data over the same period of last year
√ Applicable □ Not applicable
1. The net cash flow from operating activities saw a year-on-year increase of 174.99%, which is mainly due to the increaseof received payment of sales in this period.
2. The net cash flow from investment activities saw a year-on-year increase of 77.39%, which is mainly due to theincrease of the net cash received from the disposal of subsidiaries in this period.
3. The net cash flow from financing activities saw a year-on-year increase of 134.14%, which is mainly due to the increaseof the difference between the loans received and debt repayment in this period.Reasons for the significant difference between the net cash flow generated by the company's operating activities in thereporting period and the net profit in the current year
□ Applicable √ Not applicable
III. Non-main Business Analysis
□ Applicable √ Not applicable
IV. Analysis of Assets and Liabilities
1. Significant changes in assets composition
The Company implemented new revenue standards or new lease standards for the first time since 2020, and adjustedrelevant items of financial statements at the beginning of the yearApplicable
Unit: RMB
| End of 2020 | Beginning of 2020 | Proportion increase and decrease | Statement on Significant Changes | |||
| Amount | Proportion To Total Assets | Amount | in total assets Percentage | |||
| Cash and Bank Balances | 7,471,652,634.66 | 20.42% | 3,084,428,970.43 | 10.43% | 9.99% | Mainly due to the increase of the increase in the payment collection this year |
| Accounts receivable | 12,857,519,110.16 | 35.13% | 13,184,093,361.32 | 44.57% | -9.44% | Mainly due to the increase in the payment collection |
| Inventory | 4,928,019,838.00 | 13.47% | 3,839,810,704.33 | 12.98% | 0.49% | Mainly due to the increase in stocking |
| Investment Property | 336,008,869.13 | 0.92% | 336,181,589.99 | 1.14% | -0.22% | No Significant Change |
| Long-term Equity Investment | 455,977,616.16 | 1.25% | 490,731,236.85 | 1.66% | -0.41% | No Significant Change |
| Fixed Assets | 1,515,594,629.97 | 4.14% | 1,522,463,368.83 | 5.15% | -1.01% | No Significant Change |
| Projects under Construction | 1,164,130,453.03 | 3.18% | 435,757,406.90 | 1.47% | 1.71% | Mainly due to the increase in the investment in the Project of Smart IoT Solution R&D and Industrialization, Phase II Construction Project of |
| Hangzhou Smart Manufacturing Base and Construction Project of Xi'an R&D Center | ||||||
| Short-term loan | 250,177,083.34 | 0.68% | 400,323,888.90 | 1.35% | -0.67% | Mainly due to the repayment of short-term loans |
| Long-term loan | 878,000,000.00 | 2.40% | 153,500,000.00 | 0.52% | 1.88% | Mainly due to the increase in bank loans |
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
| Item | At the beginning of the reporting period | Changes in fair value gains and losses in the current period | Cumulative fair value changes in equity | Impairment loss of the reporting period | Purchase amount of the reporting period | Sales amount of the reporting period | Other variations | At the end of the reporting period |
| Financial Assets | ||||||||
| 2. Derivative Financial Assets | 1,005,680.45 | 3,420,856,518.90 | 3,011,812,418.90 | 1,005,680.45 | ||||
| Others | 1,470,000.00 | 1,470,000.00 | ||||||
| Subtotal of financial assets | 1,005,680.45 | 00 | 3,011,812,418.90 | 0 | ||||
| 5. Other Non-current Financial Assets | 67,213,489.43 | 184,727,296.91 | 108,147,000.00 | 360,087,786.34 | ||||
| 6. Receivables Financing | 1,086,017,357.90 | 121,862,296.68 | 1,207,879,654.58 | |||||
| Total | 1,153,230,847.33 | 185,732,977.36 | 3,530,473,518.90 | 3,011,812,418.90 | 121,862,296.68 | 1,570,443,121.37 | ||
| Financial liabilities | - | - | - | - | - | - | ||
Other changesN/AAre there any significant changes in the measurement attributes of the company's main assets during the reportingperiod?
□ Yes √ No
3. Restrictions on asset rights as of the end of the reporting period
As of December 31, 2020, restricted assets of the Company are as follows:
| Item | Balance at the End of the Period（ RMB） | Cause of restrictions |
| Cash and Bank Balances | 101,126,967.62 | Guarantee security deposit |
| Notes receivable and receivable financing | 955,959,908.06 | Pledge for issuance of bank acceptance bills |
| Long-term Receivables | 175,530,696.65 | Pledge for bank loans |
| Non-current Assets Due within 1 Year | 30,575,733.51 | Pledge for bank loans |
| Total | 1,263,193,305.84 |
V. Investment analysis
1. Overview
√ Applicable □ Not applicable
| Investment In The Reporting Period (RMB) | Investment Over The Corresponding Period Of Last Year | Rate Of Change |
| 578,149,547.42 | 1,384,120,881.15 | -58.23% |
2. Significant equity investments acquired during the reporting period
□ Applicable √ Not applicable
3. Major non-equity investments underway during the reporting period
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Investment Mode | The Investment In The Fixed Assets Or Not | Involved industry in investment projects | Amount Invested In The Current Reporting Period | Cumulative Actual Investment As Of The End Of Reporting Period | Capital Source | Progress of Project | Anticipated Income | Cumulative Income As Of The End Of The Reporting Period | Reasons For Unreached Planned Progress And Anticipated Revenue | Disclosing Date (If Any) | Disclosing Index (If Any) |
| Phase I Technical Transformation and Phase II Construction Project of Hangzhou Smart Manufacturing Base | Self-construction | Yes | Video IoT industry | 345,154,047.60 | 602,337,677.07 | Self-raised funds | 35.66% | N/A | August 17, 2019 | Juchao Information Website http://cninfo.com.cn/ | ||
| Construction Project of Xi'an R & D Center | Self-construction | Yes | Video IoT industry | 118,580,070.83 | 208,398,624.86 | Self-raised funds | 17.82% | N/A | August 17, 2019 | Juchao Information Website http://cninfo. |
| com.cn/ | ||||||||||||
| Project of Smart IoT Solution R & D and Industrialization | Self-construction | Yes | Video IoT industry | 355,078,776.15 | 550,097,951.16 | Self-raised funds | 33.88% | N/A | August 17, 2019 | Juchao Information Website http://cninfo.com.cn/ | ||
| Total | -- | -- | -- | 818,812,894.58 | 1,360,834,253.09 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Financial assets investment
(1). Securities investment
□ Applicable √ Not applicable
No such case as securities investment during the reporting period.
(2). Derivatives investment
√ Applicable □ Not applicable
Unit: ten thousand RMB
| Name of derivatives investment operator | Relation with related party | Whether it is a related transaction | Types of derivatives investment | Initial amount of derivatives | Starting date | Termination date | Initial investment amount | Amount purchased during the reporting period | Amount sold during the reporting period | Amount of provision for impairme | Investment amount at the end of the period | Proportion of investment amount in the | Actual profit and loss during the |
| investment | nt accrued (if any) | company’s net assets at end of the reporting period | reporting period | ||||||||||
| Agricultural Bank of China | No relations | No | Structured deposits | 10,000 | May 20, 2020 | December 29, 2020 | 10,000 | 10,000 | 219.95 | ||||
| China Construction Bank | No relations | No | Structured deposits | 80,000 | June 5, 2020 | September 3, 2020 | 80,000 | 80,000 | 712.83 | ||||
| Bank | No relations | No | Foreign exchange contract | February 28, 2020 | June 7, 2021 | 342,085.65 | 301,181.24 | 40,904.41 | 2.07% | 74.77 | |||
| Total | 90,000 | -- | -- | 0 | 432,085.65 | 391,181.24 | 40,904.41 | 2.07% | 1,007.55 | ||||
| Sources of funds for derivatives investment | Equity Fund | ||||||||||||
| Litigation involved (if applicable) | N/A | ||||||||||||
| Disclosure date of board of directors' announcement on the approval of derivatives investment (if any) | April 3, 2020 | ||||||||||||
| Disclosure date of shareholder meeting's announcement on the approval of derivatives investment (if any) | May 13, 2020 | ||||||||||||
| Risk analysis and description of control measures for derivatives positions during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | For detailed information on structured deposit risk analysis and control measures, please refer to the "Announcement on the Purchase of Bank Wealth Management Products with Own Fund" (Announcement No.: 2020-025) disclosed on April 3, 2020, and the "Announcement on Foreign Exchange Hedging Transactions" (Announcement No.: 2020-022) disclosed on April 3, 2020. | ||||||||||||
5. Utilization of raised funds
□ Applicable √ Not applicable
No use of funds in the reporting period of the CompanyVI. Major Assets and Equity Sales
1. Major assets sales
□ Applicable √ Not applicable
No major assets sales in the reporting period of the Company
2. Major equity sales
√ Applicable □ Not applicable
| Changes in market prices or product fair value of invested derivatives during the reporting period, and the analysis of the fair value of derivatives should disclose the specific methods used and the setting of related assumptions and parameters. | For the structured deposits signed between the Company and the bank during the reporting period, the fair value gains and losses shall be determined according to the interest rate linked to the foreign exchange options; the difference between the quotation of forward foreign exchange settlement contract quotation and the forward foreign exchange price determines the transactional financial assets or transactional financial liabilities. |
| Explanation of whether the Company’s derivatives accounting policies and specific accounting principles have changed significantly during the reporting period compared with the previous reporting period | N/A |
| Independent directors' special opinions on the Company's derivatives investment and risk control | Please refer to "The Independent Opinions of Independent Directors on Relevant Matters" disclosed by the Company on April 3, 2020 for details. |
| Counterparty | Equity sold | Sale date | Transaction price (ten thousand yuan) | Net profit contributed by the equity to the listed company from the beginning of the current period to the sale date (ten thousand yuan) | The impact of the sale on the Company | The proportion of the net profit contributed by the equity sale to the total net profit of the listed Company | Pricing principles of equity sale | Whether it is a related transaction | Relationship with the counterparty | Whether all the equity involved has been transferred | Whether it is implemented as planned or not. If it is not implemented as planned, the reasons and the measures already taken by the Company shall be explained. | Date of Disclosure | Disclosure Index |
| Hangzhou Gancheng Equity Investment Partnership (Limited Partnership) | 100% equity of Zhejiang Huatu Microchip Technology Co., Ltd. | August 1, 2020 | 40,000 | -2,133.62 | The after-tax profit from the disposal of long-term equity investment is 962 million yuan, which will not affect the independence of the | 24.64% | The appraisal value of the assets appraisal report is for reference | Yes | No | Yes | Implemented on schedule | July 9, 2020 | Juchao Information Website http://cninfo.com.cn |
| Shaoxing Gansheng Equity Investment Partnership (Limited Partnership) | 13,500 | No | |||||||||||
| Zhejiang Free Trade Zone Fenghang Investment Partnership (Limited Partnership) | 5,000 | No | |||||||||||
| Yuyao Yangming Zhixing Investment Center | 4,000 | No |
| (Limited Partnership) | Company and will not adversely affect the daily operation of the Company | ||||||||
| Ganzhou Dayu Capital Management Partnership (Limited Partnership) | 4,500 | No | |||||||
| Chen Heyu | 5,000 | No | |||||||
| Ningbo Hualing Investment Management Partnership (Limited Partnership) | 22,000 | Enterprises controlled by actual controllers | |||||||
| Zhoushan Zhixin Equity Investment Partnership (Limited Partnership) | 13,200 | Enterprises controlled by actual controllers | |||||||
| Zhoushan Weixin Equity Investment Partnership (Limited Partnership) | 12,800 | Enterprises on which the actual controllers have important influence |
VII. Analysis of Major Subsidiaries and Investees
√ Applicable □ Not applicable
Major subsidiaries and joint-stock companies with a net profit impact of over 10%.
Unit: RMB
| Company Name | Company Type | Main businesses | Registered Capital | Total Assets | Net Assets | Operating income | Operating Profit | Net Profit |
| Zhejiang Dahua System Engineering Co., Ltd. | Subsidiary Company | The development, production, installation and sales of electronic and communication products; the design, construction and installation of computer system integration and automated control engineering | 500,000,000.00 | 4,630,667,533.32 | 1,333,570,440.60 | 1,605,618,104.38 | 25,161,060.86 | 35,839,977.85 |
| Zhejiang Dahua Vision Technology Co., Ltd. | Subsidiary Company | The development, sales, and technical services related to computer software, as well as the design, development, production and sales of security equipment, electronic products and communications products | 646,810,000.00 | 21,323,291,102.10 | 1,152,049,132.01 | 22,485,425,202.65 | -230,119,268.69 | -170,921,643.22 |
| Zhejiang Dahua Zhilian Co., Ltd. | Subsidiary Company | Production and sales of electronic products and auxiliary equipment; | 1,110,000,000.00 | 4,814,495,514.30 | 772,379,453.18 | 4,693,654,571.26 | -249,336,134.17 | -195,496,877.71 |
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
technologicaldevelopment,technicalconsultation andservices,achievementtransference ofcomputersoftware,electronicproducts,communicationsproducts, anddigital securityproducts;self-owned houselease; cateringservice; importand export ofgoods.
Company Name
| Company Name | Method of acquisition and disposal of subsidiaries during the reporting period | Impact on overall production management and performance |
| Guizhou Dahua Intelligence Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Xinjiang Dahua Information Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Xinjiang Dahua Intelligence Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Zhejiang Dahua Storage Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Zhejiang Dahua Automotive Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Chengdu Dahua Zhilian Information Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Chengdu Dahua Zhian Information Technology Service Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Chengdu Dahua Zhishu Information Technology Service Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Chengdu Zhichuang Yunshu Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Chengdu Huishan Smart Network Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Zhejiang Huakong Software Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Zhejiang Xinsheng Electronic Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Hangzhou Huacheng Software Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Guizhou Dahua Information Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| Dahua Technology Nigeria Representative Ltd | Established with investment | No significant impact on overall production, operation and performance |
| Dahua Technology Israel Ltd | Established with investment | No significant impact on overall production, operation and performance |
| Henan Dahua Zhilian Information Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| VISMEXTECH DHM SERVICIOS, S.A. DE C.V. | Established with investment | No significant impact on overall production, operation and performance |
| Imou Network Technology Netherlands B.V. | Established with investment | No significant impact on overall production, operation and performance |
| LOREX Technology UK Limited | Established with investment | No significant impact on overall production, operation and performance |
| Dahua Technology Japan | Established with investment | No significant impact on overall production, operation and performance |
| South-North United Information Technology Co., Ltd. | Equity transfer | No significant impact on overall production, operation and performance |
| Hangzhou Tecomore Technology Co., Ltd. | Equity transfer | No significant impact on overall production, operation and performance |
| Zhejiang Huatu Microchip Technology Co., Ltd. | Equity transfer | No significant impact on overall production, operation and performance |
| Zhejiang Xinsheng Electronic Technology Co., Ltd. | Equity transfer | No significant impact on overall production, operation and performance |
Major holding companies and joint stock companiesVIII. The structured entity controlled by the Company
□ Applicable √ Not applicable
IX. Prospects for the Future Development of the Company
1. Development Strategy of the Company
Dahua is a world-leading video-centric smart IoT solution and service provider, offering end-to-end video surveillancesolutions, systems and services based on the technological innovation, to create value for urban operation, enterprisemanagement and individual life.Dahua will carry forward the “customer-oriented and striver-based” core value, fulfill the mission of “enabling a safersociety and smarter living”, keep a foothold in the market with outstanding quality and services, create more value forcustomers and strive for building a safe, smart, convenient and efficient society.2020 is a year in which the Company achieved high-quality development. The Company significantly improved itscash flow while realizing steady improvement of its gross profit. In 2021, the Company will continue to promote itshigh-quality development strategy, steadily increase its sales scale and perfect its net profit level. In the three years tocome, the Company will continuously increase its effective investment to realize stable and rapid development whilemaintaining high-quality development.
2. Key Works in 2021
(1) The Company will continue to enhance the targeted investment in R&D to improve the core competitiveness in theproducts and solutions. The Company will continuously boost the technical innovation oriented by the customer needs,enhance the R&D ability, and further promote the leading place and commercial application of the artificial intelligence.The Company will enhance the big data governance and big data platform construction.
(2) The Company will enhance the software architecture ability and establish the full-process operation ability (fromthe development to the sales and delivery of software), to enhance the competitiveness of software products and furtherenhance the ability of overall solutions in satisfying the demands of customers.
(3) The Company will further strengthen the technical marketing system in the region and enhance coordinationbetween the technology and the businesses. Strengthen regional and front-line business, technology and servicecapabilities, explore market segment, quickly respond to and serve for customers to drive high-quality business growth.
(4) The Company will optimize construction of the global marketing network, continuously sink and deepen itsbusinesses with the country as the center, and improve the business sinking quality and customer satisfaction.
(5) The Company will constantly improve the ability to provide the global market with stable and efficient supply safetyas well as systematic delivery and services.
(6) The Company will enhance the financial, economic and IT investment, realize digital transformation of theenterprise, and improve the enterprise management ability and level. The Company will boost the reform of the humanresources, and optimize and boost the selection, education, retention, incentive and cultural inheritance.
(7) The Company will constantly promote the development of innovative businesses and strengthen them, achieveeffective coordination with the main traditional businesses to form richer application support for the user scenarios of thecustomers, and meanwhile build the new technical highland to constantly contribute new driving force to long-termsustainable development of the Company.
(8) The Company will develop the organizations oriented to the customer businesses, realize efficient managementand resource coordination, and comprehensively improve the business operation ability; form the elite organizations toenhance the platform ability; and deepen the talent mechanism to constantly stimulate the talent vitality.
(9) The Company will enhance the construction of the global compliance system.
3. Risks and Countermeasures
During the reporting period, there was no significant change in the risks faced by the Company. The Company hasbeen trying to identify all kinds of risks and actively take countermeasures to avoid and reduce the risks:
(1) Risk of technology upgrading: The video surveillance industry is a typical technology-intensive industry, which ischanging extremely fast. If the Company is unable to keep up with development trends in the industry's technology, to payfull attention to customers' diversified individual needs, and to be followed by sufficient R&D investments, it will still facethe risk of losing market competitiveness due to discontinuous innovation. By increasing R & D investment, the Companycontinues to strengthen research on core technologies in AI, video cloud, machine vision and other fields, and reservesproduct, technology, management and talent resources for a broader market in the future, so as to achieve sustainableand steady development of business.
(2) Risk of business model change: With the development of network communications, cloud computing, big data, AIand other technologies as well as the upgrading of the smart phone application modes, the business model in the IoT eramay have an impact on the traditional industry development. If an enterprise cannot grasp opportunities brought about bythe business model transformation in a timely manner, it may face the risk that the original market structure becomesbroken. The Company continues to focus on and study the major changes in global economy, industry and technology,analyze the industry development logic, and predict the evolution of global video surveillance industry and IoT industry,the continuous integration of video, information communication and digital technologies, diversification and uncertainty ofcustomer demands. While consolidating the advantageous market, The Company actively explores and pilots new
businesses and new commercial mode, and carry out business and technical layout.
(3) Risk of product safety: The Company attaches great importance to and continuously strengthens resourceinvestment to ensure safe and reliable operations of the security system so as to respond to the product security risks onthe Internet. However, hacker’s attacks, computer viruses, physical security vulnerabilities, natural disasters, accidents,power interruptions, telecommunications failures, terrorism, and warfare events may still occur from time to time, resultingin security vulnerabilities, system failures, or service interruptions. The Company has founded a cyber security committee,and set up a professional security team to develop company-level product safety plan, ensuring product safety in wholeprocess from requirements to design, coding, and testing process. At the same time, the Company actively carries outtechnical exchanges and cooperation with mainstream safety enterprises, safety evaluation agencies and correspondingindustry associations to provide customers with safe products and solutions.
(4) Intellectual property risk: The promotion of the company's globalization and self-owned brand strategy will likelybring about intellectual property risks and patent infringement, which may cause fluctuation in business relations andpublic opinions, increasing lawsuits and rising costs. The Company attaches great importance to technological innovationand has established protection and management mechanism for intangible assets such as innovation achievements,self-owned brands, trade secrets, and constantly gathers advantageous IP assets; With IP compliance risk control system,the Company continues to strengthen its ability to understand and grasp the IP laws and regulations, administrative andjudicial environment of the region where the company's business is located in.
(5) Exchange rate risk: The Company's export transactions are mostly settled in United States Dollars ("USD"), whileoverseas sales have increased continuously. Therefore, fluctuations in the foreign exchange rate have the potential toaffect the profits of the Company. As US dollar is the settlement currency, the Company hedges and avoids the risk ofexchange rates by centralized management of exchange capitals, purchase and payment hedging and other methods.
(6) Risk of declined local fiscal capacity: At present, some local fiscal debts are relatively high. If the paying capacityis reduced, it may lead to the slowdown in the growth of industry demands, extensions of project time, longer periods forcompanies to withdraw capital, and customers' payment delay. The Company continues to improve our internal controlsystem and optimize the project review methods, select local projects carefully and assess project risks systematically,prudently assess the market logic and cash flow balance logic, control the risks reasonably, make plans to deal with cashflow shortage, project delay and other risks, and reduce the risk of delayed payment.
(7) Risk of international operation: The Company's products and solutions cover over a hundred overseas countriesand regions. International business operation may face trade protection risks. The Company actively prevents andresponds to the risk of international operation by establishing an overseas compliance risk control system, continuously
strengthens the understanding and adaptability of the laws and regulations as well as the political and economicenvironment of the regions where its business is involved, and formulates differentiated business strategies based on"one country, one policy" in accordance with the changes in politics and economy of different regions to reduce theoperational risks.
(8) Supply chain safety risk: In terms of supply safety, the Company comprehensively sorts out all kinds of potentialsupply risks through professional operation, and strengthens the sustainable and safe supply of key materials through themeans such as R&D backup solutions and diversified supply sources, guaranteeing the safety of the supply chain.
X. Reception of research, communication, interviews and other activities
1. Registration Form for reception of research, communication, interviews and other activities during the reporting period
√ Applicable □ Not applicable
| Reception Time | Reception location | Reception Method | Reception target type | Reception objects | Main content of the discussion and the information provided | Index of the basic information of research |
| January 07, 2020 | Company meeting room | Field Investigation | Institution | Everbright PGIM Fund Management; Haitong self-operated fund; First-trust Fund Management; Nuode Fund Management; Century Asset Management; Citicprufunds; Fullgoal Fund; Guoyuan Securities; Bank of China Investment Management; Trend Investment; Renbu Investment; Shengqi Assets; Gortune Investment; Haitong Securities | Communicated on the Company’s products, solutions, and key technology investment directions. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| January 16, 2020 | Company meeting room | Field Investigation | Institution, individual | UBS Securities; Employees Provident Fund; UBS Asset Point72 Asset; UBS Wealth; Fullerton Fund; Allianz Global Investors; IvyRock Asset; Franklin Templeton; Kasikorn Asset; Mirae Asset Management; Nomura Asset; Nippon Life Insurance; Permodalan Nasional; Berhad; SCB Asset Management; Sumitomo Mitsui DS Asset; Veritas Investment; PAG; Willing Capital; Pinpoint Asset; Q Fund; Neo Criterion Capital; UG Investment; Bell Asset; Artisan Partners; Cathay Securities Investment Trust; Franklin Templeton; GF Fund; Pala Investments; Pine Summit; Luxence Capital; Qilin Asset; Maitri Asset; Horeal Investment; Jin Round Asset; GF Securities; Xu | Communicated on the business condition of the Company and the strategic orientation of development. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| Shuli; Sang Hong | ||||||
| January 17, 2020 | Company meeting room | Field Investigation | Institution | E Fund | Communicated on the business condition of the Company and the strategic orientation of development. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| February 28, 2020 | Company meeting room | Telephone communication | Institution, individual | Bridge River Capital; Essence Fund; CCBI Securities; Essence Securities; CLSA; Hangzhou White Rhino Asset Management; Chongyang Investment; AEON Insurance Asset Management; Elephas Investment; Baoying Fund; Franklin Templeton; Chengsheng Investment; HSBC; Purest Invest; IDG Capital; Stoneylake Assets; JQ Asset; Yaode Investment; Manulife; Beixin Ruifeng Fund; Orchid Asia; Green Court Capital; Power Corporation of Canada; Dacheng Fund; Samsung AM; Dajia Insurance Group; Schroders; Shanghai Dajia Asset Management; Trivest; Dayu Investment; TT Fund; Changde Dekun Asset Management; UBS; Dingxin Great Wall Fund; Willing Capital; Dingtian Investment; Fidelity International; Goldman Sachs; Gaoguan Investment; Everbright PGIM Fund; Yiheng Capital; Oriental Alpha Fund; Binyuan Capital; Oriental Harbor Investment Fund; Hangzhou Bingcheng Asset Management; Orient Fund; Shanghai Caitong Asset Management; Orient Securities; Ivy Assets; COAMC; Chensheng Assets; Soochow Fund; Chen Xiang Investment; Soochow Life Insurance; Shanghai Chengshi Asset Management; Dongxing Fund; Guangzhou Bingshen Investment; East Asia Qianhai Securities; Founder Securities; Dunyi Assets; Fujian Zheyuan Assets; Fangyuan Fund; Pramerica FOSUN Life Insurance; Founder Securities; Fuanda Fund; Everbright Securities; ICBC International; GF Securities; Guhuai Capital Investment; GFI; Granford Capital; Guangzhou Shenrong Guajngxin | Communicated on the planning and goals for the future development, the management reform, and the influence of the “Entity List” on the Company. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| Shanghai Yingshui Investment; ABC-CA Fund Management; IDEO; Panjing Investment; Topfund Investment; Penghua Fund Management; Shanghai Securities; Ping An Securities; China International Fund Management; Ping An Securities Asset Management Department; Shenwan Hongyuan Securities; Ping An Fund; Shenzhen Hillview Capital Management; Ping An Bank; Xishan Capital; Shenzhen Valuebed Investment Ltd.; Alphalex Capital Management Limited; Shenzhen Jinyang Investment Fund; Mega Trust; Shenzhen Intewise Capital; Shun Shi International Investment; Shenzhen Longteng Asset Management; CPIC; Tianfeng Securities; Flying Tiger; Taikang Asset; Yide Investment; First-trust Fund; Yinhao Capital; Wanlian Securities; Yinhua Fund; Wanggong Assets; Ginkgo Global Partners; Atlantis Investment; Yingda Securities; Li Lailun; Lv Weizhi; Wu Da; Zhou Hang; Zhang Zuoxing; Deng Huanyu; Cheng Wei; Hu Fei; Liu Rongzeng; Wang Pingran | ||||||
| April 3, 2020 | Company meeting room | Telephone communication | Institution, individual | BROAD PEAK; Willing Capital; Citi; Aberdeen Standard Investments; CLSA; Essence Securities; Compass Capital; Chengsheng Investment; cyberatlas capital; Fengpei Capital LLC; IDC; APS Investment; Manulife; Green Court Capital; NSR; Binyuan Capital; Omdia; North Industries Group Finance Company Ltd.; Uob; Botong Investment; Boyuan Fund Management; Dajia Asset Management; Cailian Press; Dazheng Asset Management; Ivy Assets; Springs Capital; Chensheng Asset; Franklin Templeton Investments; Chen Xiang Investment; DJ Capital; Chengtong Fund Management; Dingtian Investment; Chuancai Securities; Oriental Alpha Fund; TruValue Asset Management; Orient Fund; Purekind Fund; Eastern Marathon; Dacheng Fund; Orient Securities; Orient Securities Assets Management; Donghai Funds; Dongrong Private Equity Fund Management Co., Ltd.; Gaosheng Asset Management; Soochow Life Insurance; Geyi Investment Management; East Asia Qianhai Securities; ICBC International; Oceanwide Investment; GF Fund Management; Founder Securities; Guangfa Securities; Shenzhen Hillview Capital Management; Guangzheng Hang Seng Securities; Fuanda Fund; Shinecapital Partnership; Fubon Securities; Guodu Securities; Fidelity | Communicated on the businesses at home and abroad and the influence of the pandemic on the Company. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| Zihao; Lin Kai | ||||||
| April 28, 2020 | Company meeting room | Telephone communication | Institution, individual | Esr Invensment; JP Morgan; Franklin Templeton; Morgan Stanley Real Estate Fund; SCHRODERS; Norway Sovereign Wealth Fund; Torq Capital Management; Penghua Fund Management; Aberdeen Standard Investments; Capital Securities; Essence Securities; Ren Bridge Asset Management; APS Investment; Brilland Capital; Green Court Capital; Ruifeng; Binyuan Capital; UBP Asset Management Asia Limited; Bingshen Investment; Credit Suisse; Purekind Fund; Credit Suisse Securities; Datong Investment; UBS; Dacheng Fund; Foresight Fund; DJ Capital; Cephei Capital Management (Hong Kong) Limited; Dingtian Investment; Sumitomo Mitsui Asset Management; Orient Fund; Shanyuan Investment Management; Orient Securities; Botong Investment; Dongxing Securities; CS Capital; Dongxing Securities; Wideview Asset; Fangyuan Tiancheng Asset Management; Linfu Investment Management; Founder Securities; Purest Assets; Shenzhen Hillview Capital Management; Shanghai Senjin Investment; Fuanda Fund; Shanghai Tanyi; Fordham Funds Management Company; Shanghai Yijinghui Asset Management; Goldman Sachs; Shanghai Zhongyu Investment; Gosuncn Technology; Chasecloud Asset; Everbright Securities; China International Fund Management; Guangdong Baoxin Assets; Shangke Investment; Guangfa Securities; Shenwan Hongyuan Securities Research; Guangzheng Hang Seng Securities; Tsing-Yuan Capital; Long-term Investment; Shenmao Fund Management; Guodu Securities; Tenbagger Capital; Sealand Securities; Taikang Asset Management; Gfund; Western Securities; CPIC Fund Management; New China Asset; Guosheng Securities; Xinhuoli Capital Investment; Guotai Junan Securities; New Bridge Capital; UBS SDIC; New Times Securities; Guoyuan Securities; New Times Securities; Haitong International Fund; Xinyuan Asset Management; Haitong International Securities; Cinda Securities; Haitong Securities; Aegon-Industrial Fund; Zeal Asset Management; Industrial Securities; Haocheng Asset Management; Aegon-Industrial Fund; Hekun Capital; Xiulong Wealth; Hongta Securities; | Communicated on the enhancement of the Company’s competitiveness, and the transformation and layout of the Company for the future. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| Symbol Investment; Hotland Innovation Asset Management; Easyfunds; Hua An Fund Management; Yiheng Capital; Huajin Securities; Infore Capital; Huatai Securities; Alltrust Insurance; China Future Capital Group; Cloudview Capital; HSBC Bank; Zequan Investment; China Universal Asset Management; Great Wall Securities; CCB International; Changjiang Securities; Jiangsu Winfast Investment; Changjiang Capital; Ninety One Assets; Changsheng Fund Management; Greenwoods Assets; Changxin Asset Management; Jiucheng Capital Management; China Merchants Securities; JT Asset Management; CMB Wealth Management; Juxin Holdings; Zhejiang Shanyuan Investment Management; Jupai Holdings Limited; Trustbridge Partners; Kingseed Capital; China Galaxy Securities; Junhe Capital; CICC Wealth Management; Ningbo Kwung's Investment Holding; China International Capital Corporation; Kunlun Fund; CICC Capital; Luopan Capital; Zhongtai Securities; Macquarie Securities; CITIC Securities; River Fund; CITIC AMC; CITIC Capital; Chen Dazhang; Chen Ji; Ji Xinyue | ||||||
| May 12, 2020 | Company meeting room | Field Investigation | Institution, individual | Jintai Futures; Zhonglian Asset Management; Chuancai Securities; Yujun Venture Capital Management; Shanghai Kaifan Investment Management; Ruoxi Investment Management; Caitong Securities; Hangzhou Zhongyu Investment Management; Shanghai Jianlong Asset Management; Hangzhou Long Assets; Chasecloud Asset; Mingyue Asset Management; Guanglong Investment; Wang Huanming; Luo Yichen | Communicated on the influence of infrared temperature detection products on the business and the internal reform of the Company. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| September 4, 2020 | Company meeting room | Field Investigation | Institution | Haitong International Securities Group; Orchid Asia; Malaysian Government Investment; Q Fund; Heqi Investment | Communicated on the business and financial condition of the | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) |
| Company. No information was provided. | Investor Relations Activity Table | |||||
| September 7, 2020 | Company meeting room | Field Investigation | Institution | Zheshang Fund; Wukong Investment; Kaifeng Investment; Chuancai Securities; China International Fund Management; Tong'an Investment; Guosen Securities; Jingling Fund; BOC International; Shenzhen Hillview Capital Management; Sino Life AMC; Rongtong Fund; Guotai Junan Securities | Communicated on the business and financial condition of the Company. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| December 2, 2020 | Company meeting room | Field Investigation | Institution | Panjing Invest, HUASHANG FUND, Chongyang Investment, Everbright Pramerica Fund, CITIC Capital, Point 72, NEW CHINA ASSET, UBS SDIC, Bin Yuan Capital, Ping An Asset Management, Fullgoal Fund, HuaAn Fund, Huatai-Pinebridge, China Securities, CITIC Securities, CMB Wealth Management, Intewise Capital, Caitong Fund, SWS MU, Yinhua Fund | Communicated on the business and financial condition of the Company. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| November 6, 2020 | Company meeting room | Field Investigation | Institution | PICC Asset, Haitong Securities, Great Wall Securities, GreatStar, Chunde Investment, ICBC Credit Suisse Asset | Communicated on the business and financial condition of the Company. No information was provided. | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
| December 11, 2020 | Company meeting room | Field Investigation | Institution | Ping An Asset Management, Huaan Securities | Communication on the Company's development strategy, exchange impact, | Please refer to Cninfo.com. for details (http://www.cninfo.com.cn) Investor Relations Activity Table |
Section V Significant Events
I. Distribution of Common Stock Profits of the Company and Capitalization of CapitalReservesDistribution policies of the common stock profits during the reporting period, especially the formulation, implementation oradjustment of the cash dividend policies
√ Applicable □ Not applicable
On June 5, 2019, the 1st Extraordinary General Meeting of Shareholders of 2019 held by the Company reviewed andapproved the Shareholder Return Planning for the Next Three Years (2019-2021), which clearly stipulates thedecision-making procedures for dividend standards, proportions and profit distribution policies that will be executed instrict rotation, guaranteeing the continuity and stability of the profit distribution policies and adequately protecting thelegitimate rights and interests of small and medium investors.
| Special notes on cash dividend policies | |
| Whether they comply with the requirements of the Company's articles of incorporation or the resolutions of the General Meeting of Shareholders: | Yes |
| Whether the dividend standards and proportions are distinct and clear: | Yes |
| Whether the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether the independent directors performed their duties and played their due role: | Yes |
| Whether the minority shareholders have the opportunity to fully express their opinions and appeals, and whether their legitimate rights and interests have been fully protected: | Yes |
| Whether relevant conditions and procedures are compliant and transparent when the cash dividend policies are being adjusted or changed: | No adjustments or changes on cash dividend policies |
The Company's common stock dividends distribution plan (preplan) and capital reserve capitalization plan (preplan) in thepast three years (including this reporting period)
1. The plan for profit distribution of the Company in 2018 is: Based on total share capital of 2,997,621,930 shares asof December 31, 2018, cash dividend of RMB 1.00 (tax included) for each 10 shares was distributed to all shareholders,with a total amount of RMB 299,762,193.00, and no bonus share sent and no capitalization of capital reserves.
2. The plan for profit distribution of the Company in 2019 is: Based on 2,994,599,750 shares of the Company's totalshare capital (13,391,480 shares bought back have been deducted) as of December 31, 2019, cash dividend of RMB 1.33(tax included) for each 10 shares was distributed to all shareholders, with a total amount of RMB 398,281,766.75, and nobonus share will be given and no capitalization of capital reserves.
3. The plan for profit distribution of the Company in 2020 is: Based on total share capital of 2,995,579,590 shares asof December 31, 2020, cash dividend of RMB 2.68 (tax included) for each 10 shares was distributed to all shareholders,with a total amount of RMB 802,815,330.12, and no bonus share sent and no capitalization of capital reserves.The Company's cash dividends for common stocks in the past three years (including this reporting period)
Unit: RMB
| Year | Cash dividend amount (tax included) | Net profit attributable to common stock shareholders of listed companies in the consolidated financial statement of the year for dividend distribution | The ratio of cash dividends to the net profit attributable to ordinary shareholders of listed companies in the consolidated statements | The amount of cash dividends in other ways (such as share repurchase) | The proportion of cash dividends in other ways to the net profit attributable to ordinary shareholders of listed companies in the consolidated statements | Total amount of cash dividends (including other ways) | The ratio of total amount of cash dividends (including other ways) to the net profit attributable to ordinary shareholders of listed companies in the consolidated statements |
| 2020 | 802,815,330.12 | 3,902,778,775.35 | 20.57% | 0.00 | 0.00 | 802,815,330.12 | 20.57% |
| 2019 | 398,281,766.75 | 3,188,144,692.55 | 12.49% | 203,499,400.44 | 6.38% | 601,781,167.19 | 18.88% |
| 2018 | 299,762,193.00 | 2,529,426,468.61 | 11.85% | 0.00 | 0.00% | 299,762,193.00 | 11.85% |
The Company's profits during the reporting period and the parent company's distribution of common stock shareholders'profits are positive but a cash dividend distribution preplan for common stock is not proposed.
□ Applicable √ Not applicable
II. Profit Distribution and Capital Reserve Converted to Share Capital in theReporting Period
√ Applicable □ Not applicable
| Number of bonus shares per 10 shares (shares) | 0 |
| Number of dividend payout per 10 shares (RMB) (tax included) | 2.68 |
| Number of capitalized shares per 10 shares (shares) | 0 |
| Equity base in the distribution preplan (shares) | 2,995,579,590 |
| The amount of cash dividends (yuan) (including tax) | 802,815,330.12 |
| The amount of cash dividends (yuan) in other ways (such as share repurchase) | 0.00 |
| The total amount of cash dividends (including in other ways) (yuan) | 802,815,330.12 |
| Distributable profits (RMB) | 13,754,915,904.19 |
| The ratio of the total amount of cash dividends (including in other ways) to the total amount of profit distribution | 100% |
| Latest cash dividend | |
| If the Company's development stage is not easy to define but there are significant capital expenditure arrangements, when the profits are being distributed, the proportion of the cash dividends in this profit distribution should be at least 20%. | |
| Details of the preplans on profit distribution or capitalization of capital reserves | |
| The plan for profit distribution of the Company in 2020 is: Based on total share capital of 2,995,579,590 shares as of December 31, 2020, cash dividend of RMB 2.68 (tax included) for each 10 shares was distributed to all shareholders, with a total amount of RMB 802,815,330.12, and no bonus share sent and no capitalization of capital reserves. The remaining undistributed profit after the distribution of dividends will be carried forward to the next year. If the total capital stock changes before implementation of the distribution plan, the Company will adjust the amount of distribution according to the principle of unchanged distribution proportion. | |
III. Performance of Commitments
1. Commitments made by the Company's controlling sharehoders, shareholders, related parties,purchasers and purchasing companies and have been fulfilled during the reporting period andthose that have not been fulfilled by the end of the reporting period
√ Applicable □ Not applicable
| Commitments | Party making commitments | Commitment Type | Content | Time | Term | Performance |
| Commitments made during initial public offerings or refinancing | Fu Liquan, Zhu Jiangming, Chen Ailing, Wu Jun | Commitment on restricted shares | The number of shares transferred each year during his/her term of service shall not exceed 25 percent of the total number of shares he/she holds in the Company; he/she shall not transfer his/her shares in the Company within half a year after he/she leaves the Company; within the next twelve months, the number of shares sold through the stock exchange listing transactions shall not exceed 50% of the total shares he/she holds. | July 15, 2007 | Long-term | As of the disclosure date of this announcement, the aforementioned commitments are still in strict execution. |
| Other commitments to minority shareholders | Fu Liquan, Chen Ailing | Commitment on horizo | (1) He/she will not directly engage in operational activities that constitute horizontal competition with the stock company's business; (2) for companies he/she held or | June 30, 2007 | Long-term | As of the disclosure date of this announcement, |
| of the Company | ntal competition | indirectly held, he/she will fulfill the obligations under this commitment through agencies and personnel (including but not limited to directors and managers); (3) if the stock company further expands its range of products and business scope, he/she and the company held by him/her will not compete with the expanded range of products or businesses of the stock company. | the aforementioned commitments are still in strict execution. | ||
| Whether the commitment is fulfilled on time | Yes | ||||
2. If there is a profit forecast for the Company's assets or projects, and the reporting period isstill within the profit forecast period, the Company shall make an explanation on the fulfillmentand its reasons
□ Applicable √ Not applicable
IV. Non-operational Capital Occupation over Listed Companies by ControllingShareholders and Their Related Parties
□ Applicable √ Not applicable
During the reporting period, there is no non-operational capital occupation over listed companies by controllingshareholders and their related parties.
V. Explanations Made by the Board of Directors, the Board of Supervisors andIndependent Directors (If Any) on the "Non-standard Audit Report" from theAccounting Firm during the Reporting Period
□ Applicable √ Not applicable
VI. Changes in Accounting Policies, Accounting Estimates and Accounting MethodsCompared with the Previous Year's Financial Report
√ Applicable □ Not applicable
For more information about the changes in the accounting policies and accounting methods during the reporting period,see “Section XII Financial Report/V. Significant Accounting Polices and Accounting Estimates/36. Changes in significantaccounting policies and accounting estimates”.
VII. Explanations on the Retroactive Restatement of Any Significant AccountingErrors during the Reporting Period
□ Applicable √ Not applicable
During the reporting period, there are no significant accounting error corrections that need to be retrospectively restated.
VIII. Changes in the Scope of Consolidated Financial Statements Compared with thePrevious Year's Financial Report
√ Applicable □ Not applicable
1) In this period, the Company invested in and established twelve domestic subsidiaries, namely, Zhejiang DahuaStorage Technology Co., Ltd., Zhejiang Dahua Automotive Technology Co., Ltd., Chengdu Dahua Zhilian InformationTechnology Co., Ltd., Chengdu Dahua Zhian Information Technology Service Co., Ltd., Chengdu Dahua ZhishuInformation Technology Service Co., Ltd., Chengdu Zhichuang Yunshu Technology Co., Ltd., Chengdu Huishan SmartNetwork Technology Co., Ltd., Zhejiang Huakong Software Co., Ltd., Zhejiang Xinsheng Electronic Technology Co., Ltd.(which has been transferred this year together with its parent company Huatu Microchip), Hangzhou Huacheng SoftwareTechnology Co., Ltd., Guizhou Dahua Information Technology Co., Ltd. and Henan Dahua Zhilian Information TechnologyCo., Ltd., as well as six overseas subsidiaries, namely, Dahua Technology Nigeria Representative Ltd., Dahua TechnologyIsrael Ltd., VISMEXTECH DHM SERVICIOS, S.A. DE C.V., Imou Network Technology Netherlands B.V., LOREXTechnology UK Limited and Dahua Technology Japan LLC. The above subsidiaries have been incorporated in the scopeof consolidation since the date of establishment.
2) The Company's subsidiaries Guizhou Dahua Intelligence Technology Co., Ltd., Xinjiang Dahua InformationTechnology Co., Ltd., and Xinjiang Dahua Intelligence Technology Co., Ltd. were canceled in this period, and will not beincluded in the scope of consolidation since the date of cancellation.
3) In this period, the Company transferred its original 51% of the equity of South-North United Information TechnologyCo., Ltd., 51% of the equity of Hangzhou Tecomore Technology Co., Ltd., and 100% of the equity of Huatu MicrochipTechnology Co., Ltd and its subsidiary Zhejiang Xinsheng Electronic Technology Co., Ltd. After the transfer, the Companyholds 0% of their equity, and no longer has control over the above subsidiaries which are hence no longer included in thescope of consolidation in this period.IX. Appointment and Dismissal of Accounting Firms
Currently appointed accounting firms
| Names of domestic accounting firms | BDO China Shu Lun Pan CPAs (special general partnership) |
| Remuneration to domestic accounting firms (Unit: ten thousand yuan) | 160 |
| Years of continuous audit service of domestic accounting firms | 17 |
| Names of Certified Public Accountants from domestic accounting firms | Zhong Jiandong, Zhang Junhui |
| The continuous period of audit service for certified public accountants in domestic accounting firms | Zhong Jiandong has been in service for 3 consecutive years, and Zhang Junhui has been in service for 1 |
Whether to reappoint accounting firms for current period
□ Yes √ No
Appointment of accounting firms, financial advisers or sponsors for internal control auditing
□ Applicable √ Not applicable
X. Delisting after Disclosure of the Annual Report
□ Applicable √ Not applicable
XI. Bankruptcy and restructuring
□ Applicable √ Not applicable
No such case as bankruptcy and reorganization related event during the reporting period.XII. Significant Lawsuits and Arbitrations
□ Applicable √ Not applicable
There is no major lawsuit or arbitration during this reporting period.XIII. Penalties and Rectification
□ Applicable √ Not applicable
No such case as penalty and rectification during the reporting period.XIV. Integrity of the Company, Its Controlling Shareholder and Actual Controller
□ Applicable √ Not applicable
XV. Implementation of the Company's Equity Incentive Plan, Employee StockOwnership Plan or Other Employee Incentive Measures
√ Applicable □ Not applicable
1. On May 16, 2017, the Company's 2016 Annual General Meeting of Shareholders deliberated and approved theZhejiang Dahua Technology Co., Ltd. Phase III Employee Stock Ownership Plan (Draft) and its summary, and decided toimplement the Phase III Employee Stock Ownership Plan. On June 1, 2017, the Company's third employee stockownership plan completed the stock purchase through the "DAHUA No. 3 Directional Asset Management Plan of CaitongSecurities Asset Management", with an average purchase price of 16.83 yuan per share and total purchase amount of47,000,000 shares.On November 12, 2018, the Company's 18th meeting of the 6th Board of Directors deliberated and approved"Suggestive Proposal on Extension of the Impending Expiration of the Company's Third Employee Stock Ownership PlanDuration". The Board of Directors agreed to extend the Company's third employee stock ownership plan for one yearaccording to the voting results of the shareholders' meeting. That is, the duration was extended for one additional year onthe basis of the original termination date, until May 15, 2020.
As of January 21, 2020, the company's shares held by CAITONG Securities in accordance with Dahua No. 3directional asset management plan have all been sold out, and the third phase of ESOP has been implemented andterminated.
2. On January 16, 2020, the first interim general meeting of shareholders in 2020 deliberated and approved the"Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy back andcancel 437,100 authorized but not unlocked restricted stocks held by 16 incentive targets who have left the Company (ofwhich, 427,100 shares were first granted, with the repurchase price of 8.17 yuan per share; Reserved grant of 10,000shares at a repurchase price of 8.75 yuan per share). The above buy-back and cancellation registrations were completedin April 2020.
3. On April 2, 2020, the 33th meeting of the 6th Board of Directors and the 19st meeting of the 6th Board ofSupervisors held by the Company reviewed and approved the “Proposal on Achievement of Unlocking Conditions for theFirst Unlocking Period Initially Granted in 2018 Restricted Stock Incentive Plan”, and agreed to unlock the 36,931,560restricted stocks held by the 2,901 incentive targets who met the unlocking conditions. This matter was completed on April16, 2020.
4. On May 12, 2020, the annual general meeting of shareholders held by the Company in 2019 reviewed andapproved the "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed tobuy back and cancel 1,810,600 authorized but not unlocked restricted stocks held by 36 incentive targets who have leftthe Company (of which, 1,787,600 shares were first granted, with the repurchase price of 8.17 per share; Reserved grantof 23,000 shares at a repurchase price of 8.75 per share). The above buy-back and cancellation registrations werecompleted in October 2020.
5. On May 12, 2020, the annual general meeting of shareholders held by the Company in 2019 reviewed andapproved the "Restricted Stock Incentive Plan of Zhejiang Dahua Technology Co., Ltd in 2020 (Draft)" and its summarywhich authorized the Board of Directors to handle relevant matters on the stock incentive plan.
6. On June 4, 2020, the 35th meeting of the 6th Board of Directors reviewed and approved the "Proposal on GrantingRestricted Stocks to Incentive Targets" and the "Proposal on Adjusting Grant Price of the Restricted Stock Incentive Planof 2020". As the Company allocated the equities for 2019 during the period from announcement of the "Restricted StockIncentive Plan of Zhejiang Dahua Technology Co., Ltd in 2020 (Draft)” until the incentive targets’ completion of therestricted stock registration, the grant price of the restricted stocks was adjusted from 7.60 yuan per share to 7.467 yuanper share. At the same time, the Board of Directors of the Company confirmed the granting conditions and concluded thatthe conditions had been reached and decided to grant the restricted stocks to the incentive targets. The granting date wasJune 4, 2020.
7. On June 29, 2020, the Company disclosed the "Announcement on the Completion of Granting Registration of theRestricted Stock Incentive Plan in 2020". The Restricted Stock Incentive Plan of 2020 granted 13,391,480 shares to 10incentive targets, which were listed on Shenzhen Stock Exchange on June 24, 2020.
7. On August 12, 2020, the 3rd Extraordinary General Meeting of Shareholders held by the Company in 2020reviewed and approved the "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks"and agreed to buy back and cancel 4,822,680 authorized but not unlocked restricted stocks held by 183 persons whowere no longer qualified as incentive targets (of which, 4,337,880 shares were first granted, with the repurchase price ofRMB 8.17 per share; reserved grant of 484,800 shares at a repurchase price of RMB 8.75 per share). The abovebuy-back and cancellation registrations were completed in November 2020.
9. On October 28, 2020, the 4th Extraordinary General Meeting of Shareholders held by the Company in 2020reviewed and approved the "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks"and agreed to buy back and cancel 1,063,260 authorized but not unlocked restricted stocks held by 62 persons who wereno longer qualified as incentive targets (of which, 892,260 shares were first granted, with the repurchase price of RMB
8.17 per share; reserved grant of 171,000 shares at a repurchase price of RMB 8.75 per share). The above buy-back andcancellation registrations were completed in December 2020.XVI. Significant Related-party Transactions
1. Related transactions relevant to daily operations
□ Applicable √ Not applicable
No such case as significant related-party transactions connected with daily operations.
2. Related transactions in acquisition or sale of assets or equities
□ Applicable √ Not applicable
No such case as significant related-party transactions arising from the acquisition or sale of assets or equity.
3. Significant related-party transactions arising from joint investments on external parties
√ Applicable □ Not applicable
For details, see "5. Other Significant Related-party Transactions" in this section.
4. Related-party creditor's rights and debts
□ Applicable √ Not applicable
No such case as related credits and debts during the reporting period.
5. Other major related transactions
√ Applicable □ Not applicable
1. On February 3, 2020, the 30th session of the 6th Board of Directors' meeting held by the Company reviewed andapproved the "Proposal on Joint Investment and Related Party Transactions with Related Persons". It is agreed that theCompany and its related party Ningbo Huagu Enterprise Management Partnership (Limited Partnership) and NingboHualing Investment Management Partnership (Limited Partnership) jointly invested RMB 50 million to establish ZhejiangDahua Storage Technology Co., Ltd. Among them, Dahua invested RMB 25.5 million with its own funds, accounting for 51%of the registered capital. In February 2020, the company was established.
2. On February 24, 2020, the 31st session of the 6th Board of Directors' meeting held by the Company reviewed andapproved the "Proposal on Joint Investment with Related Parties to Establish a Holding Subsidiary and Related PartyTransactions". It is agreed that the Company and its related party Zhejiang Leapmotor Technology Co., Ltd, NingboHualing Investment Management Partnership (Limited Partnership), and Ningbo Huaqi Enterprise ManagementPartnership (Limited Partnership) jointly invested RMB 150 million to establish Zhejiang Dahua Automotive TechnologyCo., Ltd. Among them, Dahua invested RMB 76.5 million with its own funds, accounting for 51% of the registered capital.In March 2020, the company was established.
3. On July 8, 2020, the 36th meeting of the 6th board of directors held by the Company reviewed and approved the"Proposal on Equity Transfer and Related Transactions of Subsidiary". The Company will transfer 49% equity of ZhejiangDahua Robot Technology Co., Ltd., held by related party Zhejiang Huashi Investment Management Co., Ltd., the related
transactions of which totals RMB 7,004,918. The change of industrial and commercial registrations for the above matterwas completed in August 2020.
4. On July 24, 2020, the 2nd Extraordinary General Meeting of Shareholders of 2020 held by the Company reviewedand approved the "Proposal on Equity Transfer Agreement and Related Transactions of Wholly-owned Subsidiaries". It isagreed that the Company would transfer 100% of the equity of its subsidiary Zhejiang Huatu Microchip Technology Co.,Ltd. to Hangzhou Gancheng Equity Investment Partnership (Limited Partnership), Shaoxing Gansheng Equity InvestmentPartnership (Limited Partnership), Zhejiang FTZ Fenghang Investment Partnership (Limited Partnership), YuyaoYangming Zhixing Investment Center (Limited Partnership), Ganzhou Dayu Capital Management Partnership (LimitedPartnership), Chen Heyu, Ningbo Hualing Investment Management Partnership (Limited Partnership), Zhoushan ZhixinEquity Investment Partnership (Limited Partnership), and Zhoushan Weixin Equity Investment Partnership (LimitedPartnership). The transfer price of 100% equity of Zhejiang Huatu Microchip Technology Co., Ltd. is RMB 120 million, andthe Company has received a total of RMB 612 million (51% of the equity transfer payment) from the counterparty for thefirst phase of equity transfer. The change of industrial and commercial registrations for the above matter was completed inAugust 2020.
5. On September 23, 2020, the third meeting of the 7th board of directors held by the Company reviewed andapproved the "Proposal on Transfer of Equity of Holding Subsidiary and Waiver of Right of Preemption and RelatedTransaction". The Company transferred 51% equity of its holding subsidiary, Hangzhou Tecomore Technology Co., Ltd,Ltd., to an unrelated natural person Wu Yuwei at a price of RMB 4,823,223. At the same time, the related legal personZhejiang Huashi Investment Management Co., Ltd. transferred its 27.50% equity of Tanmu Technology to Wu Yuwei at aprice of RMB 2,600,757; Tanmu Technology shareholder Yang Feng transferred 12% of his equity to Wu Yuwei at a priceof RMB 1,134,876, the shareholder Wei Meizhong transferred 7% of his equity to Wu Yuwei at a price of RMB 662,011,and the shareholder Zhang Guoquan transferred 2.50% of his equity to Wu Yuwei at a price of RMB 23,6433. TheCompany waived its right of preemption to 49% of the shares of Tanmu Technology. The change of industrial andcommercial registrations for the above matter was completed in September 2020.
6. On November 16, 2020, the 5th meeting of the 7th Board of Directors held by the Company reviewed andapproved the “Proposal on Transfer of Some Assets to Its Holding Subsidiary and Related Transactions”, and agreed totransfer the robot business-related asset group and other assets and liabilities (including but not limited to physical assetsand intangible assets and liabilities) of the Company and its wholly-owned subsidiary Zhejiang Dahua Robot TechnologyCo., Ltd. as well as the corresponding persons and businesses of the aforesaid assets to its holding subsidiary ZhejiangHuaRay Technology Co., Ltd. at the price of RMB 40.275 million. The above matter was completed in December 2020.
7. On December 30, 2020, the 7th meeting of the 7th Board of Directors held by the Company reviewed andapproved the "Proposal on Joint Investment with Related Parties and Related Transactions". The Company and its relatedlegal persons Ningbo Hualing Investment Management Partnership (Limited Partnership) and Hangzhou Huazhen EquityInvestment Partnership (Limited Partnership) jointly invested RMB 50 million to establish Zhejiang Huashi ZhijianTechnology Co., Ltd. In the company, Dahua invested RMB 22.50 million with its own funds, resulting in its holding of 45%of the equity, and held 85% of the voting rights therein through the agreement on voting rights. In January 2021, thecompany was established.Website for disclosing the interim report on significant related-party transactions
| Announcement name | Disclosure date | Website for the disclosure |
| Announcement on Joint Investment and Related Transactions with Related Parties | February 4, 2020 | http://www.cninfo.com.cn |
| Announcement on the Establishment of Holding Subsidiary Through Joint Investment with Related Parties and Related | February 25, 2020 | http://www.cninfo.com.cn |
| Transactions | ||
| Announcement on Execution of Framework Agreement on Equity Transfer of Wholly-owned Subsidiaries and Related Transactions Announcement on Equity Transfer and Related Transactions of Subsidiaries | April 28, 2020 | http://www.cninfo.com.cn |
| July 9, 2020 | ||
| Announcement of Resolutions at 2nd Extraordinary General Meeting of Shareholders in 2020 | July 25, 2020 | http://www.cninfo.com.cn |
| Announcement on Progress of Equity Transfer of Wholly-owned Subsidiaries and Related Transactions | August 13, 2020 | http://www.cninfo.com.cn |
| Announcement on Equity Transfer of Holding Subsidiaries and Waiver of Right of Preemption, and Related Transactions | September 24, 2020 | http://www.cninfo.com.cn |
| Announcement on Transfer of Some Assets to Holding Subsidiaries and Related Transactions | November 17, 2020 | http://www.cninfo.com.cn |
| Announcement on Joint Investment and Related Transactions with Related Parties | December 31, 2020 | http://www.cninfo.com.cn |
XVII. Significant Contracts and Performance
1. Matters on trusteeship, contracting, and leasehold
(1) Matters on trusteeship
□ Applicable √ Not applicable
No such case as custody during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No such case as contracting during the reporting period.
(3) Leasing
√ Applicable □ Not applicable
Explanations on leasesDuring the reporting period, some of the Company's own real estate properties were used for rental, and the leased realestate property was used for office, warehouse and production workshops. There were no other major real estate leasing.Cases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reportingperiod
□ Applicable √ Not applicable
No such leases that brought the profit and loss accounted for more than 10% of the Company's total profit during thereporting period.
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: ten thousand RMB
| External guarantees from the Company and its subsidiaries (excluding guarantees to the subsidiaries) | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Total amount of guarantees approved during the reporting period (A1) | Total amount of guarantees actually occurred during the reporting period (A2) | |||||||
| Total amount of guarantees approved by the end of the reporting period (A3) | Total balance of guarantees at the end of the reporting period (A4) | |||||||
| Company's guarantees to subsidiaries | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Zhejiang Dahua Vision Technology Co., Ltd. | July 9, 2020 | 1,000,000.00 | June 6, 2016 | 29,000.00 | Joint liability guarantee | June 6, 2016–January 15, 2020 | Yes | Yes |
| April 13, 2018 | 24,000.00 | Joint liability guarantee | April 13, 2018–April 12, 2020 | Yes | Yes | |||
| January 3, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of | Yes | Yes | |||
| the debts in the master contract | |||||
| January 17, 2019 | 30,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| March 21, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| April 18, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| May 13, 2019 | 23,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| September 26, 2019 | 14,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| August 30, 2019 | 38,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes |
| August 10, 2017 | 60,000.00 | Joint liability guarantee | Two years after the maturity of | Yes | Yes |
| the debts in the master contract | |||||
| May 10, 2019 | 65,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes |
| September 20, 2019 | 5,000.00 | Joint liability guarantee | Three years since the date on which the debt period of master contract expires or the date on which the secured claim is determined, whichever is later | Yes | Yes |
| October 22, 2019 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| December 10, 2019 | 50,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| January 15, 2020 | 30,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| October 13, 2017 | 22,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| March 27, 2018 | 50,000.00 | Joint liability guarantee | March 20, 2018–March 19, 2021 | No | Yes |
| September 21, 2018 | 26,099.60 (40 million US dollars) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| June 26, 2019 | 18,000.00 | Joint liability guarantee | June 26, 2019–June 25, 2022 | No | Yes |
| July 22, 2019 | 44,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| September 29, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| February 27, 2020 | 25,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| February 25, 2020 | 30,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| April 7, 2020 | 53,000.00 | Joint liability guarantee | April 7, 2020–March 31, 2024 | No | Yes | |||
| April 13, 2020 | 24,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| August 3, 2020 | 50,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| August 12, 2020 | 60,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| August 18, 2020 | 33,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| September 1, 2020 | 30,000.00 | Joint liability guarantee | Five years upon expiration of debt period of master contract | No | Yes | |||
| September 27, 2020 | 40,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| Zhejiang Dahua Zhilian Co., Ltd. | July 9, 2020 | 500,000.00 | April 9, 2019 | 10,000.00 | Joint liability guarantee | One years upon expiration of | Yes | Yes |
| debt period of master contract | |||||
| May 13, 2019 | 6,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| December 12, 2019 | 20,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | Yes | Yes |
| June 6, 2016 | 20,000.00 | Joint liability guarantee | June 6, 2016–June 30, 2020 | Yes | Yes |
| September 1, 2018 | 50,000.00 | Joint liability guarantee | September 1, 2018–September 1, 2020 | Yes | Yes |
| November 1, 2019 | 40,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | Yes | Yes |
| October 12, 2018 | 30,000.00 | Joint liability guarantee | October 12, 2018–October 12, 2021 | No | Yes |
| August 30, 2019 | 10,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| February 25, 2020 | 6,000.00 | Joint liability guarantee | Three years after the maturity of the debts in | No | Yes |
| the master contract | ||||||||
| April 9, 2020 | 10,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | No | Yes | |||
| May 1, 2020 | 39,149.40 (60 million US dollars) | Joint liability guarantee | One years upon expiration of debt period of master contract | No | Yes | |||
| September 24, 2020 | 30,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| September 25, 2020 | 16,500.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| September 27, 2020 | 7,500.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| September 29, 2020 | 16,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| Zhejiang Dahua System Engineering Co., Ltd. | July 9, 2020 | 50,000.00 | June 6, 2016 | 10,000.00 | Joint liability guarantee | June 6, 2016–March 30, 2020 | Yes | Yes |
| May 13, 2019 | 4,000.00 | Joint liability | Three years | Yes | Yes |
| guarantee | after the maturity of the debts in the master contract | |||||||
| May 10, 2019 | 10,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes | |||
| August 30, 2019 | 1,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| November 7, 2019 | 6,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| February 25, 2020 | 4,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| August 3, 2020 | 5,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| Dahua Technology (HK) Limited | July 9, 2020 | 110,000.00 | December 15, 2017 | 32,624.50 (50 million US dollars) | Joint liability guarantee | December 15, 2017–December 15, 2020 | Yes | Yes |
| November 25, 2019 | 4,567.43 (7 million | Joint liability guarantee | Two years after the | No | Yes |
| US dollars) | maturity of the debts in the master contract | |||||||
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V | July 9, 2020 | 20,000.00 | March 26, 2019 | 1,967.24 (59,973,100 MXN) | Joint liability guarantee | March 26, 2019–March 26, 2020 | Yes | Yes |
| April 9, 2019 | 5,901.71 (179,919,400 MXN) | Joint liability guarantee | April 9, 2019–April 9, 2020 | Yes | Yes | |||
| October 27, 2020 | 4,241.19 (6.5 million US dollars) | Joint liability guarantee | October 27, 2020–October 20, 2021 | No | Yes | |||
| September 1, 2020 | 652.49 (1 million US dollars) | Joint liability guarantee | September 1, 2020–August 31, 2021 | No | Yes | |||
| Hangzhou Huacheng Network Technology Co., Ltd. | July 9, 2020 | 60,000.00 | August 30, 2019 | 5,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| August 3, 2020 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| September 25, 2020 | 5,500.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| September 27, 2020 | 5,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| Dahua Technology UK Limited | July 9, 2020 | 2,000.00 | August 12, 2020 | 1,031.27 (GBP 1.16 million ) | Joint liability guarantee | August 12, 2020–Signature of the notice of termination | No | Yes |
| Guangxi Dahua Information Technology Co., Ltd. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Xi'an Dahua Zhilian Technology Co., Ltd. | July 9, 2020 | 50,000.00 | No such case during the reporting period | |||||
| Chengdu Dahua Zhian Information Technology Service Co., Ltd. | July 9, 2020 | 50,000.00 | No such case during the reporting period | |||||
| Zhejiang Huafei Intelligent Technology CO., LTD. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Zhejiang Huachuang Vision Technology Co., Ltd. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Zhejiang HuaRay Technology Co., Ltd. | July 9, 2020 | 5,000.00 | No such case during the reporting period | |||||
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Hangzhou Xiaohua Technology CO., LTD. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Zhejiang Dahua Security Service Co., Ltd. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Hangzhou Tecomore Technology Co., Ltd. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Wuxi Dahua Ruipin Technology Co., Ltd. | July 9, 2020 | 1,000.00 | No such case during the reporting period | |||||
| Zhejiang Huaxiao Technology Co., Ltd. | July 9, 2020 | 5,000.00 | No such case during the reporting period |
| Zhejiang Fengshi Technology Co., Ltd. | July 9, 2020 | 10,000.00 | No such case during the reporting period |
| Zhejiang Dahua Storage Technology Co., Ltd. | July 9, 2020 | 1,000.00 | No such case during the reporting period |
| DAHUA EUROPE B.V. | July 9, 2020 | 15,000.00 | No such case during the reporting period |
| Dahua Technology USA Inc. | July 9, 2020 | 4,000.00 | No such case during the reporting period |
| Dahua Technology Singapore Pte.Ltd. | July 9, 2020 | 200.00 | No such case during the reporting period |
| Dahua Technology Poland sp.zo.o. | July 9, 2020 | 2,000.00 | No such case during the reporting period |
| Dahua Technology Hungary Kft | July 9, 2020 | 2,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY INDIA PRIVATE LIMITED | July 9, 2020 | 4,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY BRASIL COMERCIO SERV EM SEGURANCA ELETRONICA LTDA | July 9, 2020 | 2,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY MIDDLE EAST FZE | July 9, 2020 | 1,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PER? S.A.C | July 9, 2020 | 4,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY RUS LIMITED | July 9, 2020 | 3,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY AUSTRALIA PTY LTD | July 9, 2020 | 500.00 | No such case during the reporting period |
| Dahua Technology South Africa Proprietary Limited | July 9, 2020 | 500.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY CANADA INC. | July 9, 2020 | 1,000.00 | No such case during the reporting period |
| DAHUA GUVENLIK TEKNOLOJILERI SANAYI VE TICARET ANONIM SIRKETI | July 9, 2020 | 1,000.00 | No such case during the reporting period |
| Dahua Technology SRB d.o.o. | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology Bulgaria EOOD | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA IBERIA, S.L.(U.) | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA SECURITY MALAYSIA SDN. BHD. | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology Kazakhstan LLP | July 9, 2020 | 100.00 | No such case during the reporting period |
| PT DAHUA VISION TECHNOLOGY INDONESIA | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology Korea Company Limited | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology S.R.L. | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua technology France SAS | July 9, 2020 | 250.00 | No such case during the reporting period |
| Dahua vision LLc | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology New Zealand Limited | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology GmbH | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA | July 9, | No such case during the reporting period |
| TECHNOLOGY COLOMBIA S.A.S. | 2020 | 2,000.00 | |
| DAHUA TECHNOLOGY PANAMA S.A. | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology Chile SpA | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua technology tunisia limited liability company | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY KENYA LIMITED | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY CHINA(PVT) LTD | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PAKISTAN (PRIVATE) LIMITED | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY MOROCCO SARL | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA ARGENTINA S.A. | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology Czech s.r.o. | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology Denmark ApS | July 9, 2020 | 100.00 | No such case during the reporting period |
| Dahua Technology Netherlands B.V. | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY (THAILAND) CO., LTD | July 9, 2020 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY ITALY S.R.L. | July 9, 2020 | 100.00 | No such case during the reporting period |
| LOREX TECHNOLOGY INC | July 9, 2020 | 2,000.00 | No such case during the reporting period |
| LOREX CORPORATION | July 9, 2020 | 2,000.00 | No such case during the reporting period | |||||
| Total amount of guarantees to subsidiaries approved during the reporting period (B1) | 1,920,850.00 | Total amount of guarantees to subsidiaries actually occurred during the reporting period (B2) | 535,574.35 | |||||
| Total amount of guarantees to subsidiaries approved by the end of the reporting period (B3) | 1,920,850.00 | Total balance of guarantees actually paid to subsidiaries at the end of the reporting period (B4) | 742,241.38 | |||||
| Subsidiaries' guarantees to subsidiaries | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Total amount of guarantees to subsidiaries approved during the reporting period (C1) | Total amount of guarantees to subsidiaries actually occurred during the reporting period (C2) | |||||||
| Total amount of guarantees to subsidiaries approved at the end of the reporting period (C3) | Total of actual guarantee balance for subsidiaries at the end of the reporting period (C4) | |||||||
| Total amount of company guarantees (namely sum of the previous three major items) | ||||||||
| Total amount of guarantees approved during the reporting period (A1+B1+C1) | 1,920,850.00 | Total amount of guarantees actually occurred during the reporting period (A2+B2+C2) | 535,574.35 | |||||
| Total amount of guarantees approved by the end of the reporting period (A3+B3+C3) | 1,920,850.00 | Total balance of guarantees actually paid at the end of the reporting period (A4+B4+C4) | 742,241.38 | |||||
| Total amount of actual guarantees (A4+B4+C4) as a percentage of the Company's net assets | 37.54% |
| Including: | |
| Balance of guarantees to the shareholders, actual controllers and their related parties (D) | |
| Balance of debt guarantees directly or indirectly offered to guaranteed objects with asset-liability ratio exceeding 70% (E) | 742,241.38 |
| Amount of the guarantees with the total volume exceeding 50% of the net assets (F) | |
| Total amount of the above three guarantees (D+E+F) | 742,241.38 |
| Notes on unexpired guarantees with guarantee responsibilities occurred or possible joint liabilities within the reporting period (if any) | |
| Notes on providing external guarantees in violation of specified procedures (if any) | |
(2) Illegal external guarantees
□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.
3. Entrusting Others to Manage Cash Assets
(1) Entrusted Financing
√ Applicable □ Not applicable
Entrusted financing during the reporting period
Unit: ten thousand RMB
| Specific type | Funding source | Entrusted amount | Unexpired balance | Overdue outstanding amount |
| Structured deposits | Equity Fund | 90,000 | - | - |
| Total | 90,000 | - | - | |
Specific matters on high-risk entrusted capital management with a large amount for a single item, or with low security, poor liquidity and no capital preservation guarantee.
√ Applicable □ Not applicable
Unit: ten thousand RMB
| Name of trustee organization (or name of trustee) | Trustee organization (or trustee) type | Product type | Amount | Capital Source | Starting date | Termination date | Investment direction | Payment determination method | Reference for annualized rate of return | Expected earnings (if any) | Actual profit and loss during the reporting period | Actual recovery of profits and losses during the reporting period | Amount of provision for impairment accrued (if any) | Whether it passed the legal procedures | Whether there will be entrusted financial plan in the future | Item overview and related query index (if any) |
| Agricultural Bank of China | Bank | Structured deposits | 10,000 | Equity Fund | May 20, 2020 | December 29, 2020 | - | By contract | 3.60% | 219.95 | Recovered | Yes | Yes | The "Announcement on Purchase of Bank Wealth Management Products with Own Funds" (Announcement No.: 2020-025) is published on www.cninfo.com.cn on April | ||
| China Construction Bank | Bank | Structured deposi | 80,000 | Equity Fund | June 5, 2020 | September 3, 2020 | - | By contract | 3.70% | 712.83 | Recovered | Yes | Yes |
| ts | 3, 2020. | ||||||||||||||
| Total | 90,000 | -- | -- | -- | -- | -- | -- | - | 932.78 | -- | - | -- | -- | -- | |
Cases of entrusted financing expected to be unable to recover the principal or cases that may result in impairment
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such case as entrusted loan during the reporting period.
4. Major Contracts in Daily Operations
□ Applicable √ Not applicable
5. Other Significant Contracts
□ Applicable √ Not applicable
No such case as other significant contract during the reporting period.XVIII. Social Responsibilities
1. Fulfillment of Social Responsibilities
In 2020, Dahua "deepened the segmentation and grew effectively" by constantly improving its corporate governancestructure, promoting the level of corporate governance, caring for its employees, protecting the shareholders' rights andinterests, and practicing social responsibility. In 2021, the Company will continue to adhere to the core concept of"Customer-centered and striving for the goal" and the values of "Integrity, dedication, responsibility, innovation,cooperation and openness" to pursue economic benefits and protect shareholders' interests; Meanwhile the Company willactively create value for its employees and get engaged in environmental public welfare endeavors to promote theharmonious integration of the Company, the society, interested parties and the environment. For details of the Company'ssocial responsibility fulfillment during the reporting period, refer to the "2020 Social Responsibility Report" and "2020Environmental, Social and Governance Report" published on www.cninfo.com.cn on the same day.
2. Social responsibility fulfillment regarding targeted poverty alleviationIn the reporting year of the Company, there has been no targeted poverty alleviation activity, or follow-up targeted povertyalleviation plan.
3.Environmental Protection-related Matters
Whether the listed company and its subsidiaries belong to the key pollutant discharging units announced by theenvironmental protection department
□ Yes √ No
No
The Company does not belong to the key pollutant discharging units announced by the environmental protectiondepartment. For details, refer to Chapter 7 Green and Environmental Protection of “2020 Social Responsibility Report”published on www.cninfo.com.cn on the same day.
XIX. Explanations on Other Significant Matters
√ Applicable □ Not applicable
1. On April 25, 2019, the Company’s 21st meeting of the 6th board of directors reviewed and approved the “Proposalon the Scheme for the Repurchase of Shares”. The Company plans to buy back some shares with the funds raised byitself through centralized competitive bidding. The total amount of funds for the repurchase shall not be lower than 200million yuan (inclusive) and higher than 400 million yuan (inclusive). The price of the repurchase shall not exceed 25.37yuan per share (inclusive). Calculated according to the purchase price and the upper limit for the repurchase, it’sestimated to buy back 15,766,653 shares. The repurchased shares will make up 0.53% of the current total share capital ofthe Company. The specific amount of repurchased shares and the proportion in the total share capital of the Companyshall be subject to the actually repurchased number of shares and the actual proportion when the period of repurchaseexpires. The period for the implementation of repurchase shall be 12 months from the day the board of directors reviewsand approves the repurchase scheme.As of April 24, 2020, the Company bought back 13,391,480 shares with its special securities account throughcentralized competitive bidding, accounting for 0.45% of the Company's total share capital. The highest transaction pricewas RMB 17.88 per share and the lowest transaction price was RMB 12.9 per share. The total amount of transactions wasRMB 203,499,400.44 (excluding transaction expenses). The Company's share repurchase plan has been completed.
2. On February 24, 2020, the 31st session of the 6th Board of Directors' meeting held by the Company reviewed andapproved the "Proposal on Investment in Establishing a Joint Venture Company". The Company and Tianjin RongyuEnterprise Management Partnership (Limited Partnership), Tianjin Qushi Management Consulting Partnership (LimitedPartnership), and Huzhou Xubo Smart City Technology Partnership (Limited Partnership) signed a "Joint VentureAgreement" to jointly invest in the establishment of Ruicity Digital Technology Co., Ltd. (tentative name), with a registeredcapital of RMB 800 million and the Company's shareholding accounted for 20%. In March 2020, this company wasestablished and the approved company name by the Bureau of Industry and Commerce was Ruicity Digital TechnologyCo., Ltd.
3. On June 5, 2019, the 1st Extraordinary General Meeting of Shareholders of 2019 held by the Company reviewedand approved the “Proposal on Public Offering of Convertible Corporate Bonds” and other relevant contents.
On June 4, 2020, the 35th meeting of the 6th Board of Directors and the 21st meeting of the 6th Board of Supervisorsheld by the Company reviewed and approved the "Proposal on Terminating the Public Offering of Convertible CorporateBonds" and agreed to terminate the public offering of convertible corporate bonds.
XX. Significant Events of the Company's Subsidiaries
√ Applicable □ Not applicable
On December 21, 2020, the 6th meeting of the 7th Board of Directors held by the Company reviewed and approvedthe “Proposal on Planning of the Splitting and Listing of the Holding Subsidiary”. The Board of Directors of the Companyauthorized the management of the Company to initiate splitting of its holding subsidiary Zhejiang Huachuang VisionTechnology Co., Ltd. to facilitate early preparation for listing at the domestic stock exchange. The above splitting andlisting is under progress.
Section VI Changes in Shares and Information about
ShareholdersI. Changes in Shares
1. Changes in shares
Unit: share
| Before the change | Increase or decrease in the change (+, -) | After the change | |||||||
| Number | Percentage | Shares newly issued | Bonus shares | Shares converted from capital reserves | Others | Subtotal | Number | Percentage | |
| I. Shares with limited sales condition | 1,194,350,711 | 39.71% | -57,052,995 | -57,052,995 | 1,137,297,716 | 37.97% | |||
| 1. Other domestic shares | 1,194,295,711 | 39.71% | -57,017,195 | -57,017,195 | 1,137,278,516 | 37.97% | |||
| Including: Shares held by domestic natural persons | 1,194,295,711 | 39.71% | -57,017,195 | -57,017,195 | 1,137,278,516 | 37.97% | |||
| 2. Foreign shares | 55,000 | 0.00% | -35,800 | -35,800 | 19,200 | 0.00% | |||
| Shares held by foreign natural persons | 55,000 | 0.00% | -35,800 | -35,800 | 19,200 | 0.00% | |||
| II. Shares without restrictions | 1,813,640,519 | 60.29% | 44,641,355 | 44,641,355 | 1,858,281,874 | 62.03% | |||
| 1. RMB ordinary shares | 1,813,640,519 | 60.29% | 44,641,355 | 44,641,355 | 1,858,281,874 | 62.03% | |||
| III. Total | 3,007,991,230 | 100.00% | -12,411,640 | -12,411,640 | 2,995,579,590 | 100.00% | |||
Reasons for changes in shares
√ Applicable □ Not applicable
1. At the beginning of each year, the number of shares locked by executives of the Company shall be re-verifiedaccording to 75% of the total number of shares held by executives.
2. In April 2020, the unlocking conditions for the first period initially granted in the Restricted Stock Incentive Plan ofthe Company in 2018 were achieved and the unlocking was completed.
3. The Restricted Stock Incentive Plan of the Company in 2020 granted 13,391,480 restricted stocks to 10 incentivetargets, which were sourced from the buy-back account of the Company and listed on June 24, 2020.
4. In 2020, the Company bought back and canceled the granted but unlocked restricted shares held by the incentivetargets who have left the Company.Approval for changes in shares
√ Applicable □ Not applicable
1. On January 16, 2020, the 1st Extraordinary General Meeting of Shareholders held by the Company in 2020reviewed and approved the "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks"and agreed to buy back and cancel 437,100 authorized but not unlocked restricted stocks held by 16 incentive targetswho have left the Company.
2. On April 2, 2020, the 33th meeting of the 6th Board of Directors held by the Company reviewed and approved the“Proposal on Initial Granting of Unlocking Condition Satisfaction for the First Unlocking Period in 2018 Restricted StockIncentive Plan”, and agreed to unlock the 36,931,560 restricted stocks held by the 2,901 incentive targets who met theunlocking conditions.
3. On May 12, 2020, the annual general meeting of shareholders held by the Company in 2019 reviewed andapproved the "Restricted Stock Incentive Plan of Zhejiang Dahua Technology Co., Ltd in 2020 (Draft)" and its summarywhich authorized the Board of Directors to handle relevant matters on the stock incentive plan.
On May 12, 2020, the annual general meeting of shareholders held by the Company in 2019 reviewed and approvedthe "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy backand cancel 1,810,600 authorized but not unlocked restricted stocks held by 36 incentive targets who have left theCompany.
4. On June 4, 2020, the 35th meeting of the 6th Board of Directors reviewed and approved the "Proposal on GrantingRestricted Stocks to Incentive Targets" and the "Proposal on Adjusting Grant Price of the Restricted Stock Incentive Planof 2020". As the Company allocated the equities for 2019 during the period from announcement of the "Restricted StockIncentive Plan of Zhejiang Dahua Technology Co., Ltd in 2020 (Draft)” until the incentive targets’ completion of therestricted stock registration, the grant price of the restricted stocks was adjusted from 7.60 yuan per share to 7.467 yuanper share. At the same time, the Board of Directors of the Company confirmed the granting conditions and concluded thatthe conditions had been reached and decided to grant the restricted stocks to the incentive targets. The granting date wasJune 4, 2020.
5. On June 29, 2020, the Company disclosed the "Announcement on the Completion of Granting Registration of theRestricted Stock Incentive Plan in 2020". The Restricted Stock Incentive Plan of 2020 granted 13,391,480 shares to 10incentive targets, which were listed on Shenzhen Stock Exchange on June 24, 2020.
6. On August 12, 2020, the 3rd Extraordinary General Meeting of Shareholders held by the Company in 2020reviewed and approved the "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks"and agreed to buy back and cancel 4,822,680 authorized but not unlocked restricted stocks held by 183 persons whowere no longer qualified as incentive targets.
7. On October 28, 2020, the 4th Extraordinary General Meeting of Shareholders held by the Company in 2020reviewed and approved the "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks"and agreed to buy back and cancel 1,063,260 authorized but not unlocked restricted stocks held by 62 persons who wereno longer qualified as incentive targets.Transfer for changes in shares
√ Applicable □ Not applicable
1. According to the 33th meeting of the 6th Board of Directors held by the Company, the Company completed theinitial granting of unlocking for the restricted stocks in 2018 for the first period, and the unlocking date, namely the listing
date was April 16, 2020.
2. According to the resolution of the 1st Extraordinary General Meeting of Shareholders held by the Company in 2020,the Company bought back and canceled the 437,100 authorized but not unlocked restricted shares held by the 16incentive targets who have left the Company, and the procedure was completed in April 2020.
3. On June 24, 2020, the granted shares of the Company's restricted stocks incentive plan in 2020 were listed onShenzhen Stock Exchange.
4. According to the resolution of the annual general meeting of shareholders held by the Company in 2019, theCompany bought back and canceled the 1,810,600 authorized but not unlocked restricted shares held by the 36 incentivetargets who have left the Company, and the procedure was completed in October 2020.
5. According to the resolution of the 3rd Extraordinary General Meeting of Shareholders held by the Company in 2020,the Company bought back and canceled the 4,822,680 authorized but not unlocked restricted shares held by the 183persons who were no longer qualified as incentive targets, and the procedure was completed in November 2020.
6. According to the resolution of the 4th Extraordinary General Meeting of Shareholders held by the Company in 2020,the Company bought back and canceled the 1,063,260 authorized but not unlocked restricted shares held by the 62persons who were no longer qualified as incentive targets, and the procedure was completed in December 2020.The progress on share repurchase
√ Applicable □ Not applicable
On April 25, 2019, the Company’s 21st meeting of the 6th board of directors reviewed and approved the “Proposal onthe Scheme for the Repurchase of Shares”. The Company plans to buy back some shares with the funds raised by itselfthrough centralized competitive bidding. The total amount of funds for the repurchase shall not be less than RMB 200million (inclusive) and not be more than RMB 400 million (inclusive). The price of the repurchase shall not exceed 25.37yuan per share (inclusive). Calculated according to the purchase price and the upper limit for the repurchase, it’sestimated to buy back 15,766,653 shares. The repurchased shares will make up 0.53% of the current total share capital ofthe Company. The specific amount of repurchased shares and the proportion in the total share capital of the Companyshall be subject to the actually repurchased number of shares and the actual proportion when the period of repurchaseexpires. The period for the implementation of repurchase shall be 12 months from the day the board of directors reviewsand approves the repurchase scheme.
As of April 24, 2020, the Company bought back 13,391,480 shares with its special securities account throughcentralized competitive bidding, accounting for 0.45% of the Company's total share capital. The highest transaction pricewas RMB 17.88 per share and the lowest transaction price was RMB 12.9 per share. The total amount of transactions wasRMB 203,499,400.44 (excluding transaction expenses). The Company's share repurchase plan has been completed.The progress on reduction of re-purchase shares by means of centralized competitive bidding
□ Applicable √ Not applicable
Effects of changes in shares on the basic earnings per share ("EPS"), diluted EPS, net assets per share, attributable tocommon shareholders of the Company, and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or are required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted stocks
√ Applicable □ Not applicable
Unit: share
| Name of Shareholder | Number Of Shares With Limited Sales Condition At The Beginning Of The Period | Number of increased shares with limited sales condition in current period | Number of unlocked shares with limited sales condition in current period | Number of shares with limited sales condition at the end of the period | Reasons for limited sales | Date of unlocking |
| Fu Liquan | 834,736,410 | 23,175,000 | 811,561,410 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management | |
| Zhu Jiangming | 139,846,117 | 139,846,117 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management | ||
| Chen Ailing | 53,447,110 | 53,447,110 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management | ||
| Wu Jun | 51,938,164 | 51,938,164 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | ||
| Zhang Xingming | 1,261,060 | 2,361,480 | 3,622,540 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Zhao Yuning | 740,000 | 1,775,000 | 2,515,000 | Per relevant management | Per relevant management |
| regulations of equity incentives and senior managers' shares | regulations of equity incentives and senior managers' shares | |||||
| Ying Yong | 1,251,937 | 1,020,000 | 2,271,937 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Wu Jian | 1,147,001 | 1,020,000 | 2,167,001 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Jiang Xiaolai | 530,000 | 1,474,400 | 2,004,400 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Zhu Jiantang | 670,000 | 1,267,669 | 1,937,669 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Other senior executives and incentive | 108,782,912 | 3,561,900 | 46,358,444 | 65,986,368 | Per relevant management regulations of equity incentives and | Per relevant management regulations of equity incentives and |
| targets | senior managers' shares | senior managers' shares | ||||
| Total | 1,194,350,711 | 12,480,449 | 69,533,444 | 1,137,297,716 | -- | -- |
II. Issuance and listing of securities
1. Securities (excluding preferred share) issued in reporting period
□ Applicable √ Not applicable
2. Explanation on changes in total number of the Company's shares & the structure ofshareholders and the structure of assets and liabilities
□ Applicable √ Not applicable
3. Existing shares held by internal staff of the Company
□ Applicable √ Not applicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
| Total Number Of Common Shareholders At The End Of The Reporting Period | 148,905 | Total number of common shareholders at the end of previous month before the disclosure date of the annual report | 148,198 | Total Number of Preferred Shareholders (If Any) (Refer to Note 8) Whose Voting Rights have been Recovered at the End of the Reporting Period | 0 | Total number of preferred shareholders (if any) (refer to Note 8) with resumed voting rights at the end of previous month before the disclosure date of the annual report | 0 | |||||||
| Shareholding list of shareholders with over 5% shares or top ten shareholders | ||||||||||||||
| Name of Shareholder | Nature Of Shareholder | Shareholding Percentage | Number of shares held at the end of the reporting period | Changes in the reporting period | Number of shares held with limited sales conditions | Number of shares held without limited sales condition | Pledges or freezings | |||||||
| State Of Shares | Number | |||||||||||||
| Fu Liquan | Domestic Natural Person | 34.18% | 1,023,868,980 | -58,212,900 | 811,561,410 | 212,307,570 | Pledge | 280,262,000 |
| Zhu Jiangming | Domestic Natural Person | 5.36% | 160,577,490 | -25,884,000 | 139,846,117 | 20,731,373 | Pledge | 66,004,000 |
| Shanghai Perseverance Asset Management (Limited Partnership) - Gaoyi Linshan No.1 Yuanwang Fund | Others | 4.61% | 138,000,000 | 138,000,000 | 0 | 138,000,000 | ||
| Hong Kong Securities Clearing Co. Ltd. | Overseas Legal Person | 3.36% | 100,535,485 | -56,710,140 | 0 | 100,535,485 | ||
| Chen Ailing | Domestic Natural Person | 2.38% | 71,262,813 | 0 | 53,447,110 | 17,815,703 | Pledge | 21,100,000 |
| Wu Jun | Domestic Natural Person | 2.31% | 69,250,886 | 0 | 51,938,164 | 17,312,722 | ||
| China Galaxy Securities Co., Ltd. | State-owned Legal Person | 1.82% | 54,637,400 | 54,632,700 | 0 | 54,637,400 | ||
| China Securities Finance Co., Ltd. | Domestic Non-state-owned Legal Person | 1.32% | 39,611,241 | 0 | 0 | 39,611,241 | ||
| Bank of Communications Company Limited - Nanfang Growth Pioneer Hybrid Type Securities Investment Fund | Others | 1.11% | 33,382,739 | 33,382,739 | 0 | 33,382,739 |
| Central Huijin Asset Management Co., Ltd. | State-owned Legal Person | 1.05% | 31,448,750 | 0 | 0 | 31,448,750 | |||
| Description of the association relationship or concerted action of above-mentioned shareholders | Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert. | ||||||||
| Shareholding list of top ten shareholders without limited sales condition | |||||||||
| Name of Shareholder | Number of shares held without limited sales condition at the end of the reporting period | Type of shares | |||||||
| Type of shares | Number | ||||||||
| Fu Liquan | 212,307,570 | RMB common stock | 212,307,570 | ||||||
| Shanghai Perseverance Asset Management (Limited Partnership) - Gaoyi Linshan No.1 Yuanwang Fund | 138,000,000 | RMB common stock | 138,000,000 | ||||||
| Hong Kong Securities Clearing Co. Ltd. | 100,535,485 | RMB common stock | 100,535,485 | ||||||
| China Galaxy Securities Co., Ltd. | 54,637,400 | RMB common stock | 54,637,400 | ||||||
| China Securities Finance Co., Ltd. | 39,611,241 | RMB common stock | 39,611,241 | ||||||
| Bank of Communications Company Limited - Nanfang Growth Pioneer Hybrid Type Securities Investment Fund | 33,382,739 | RMB common stock | 33,382,739 | ||||||
| Central Huijin Asset Management Co., Ltd. | 31,448,750 | RMB common stock | 31,448,750 | ||||||
| Shanghai Greenwoods Asset Management Co., Ltd. - Greenwoods Global Fund | 30,617,393 | RMB common stock | 30,617,393 | ||||||
| Zhu Jiangming | 20,731,373 | RMB common stock | 20,731,373 | ||||||
| Guotai Asset Management Co., Ltd. - Four Two One Combination of Social Security Fund | 19,971,515 | RMB common stock | 19,971,515 | ||||||
| Explanation on associated | Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of | ||||||||
| relationship or persons acting in concert among top ten shareholders without limited shares, and between top ten shareholders without limited shares and top ten shareholders | Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert. |
| Explanation on Top Ten Common Shareholders’ Participation In Securities Margin Trading (If Any) (Refer to Note 4) | N/A |
Whether the Company's top ten common shareholders or top ten common shareholders without limited shares agree onany repurchase transaction in the reporting period
□ Yes √ No
None of the Company's top ten common shareholders or top ten common shareholders without limited shares agreed onrepurchase in the reporting period.
2. Particulars about the controlling shareholder
Nature of the controlling shareholder: Natural person-ownedType of the controlling shareholder: Natural person
| Name of the controlling shareholder | Nationality | Whether he/she has obtained the right of residence in another country or region |
| Fu Liquan | China | Yes |
| Main occupation and title | Mr. Fu Liquan holds the position of the chairman and president of the Company. | |
Change of the controlling shareholders in the reporting period
□ Applicable √ Not applicable
No change has happened to the controlling shareholder in the reporting period of the Company
3. The actual controller of the Company and persons acting in concertNature of the actual controller: Domestic natural personType of the actual controller: Natural person
| Name of the actual controller | Relationship with the actual controller | Nationality | Whether he/she has obtained the right of residence in another country or region |
| Fu Liquan | Himself | China | Yes |
| Chen Ailing | Acting in concert (including agreement, relatives, under same control) | China | Yes |
| Main occupation and title | Mr. Fu Liquan holds the position of the chairman and president of the Company; Ms. Chen Ailing holds the position of the director of the Company. |
| Information about other listed companies at home and abroad controlled in the last ten years | N/A |
Change of the actual controller in the reporting period
□ Applicable √ Not applicable
No change has happened to the actual controller in the reporting periodBlock Digram for Property Right and Control Relationship between the Company and Actual Controllers
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
4. Particulars about other corporate shareholders with shareholding proportion over 10%
□ Applicable √ Not applicable
5. Particulars on share reduction restricted for controlling shareholders, actual controller,restructuring party or other commitment entities
□ Applicable √ Not applicable
| Fu Liquan | Chen Ailing |
Section VII Information of Preferred Shares
□ Applicable √ Not applicable
There are no preferred shares in the reporting period.
Section VIII Convertible Corporate Bonds
□ Applicable √ Not applicable
There are no convertible corporate bonds in the reporting period.
Section IX Directors, Supervisors, Senior Managers and EmployeesI. Shareholding Changes of Directors, Supervisors and Senior Management
| Name | Post | Position status | Gender | Age | Starting date of tenure | Termination Date of tenure | Number of shares held at the beginning of the period (share) | Number of shares increased in the period (share) | Number of shares decreased in the period (share) | Other changes (share) | Number of shares held at the end of the period |
| Fu Liquan | Chairman, President | Incumbent | Male | 54 | April 1, 2005 | August 11, 2023 | 1,082,081,880 | 58,212,900 | 0 | 1,023,868,980 | |
| Wu Jun | Vice Chairman | Incumbent | Male | 49 | April 1, 2005 | August 11, 2023 | 69,250,886 | 0 | 0 | 69,250,886 | |
| Zhang Xingming | Director, Executive President | Incumbent | Male | 44 | May 20, 2010 | August 11, 2023 | 1,681,413 | 0 | 2,361,480 | 4,042,893 | |
| Zhu Jiangming | Director | Incumbent | Male | 54 | April 1, 2005 | August 11, 2023 | 186,461,490 | 25,884,000 | 0 | 160,577,490 | |
| Chen Ailing | Director | Incumbent | Female | 54 | April 1, 2005 | August 11, 2023 | 71,262,813 | 0 | 0 | 71,262,813 | |
| Yang Huayong | Independent Director | Incumbent | Male | 60 | August 12, 2020 | August 11, 2023 | 0 | 0 | 0 | 0 | |
| Liu Hanlin | Independent Director | Incumbent | Male | 58 | August 12, 2020 | August 11, 2023 | 0 | 0 | 0 | 0 | |
| Zhang | Independent Director | Incum | Male | 56 | August 12, 2020 | August 11, 2023 | 0 | 0 | 0 | 0 |
| Yuli | bent | ||||||||||
| Song Maoyuan | Supervisor | Incumbent | Female | 39 | April 3, 2008 | August 11, 2023 | 0 | 0 | 0 | 0 | |
| Zheng Jieping | Supervisor | Incumbent | Female | 42 | August 12, 2020 | August 11, 2023 | 124,500 | 8,300 | -6,6000 | 50,200 | |
| Zuo Pengfei | Supervisor | Incumbent | Female | 43 | April 3, 2008 | August 11, 2023 | 0 | 0 | 0 | 0 | |
| Jiang Xiaolai | Senior Vice President | Incumbent | Male | 41 | February 27, 2020 | August 11, 2023 | 530,000 | 0 | 1,560,000 | 2,090,000 | |
| Liu Ming | Vice President | Incumbent | Male | 40 | October 12, 2020 | August 11, 2023 | 298,100 | 1,020,000 | 1,318,100 | ||
| Li Zhijie | Senior Vice President | Incumbent | Male | 46 | February 27, 2020 | August 11, 2023 | 670,000 | 0 | 1,020,000 | 1,690,000 | |
| Song Ke | Vice President | Incumbent | Male | 43 | October 12, 2020 | August 11, 2023 | 0 | 0 | 0 | 0 | |
| Supervisor | Resigned | Male | 43 | August 7, 2015 | August 12, 2020 | 0 | 0 | 0 | 0 | ||
| Wu Jian | Secretary of the Board, Senior Vice President | Incumbent | Male | 47 | December 1, 2005 | August 11, 2023 | 1,529,335 | 0 | 1,020,000 | 2,549,335 | |
| Xu Qiaofen | CFO, Senior Vice President | Incumbent | Female | 49 | February 27, 2020 | August 11, 2023 | 530,000 | 0 | 1,020,000 | 1,550,000 | |
| Xu Zhicheng | Senior Vice President | Incumbent | Male | 55 | March 22, 2018 | August 11, 2023 | 530,000 | 0 | 1,020,000 | 1,550,000 | |
| Zhu Jiantang | Senior Vice President | Incumbent | Male | 39 | March 22, 2018 | August 11, 2023 | 730,225 | 0 | 1,390,000 | 2,120,225 | |
| Zhao | Senior Vice President | Incum | Male | 44 | March 22, 2018 | August 11, 2023 | 740,000 | 0 | 1,960,000 | 2,700,000 |
| Yuning | bent | ||||||||||
| He Chao | Independent Director | Resigned | Male | 62 | January 7, 2014 | August 12, 2020 | 0 | 0 | 0 | 0 | |
| Wang Zexia | Independent Director | Resigned | Female | 56 | January 7, 2014 | August 12, 2020 | 0 | 0 | 0 | 0 | |
| Huang Siying | Independent Director | Resigned | Female | 43 | May 22, 2017 | August 12, 2020 | 0 | 0 | 0 | 0 | |
| Ying Yong | Senior Vice President | Resigned | Male | 52 | May 20, 2010 | March 23, 2021 | 1,669,250 | 0 | 1,020,000 | 2,689,250 | |
| Chen Yuqing | Vice President | Resigned | Male | 47 | May 20, 2010 | March 23, 2021 | 1,835,951 | 0 | 0 | 1,835,951 | |
| Wu Yunlong | Vice President | Resigned | Male | 65 | May 20, 2010 | March 23, 2021 | 762,280 | 0 | 0 | 762,280 | |
| Yan Gang | Vice President | Resigned | Male | 52 | December 6, 2012 | April 27, 2020 | 606,349 | 0 | 0 | 606,349 | |
| Wei Meizhong | CFO, Vice President | Resigned | Male | 50 | November 1, 2007 | April 27, 2020 | 1,510,000 | 206,000 | 0 | 1,304,000 | |
| Zhang Wei | Vice President | Resigned | Male | 50 | December 6, 2012 | April 27, 2020 | 927,500 | 444,000 | 0 | 483,500 | |
| Li Ke | Director, President | Resigned | Male | 49 | May 3, 2017 | February 27, 2020 | 2,420,000 | 40,5000 | -80,0000 | 1,215,000 | |
| Total | -- | -- | -- | -- | -- | -- | 1,426,151,972 | - | 85,160,200 | 12,525,480 | 1,353,517,252 |
II. Changes of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Title | Type | Date | Causes |
| Fu Liquan | Chairman, President | Elected | August 12, 2020 | General Election of the Board of Directors |
| Wu Jun | Vice Chairman | Elected | August 12, 2020 | General Election of the Board of Directors |
| Zhang Xingming | Executive President | Appointed | February 27, 2020 | Appointed as Executive President and Resigned as Vice President |
| Executive President | Appointed | August 12, 2020 | Appointed by the Board of Directors | |
| Director | Elected | August 12, 2020 | General Election of the Board of Directors | |
| Zhu Jiangming | Director | Elected | August 12, 2020 | General Election of the Board of Directors |
| Chen Ailing | Director | Elected | August 12, 2020 | General Election of the Board of Directors |
| Yang Huayong | Independent Director | Elected | August 12, 2020 | General Election of the Board of Directors |
| Liu Hanlin | Independent Director | Elected | August 12, 2020 | General Election of the Board of Directors |
| Zhang Yuli | Independent Director | Elected | August 12, 2020 | General Election of the Board of Directors |
| Song Maoyuan | Supervisor | Elected | August 12, 2020 | General Election of the Board of Supervisors |
| Zheng Jieping | Supervisor | Elected | August 12, 2020 | General Election of the Board of Supervisors |
| Zuo Pengfei | Supervisor | Elected | August 12, 2020 | General Election of the Board of Supervisors |
| Jiang Xiaolai | Vice President | Appointed | February 27, 2020 | Appointed by the Board of Directors |
| Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors | |
| Senior Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors | |
| Liu Ming | Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors |
| Li Zhijie | Vice President | Appointed | February 27, 2020 | Appointed by the Board of Directors |
| Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors | |
| Senior Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors |
| Song Ke | Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors |
| Supervisor | Resigned upon Expiration of Term of Office | August 12, 2020 | Resigned upon Expiration of Term of Office | |
| Wu Jian | Secretary of the Board, Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors |
| Senior Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors | |
| Xu Qiaofen | Vice President | Appointed | February 27, 2020 | Appointed by the Board of Directors |
| CFO | Appointed | April 27, 2020 | Appointed by the Board of Directors | |
| CFO, Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors | |
| Senior Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors | |
| Xu Zhicheng | Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors |
| Senior Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors | |
| Zhu Jiantang | Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors |
| Senior Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors | |
| Zhao Yuning | Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors |
| Senior Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors | |
| He Chao | Independent Director | Resigned upon Expiration of Term of Office | August 12, 2020 | Resigned upon Expiration of Term of Office |
| Wang Zexia | Independent Director | Resigned upon Expiration of Term of Office | August 12, 2020 | Resigned upon Expiration of Term of Office |
| Huang Siying | Independent Director | Resigned upon Expiration of Term of Office | August 12, 2020 | Resigned upon Expiration of Term of Office |
| Li Ke | Director, President | Resigned | February 27, 2020 | Left the Company Voluntarily |
| Yan Gang | Vice President | Dismissed | April 27, 2020 | Resigned Voluntarily as Vice President but Still Employed in the Company |
| Wei Meizhong | CFO, Vice President | Dismissed | April 27, 2020 | Left the Company Voluntarily |
| Zhang Wei | Vice President | Dismissed | April 27, 2020 | Left the Company Voluntarily |
| Ying Yong | Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors |
| Senior Vice President | Appointed | October 12, 2020 | Appointed by the Board of Directors | |
| Senior Vice President | Dismissed | March 23, 2021 | Resigned Voluntarily as Senior Vice President but Still Employed in the |
| Company | ||||
| Wu Yunlong | Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors |
| Vice President | Dismissed | March 23, 2021 | Resigned Voluntarily as Vice President but Still Employed in the Company | |
| Chen Yuqing | Vice President | Appointed | August 12, 2020 | Appointed by the Board of Directors |
| Vice President | Dismissed | March 23, 2021 | Resigned Voluntarily as Vice President but Still Employed in the Company |
III. Positions
Professional backgrounds, major work experiences and current main responsibilities in the Company for incumbentdirectors, supervisors and senior management of the CompanyMr. Fu Liquan, Chinese nationality, permanent residence in Cyprus, born in 1967, with master degree in EMBA ofZhejiang University. As one of the main founders of the Company, he has been serving as the Chairman and President ofthe Company. In 2018, his employment was renewed by China Security Association as an expert of the Expert Committeeof China Security & Protection Industry Association. He has won the honors of “Outstanding Figure Award of ChinaSecurity - Tribute to the 40 Years Anniversary of Reform and Opening Up”, “Top Ten Influential Zhejiang Entrepreneurs”,“Model Worker of Zhejiang Province”, “One of the 40 Figures of Industry Innovative Development of Zhejiang for the 40years Anniversary of Reform and Opening Up”, “Excellent Enterprise Operator with Outstanding Contributions to theInformation Economy”, “Excellent Constructer of Socialism with Chinese Characteristics in the New Era of Non-PublicEconomy in Zhejiang Province”, “Outstanding Contributions Award in ‘Ingenuity for a Safe China’”, Global SecurityContribution Award, Top Ten Figures in Security and Protection Industry, and the Best CEO of listed companies of Forbes.Mr. Wu Jun, Chinese nationality, born in 1972, with a bachelor's degree, engineer, served as vice chairman and vicepresident of the Company and general manager of Zhejiang Dahua System Engineering Co., Ltd. He now serves as vicechairman of the Company and executive director of Zhejiang Dahua System Engineering Co., Ltd.Mr. Zhang Xingming, Chinese nationality, born in 1977, holds master degree, In the past 5 years, he has been servingas the Vice President of the Company, General Manager of the R&D center and General Manager of Zhejiang HuatuMicrochip Technology Co., Ltd. He is currently the Board Director and Executive President of the Company, GeneralManager of the R&D Center, and General Manager of Chengdu Dahua Information Technology Co., Ltd.Mr. Zhu Jiangming, Chinese nationality, born in 1967, has the right of permanent residence in Cyprus, holds bachelordegree and works as an engineer. As one of the main founders of the Company, he has served as the Vice Chairman ofthe Company, Business Operations Director and General Manager of Hangzhou Motorola Technologies Co., Ltd., andExecutive Director and Executive Vice President of Zhejiang Huatu Microchip Technology Co., Ltd. He is currently theDirector of the Company and the Chairman of Zhejiang Leapmotor Technology Co., Ltd. He was awarded the title ofadvanced technology worker in Hangzhou in 2003-2004, and employed as "Zhejiang Provincial Security TechnologyProtection Industry Expert" by Zhejiang Provincial Security Technology Protection Industry Association in 2006.Ms. Chen Ailing, Chinese nationality, born in 1967, has the right of permanent residence in Cyprus, and holdsbachelor degree. As one of the main founders of the Company, she served as director and CFO of the Company, and nowserves as director of the Company.Mr. Yang Huayong, Chinese nationality, born in 1961, is an academician of the Chinese Academy of Engineering, anexpert in the field of fluid transmission and control, and professor and doctoral supervisor of Zhejiang University. He is
currently the director of the Institute of High-End Equipment of Zhejiang University, dean of the School of MechanicalEngineering of Zhejiang University, honorary director of the Fluid Transmission and Control Branch of the ChineseMechanical Engineering Society, and editor-in-chief of the Journal of Bio-Design and Manufacturing, the English versionof the Journal of Zhejiang University-Science A, and the Chinese Journal of Engineering Design. He was awarded thespecial allowance of the State Council in 2001, the "Young Teacher Award for Universities" of the Ministry of Education in2002, the second prize of the National Science and Technology Progress Award in 2003, the Outstanding Youth Fund ofthe National Natural Science Foundation in 2004, the "National Outstanding Postdoctoral Fellow" of the Ministry of HumanResources and Social Security and the distinguished professor of the Chang Jiang Scholars Program in 2005, the chiefscientist of the "973" project in 2007 and 2012 respectively, the special expert of Zhejiang Province in 2008, the first prizeof the National Science and Technology Progress Award in 2012, the academician of the Chinese Academy ofEngineering in 2013, and the national innovation pioneer award in May 2017, a member of the Standing Committee ofZhejiang Provincial Committee and a member of the National Committee of the CPPCC in January 2018, the Book Awardof the Fourth China Publishing Government Award, the Second Prize of National Teaching Achievement (rank 1), the FirstPrize of the Outstanding Achievement Award (rank 1) and the Science and Technology Progress Award (Science andTechnology) of Higher Education Institutions in 2018, and the Science and Technology Innovation Award of ChinaInternational Industry Fair in 2019. He is the Independent Director of the Company.Mr. He Hanlin, Chinese nationality, born in 1963, holds a master degree. He has served as assistant professor,lecturer, associate professor and professor of accounting at Hangzhou Dianzi University, and was once the vice dean ofthe College of Finance and Economics and secretary of the Party Committee of the College of Accounting at HangzhouDianzi University. He is currently a professor of Hangzhou Dianzi University, a member of the Chinese Institute of CertifiedPublic Accountants, a director of the Electronics Branch of the Accounting Society of China, a director and member of theZhejiang Accounting Society, an executive director of the Zhejiang Audit Society, an executive director of the ZhejiangAssociation of CFO, a deputy director of the Management Accounting Expert Advisory Committee of Zhejiang Province,and a director of the Zhejiang Management Accounting Application Innovation Research Center, as well as anindependent director of Zhejiang Tiantai Xianghe Industrial Co., Ltd., New Oriental New Materials Co., Ltd., Litian PicturesHoldings Limited, and Zhejiang Runyang New Material Technology Co., Ltd. He is an independent director of theCompany.
Mr. Zhang Yuli, Chinese nationality, born in 1965, holds a master degree. He used to serve as the director of theDepartment of Business Management, the executive deputy director of the MBA Center, the deputy dean of the GraduateSchool, and the deputy dean and dean of the Business School at Nankai University. He is currently a professor anddoctoral supervisor of the Business School \at Nankai University, director of the Center for Collaborative Promotion ofInnovation and Entrepreneurship of the National MBA Education Steering Committee, director of the Research Base ofEntrepreneurship and Small and Medium Enterprise Management, a key research base of the philosophical and socialsciences in Tianjin universities, and co-editor-in-chief of the Quarterly Journal of Management. He is also a member of theDiscipline Review Group (Business Administration) of the Academic Degrees Committee of the State Council, a memberof the Management Department of the Science and Technology Commission of the Ministry of Education, a member of theAccreditation Committee for High-Quality MBA Education in China, a member of the Discipline Review Group and theSteering Committee of Professional Degree Education in Tianjin, as well as an expert of the National Natural ScienceFoundation of China and the National Social Science Foundation of China, and an independent director of Tianjin JinbinDevelopment Co., Ltd. He was awarded the special allowance by the State Council in 2004, and was selected as adistinguished professor of the Chang Jiang Scholars Program by the Ministry of Education in 2013. He is an independentdirector of Tianjin Jinbin Development Co., Ltd., and an independent director of the Company.Ms. Song Maoyuan, Chinese nationality, born in 1982, holds a bachelor degree. She now serves as chairman of theBoard of Supervisors and secretary to president of the Company.
Ms. Zheng Jieping, Chinese nationality, born in 1979, holds a bachelor degree. She served as the director of theCompensation and Performance Department of the Company's Human Resources Center from October 2014 to June2018, and has been serving as the director of the Organizational Management and Compensation and PerformanceDepartment of the Company's Human Resources Center since July 2018, and the vice president of the Company'sHuman Resources Center since January 2021.Ms. Zuo Pengfei, Chinese nationality, born in 1978, holds a bachelor degree. She joined the Company in 2001, and iscurrently the supervisor of the Company, the chairman of the labor union, the director of human resources employeerelations, and the supervisor of Hangzhou Xiaohua Technology Co., Ltd.Mr. Jiang Xiaolai, Chinese nationality,was born in 1980, holds a bachelor degree, served as regional generalmanager of Domestic Marketing Center of the Company from January 2015 to December 2018, and has been serving asgeneral manager of Domestic Marketing Center of the Company since January 2019. He now serves as the senior vicepresident of the Company and general manager of Domestic Marketing Center.Mr. Liu Ming, Chinese nationality, born in 1981, holds a master degree. He joined the Company in 2006, and in thelast 5 years, he has served as the director of Hardware Platform Development Department in the R&D Center, generalmanager of front-end product line in the R&D Center, general manager of Product Development Department in the R&DCenter, and deputy general manager of the R&D Center. Since March 2020, he has been the executive vice president ofthe R&D Center. He is currently the vice president of the Company and executive vice president of the R&D Center.
Mr. Li Zhijie, Chinese nationality, born in 1975, holds a master degree, served as technical engineer, director of theDelivery and Service Department of the Representative Office, national delivery representative, and vice president ofRegional Delivery Department of Huawei Technologies Co., Ltd. from March 2005 to August 2017, and has been servingas general manager of the Delivery and Service Center of the Company since September 2017. He now serves as seniorvice president of the Company and general manager of the Delivery and Service Center of the Company.
Mr. Song Ke, Chinese nationality, born in 1978, holds a master degree, and served as manager of IT Department ofHangzhou H3C Co., Ltd., and general manager of the IT Center and supervisor of Zhejiang Dahua Technology Co., Ltd.He now serves as the vice president of the Company and general manager of Process IT Center of the Company.
Mr. Wu Jian, Chinese nationality, born in 1974, holds a master degree. He served as secretary of the Board ofDirectors and vice president of the Company in the recent five years, and now serves as secretary of the Board ofDirectors and senior vice president of the Company.
Ms. Zu Qiaofen, Chinese nationality, born in 1972, holds a college degree, and served as the chief financial officer ofthe Company's Finance Center from January 2015 to January 2017, deputy general manager of the Company's FinanceCenter from January 2017 to December 2017, and general manager of the Company's Finance Center since December2017. She now serves as the chief financial officer and senior vice president of the Company and general manager of theFinance Center.
Mr. Xu Zhicheng, Chinese nationality, born in 1966, holds a college degree. He successively served as deputygeneral manager of marketing, general manager and supervisor of the Company from September 2013 to June 2015, hasbeen serving as general manager of the Internal Audit Department of the Company since June 2015, and now serves assenior vice president and general manager of the Internal Audit Department of the Company.
Mr. Zhu Jiantang, Chinese nationality,was born in 1982 and graduated from college with the bachelor degree. FromMarch 2012 to January 2015, he has successively served as Product Director of R&D and Deputy General Manager ofR&D Center. Since January 2015, he has been the general manager of the Company's Supply Chain Management Center.He is currently the senior vice president of the Company, general manager of the Supply Chain Management Center, andgeneral manager of the Quality Management Center.
Mr. Zhao Yuning, Chinese nationality, was born in 1977 and graduated from National University of Singapore with amaster degree in science. From July 2000 to June 2017, he has successively served as technical engineer, regional sales
manager, national general manager, vice president and president of regional sales department of Huawei TechnologiesCo., Ltd. He now serves as senior vice president of the Company and general manager of overseas marketing centerPosition held in shareholders entities
□ Applicable √ Not applicable
Position held in other entities
√ Applicable □ Not applicable
| Name | Name of other entity | Position held in other entities | Renumeration received from other entity or not |
| Fu Liquan | Zhejiang Leapmotor Technology Co., Ltd. | Director | No |
| Fu Liquan | Leapmotor Automobile Co., Ltd. | Director | No |
| Fu Liquan | Zhejiang Huashi Investment Management Co., Ltd. | Executive Director | No |
| Fu Liquan | Guizhou Huayi Shixin Technology Co., Ltd. | Director | No |
| Fu Liquan | Hangzhou Gulin Equity Investment Partnership (limited partnership) | Executive Partner | No |
| Fu Liquan | Ningbo Huaqi Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Fu Liquan | Ningbo Huayang Investment Management Partnership Enterprise (Limited Partnership) | Executive Partner | No |
| Fu Liquan | Zhejiang Huashi Zhijian Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Zhengzhou Dahua Zhian Information Technology Co., Ltd. | Executive Director | No |
| Wu Jun | Guangdong Dahua Zhishi Technology Co., Ltd. | Director | No |
| Wu Jun | Hangzhou Yuneng Technology Co., Ltd. | Executive Director | No |
| Wu Jun | Zhoushan Xinhao Technology Development Co., Ltd. | Executive Director and General Manager | No |
| Wu Jun | Ningbo Huakun Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Zhang Xingming | Hangzhou Jingbo Equity Investment Partnership (Limited Partnership) | Executive Partner | No |
| Zhu Jiangming | Zhejiang Leapmotor Technology Co., Ltd. | Chairman | No |
| Zhu Jiangming | Leapmotor Automobile Co., Ltd. | Chairman | No |
| Zhu Jiangming | Zhejiang Lancable Technology Co., Ltd. | Director | No |
| Zhu Jiangming | Hangzhou Xunwei Robotics Technology Co., Ltd. | Director | No |
| Zhu Jiangming | Zhejiang Leapmotor Automobile Marketing Service Co., Ltd. | Executive Director | No |
| Zhu Jiangming | Hangzhou Xintu Technology Co., Ltd. | Executive Director and General Manager | No |
| Zhu Jiangming | Hangzhou Xiaohi Technology Co., Ltd. | Supervisor | No |
| Zhu Jiangming | Hangzhou Leapmotor Automobile Marketing Service Co., Ltd. | Executive Director | No |
| Zhu Jiangming | Ningbo Jinghang Equity Investment Partnership (Limited Partnership) | Executive Partner | No |
| Zhu Jiangming | Wanzai Mingzhao Consulting Service Center (Limited Partnership) | Executive Partner | No |
| Zhu Jiangming | Hangzhou Menghao Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Zhejiang Lancable Technology Co., Ltd. | Director | No |
| Chen Ailing | Zhejiang Huanuokang Technology Co., Ltd. | Executive Director | No |
| Chen Ailing | Zhejiang Huashi Investment Management Co., Ltd. | General Manager | No |
| Chen Ailing | Hangzhou Huaxi Information Technology Service Co., Ltd. | Executive Director and General Manager | No |
| Chen Ailing | Hangzhou Huayan Equity Investment Co., Ltd. | Chairman | No |
| Chen Ailing | Ningbo Hualing Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huaqian Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huadi Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huayan Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huali Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huaqi Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huagu Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Hangzhou Huazhen Equity Investment Partnership (Limited Partnership) | Executive Partner | No |
| Yang Huayong | Shanghai Shield Design Test Research Center Co., Ltd. | Director | No |
| Yang Huayong | Fuxin Zhejiang University Hydraulic Equipment Technology Innovation Center Co., Ltd. | Director | No |
| Yang Huayong | Hangzhou Huatai Mechanical-Electrical-Liquid Technology Co., Ltd. | Chairman | No |
| Liu Hanlin | Zhejiang Runyang New Material Technology Co., Ltd. | Independent Director | Yes |
| Liu Hanlin | Zhejiang Tiantai Xianghe Industrial Co., Ltd. | Independent Director | Yes |
| Liu Hanlin | New Oriental New Materials Co., Ltd. | Independent Director | Yes |
| Liu Hanlin | Litian Pictures Holdings Limited | Independent Director | Yes |
| Zhang Yuli | Tianjin Jinbin Development Co., Ltd. | Independent Director | Yes |
| Song Maoyuan | China Standard Intelligent Security Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | Guizhou Huayi Shixin Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | Guangdong Dahua Zhishi Technology Co., Ltd. | Supervisor | No |
| Zheng Jieping | Hangzhou Huarong Investment Management Co., Ltd. | Manager | No |
| Xu Zhicheng | Hangzhou Fuyang Hua'ao Technology Co., Ltd. | Chairman | No |
| Positions held in other companies | N/A | ||
Incumbent or outgoing directors, supervisors and senior management in the reporting period that have been imposedadministrative penalties by CSRC in the last three years
□ Applicable √ Not applicable
IV. Remuneration of Directors, Supervisors and Senior ManagementThe following describes the decision-making program, determination basis and actual payment of remuneration fordirectors, supervisors and senior management.Top management of the Company shall be evaluated by the performance commitments of senior management andthe department managers and those above shall be evaluated by their work report at the end of the year. The managershave made business goal responsibility system in their term of office, and set up the evaluation approach combining KPIindex commitments at the level of the Company and individual performance commitments. They have achieved qualifiedevaluation indices, meaning that they can complete their respective tasks in the latest term of office. The Company willincrease their remuneration or adopt other incentive measures, as appropriate, based on their completion of goals.Remuneration of directors, supervisors and senior management in the reporting period of the Company
Unit: ten thousand RMB
| Name | Post | Gender | Age | Position status | Total remuneration from the Company before tax | Whether to receive remuneration from related parties or not |
| Fu Liquan | Chairman, President | Male | 54 | Incumbent | 88.08 | No |
| Wu Jun | Vice Chairman | Male | 49 | Incumbent | 89.52 | No |
| Zhang Xingming | Director, Executive President | Male | 44 | Incumbent | 177.62 | No |
| Zhu Jiangming | Director | Male | 54 | Incumbent | 88.08 | No |
| Chen Ailing | Director | Female | 54 | Incumbent | 0 | No |
| Yang Huayong | Independent Director | Male | 60 | Incumbent | 9.53 | No |
| Liu Hanlin | Independent Director | Male | 58 | Incumbent | 9.53 | No |
| Zhang Yuli | Independent Director | Male | 56 | Incumbent | 9.53 | No |
| Song Maoyuan | Supervisor | Female | 39 | Incumbent | 47.95 | No |
| Zheng Jieping | Supervisor | Female | 42 | Incumbent | 113.14 | No |
| Zuo Pengfei | Supervisor | Female | 43 | Incumbent | 71.74 | No |
| Jiang Xiaolai | Senior Vice President | Male | 41 | Incumbent | 169.48 | No |
| Liu Ming | Vice President | Male | 40 | Incumbent | 170.30 | No |
| Li Zhijie | Senior Vice President | Male | 46 | Incumbent | 125.75 | No |
| Song Ke | Vice President | Male | 43 | Incumbent | 127.49 | No |
| Wu Jian | Secretary of the Board, Senior Vice President | Male | 47 | Incumbent | 157.48 | No |
| Xu Qiaofen | CFO, Senior Vice President | Female | 49 | Incumbent | 142.48 | No |
| Xu Zhicheng | Senior Vice President | Male | 55 | Incumbent | 157.49 | No |
| Zhu Jiantang | Senior Vice President | Male | 39 | Incumbent | 156.97 | No |
| Zhao Yuning | Senior Vice President | Male | 44 | Incumbent | 175.68 | No |
| He Chao | Independent Director | Male | 62 | Resigned | 12.35 | No |
| Wang Zexia | Independent Director | Female | 56 | Resigned | 12.35 | No |
| Huang Siying | Independent Director | Female | 43 | Resigned | 12.35 | No |
| Ying Yong | Senior Vice President | Male | 52 | Resigned | 157.48 | No |
| Wu Yunlong | Vice President | Male | 65 | Resigned | 90.08 | No |
| Chen Yuqing | Vice President | Male | 47 | Resigned | 127.48 | No |
| Yan Gang | Vice President | Male | 52 | Resigned | 53.69 | No |
| Wei Meizhong | CFO, Vice President | Male | 50 | Resigned | 23.41 | No |
| Zhang Wei | Vice President | Male | 50 | Resigned | 77.17 | No |
| Li Ke | Director, President | Male | 49 | Resigned | 16.15 | No |
| Total | -- | -- | -- | -- | 2,670.35 | -- |
Share incentives for the Company's directors, supervisors and senior executives in the reporting period
√ Applicable □ Not applicable
Unit: share
| Name | Post | Number of vesting shares during the reporting period | Number of vested shares during the reporting period | The exercise price of the vested shares during the reporting period (yuan/share) | Market price at the end of the reporting period (yuan/share) | Number of restricted stocks held at the beginning of the period | Number of unlocked shares in this period | Number of restricted stocks newly granted during the reporting period | The granting price of restricted stocks (yuan/share) | Number of restricted stocks held at the end of the period |
| Zhang Xingming | Executive President | 0 | 0 | 0 | 20.02 | 740,000 | 296,000 | 2,361,480 | 7.467 | 2,805,480 |
| Jiang Xiaolai | Senior Vice President | 0 | 0 | 0 | 20.02 | 214,000 | 85,600 | 1,560,000 | 7.467 | 1,688,400 |
| Li Zhijie | Senior Vice President | 0 | 0 | 0 | 20.02 | 670,000 | 268,000 | 1,020,000 | 7.467 | 1,422,000 |
| Wu Jian | Secretary of the Board, Senior Vice President | 0 | 0 | 0 | 20.02 | 530,000 | 212,000 | 1,020,000 | 7.467 | 1,338,000 |
| Xu | CFO, Senior | 0 | 0 | 0 | 20.02 | 530,000 | 212,000 | 1,020,000 | 7.467 | 1,338,000 |
| Qiaofen | Vice President | |||||||||
| Xu Zhicheng | Senior Vice President | 0 | 0 | 0 | 20.02 | 530,000 | 212,000 | 1,020,000 | 7.467 | 1,338,000 |
| Ying Yong | Senior Vice President | 0 | 0 | 0 | 20.02 | 670,000 | 268,000 | 1,020,000 | 7.467 | 1,422,000 |
| Zhu Jiantang | Senior Vice President | 0 | 0 | 0 | 20.02 | 670,000 | 268,000 | 1,390,000 | 7.467 | 1,792,000 |
| Zhao Yuning | Senior Vice President | 0 | 0 | 0 | 20.02 | 740,000 | 296,000 | 1,960,000 | 7.467 | 2,404,000 |
| Liu Ming | Vice President | 0 | 0 | 0 | 20.02 | 214,000 | 85,600 | 1,020,000 | 7.467 | 1,148,400 |
| Total | -- | 0 | 0 | -- | -- | 5,508,000 | 2,203,200 | 13,391,480 | -- | 16,696,280 |
V. Employees in the Company
1. Number, profession composition and educational background of the employees
| Number of incumbent employees in the parent company (person) | 10,429 |
| Number of incumbent employees in major subsidiaries (person) | 6,822 |
| Total number of incumbent employees (person) | 17,251 |
| Number of employees receiving salaries in current period (person) | 17,251 |
| Number of retired employees requiring the parent company and major subsidiaries to bear their costs | 8 |
| Profession composition | |
| Type of profession composition | Number of employees for profession composition (person) |
| R&D staff | 8,998 |
| Sales | 3,433 |
| Supply chain | 2,991 |
| Administrative staff | 356 |
| Professional support staff | 1,473 |
| Total | 17,251 |
| Educational background | |
| Type of educational background | Number of employees (person) |
| Master and above | 2,916 |
| Bachelor | 9,605 |
| College, technical secondary school | 2,358 |
| Others | 2,372 |
| Total | 17,251 |
Note: The major subsidiaries added are innovative business subsidiaries, mainly in businesses of industrial internet area,video collaboration, Imou household appliances, intelligent firefighting and drones.
2. Remuneration policies
The Company has established complete remuneration management systems and incentive mechanisms to providethe employees with competitive remunerations in strict accordance with Labor Law, Labor Contract Law and otherrelevant laws and regulations, departmental rules and normative documents. The Company links its remuneration systemand performance appraisal system with the business performance of the Company, which fully arouses the enthusiasm ofthe employees and effectively improves the executive force and responsibility consciousness of employees, thus betterattracting and retaining talents and providing guarantee for sustainable, stable development of the Company in respect ofhuman resources.
3. Training plan
The Company has been dedicated to the building of employee education and training system, established the internallecturer management measures including new employee training and in-service employee training, implemented trainingcredits management system, improved the comprehensive quality of the Company's employees, created good leaningatmosphere, established learning organization and comprehensively helped employees to improve their ability to meetchallenges and reforms in the future, thus providing powerful talent guarantee and support for sustainable, fast growth ofthe Company and achieving joint development of employees and the Company.
4. Labor outsourcing
□ Applicable √ Not applicable
Section X Corporate GovernanceI. Basic Situation on Corporate GovernanceDuring the reporting period, the Company constantly improved corporate governance structure, established andimproved internal control system, constantly improved the Company's standardized operation level, strictly performed theinformation disclosure obligations, and focused on protection of the investors’ interests by strictly following the provisionsof "Company Law", "Securities Law", "Code of Corporate Governance for Listed Companies", " Rules Governingthe Listing of Shares on Shenzhen Stock Exchange", "Guidelines of the Shenzhen Stock Exchange for the StandardOperation of Listed Companies" and other relevant laws and regulations and regulatory documents. During the reportingperiod, the actual situation of corporate governance is basically in line with the regulatory documents on the governanceof listed companies issued by China Securities Regulatory Commission.(I) Shareholders·and·General Meeting: The·Company·standardizes·the·calling,·convening,·and·voting·procedures·of the shareholders’ general meetings in accordance with·the·regulations·and·requirements·of·the Company Law,·the·Articles·of·Association·and·the·Rules·of·Procedures·of·the·Shareholders’·General·Meeting, treats all shareholders equally, and ensures that shareholders, especially small and medium-sized shareholders, can fully exercise their rights by right of voting both on the site and online. The shareholders shall avoid from voting when deliberating related matters at the general meeting. The related transactions are fair and reasonable, without damages to the interests of the shareholders;; when voting on the proposals affecting the interests of small and medium investors, their votes shall be counted separately. The·general·meetings·of·shareholders·have all been·convened·by·the·company's·board·of·directors·and·witnessed·by·the·lawyer.(II)·The·company·and·the·controlling·shareholders:·The·company·is·independent·from·the·controlling·shareholders·in·terms·of·business,·personnel,·assets,·finance·and·organizations.·The·company's·board·of·directors,·board·of·supervisors·and·other·internal·agencies·operate·independently. The controlling shareholders of the Company were able tostrictly regulate his own behaviors, and there was no behavior that directly or indirectly interfered with the Company'sdecision-making and business activities outside of the shareholders' general meeting, and there was no non-operationalbehavior of appropriation of the capital of listed companies. The Board of Directors, Board of Supervisors and otherinternal agencies of the Company can operate independently.
(III) Directors and Board of Directors: The Company elects the directors and appoints the independent directors instrict accordance with the selection and employment procedure specified in the “Company Law” and the“Articles·of·Association”. At present, the Company has eight directors, including three independent directors, all of whomare experts in corporate management and financial accounting and other fields. The number and composition of the boardof directors meet the requirements of relevant laws and regulations and the “Articles of Association”. All the directors ofthe Company can perform their duties with integrity and diligence to the best interests of the Company and theshareholders. There are four special committees under the board of directors, including Audit Committee, StrategyCommittee, Nomination Committee and Remuneration and Appraisal Committee. With reasonable composition andstructure of members, they have provided scientific and professional opinions and references for decision-making of theboard of directors. The Board of Directors convened board meetings and implemented the resolutions of the shareholders'meeting in strict accordance with "Articles of Association" and "Rules of Procedure of the Board of Directors"; All thedirectors were able to perform their due duties and conscientiously attended the Board meetings and shareholders'meetings to safeguard the legitimate rights and interests of the Company and shareholders.
(IV) Supervisors and the Board of Supervisors: The Company strictly elects the supervisors by the election and
appointment procedures specified in the “Company Law” and the “Articles·of·Association”. The Company currently hasthree supervisors, including one chairman of the board supervisors. The number and composition of the board ofsupervisors meet the requirements of relevant laws and regulations and the “Articles of Association”. The Board ofSupervisors convened supervisor meetings in strict accordance with the provisions of "Articles of Association" and "Rulesof Procedure of the Board of Supervisors"; All the supervisors performed their duties conscientiously, and with integrity,diligence and conscientiousness, they effectively supervised and expressed independent opinions on company finance aswell as the legitimacy and compliance of the performance of job duties for directors and senior managers to safeguard thelegitimate rights and interests of the Company and shareholders.(V)·Performance·Appraisal·and·Incentive·and·Constraint·Mechanisms:·To·further·establish·and·improve·the·company's·incentive·mechanism·and·strengthen·the·company's·philosophy·of·sustainable·development·of both·management·and·core·employees,·the·company·implements·a·restricted·stock·incentive·plan·and·employee·stock·ownership·planwhich reinforce the·interest·sharing and·restraint·mechanisms applied to shareholders·and·core·business·personnel.It has·maintained·the·stability·of·management·teams·and·business·leaders, guaranteed·the·realization of the company's·development·strategy·and·business·objectives,·and·ensured·the·company's sound·long-term·development. The appointment of company executives is open, transparent and complies with laws and regulations.(VI) Stakeholders: The Company fully respects and safeguards the legitimate rights and interests of relevantstakeholders. While striving to achieve a steady growth of the company's performance, the company also effectively treats and protects the legitimate rights and interests of all stakeholders, enhances communication and cooperation with various parties and continuously improves product quality, protects the environment, implements energy-saving and emission-reduction programs, etc. The company actively participates in social charity and philanthropy to realize the balance of interests among shareholders, employees, society, etc., in order to promote sustainable, stable and healthy development of the company.(VII) Information Disclosure and Transparency: The Company performs obligations for truthful, accurate, timely, andcomplete information disclosure in strict accordance with the relevant laws and regulations and the Company's“Information Disclosure Management System”, and designates Securities Times and www.cninfo.com as the mediachannels for such disclosure; the Company strictly enforces the confidentiality of undisclosed information. According tothe Company's “Inside Information Confidentiality System”, registering and filing internal information insiders has beendone properly. The internal information insider filing system has been established and submitted to the regulatoryauthorities for record in time as required, and the behavior of submitting company information to external informationusers has been strictly regulated. In the process of receiving specific visitors, the company has strictly followed therelevant requirements, and performed careful reception. It also asks visitors to sign the Commitment Letter and promptlyuploads relevant research records to the Shenzhen Stock Exchange "Interaction Easy" for disclosure after the visits.During the reporting period, no incidence of stock trading based on insider information has occurred. At the same time, thecompany has opened an investor hotline and investor relations management column, and designated the personresponsible for timely communication with investors. In addition, the company also maintains active and timely contactand communication with the regulatory authorities to report on the company's related issues, in order to accurately graspthe regulatory requirements of information disclosure, and further improve the company's transparency and quality ofinformation disclosure. In strict accordance with the relevant requirements regarding content and format, the Companydisclosed information in an authentic, accurate, complete and timely manner to ensure that all shareholders have equalaccess to information.Whether the actual status of corporate governance significantly deviates from the regulatory documents issued by theChina Securities Regulatory Commission regarding the governance of listed companies.
□ Yes √ No
There is no significant difference between the actual situation of corporate governance and the regulatory documents on
the governance of listed companies issued by China Securities Regulatory Commission.II. The company's independence from the controlling shareholders in business,personnel, assets, organization, finance, etc.The company and the controlling shareholders are completely separated in terms of business, personnel, assets,organization, and finance, and has independent and complete businesses and capabilities of independent operation.
1. Business independence
The company's business is independent of the controlling shareholders, actual controllers and other enterprisesunder their control, and has an independent and complete R&D, production, procurement, and sales system; thetechnology required for production and operation is legal, independently owned, or licensed for use by the company withno asset disputes. The company has signed all external contracts independently, and has the ability to independentlymake production and operation decisions and engage in production and business activities. The company hasindependent spaces for production and operation and offices.
2. Staff independence
The company's personnel are independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company has an independent human resources department responsible for labor, personnel andpayroll management. The Company has established an independent labor, personnel, and salary management system.The production, operation, and administration are independent of the controlling shareholders, actual controllers, andother companies controlled by them; the recommendation, election, and appointment of directors, supervisors, and seniormanagers of the Company have all been conducted legally and independently; senior management personnel such as thepresident, executive president, senior vice president, vice president, board secretary, and finance director did not holdpositions other than directors and supervisors for controlling shareholders, actual controllers, and other companiescontrolled by them or receive salaries from them; the Company's financial staff do not have a part-time job with thecontrolling shareholders, actual controllers, and other companies controlled by them.
3. Asset independence
The company's assets are independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company's main assets include the ownership and use rights of complete land, plants, machineryand equipment, trademarks, patents, non-patented technology required for the main business, and an independent rawmaterial procurement and product sales system. The property rights of the above assets are clear and completelyindependent of the controlling shareholders and major shareholders. There was misappropriation of the company's assetsby the controlling shareholders and major shareholders.
4. Institutional independence
The company's organizations are independent from the controlling shareholders, actual controllers and othercompanies controlled by them. The Company has established shareholders' general meeting, board of directors andboard of supervisors, and other decision-making, implementation and supervision agencies. It has also appointed seniormanagers such as president, executive president, vice president, board secretary, and chief financial officer; the Companyhas set up specialized departments equipped with the necessary personnel independently responsible fordomestic/overseas sales, R&D, supply chain, delivery and service, quality and service, finance, legal affairs, securities,internal audit, human resources, administration, IT, and other functions. The internal organizations perform theirrespective operational management responsibilities under the leadership of the board of directors and the president inaccordance with the rules and regulations; there have been no cases in which the controlling shareholders, actualcontrollers, and other companies controlled by them are confused with their identities and duties; there has been noincidence of the controlling shareholders or actual controllers intervening in the establishment of the Company's
organizational setup.
5. Financial independence
The company's finance is independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company has established an independent financial department with full-time financial accountingpersonnel, and has established an independent financial accounting system for independent financial decisions. It has astandardized financial accounting system and financial management system for subsidiaries; the company hasindependently opened a basic deposit account so that there is no sharing of bank accounts with actual controllers,controlling shareholders, and other companies controlled by it; the company handled tax registrations with the ZhejiangProvincial State Tax Bureau and the Zhejiang Provincial Local Tax Bureau and paid taxes independently as required bylaw.
III Horizontal competition
□ Applicable √ Not applicable
IV. Relevant Situation of the Annual General Meeting of Shareholders and theExtraordinary General Meeting of Shareholders Held in the Reporting Period
1. The shareholders' meetings for this reporting period
| Conference Session | Conference Type | Percentage of Investors Involved | Date of Conference | Date of Disclosure | Disclosure Index |
| The First Extraordinary Shareholders’ Meeting in 2020 | Extraordinary General Meeting | 41.69% | January 16, 2020 | January 17, 2020 | CNINFO: http://www.cninfo.com.cn |
| Shareholders' General Meeting in 2019 | Annual General Meeting | 51.25% | May 12, 2020 | May 13, 2020 | CNINFO: http://www.cninfo.com.cn |
| The Second Extraordinary Shareholders’ Meeting in 2020 | Extraordinary General Meeting | 54.39% | July 24, 2020 | July 25, 2020 | CNINFO: http://www.cninfo.com.cn |
| The Third Extraordinary Shareholders’ Meeting in 2020 | Extraordinary General Meeting | 47.00% | August 12, 2020 | August 13, 2020 | CNINFO: http://www.cninfo.com.cn |
| The Fourth Extraordinary Shareholders’ Meeting in 2020 | Extraordinary General Meeting | 38.01% | October 28, 2020 | October 29, 2020 | CNINFO: http://www.cninfo.com.cn |
2. Convening of the interim shareholders' general meetings upon request of the preferredstockholders whose voting rights are restored
□ Applicable √ Not applicable
V. The performance of the duties of independent directors during the reportingperiod
1. Attendance of independent directors in the board of directors and shareholders' meeting
| Attendance of independent directors at the BOD meeting and shareholders' general meetings | |||||||
| Name of independent director | Number of board meetings to attend during the reporting period | Number of on-site attendance of board meetings | Number of attendance of board meetings by means of telecommunications | Number of attendance of board meetings by entrustees | Number of absence at board meetings | Whether absent from board meetings in person for two consecutive times | Number of attendance of shareholders' general meetings |
| Yang Huayong | 7 | 0 | 7 | 0 | 0 | No | 0 |
| Liu Hanlin | 7 | 1 | 6 | 0 | 0 | No | 0 |
| Zhang Yuli | 7 | 0 | 7 | 0 | 0 | No | 1 |
| He Chao | 8 | 3 | 5 | 0 | 0 | No | 2 |
| Wang Zexia | 8 | 2 | 6 | 0 | 0 | No | 2 |
| Huang Siying | 8 | 0 | 8 | 0 | 0 | No | 0 |
Explanation of absence from board meetings in person for two consecutive timesDuring the reporting period, no independent directors of the Company have been absent from board meetings in personfor two consecutive times.
2. Objections of independent directors to related issues of the company
Whether the independent directors challenge the company's related issues?
□ Yes √ No
During the reporting period, independent directors did not raise objections to the company's related matters.
3. Other information on independent directors' performance of duties
Whether independent director's proposals on the company issues are accepted
√ Yes □ No
Note on the acceptance or rejection of independent director's proposals on company issues.
During the reporting period, the independent directors performed their duties with integrity, diligence,
conscientiousness and loyalty according to the provisions of "Company Law", "Guiding Opinions on EstablishingIndependent Directors in Listed Companies", "Guidelines of the Shenzhen Stock Exchange for the Standard Operation ofListed Companies", "Articles of Association" and "Working Rules of Independent Directors" and relevant laws andregulations, made full use of their professional advantages, paid close attention to the Company's business condition, andtook the opportunity of board meetings and other time to look into the Company's production and operation, internalcontrol development and implementation of the board resolutions and actively communicate with other directors,supervisors and administrative staff to timely grasp the Company's business trend, provide professional opinions in thedevelopment strategy, internal control, major operation decision and other production and operation conditions of theCompany, jointly analyze and study the problems confronted by the Company, and use their own expertise to advice andsuggest for the company's development Independent directors offered reasonable ideas and suggestions for theCompany's business development from their respective professional perspectives, and issued their objective andindependent opinions on matters such as related transactions, profit distribution, foreign investment, renewal of theengagement of the accounting firms, restricted stocks incentive plan and related transactions that require independentdirectors' opinions during the reporting period. They played a due role in safeguarding the interests of the Company andshareholders, especially the public shareholders. The company has adopted the opinions of independent directors.VI. Performance of duties of the special committee under the board of directorsduring the reporting periodThere are four special committees under the Board of Directors, including Audit Committee, Strategy Committee,Remuneration and Appraisal Committee and Nomination Committee. During the reporting period, the special committeesunder the Board of Directors fulfilled their duties earnestly, further regulated the corporate governance structure, studiedthe professional matters and proposed relevant opinions and suggestions for the information of the Board of Directors, inaccordance with the "Code of Corporate Governance for Listed Companies", the "Articles of Association", the "Work Rulesfor the Special Committees Under the Board of Directors” and other relevant regulations.
1. Strategy Committee
During the reporting period, the Strategy Committee discussed the corporate strategy, long-term development plan,the deepening of innovation and transformation,and global layout in accordance with the company's strategicdevelopment requirements,timely analyzed the market conditions and made corresponding adjustments. They proposedconstructive suggestions on the Company's business strategy and significant matters that may influence futuredevelopment of the Company, ensured the scientific nature of the Company's development planning and strategicdecision-making, and provided strategic support for the company's sustained and steady development.
2. Nomination Committee
During the reporting period, the Nomination Committee actively carried out its work in accordance with the “WorkingSystem of the Nomination Committee of the Board of Directors” and other relevant regulations and fulfilled its dutiesearnestly. The Nomination Committee gave prudent consideration to the qualifications and capabilities of the Company'sindependent directors, directors and senior managers, and conducted evaluation over the work of the Company'sdirectors and senior managers according to the performance indicators set by the Company at the beginning of the year.
3. Audit Committee
During the reporting period, the Audit Committee fully played its supervisory role and maintained the independence ofauditing in accordance with the principle of due diligence. The Audit Committee held meetings as required and listenedcarefully to the management's report on operation condition, financial position and other significant matters of this year,and discuss and expressed opinions on the internal audit reports, self-evaluation on internal controls, and reappointmentof auditing institutions, submitted by the internal audit department. Earnestly urged the Company to conduct the annual
report audit, communicated with the accountants, summarized and evaluated the audit work of the audit institutions andreviewed the financial statements of the Company as required by the relevant laws and regulations and the internalcontrol system of the Company.
4. Remuneration and Appraisal Committee
During the reporting period, the Remuneration and Appraisal Committee, based on the Company's performance andindustry standards, carried out a review of the ranking of staff positions and assessment standards, and reviewed andconfirmed the Company's remuneration for directors, supervisors and senior management and other issues, concludingthat the remunerations of the directors, supervisors and senior managers were paid according to the remuneration plan ofthe Company and remunerations of the Company’s directors, supervisors and senior managers were consistent with theactual conditions.
VII. Work of the Supervisory CommitteeHas the supervisory board discovered any risk in the company during the supervision in the reporting period
□ Yes √ No
The supervisory board had no objection to the supervisory matters in the report period.VIII. Evaluation and Incentive Mechanisms for Senior Management
The Company has established an assessment and incentive system for senior management personnel, formulated asenior management personnel selection, evaluation, incentive and restraint mechanism, and assessed fulfillment of theirduties and annual performance. At present, the assessment of the company's senior staff mainly involves promisedperformance-based evaluation for senior executives and the year-end performance debriefing of staff higher thandepartment managers. The managers have made business goal responsibility system in their term of office, and set upthe evaluation approach combining KPI index commitments at the level of the Company and individual performancecommitments. They have achieved qualified evaluation indices, meaning that they can complete their respective tasks inthe latest term of office. The Company will increase their remuneration or adopt other incentive measures, as appropriate,based on their completion of goals. In the future, the company will adopt a multi-level comprehensive incentive system toeffectively mobilize the management personnel, attract, and stabilize outstanding management talents and the backboneof technology and business.
During the reporting period, the Company further improved the incentive and constraint mechanism for seniorexecutives and other key employees of the Company,established and improved the middle and long term incentive andconstraint mechanism, which fully mobilized and facilitated the enthusiasm and creativity of the incentive objects andeffectively aligned the interests of shareholders and the Company with those of the employees to continuously promotethe Company's performance, and bring the benefits of the Company's development to all employees for the shareddevelopment. In 2020, the remuneration plan for the senior managers of the Company was implemented according to theremuneration appraisal system of the Company and reasonable, and the remuneration payment procedure wasconsistent with the provisions in the relevant laws, regulations and systems of the Company.IX. Internal Control Assessment Report
1. Details of material weakness in internal control found during the reporting period
□ Yes √ No
2. Internal control self-evaluation report
| Date of full-text disclosure for internal control assessment report | March 24, 2021 | |
| Full-text disclosure index for internal control assessment report | http://www.cninfo.com.cn | |
| Percentage of total asset from units included in the assessment out of the total asset from the company's consolidated financial statements | 100% | |
| The proportion of operating income of parties included in the assessment to the operating income from the Company's consolidated financial statements | 100% | |
| Defect identification criteria | ||
| Category | Financial Report | Non-financial reports |
| Qualitative standards | Signs of material weakness in financial reporting include: (1) Corrupt practices of directors, supervisors and senior managers of the Company; (2) Material misstatements in the current Financial Report discovered by the Certified Public Accountants but not recognized by the internal control of the Company; (3) Invalid internal control and supervision of the External Financial Report and the Financial Report of the Company by the Audit Committee and the Audit Department. Signs of significant deficiencies in financial reporting include: (1) Failure to select and apply the accounting policies in accordance with the accepted accounting standards; (2) Failure to establish anti-fraud procedure and control measures; (3) No appropriate control mechanism established or | The identification of non-financial report defects is mainly determined by the extent of their influence on validity of business process and the probability of occurrence. Deficiencies are defined as general deficiencies if they are less likely to happen, and will lower the work efficiency or effect, or increase the uncertainty of the effect or make it deviate from the expected goal. |
| appropriate compensating control implemented for accounting treatment of irregular or special transactions; (4) There are one or more defects in the control of final financial reporting process, and no reasonable guarantee that the financial statements can achieve the goal of being true and complete. General deficiencies refer to the control deficiencies other than the material deficiencies and important deficiencies described above. | ||
| Quantitative standards | Losses which have been or may be incurred due to internal control deficiencies and are related to the profit statement should be measured by the operating income indicators. If the misreporting amount in the financial statement, which may be incurred by the deficiencies alone or together with other deficiencies, is less than 0.5% of the operating income, it is considered as a general deficiency; If it exceeds 0.5% of the operating income but is less than 1%, then it is an important deficiency; If it exceeds 1% of the operating income, then it is considered as a major deficiency. Losses which have been or may be incurred due to internal control deficiencies and are related to the asset management should be measured by the total asset indicators. If the misstated amount in the financial statement, which may be incurred by the deficiency alone or together with other deficiencies, is less than 0.5% of the total asset, it is considered as a general deficiency; If it exceeds 0.5% of the total asset but less than 1%, it is an important deficiency; If it exceeds 1% of the total asset,it is considered as a major deficiency. | The quantitative criteria is based on operating income and total assets. Losses which have been or may be incurred due to internal control deficiencies and are related to the profit statement should be measured by the operating income indicators If the misreporting amount in the financial statement, which may be incurred by the deficiencies alone or together with other deficiencies, is less than 0.5% of the operating income, it is considered as a general deficiency; If it exceeds 0.5% of the operating income but is less than 1%, then it is an important deficiency; If it exceeds 1% of the operating income, then it is considered as a major deficiency. Losses which have been or may be incurred due to internal control deficiencies and are related to the asset management should be measured by the total asset indicators. If the misstated amount in the financial statement, which may be incurred by the deficiency alone or together with other deficiencies, is less than 0.5% of |
| the total asset, it is considered as a general deficiency; If it exceeds 0.5% of the total asset but is less than 1%, then it is considered as an important deficiency; If it exceeds 1% of the total asset, it is considered as a major deficiency. | ||
| Number of material weakness in financial reports | 0 | |
| Number of material weakness in non-financial reports | 0 | |
| Number of significant deficiency in financial reports | 0 | |
| Number of significant deficiency in non-financial report | 0 | |
X. Internal Control Audit Report or Assurance ReportNot applicable.
Section XI Corporate BondsWhether the Company has corporate bonds which have been publicly issued and listed on the stock exchange and havenot matured or are not fully redeemed at the approval date of annual reportNo
Section XII Financial Report
I. Audit Reports
| Audit opinion type | Standard Unqualified Opinion |
| Signature Date of audit report | March 23, 2021 |
| Name of audit institution | BDO China Shu Lun Pan CPAs (special general partnership) |
| Audit report ref. | Xin Kuai Shi Bao Zi [2021] No.ZF10186 |
| Name of Certified Public Accountant | Zhong Jiandong, Zhang Junhui |
Audit Report Text
To the shareholders of Zhejiang Dahua Technology Co., Ltd.:
I. OpinionWe have audited the financial statements of Zhejiang Dahua Technology Co., Ltd. (hereinafterreferred to as Dahua), including the parent company's and the consolidated balance sheet datedDecember 31, 2020, the parent company's and the consolidated income statement, the parentcompany's and the consolidated cash flow statement and the parent company's and the consolidatedstatement of changes in owners' equity in 2020, as well as the notes to relevant financial statements.
In our opinion, the attached financial statements are prepared, in all material respects, inaccordance with “Accounting Standards for Business Enterprises” , which fairly reflected the financialposition of the merged companies and the parent company as at December 31, 2020 and the operatingresults and cash flows of the merger and the parent company in 2020.
II. Basis for Our Opinion
We conducted our audit in accordance with the Auditing Standards for Certified PublicAccountants in China. Our responsibilities under those standards are further described in the CPA'sResponsibilities for the Audit of the Financial Statements section of our report. According to the “Code ofEthics for Chinese Certified Public Accountants”, we are independent of Dahua and have fulfilled ourother ethical responsibilities in accordance with the Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinions.
III. Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significancein our audit of the financial statements of the current period. These matters were addressed in thecontext of our audit of the financial statements as a whole, and in forming our opinion thereon, and we donot provide a separate opinion on these matters.
The key audit matters identified during the audit are summarized as follows:
| Key Audit Matters | How the matter was addressed in the audit |
| A. Recognition of revenue | |
| The revenue of Dahua in 2020 is RMB 26,465,968,181.10, which is an important part of its income statement. We recognize the revenue as a key audit matter. Based on the accounting policy of Dahua, the Company's main products include security standard products, system integration and other labor services. Among them, the security standard products for domestic market were delivered to customers or picked up by customers based on the contractual terms in the sales contract. The revenue was recognized after customers received and accepted the goods and the Company obtained the evidence proving the customers' receipt of goods; for the security standard products exported by domestic companies, the revenue was recognized after the goods were declared and exported, and for the security standard products sold overseas by overseas subsidiaries, the revenue was recognized after the customer received and accepted the goods; the revenue from the system integration sales was recognized after the acceptance of goods by customers; the revenue from the labor services sales was recognized when relevant labor services were provided. See Notes III (26) for details. | The main audit procedures for the above key audit matter include: ① Understand the internal control system in relation to revenue recognition and the design and implementation of the financial accounting system, and test the effectiveness of its operation; ② Check the agreements of relevant contracts for different sales types in accordance with the actual situation of the specific businesses, and evaluate whether the revenue recognition meets the requirements of Accounting Standards for Business Enterprises; ③ Perform an analytical procedures to judge the reasonableness of the changes in sales revenue and gross profit margin; ④ Perform confirmation procedures: send confirmation to sampled customers for the annual sales amount and the outstanding at the end of the year, and the export sales income shall be certified by the customs. ⑤ Test different types of income samples: for standard products for domestic market and overseas sales of overseas subsidiaries, sample the out-of-stock records, shipping orders, customer countersign records, received payment records, etc.; for standard products exported by domestic companies, check the out-of-stock records, customs declaration, bill of lading, and received payment records; for system integration sales, check the product delivery records, shipping list and contract list, unpacking acceptance report, acceptance report for the completion of installation and commissioning, received payment records, etc. ⑥ Sample the transactions made before or after the balance sheet date and check their out-of-stock records, customs declaration, and other relevant supportive documents to confirm whether the revenues have been recognized in an appropriate accounting period. |
| B. Recoverability of accounts receivable | |
| As of the end of 2020, the net receivables of Dahua was RMB 12,857,519,110.16. The management needs to make significant judgments about the identification of accounts receivable impairment accounts, and the likelihood of inward cash flows of future customers The management's estimates and assumptions are uncertain. Since the amount of accounts receivable is significant to the financial statements as a whole and the recoverability involves the estimation and judgment of future cash flows, we recognize the recoverability of accounts receivable as a key audit matter. | We evaluated the recoverability of accounts receivable by the following procedure: ①Understand the management and the internal control of key financial reporting related to credit control, account recovery and assessment of impairment provision for receivables, and evaluate the effectiveness of the design and operation of the internal control; ②Understand the Company's management procedures for customers' credit and the collection measures for overdue debts; ③Review the division by the Management of the combination with respect to the accounts receivable for which the expected credit loss is calculated according to the combination of credit risk characteristics, and assess the reasonableness of the expected credit loss rate based on the estimates including historical credit loss rate, current circumstance and prediction of the future economic condition. We assessed the reasonableness of the accrued proportion with reference to the historical audit experience and prospective information, tested the accuracy of the portfolio classification and aging division of the accounts receivable, and recalculated the accuracy of the accrued amount of the expected credit loss; we sampled the accounts receivable subject to separate bad debt provision, and reviewed the basis for the Management’s assessment of the expected credit loss based on the financial position and credit position of the customer, historical repayment records and prediction of the future economic condition. We validated the management's assessment against the evidence we have obtained during the audit process, including background information, past transaction history and payment status of the customer, and forward-looking considerations; ④Test the payment received after the balance sheet date; ⑤Perform the correspondence-based confirmation procedure and check whether the confirmation results are consistent; ⑥Analyze whether there are amounts of accounts receivable that cannot be recovered and need to be written off. |
IV. Other InformationThe management of Dahua (hereinafter referred to as the Management) is responsible for theother information. The other information includes the information covered in Dahua's annual report in2020, but excludes the financial statements and our audit report.
Our opinion on the financial statements does not cover the other information and we do not andwill not express any form of assurance conclusion thereon.
In combination with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit, or otherwise appears to be materiallymisstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Management is responsible for preparing the financial statements in accordance with therequirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and fordesigning, implementing and maintaining necessary internal control to ensure that the financialstatements are free from material misstatements, whether due to frauds or errors.
In preparing the financial statements, the Management is responsible for assessing Dahua's abilityto continue operating, disclosing matters related to continuous operation (if applicable) and using thehypothesis of continuous operation unless there is a plan to liquidate, terminate operations or no otherrealistic options.
The management is responsible for supervising the financial reporting process of Dahua.
VI. CPA's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an audit reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee thatan audit conducted in accordance with the audit standards will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individually orin the aggregate, they could reasonably be expected to influence the economic decisions of users madeon the basis of these financial statements.
As part of an audit in accordance with the audit standards, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether dueto fraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design appropriateaudit procedures, but not for the purpose of expressing an opinion on the effectiveness of theCompany's internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the Management.
(4) Conclude on the appropriateness of using the going concern assumption by the Management.At the same time, draw a conclusion, based on the audit evidence obtained, on whether there issignificant uncertainty in matters or situations that may cause major doubts about Dahua's ability incontinuous operation. If we conclude that a material uncertainty exists, we are required to draw attentionin our audit report to the related disclosures in the financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the information available up to the dateof our audit report. However, future events or conditions may result in Dahua's inability to continueoperating.
(5) Evaluate the overall presentation (including the disclosures), structure and content of thefinancial statements, and whether the financial statements fairly reflect the relevant transactions andevents.
(6) Obtain sufficient and appropriate audit evidence regarding the financial information of theentities or business activities within Dahua to express an opinion on the financial statements. We areresponsible for guiding, supervising and implementing the group audit, and remain solely responsible forour audit opinion.
We have communicated with those charged with governance on such matters as the scope ofaudit as planned, the schedule and material audit findings, including the defects in the internal controlthat are worth paying attention to found in this audit.
We have also provided those charged with governance with a statement on observing theprofessional ethics related to independence, and communicated with those charged with governance onall the relationships and other matters that might be reasonably deemed to affect our independence, andrelevant preventative measures.
From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the financial statements of the current period and aretherefore the key audit matters. We describe these matters in our audit report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of such communication.
BDO China Shu Lun Pan Certified Public Accountants LLP Chinese CPA: Zhong Jiandong(Special general partnership) (Project partner)
Chinese CPA: Zhang Junhui
Shanghai, China March 23, 2020
II. Financial StatementsUnits of financial reports in the notes: yuan
1. Consolidated Balance Sheet
Prepared by: Zhejiang Dahua Technology Co., Ltd.
Unit: RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current Assets: | ||
| Cash and Bank Balances | 7,471,652,634.66 | 3,084,428,970.43 |
| Deposit Reservation for Balance | ||
| Loans to Banks and Other Financial Institutions | ||
| Trading Financial Assets | 2,475,680.45 | |
| Derivative Financial Assets | ||
| Notes receivable | 232,857,354.55 | |
| Accounts receivable | 12,857,519,110.16 | 13,241,196,380.65 |
| Receivables Financing | 1,207,879,654.58 | 1,086,017,357.90 |
| Prepayments | 162,250,648.05 | 128,182,099.47 |
| Premium Receivable | ||
| Reinsurance Accounts Receivable | ||
| Reinsurance Contract Reserves Receivable | ||
| Other Receivables | 970,427,893.48 | 408,776,610.17 |
| Including: interest receivable | ||
| Dividends Receivable | ||
| Buying Back the Sale of Financial Assets | ||
| Inventory | 4,928,019,838.00 | 3,839,810,704.33 |
| Contract Assets | 84,825,834.82 | |
| Holding for-sale assets | ||
| Non-current Assets Due within 1 Year | 635,956,549.07 | 630,717,329.58 |
| Other Current Assets | 558,434,219.93 | 556,311,770.08 |
| Subtotal of Current Assets | 29,112,299,417.75 | 22,975,441,222.61 |
| Non-current Assets: | ||
| Granting of loans and advances | ||
| Investment in Creditor's Rights | ||
| Investment in Other Creditor's Rights | ||
| Long-term Receivables | 2,250,315,769.50 | 2,568,442,030.19 |
| Long-term Equity Investment | 455,977,616.16 | 490,731,236.85 |
| Investment in Other Equity |
| Instruments | ||
| Other Non-current Financial Assets | 360,087,786.34 | 67,213,489.43 |
| Investment Property | 336,008,869.13 | 336,181,589.99 |
| Fixed Assets | 1,515,594,629.97 | 1,522,463,368.83 |
| Projects under Construction | 1,164,130,453.03 | 435,757,406.90 |
| Productive Biological Assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | ||
| Intangible Assets | 406,777,323.39 | 411,758,785.31 |
| Development Expenditure | ||
| Goodwill | 42,685,490.30 | 42,685,490.30 |
| Long-term unamortized expenses | 32,280,430.67 | 37,311,198.19 |
| Deferred Income Tax Assets | 832,453,676.69 | 668,058,558.83 |
| Other Non-current Assets | 86,422,617.82 | 8,605,835.50 |
| Subtotal of Non-current Assets | 7,482,734,663.00 | 6,589,208,990.32 |
| Total Assets | 36,595,034,080.75 | 29,564,650,212.93 |
| Current Liabilities: | ||
| Short-term loan | 250,177,083.34 | 400,323,888.90 |
| Borrowings from the Central Bank | ||
| Borrowings from Banks and Other Financial Institutions | ||
| Transactional financial liabilities | ||
| Derivative Financial Liabilities | ||
| Notes Payable | 3,258,552,758.17 | 3,807,292,795.07 |
| Accounts Payable | 6,444,787,705.28 | 4,290,253,501.81 |
| Received Prepayments | 375,521,795.82 | |
| Contract liabilities | 671,120,385.08 | |
| Financial Assets Sold for Repurchase | ||
| Deposit Taking and Interbank Deposit | ||
| Receiving from Vicariously Traded Securities | ||
| Receiving from Vicariously Sold Securities | ||
| Payroll payable | 1,805,464,535.31 | 1,582,368,359.30 |
| Tax Payable | 900,144,863.67 | 813,357,471.37 |
| Other Payables | 970,552,877.22 | 1,163,915,713.24 |
| Including: interest payable | ||
| Dividends Payable | 12,982,399.27 | 9,454,479.13 |
| Service Charge and Commission Payable | ||
| Reinsurance Accounts Payable |
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 Year | 151,891,709.34 | 26,993,755.57 |
| Other Current Liabilities | 209,401,914.77 | 71,233,107.93 |
| Subtotal of Current Liabilities | 14,662,093,832.18 | 12,531,260,389.01 |
| Non-current Liabilities: | ||
| Insurance Contract Reserves | ||
| Long-term loan | 878,000,000.00 | 153,500,000.00 |
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | ||
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 282,427,517.82 | 303,670,887.50 |
| Deferred Income | 110,469,806.29 | 117,210,761.34 |
| Deferred Income Tax Liabilities | 67,272,768.46 | 50,565,095.68 |
| Other Non-current Liabilities | 391,128,045.90 | 432,275,367.74 |
| Subtotal of Non-current Liabilities | 1,729,298,138.47 | 1,057,222,112.26 |
| Total Liabilities | 16,391,391,970.65 | 13,588,482,501.27 |
| Shareholders' Equity: | ||
| Share Capital | 2,995,579,590.00 | 3,003,713,230.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 1,989,655,334.05 | 1,882,855,119.53 |
| Less: Treasury Share | 581,968,930.89 | 1,057,584,258.31 |
| Other Comprehensive Incomes | 61,157,523.13 | 12,308,276.23 |
| Special Reserves | ||
| Surplus Reserves | 1,553,691,005.92 | 1,553,691,005.92 |
| General Risk Reserves | ||
| Undistributed Profits | 13,754,915,904.19 | 10,248,023,654.54 |
| Total Shareholders' Equity Attributable to the Parent Company | 19,773,030,426.40 | 15,643,007,027.91 |
| Minority Shareholders' Equity | 430,611,683.70 | 333,160,683.75 |
| Total Shareholders' Equity | 20,203,642,110.10 | 15,976,167,711.66 |
| Total Liabilities and Shareholders' Equity | 36,595,034,080.75 | 29,564,650,212.93 |
Legal representative: Fu Liquan Person in charge of accounting: Xu Qiaofen Person in charge of the accounting institution: Zhu Zhuling
2. Balance Sheet of the Parent Company
Unit: RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current Assets: | ||
| Cash and Bank Balances | 3,130,479,311.55 | 890,598,735.62 |
| Trading Financial Assets | ||
| Derivative Financial Assets | ||
| Notes receivable | 74,284,006.99 | |
| Accounts receivable | 2,740,152,239.35 | 8,450,364,515.05 |
| Receivables Financing | 169,109,529.24 | 841,427,888.19 |
| Prepayments | 48,203,550.97 | 30,501,431.44 |
| Other Receivables | 13,796,603,550.30 | 5,138,830,912.64 |
| Including: interest receivable | ||
| Dividends Receivable | ||
| Inventory | 171,756,222.72 | 124,904,729.01 |
| Contract Assets | 8,338,657.15 | |
| Holding for-sale assets | ||
| Non-current Assets Due within 1 Year | 61,828,724.54 | 53,952,526.19 |
| Other Current Assets | 12,592.38 | 21,919,487.88 |
| Subtotal of Current Assets | 20,200,768,385.19 | 15,552,500,226.02 |
| Non-current Assets: | ||
| Investment in Creditor's Rights | ||
| Investment in Other Creditor's Rights | ||
| Long-term Receivables | 100,221,713.49 | 137,284,594.67 |
| Long-term Equity Investment | 3,660,410,557.29 | 3,523,259,061.78 |
| Investment in Other Equity Instruments | ||
| Other Non-current Financial Assets | 355,853,684.59 | 62,979,387.68 |
| Investment Property | 173,003,549.71 | 187,756,594.11 |
| Fixed Assets | 550,991,444.04 | 536,909,246.66 |
| Projects under Construction | 438,014,907.22 | 203,836,998.96 |
| Productive Biological Assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | ||
| Intangible Assets | 156,335,152.97 | 168,215,377.39 |
| Development Expenditure | ||
| Goodwill | ||
| Long-term unamortized expenses | 21,149,342.55 | 26,687,122.32 |
| Deferred Income Tax Assets | 135,371,242.86 | 131,503,372.44 |
| Other Non-current Assets | 35,774,247.16 | 1,964,757.00 |
| Subtotal of Non-current Assets | 5,627,125,841.88 | 4,980,396,513.01 |
| Total Assets | 25,827,894,227.07 | 20,532,896,739.03 |
| Current Liabilities: | ||
| Short-term loan | 250,177,083.34 | 400,323,888.90 |
| Transactional financial liabilities | ||
| Derivative Financial Liabilities | ||
| Notes Payable | 303,660,579.62 | 302,168,249.70 |
| Accounts Payable | 752,373,890.95 | 948,348,622.52 |
| Received Prepayments | 181,462,746.37 | |
| Contract liabilities | 85,275,423.36 | |
| Payroll payable | 1,127,500,408.14 | 1,078,396,381.39 |
| Tax Payable | 627,351,201.46 | 460,577,509.52 |
| Other Payables | 1,002,654,121.27 | 1,363,740,346.75 |
| Including: interest payable | ||
| Dividends Payable | 12,982,399.27 | 9,454,479.13 |
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 Year | 150,643,750.02 | |
| Other Current Liabilities | 26,870,130.42 | 5,892,364.82 |
| Subtotal of Current Liabilities | 4,326,506,588.58 | 4,740,910,109.97 |
| Non-current Liabilities: | ||
| Long-term loan | 750,000,000.00 | |
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | ||
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 8,333,634.18 | 9,735,157.34 |
| Deferred Income | ||
| Deferred Income Tax Liabilities | 29,407,289.24 | 1,297,719.64 |
| Other Non-current Liabilities | 10,599,934.34 | 16,155,036.85 |
| Subtotal of Non-current Liabilities | 798,340,857.76 | 27,187,913.83 |
| Total Liabilities | 5,124,847,446.34 | 4,768,098,023.80 |
| Shareholders' Equity: | ||
| Share Capital | 2,995,579,590.00 | 3,003,713,230.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 1,976,156,775.91 | 1,867,489,901.04 |
| Less: Treasury Share | 581,968,930.89 | 1,057,584,258.31 |
| Other Comprehensive Incomes | 522,554.00 |
| Special Reserves | ||
| Surplus Reserves | 1,553,691,005.92 | 1,553,691,005.92 |
| Undistributed Profits | 14,759,065,785.79 | 10,397,488,836.58 |
| Total Shareholders' Equity | 20,703,046,780.73 | 15,764,798,715.23 |
| Total Liabilities and Shareholders' Equity | 25,827,894,227.07 | 20,532,896,739.03 |
3. Consolidated Income Statement
Unit: RMB
| Item | 2020 | The Year Of 2019 |
| I. Total Operating Revenue | 26,465,968,181.10 | 26,149,430,652.42 |
| Including: Operating Revenue | 26,465,968,181.10 | 26,149,430,652.42 |
| Interest Income | ||
| Earned Premiums | ||
| Service Charge and Commission Income | ||
| II. Total Operating Cost | 23,700,192,030.78 | 22,996,746,203.46 |
| Including: Operating Cost | 15,164,331,155.66 | 15,396,193,940.44 |
| Interest Expenditures | ||
| Service Charge and Commission Expenses | ||
| Surrender Value | ||
| Net Claims Paid | ||
| Net Amount of Withdrawn Reserve for Insurance Liability Contract | ||
| Policyholder Dividend Expense | ||
| Reinsurance Cost | ||
| Taxes and Surcharges | 161,682,305.76 | 182,582,118.36 |
| Sales Expenses | 4,291,121,362.75 | 3,952,947,275.82 |
| Administration expenses | 785,101,729.55 | 740,880,944.67 |
| Research and development expense | 2,997,545,666.82 | 2,794,219,504.28 |
| Financial Expenses | 300,409,810.24 | -70,077,580.11 |
| Including: interest expenses | 68,153,838.27 | 133,656,681.06 |
| Interest Income | 156,578,920.70 | 197,576,570.81 |
| Add: Other income | 1,033,605,961.79 | 927,125,385.10 |
| Investment Income (Mark "-" for Loss) | 975,589,960.06 | -95,569,041.41 |
| Including: Investment Income from Affiliates and Joint Ventures | -181,278,822.04 | -115,707,007.32 |
| Profits from recognition Termination of Financial Assets at Amortized Cost | ||
| Exchange Gains (Mark "-" for Losses) | ||
| Profit of Net Exposure Hedging (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | 185,732,977.36 | 41,855,239.60 |
| Credit Impairment Losses (Mark "-" for Loss) | -575,685,022.80 | -418,876,180.92 |
| Asset Impairment Losses (Mark "-" for Loss) | -128,579,641.41 | -111,174,681.00 |
| Asset Disposal Income (Mark "-" for Loss) | 509,340.38 | 835,214.24 |
| III. Operating Profit (Mark "-" for Loss) | 4,256,949,725.70 | 3,496,880,384.57 |
| Add: Non-operating Revenues | 11,652,641.39 | 11,479,262.60 |
| Less: Non-operating Expenses | 19,833,811.30 | 9,796,489.66 |
| IV. Total Profit (Mark "-" for Total Loss) | 4,248,768,555.79 | 3,498,563,157.51 |
| Less: Income Tax Expense | 313,526,899.50 | 337,704,672.97 |
| V. Net Profit (Mark "-" for Net Loss) | 3,935,241,656.29 | 3,160,858,484.54 |
| i. Classified by operation continuity | ||
| 1. Net Profit as a Going Concern (Mark "-" for Net Loss) | 3,935,241,656.29 | 3,160,858,484.54 |
| 2. Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| ii. Classified by the attribution of ownership | ||
| 1. Net Profit Attributable to Shareholders of Parent Company | 3,902,778,775.35 | 3,188,144,692.55 |
| 2. Minority Shareholders' Profit and Loss | 32,462,880.94 | -27,286,208.01 |
| VI. Net Amount of Other Comprehensive Incomes after Tax | 48,849,278.20 | 1,971,193.29 |
| Net Amount of Other Comprehensive Incomes after Tax Attributable to the Parent Company's Owner | 48,849,246.90 | 1,971,111.82 |
| (1) Other comprehensive income that cannot be reclassified as P/L | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in the fair value of investment in other equity instruments | ||
| 4. Changes in the fair value of the credit risk of the enterprise | ||
| 5. Others | ||
| (2) Other comprehensive income that will be reclassified as P/L | 48,849,246.90 | 1,971,111.82 |
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in the fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Provisions for the credit impairment of investment in other creditor's rights | ||
| 5. Cash flow hedge reserves | ||
| 6. Currency translation difference | 42,407,695.80 | 1,971,111.82 |
| 7. Others | 6,441,551.10 | |
| Net Amount of Other Comprehensive Incomes After Tax Attributable to Minority Shareholders | 31.30 | 81.47 |
| VII. Total Comprehensive Income | 3,984,090,934.49 | 3,162,829,677.83 |
| Total Comprehensive Income Attributable to the Parent Company's Owner | 3,951,628,022.25 | 3,190,115,804.37 |
| Total Comprehensive Income Attributable to Minority Shareholders | 32,462,912.24 | -27,286,126.54 |
| VIII. Earnings per Share: | ||
| (I) Basic Earnings per Share | 1.34 | 1.10 |
| (II) Diluted Earnings per Share | 1.33 | 1.10 |
Legal representative: Fu Liquan Person in charge of accounting: Xu Qiaofen Person in charge of the accounting institution: Zhu Zhuling
4. Income Statement of the Parent Company
Unit: RMB
| Item | 2020 | The Year Of 2019 |
| I. Operating Revenue | 9,241,424,111.34 | 8,482,060,132.96 |
| Less: Operating Cost | 1,432,554,360.70 | 1,200,706,524.01 |
| Taxes and Surcharges | 110,800,941.53 | 121,881,528.62 |
| Sales Expenses | 1,706,397,097.75 | 1,826,394,447.02 |
| Administration expenses | 443,452,678.15 | 389,756,057.22 |
| Research and development expense | 2,342,474,614.79 | 2,306,679,313.62 |
| Financial Expenses | 5,707,678.34 | 24,933,907.79 |
| Including: interest expenses | 59,812,230.42 | 83,078,555.46 |
| Interest Income | 59,618,328.67 | 62,880,482.42 |
| Add: Other income | 846,285,628.56 | 799,333,571.65 |
| Investment Income (Mark "-" for Loss) | 919,245,362.94 | -99,305,651.23 |
| Including: Investment Income from Affiliates and Joint Ventures | -221,917,515.47 | -115,786,382.36 |
| Profits from Derecognition of Financial Assets at Amortized Cost (Mark "-" for Loss) | ||
| Profit of Net Exposure Hedging (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | 184,727,296.91 | 1,703,118.82 |
| Credit Impairment Losses (Mark "-" for Loss) | -39,626,521.03 | -22,993,302.46 |
| Asset Impairment Losses (Mark "-" for Loss) | -5,090,736.83 | 1,019,151.05 |
| Asset Disposal Income (Mark "-" for Loss) | 127,226,851.78 | 647,551.91 |
| II. Operating Profit (Mark "-" for Loss) | 5,232,804,622.41 | 3,292,112,794.42 |
| Add: Non-operating Revenues | 3,913,459.31 | 4,342,038.03 |
| Less: Non-operating Expenses | 8,513,129.27 | 1,506,697.13 |
| III. Total Profit (Mark "-" for Total Loss) | 5,228,204,952.45 | 3,294,948,135.32 |
| Less: Income Tax Expense | 470,741,477.54 | 216,330,316.67 |
| IV. Net Profit (Mark "-" for Net Loss) | 4,757,463,474.91 | 3,078,617,818.65 |
| (I) Net Profit as a Going Concern (Mark "-" for Net Loss) | 4,757,463,474.91 | 3,078,617,818.65 |
| (II) Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| V. Net Amount of Other Comprehensive Incomes After Tax | 522,554.00 | |
| (1) Other comprehensive income that cannot be reclassified as P/L | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in the fair value of investment in other equity instruments | ||
| 4. Changes in the fair value of the credit risk of the enterprise | ||
| 5. Others | ||
| (2) Other comprehensive income that will be reclassified as P/L | 522,554.00 | |
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in the fair value of investment in other creditor's rights | ||
| 3. Financial assets reclassified into other comprehensive income | ||
| 4. Provisions for the credit impairment of investment in other creditor's rights | ||
| 5. Cash flow hedge reserves | ||
| 6. Currency translation difference | ||
| 7. Others | 522,554.00 | |
| VI. Total Comprehensive Income | 4,757,986,028.91 | 3,078,617,818.65 |
| VII. Earnings per Share: | ||
| (I) Basic Earnings per Share | 1.63 | 1.06 |
| (II) Diluted Earnings per Share | 1.62 | 1.06 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | 2020 | The Year Of 2019 |
| I. Cash Flow Generated by Operational Activities: | ||
| Cash from Sales of Merchandise and Provision of Services | 28,721,463,584.87 | 24,987,844,514.59 |
| Net Increase in Customer's Bank Deposits and Interbank Deposits | ||
| Net Increase in Borrowings from the Central Bank | ||
| Net Increase in Borrowings from Other Financial Institutions | ||
| Cash Arising from Receiving Premiums for the Original Insurance Contract | ||
| Net Amount Arising from Reinsurance Business | ||
| Net Increase in Deposits and Investments from Policyholders | ||
| Cash Arising from Interests, Service Charges and Commissions | ||
| Net Increase in Borrowings from Banks and Other Financial Institutions | ||
| Net Increase in Repurchase Business Funds | ||
| Net Amount of Cash Received from the Vicariously Traded Securities | ||
| Tax Refund | 2,145,968,090.43 | 1,765,101,617.55 |
| Other Received Cashes Related to Operational Activities | 571,499,575.77 | 536,826,402.85 |
| Subtotal of cash inflow from operational activities | 31,438,931,251.07 | 27,289,772,534.99 |
| Cash Paid for Merchandise and Services | 16,795,378,933.09 | 16,791,787,238.65 |
| Net Increase in Loans and Advances to Customers | ||
| Net Increase in Deposits with Central Bank and Other Financial Institutions | ||
| Cash Paid for Original Insurance Contract Claims | ||
| Net increase of funds lent | ||
| Cash Paid for Interests, Service Charges and Commissions | ||
| Cash Paid for Policy Dividends | ||
| Cash Paid to and for Employees | 5,720,313,227.03 | 4,669,876,392.04 |
| Cash Paid for Taxes and Surcharges | 2,091,640,964.97 | 1,724,636,831.64 |
| Other Paid Cashes Related to Operational Activities | 2,430,065,057.59 | 2,502,867,784.96 |
| Subtotal of cash outflow from operational activities | 27,037,398,182.68 | 25,689,168,247.29 |
| Net cash flow generated by operating activities | 4,401,533,068.39 | 1,600,604,287.70 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 1,634,199,750.21 | 3,500,251,299.97 |
| Cash Arising from Investment Incomes | 12,348,849.70 | 11,205,093.27 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 2,215,395.66 | 5,958,809.09 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | 603,416,723.92 | |
| Other Received Cashes Related to Investment Activities | 89,135,991.22 | 26,306,832.09 |
| Subtotal of cash inflow from investment activities | 2,341,316,710.71 | 3,543,722,034.42 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 641,719,756.37 | 531,097,534.64 |
| Cash Paid for Investments | 1,790,971,318.35 | 3,825,759,977.62 |
| Net Increase in Pledge Loans | ||
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | ||
| Other Paid Cashes Related to Investment Activities | 98,539,575.66 | 26,659,828.19 |
| Subtotal of Cash Outflow from Investment Activities | 2,531,230,650.38 | 4,383,517,340.45 |
| Net amount of cash flow generated by investment activities | -189,913,939.67 | -839,795,306.03 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | 70,218,000.00 | 165,554,375.00 |
| Including: Cash Arising from Subsidiaries Absorbing Investments by Minority Shareholders | 70,218,000.00 | 74,436,250.00 |
| Cash Arising from Borrowings | 5,183,085,902.98 | 5,043,403,113.41 |
| Other Received Cashes Related to Financing Activities | 3,224,665,370.08 | 1,240,932,000.00 |
| Subtotal of cash inflow from financing activities | 8,477,969,273.06 | 6,449,889,488.41 |
| Cash Paid for Debts Repayment | 4,468,423,443.42 | 6,505,580,678.17 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 449,568,123.55 | 402,855,499.39 |
| Including: Dividends and Profits Paid to Minority Shareholders by Subsidiaries | ||
| Other Paid Cashes Related to Financing Activities | 2,954,360,449.72 | 1,315,329,709.65 |
| Subtotal of cash outflow from financing activities | 7,872,352,016.69 | 8,223,765,887.21 |
| Net cash flow generated by financing activities | 605,617,256.37 | -1,773,876,398.80 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | -192,969,591.97 | 44,969,590.00 |
| V. Net Increase in Cash and Cash Equivalents | 4,624,266,793.12 | -968,097,827.13 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 2,734,185,976.41 | 3,702,283,803.54 |
| VI. Cash and Cash Equivalents at the End of the Period | 7,358,452,769.53 | 2,734,185,976.41 |
6. Cash Flow Statement of the Parent Company
Unit: RMB
| Item | 2020 | The Year Of 2019 |
| I. Cash Flow Generated by Operational Activities: | ||
| Cash from Sales of Merchandise and Provision of Services | 16,022,674,927.78 | 5,327,099,927.44 |
| Tax Refund | 814,531,270.70 | 722,774,549.21 |
| Other Received Cashes Related to Operational Activities | 282,829,879.15 | 151,622,737.84 |
| Subtotal of cash inflow from operational activities | 17,120,036,077.63 | 6,201,497,214.49 |
| Cash Paid for Merchandise and Services | 1,242,934,106.98 | 586,206,758.70 |
| Cash Paid to and for Employees | 3,300,991,851.54 | 2,827,880,887.48 |
| Cash Paid for Taxes and Surcharges | 1,313,259,022.81 | 1,203,721,482.08 |
| Other Paid Cashes Related to Operational Activities | 1,183,016,765.48 | 1,208,505,156.52 |
| Subtotal of cash outflow from operational activities | 7,040,201,746.81 | 5,826,314,284.78 |
| Net cash flow generated by operating activities | 10,079,834,330.82 | 375,182,929.71 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 2,115,117,663.30 | 3,500,300,000.00 |
| Cash Arising from Investment Incomes | 9,704,215.11 | 11,205,093.27 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 94,656,703.67 | 17,794,823.64 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | ||
| Other Received Cashes Related to Investment Activities | 6,518,245.35 | 7,155,384.02 |
| Subtotal of cash inflow from investment activities | 2,225,996,827.43 | 3,536,455,300.93 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 263,007,171.79 | 197,970,380.43 |
| Cash Paid for Investments | 1,912,611,918.00 | 4,031,514,450.00 |
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | ||
| Other Paid Cashes Related to Investment Activities | ||
| Subtotal of Cash Outflow from Investment Activities | 2,175,619,089.79 | 4,229,484,830.43 |
| Net amount of cash flow generated by investment activities | 50,377,737.64 | -693,029,529.50 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | 91,118,125.00 | |
| Cash Arising from Borrowings | 3,478,639,728.69 | 1,963,462,853.53 |
| Other Received Cashes Related to Financing Activities | 1,992,107,169.55 | 4,583,054,336.88 |
| Subtotal of cash inflow from financing activities | 5,470,746,898.24 | 6,637,635,315.41 |
| Cash Paid for Debts Repayment | 2,728,639,728.69 | 2,943,462,853.53 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 438,708,297.34 | 375,050,392.54 |
| Other Paid Cashes Related to Financing Activities | 10,203,675,290.09 | 2,742,610,010.63 |
| Subtotal of cash outflow from financing activities | 13,371,023,316.12 | 6,061,123,256.70 |
| Net cash flow generated by financing activities | -7,900,276,417.88 | 576,512,058.71 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | -180,445.72 | -1,354,369.20 |
| V. Net Increase in Cash and Cash Equivalents | 2,229,755,204.86 | 257,311,089.72 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 860,741,299.14 | 603,430,209.42 |
| VI. Cash and Cash Equivalents at the End of the Period | 3,090,496,504.00 | 860,741,299.14 |
7. Consolidated Statement of Changes in Owners' Equity
Amount of this period
Unit: RMB
| Item | 2020 | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 3,003,713,230.00 | 1,882,855,119.53 | 1,057,584,258.31 | 12,308,276.23 | 1,553,691,005.92 | 10,248,023,654.54 | 15,643,007,027.91 | 333,160,683.75 | 15,976,167,711.66 | ||||||
| Add: Changes in Accounting Policies | |||||||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Consolidated under the Same Control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the | 3,003,713, | 1,882,855,119.5 | 1,057,584,258. | 12,308,276. | 1,553,691,005. | 10,248,023,654 | 15,643,007,027 | 333,160,683.75 | 15,976,167,711 | ||||||
| Start of This Year | 230.00 | 3 | 31 | 23 | 92 | .54 | .91 | .66 | |||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -8,133,640.00 | 106,800,214.52 | -475,615,327.42 | 48,849,246.90 | 3,506,892,249.65 | 4,130,023,398.49 | 97,450,999.95 | 4,227,474,398.44 | |||||||
| (I) Total Comprehensive Income | 48,849,246.90 | 3,902,778,775.35 | 3,951,628,022.25 | 32,462,912.24 | 3,984,090,934.49 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | -8,133,640.00 | 123,845,629.06 | -475,615,327.42 | 591,327,316.48 | 70,218,000.00 | 661,545,316.48 | |||||||||
| 1． Common stock invested by the owner | -8,133,640.00 | -58,717,702.80 | -475,615,327.42 | 408,763,984.62 | 70,218,000.00 | 478,981,984.62 | |||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 182,563,331.86 | 182,563,331.86 | 182,563,331.86 | ||||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | -395,886,525.70 | -395,886,525.70 | -395,886,525.70 | ||||||||||||
| 1． Appropriation |
| of Surplus Reserves | |||||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -395,886,525.70 | -395,886,525.70 | -395,886,525.70 | ||||||||||||
| 4． Others | |||||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit |
| plan | |||||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special Reserves | |||||||||||||||
| 1． Withdrawal in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | -17,045,414.54 | -17,045,414.54 | -5,229,912.29 | -22,275,326.83 | |||||||||||
| IV. Balance at the End of This Period | 2,995,579,590.00 | 1,989,655,334.05 | 581,968,930.89 | 61,157,523.13 | 1,553,691,005.92 | 13,754,915,904.19 | 19,773,030,426.40 | 430,611,683.70 | 20,203,642,110.10 |
Amount of Previous Period
Unit: RMB
| Item | 2019 | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 2,997,621,930.00 | 1,501,180,862.83 | 807,733,586.00 | 10,337,164.41 | 1,246,369,430.91 | 7,670,983,116.33 | 12,618,758,918.48 | 284,506,754.95 | 12,903,265,673.43 | ||||||
| Add: Changes in Accounting Policies | -540,206.86 | -4,861,861.70 | -5,402,068.56 | -5,402,068.56 | |||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Consolidated under the Same Control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Start of This Year | 2,997,621,930.00 | 1,501,180,862.83 | 807,733,586.00 | 10,337,164.41 | 1,245,829,224.05 | 7,666,121,254.63 | 12,613,356,849.92 | 284,506,754.95 | 12,897,863,604.87 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 6,091,300.00 | 381,674,256.70 | 249,850,672.31 | 1,971,111.82 | 307,861,781.87 | 2,581,902,399.91 | 3,029,650,177.99 | 48,653,928.80 | 3,078,304,106.79 | ||||||
| (I) Total Comprehensive Income | 1,971,111.82 | 3,188,144,692.55 | 3,190,115,804.37 | -27,286,126.54 | 3,162,829,677.83 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 6,091,300.00 | 311,103,528.74 | 249,850,672.31 | 67,344,156.43 | 74,436,250.00 | 141,780,406.43 | |||||||||
| 1． Common stock invested by the owner | 6,091,300.00 | 49,690,015.79 | 249,850,672.31 | -194,069,356.52 | 74,436,250.00 | -119,633,106.52 | |||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 261,413,512.95 | 261,413,512.95 | 261,413,512.95 | ||||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | 307,861,781.87 | -607,195,646.68 | -299,333,864.81 | -299,333,864.81 | |||||||||||
| 1． Appropriation of Surplus Reserves | 307,861,781.87 | 307,861,781.87 | |||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | 299,333,864.81 | 299,333,864.81 | 299,333,864.81 | ||||||||||||
| 4． Others |
| (IV) Internal Carry-forward of Shareholders' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | |||||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special Reserves |
| 1． Withdrawal in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | 70,570,727.96 | 953,354.04 | 71,524,082.00 | 1,503,805.34 | 73,027,887.34 | ||||||||||
| IV. Balance at the End of This Period | 3,003,713,230.00 | 1,882,855,119.53 | 1,057,584,258.31 | 12,308,276.23 | 1,553,691,005.92 | 10,248,023,654.54 | 15,643,007,027.91 | 333,160,683.75 | 15,976,167,711.66 |
8. Statement of Changes in Owners' Equity of the Parent Company
Amount of this period
Unit: RMB
| Item | 2020 | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 3,003,713,230.00 | 1,867,489,901.04 | 1,057,584,258.31 | 1,553,691,005.92 | 10,397,488,836.58 | 15,764,798,715.23 | ||||||
| Add: Changes in Accounting Policies | ||||||||||||
| Correction of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 3,003,713,230.00 | 1,867,489,901.04 | 1,057,584,258.31 | 1,553,691,005.92 | 10,397,488,836.58 | 15,764,798,715.23 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -8,133,640.00 | 108,666,874.87 | 475,615,327.42 | 522,554.00 | 4,361,576,949.21 | 4,938,248,065.50 | ||||||
| (I) Total Comprehensive Income | 522,554.00 | 4,757,463,474.91 | 4,757,986,028.91 | |||||||||
| (II) Shareholders' | 8,133,640.00 | 16,200,355.59 | 475,615,327.42 | 483,682,043.01 | ||||||||
| Contribution and Reduction in Capital | ||||||||||||
| 1． Common stock invested by the owner | 8,133,640.00 | 58,717,702.80 | 475,615,327.42 | 408,763,984.62 | ||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 74,918,058.39 | 74,918,058.39 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | 395,886,525.70 | -395,886,525.70 | ||||||||||
| 1． Appropriation of Surplus Reserves | ||||||||||||
| 2． Distribution to Owners (or Shareholders) | 395,886,525.70 | -395,886,525.70 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | ||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) |
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period | ||||||||||||
| 2． Used in This Period | ||||||||||||
| (VI) Others | 92,466,519.28 | 92,466,519.28 | ||||||||||
| IV. Balance at the End of This Period | 2,995,579,590.00 | 1,976,156,775.91 | 581,968,930.89 | 522,554.00 | 1,553,691,005.92 | 14,759,065,785.79 | 20,703,046,780.73 |
Amount of Previous Period
Unit: RMB
| Item | 2019 | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 2,997,621,930.00 | 1,497,801,068.88 | 807,733,586.00 | 1,246,369,430.91 | 7,930,928,526.31 | 12,864,987,370.10 | ||||||
| Add: Changes in Accounting Policies | -540,206.86 | -4,861,861.70 | -5,402,068.56 | |||||||||
| Correction of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 2,997,621,930.00 | 1,497,801,068.88 | 807,733,586.00 | 1,245,829,224.05 | 7,926,066,664.61 | 12,859,585,301.54 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 6,091,300.00 | 369,688,832.16 | 249,850,672.31 | 307,861,781.87 | 2,471,422,171.97 | 2,905,213,413.69 | ||||||
| (I) Total Comprehensive Income | 3,078,617,818.65 | 3,078,617,818.65 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 6,091,300.00 | 299,118,104.20 | 249,850,672.31 | 55,358,731.89 | ||||||||
| 1． Common stock invested by the owner | 6,091,300.00 | 49,690,015.79 | 249,850,672.31 | -194,069,356.52 | ||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 249,428,088.41 | 249,428,088.41 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | 307,861,781.87 | 607,195,646.68 | -299,333,864.81 | |||||||||
| 1． Appropriation of Surplus Reserves | 307,861,781.87 | -307,861,781.87 | ||||||||||
| 2． Distribution to Owners (or Shareholders) | 299,333,864.81 | -299,333,864.81 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | ||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period | ||||||||||||
| 2． Used in This Period | ||||||||||||
| (VI) Others | 70,570,727.96 | 70,570,727.96 | ||||||||||
| IV. Balance at the End of This Period | 3,003,713,230.00 | 1,867,489,901.04 | 1,057,584,258.31 | 1,553,691,005.92 | 10,397,488,836.58 | 15,764,798,715.23 |
III. Basic Information about the Company
Zhejiang Dahua Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company") was incorporated underthe official approval document No. 18 [2002] issued by Zhejiang Provincial People's Government Work Leading Group forEnterprise Listing in June 2002, a company established on the basis of overall change of the former Hangzhou DahuaInformation Technology Co., Ltd. fo-founded by five natural persons, Fu Liquan, Chen Ailing, Zhu Jiangming, Liu Yunzhenand Chen Jianfeng.On April 22, 2008, the Company issued 16.8 million shares of common stock in RMB to the general public for the first timeunder the approval document No. 573 [2008] Securities Regulatory Issuance, issued by China Securities RegulatoryCommission ("CSRC"). It was listed on Shenzhen Stock Exchange on May 20, 2008 with a registered capital of RMB 66.8million and the change registration filed with Administration for Industry and Commerce was completed on May 23, 2008.The Company's unified social credit code is 91330000727215176K. The Company belongs to the industry of Internet ofVideo ThingsAs at December 31, 2020, the Company has issued a total of 2,995,579,590 shares, with a registered capital of RMB2,995,579,590.00. The registered address is No.1187, Bin'an Road, Binjiang District, Hangzhou, and the headquartersaddress is No.1199, Bin'an Road, Binjiang District, Hangzhou. The Company's main operation activities include thedevelopment, services & sales of computer software, the design, development, production, installation & sales ofelectronic products and communication products, the development, system integration & sales of network products, thedesign & installation of electronic engineering products, information technology consulting service, import & exportbusinesses. (refer to the “Importer and Exporter Qualification” for the details of the scope). (For items subject to approvalaccording to law, business activities can only be carried out after approval by relevant departments)The actual controllers of the Company are Fu Liquan and Chen Ailing.This financial statement has been approved by Board of Directors on March 23, 2021.For details of the scope of the consolidated financial statement for the current period, refer to Notes IX “Equity in OtherEntities”, and for details of the changes in the scope of the consolidated financial statement for the current period, refer toNotes VIII “Changes in the Scope of Consolidation”.IV. Basis for Preparing the Financial Statement
1. Basis for the preparation
The Company prepares the financial statement, as a going concern, based on transactions and matters that have actuallyoccurred, in accordance with Accounting Standards for Business Enterprises - Basic Standards issued by the Ministry ofFinance and all specific accounting standards, application guidelines for accounting standards for business enterprises,explanations on the accounting standards for business enterprises and other related regulations (hereinafter referred toas "Accounting Standards for Business Enterprises" collectively), and the disclosure provisions in the Preparation Rulesfor Information Disclosures by Companies Offering Securities to the Public No. 15 - General Provisions on FinancialReports issued by CSRC.
2. Going concern
The Company has the capability to continue as a going concern for at least 12 months as of the end of current reportingperiod, without any significant item affecting the capability for continuing as a going concern.
V. Significant Accounting Polices and Accounting EstimatesNotes to specific accounting policies and accounting estimates:
The following disclosures cover the specific accounting policies and accounting estimates formulated by the Companyaccording to the characteristics of its production and operation.
1. Statement on compliance with Accounting Standards for Business EnterprisesThis financial statement is in compliance with the requirements in the Accounting Standards for Business Enterprisespromulgated by the Ministry of Finance and presents truly and completely the financial position of the merged companiesand the parent company as at December 31, 2020 and the operating results and cash flows of the merger and the parentcompany in 2020.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
The Company's operating cycle is 12 months.
4. Functional currency
For the domestic operating entities of the Company and its overseas operating entity Dahua Technology (HK) Limited, thereporting currency is Renminbi ("RMB"). The remaining offshore operating entities use the local currency as the reportingcurrency.
5. The accounting treatment of business combinations involving enterprises under commoncontrol and business combinations not involving enterprises under common controlBusiness combination under common control: The assets and liabilities acquired by the merging party in businesscombination shall be measured at the book value of the assets, liabilities of the merged party (including goodwill incurredin the acquisition of the merged party by ultimate controlling party) in the consolidated financial statements of the ultimatecontrolling party on the date of combination. The difference between the book value of the net assets obtained and thebook value of the consideration paid for the combination (or total nominal value of the issued shares) is adjusted to capitalpremium in capital reserve. Adjustments shall be made to retained earnings in the event that the share premiums in thecapital reserves are not sufficient for write-down.Business combinations involving entities not under common control: The assets paid and liabilities incurred or committedas a consideration of business combination by the merging party were measured at fair value on the date of acquisitionand the difference between the fair value and its book value shall be charged to the profit or loss for the period. Where thecost of combination is higher than the fair value of the identifiable net assets acquired from the merging party in businesscombination, such difference shall be recognized as goodwill; where the cost of combination is less than the fair value ofthe identifiable net assets acquired from the merging party in business combination, such difference shall be charged tothe profit or loss for the period.The fees which are directly related to the business combination shall be recognized as the profit or loss in the period when
the costs are incurred; the transaction expenses of issuing equity securities or debt securities for business merger shall beinitially capitalized for equity securities or debt securities.
6. Preparation method of consolidated financial statements
(1) Scope of Consolidation
The scope of consolidation of the consolidated financial statements is based on controlling interests and includes theCompany and all the subsidiaries. Control means that the Company has the rights over the investee, enjoys variablereturns through participating in relevant activities of the investee, and has the ability to influence the amount of returns byexercising its rights over the investee.
(2) Procedures of Consolidation
The Company regards the Enterprise Group as an accounting entity and prepares consolidated financial statements inaccordance with unified accounting policies to reflect the overall financial position, operating result and cash flow of theEnterprise Group. The influence of internal transactions between the Company and the Subsidiaries and between theSubsidiaries shall be offset. Where internal transaction indicates the occurrence of impairment loss to relevant assets,such loss shall be recognized in full. In preparing the consolidated financial statements, where the accounting policies andthe accounting periods are inconsistent between the Company and subsidiaries, the financial statements of subsidiariesare adjusted in accordance with the accounting policies and accounting period of the Company.The owner's equity, the net profit or loss and the comprehensive income attributable to minority shareholders of asubsidiary of the current period are presented separately under the owners' equity in the consolidated balance sheet, thenet profit and the total comprehensive income in the consolidated income statement respectively. Where lossesattributable to the minority shareholders of a subsidiary of the current period exceed the minority shareholders' interestentitled in the shareholders' equity of the subsidiary at the beginning of the period, the excess is allocated against theminority shareholders interest.
① Acquisition of Subsidiaries or Business
For acquisition of subsidiaries or business due to business combination involving entities under common control duringthe reporting period, the operating results and cash flows of such subsidiaries or business from the beginning to the end ofthe reporting period when the acquisition occurs shall be included in the consolidated financial statements. Adjustmentsshall be made to the opening balance of the consolidated financial statements and the related items in the comparativestatements simultaneously as if the consolidated reporting entity has been in existence since the beginning of the controlby the ultimate controlling party.Where the control over the investee under common control is made possible due to additional investment or other reasons,the equity investment held before gaining control of the combined party is recognized as relevant profit or loss, othercomprehensive income and changes of other net assets at the later of the date of acquisition of the original equity and thedate when the combining and the combined parties are under common control, and shall be written down to the openingretained earnings or current profit or loss in the comparative reporting period.For acquisition of subsidiaries or business due to business combination involving entities not under common controlduring the reporting period, the identifiable assets, liabilities and contingent liabilities shall be included in the consolidatedfinancial statements based on the fair value determined on the date of the acquisition.In connection with imposing control over the investee not under joint control due to additional investment and otherreasons, the equity of acquiree held before acquisition date shall be remeasured by the Company at the fair value of suchequity on the acquisition date and the difference between fair value and book value shall be recognized as investmentincome in current period. Other comprehensive income related to the equity held by the Acquiree before the acquisitiondate which can be reclassified into future profit or loss, and other changes of owners’ equity accounted for under equity
method shall be recognized in investment income in the period in which the acquisition occurs.
② Disposal of Subsidiaries or Business
a. General TreatmentWhen losing control of the investee due to partial disposal of the equity investment, or any other reasons, the remainingequity investment is remeasured at fair value at the date in which control is lost. The sum of consideration received fromdisposal of equity investment and the fair value of the remaining equity investment, net of the difference between the sumof the Company's previous share of the subsidiary's net assets recorded from the acquisition date or combination dateand the sum of goodwill, is recognized in investment income in the period in which control is lost. Other comprehensiveincome related to the equity investment of the original subsidiary that can be reclassified into future profit or loss, andother changes of owners’ equity accounted for under equity method shall be recognized in investment income in theperiod in which control is lost.b. Disposal of Subsidiary Achieved by StagesWhen disposal of equity interests of subsidiaries through multiple transaction until the control is lost, generallytransactions in stages are treatment as a package deal in accounting if the transaction terms, conditions, and economicimpact of disposal of the subsidiary's equity interests comply with one or more of the following:
i. These transactions are achieved at the same time or the mutual effects on each other are considered;ii. A complete set of commercial results can be achieved with reference to the series of transactions as a whole;iii. Achieving a transaction depends on at least achieving of one of the other transaction;iv. One transaction recognized separately is not economical, but it is economical when considered together with other
transactions.When losing control of a subsidiary in disposal of equity interests through multiple transactions is recognized as apackage deal, these transactions shall be in accounting treated as loss control of a subsidiary in disposal of equityinterests achieved. However, the differences between price on each disposal and disposal of investment on thesubsidiary's net assets shall be recognized in other comprehensive income in the consolidated financial statements, andincluded in profit or loss for the period when the control is lost.When all transactions in disposal of equity interests of subsidiaries are not a package deal, accounting treatment forpartial disposal of equity investments of subsidiary without losing control shall be applied before control is lost. When thecontrol is lost, general accounting treatment for disposal of a subsidiary shall be used.
③ Acquisition of Minority Interest of Subsidiaries
The Company shall adjust the share premium in the capital reserve of the consolidated balance sheet with respect to anydifference between the long-term equity investment arising from the purchase of minority interest and the net assetsattributing to the parent company continuously calculated on the basis of the newly increased share proportion as of theacquisition date or date of combination, adjust the retained earnings if the share premium in the capital reserve isinsufficient for write-down.
④ Partial Disposal of Equity Investment in Subsidiaries without Losing Control
Disposal price and disposal of long-term equity investment shall be entitled to the difference between the shares of the netassets of the subsidiaries calculated continuously from the date of purchase or acquisition. Adjustments shall be made tothe equity premiums in the capital reserve of consolidated balance sheet. When the equity premiums in the capital reserveare not sufficient for write-down, the retained earnings shall be adjusted.
7. Classification of Joint Arrangement and Accounting Treatment Methods of Joint OperationJoint arrangement can be divided into joint operation and joint venture.Joint operation refers to a joint arrangement in which the parties have rights to the assets and obligations for the liabilities
relating to the joint operation.The Company recognizes the following items related to the share of interests in the joint operation:
(1) Recognize the assets held separately by the Company and the assets jointly held in accordance with the share of theCompany;
(2) Recognize the liabilities assumed separately by the Company and the liabilities jointly assumed in accordance with theshare of the Company;
(3) Recognize the income generated through the sale of the Company’s share of the output of the joint operation;
(4) Recognize the income generated through the sale of the output of the joint operation in accordance with the share ofthe Company.
(5) Recognize the expenses incurred separately, and the expenses incurred in joint operation in accordance with theshare of the Company .The Company’s investment in joint venture is accounted for by the equity method, as specified in the financial report in thischapter – V. Important Accounting Policies and Accounting Estimates – No. 19. Long-term Equity Investment.
8. Recognition criteria of cash and cash equivalents
Cash refers to the cash on hand and deposits that are available for payment at any time of the Company. Cashequivalents refer to investments held by the Company featuring short duration, strong liquidity, easy conversion into cashof known amount and low risk of changes in value.
9. Conversion of transactions and financial statements denominated in foreign currencies
(1) Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the day when the transactionsoccurred.Balance sheet date foreign currency monetary items shall be translated using the spot exchange rate at the balance sheetdate. The resulting exchange differences are recognized in profit or loss for the current period, except for thosedifferences related to the principal and interest on a specific-purpose borrowing denominated in foreign currency foracquisitions, construction or production of the qualified assets, which should be capitalized as cost of the assets.
2. Translation of foreign currency financial statements
All assets and liabilities items in balance sheet are translated based on spot exchange rate on the balance sheet date;owners' equity items other than "undistributed profit" are translated at a spot exchange rate when accrued. Revenue andexpense items in the income statement are translated at a spot exchange rate at the transaction occurrence date.For disposal of overseas operation, the translation difference as stated in the foreign currency financial statementsrelating to overseas operation, is accounted for in the profit and loss account in the current period from owners' equityitems.
10. Financial instruments
The Company recognizes a financial asset, financial liability or equity instrument when it becomes a party to a financialinstrument contract.
(1) Classification of the financial instruments
According to the Company's business model for management of the financial assets and the contractual cash flowfeatures of the financial assets, the financial assets, when initially recognized, are classified as: financial assets atamortized cost, financial assets at fair value through other comprehensive income (debt instruments) and financial assets
at fair value through profit or loss.For financial assets that meet the following conditions and are not designated to be measured at fair value through thecurrent profit or loss, the Company classifies them as financial assets at amortized cost:
－ The business model is aimed at collecting contract cash flow;－ Contract cash flow is the payment of principal and interest based on the outstanding principal amount.For financial assets that meet the following conditions and are not designated to be measured at fair value through currentprofit or loss, the Company classifies them as financial assets at fair value through other comprehensive income (debtinstruments).－ The business model is aimed at both collecting contract cash flows and selling financial asset;－ Contract cash flow is the payment of principal and interest based on the outstanding principal amount.The Company will, at the time of initial recognition, irrevocably designate non-trading investments in equity instruments asfinancial assets measured at fair value and the change shall be included in other comprehensive income (equityinstrument). The designation is made on the basis of independent investment, and the related investments fit the definitionof an equity instrument from an issuer’s perspective.In addition to the aforementioned financial assets at amortized cost and at fair value through other comprehensive income,the Company classifies all other financial assets as financial assets at fair value through current profit or loss. At the timeof initial recognition, for financial assets that should have been classified as financial assets at amortized cost or fair valuethrough other comprehensive income, the Company can irrevocably designate them as financial assets at fair valuethrough current profit or loss in order to eliminate or significantly reduce the accounting mismatch.The financial liabilities, when initially recognized, are classified as: financial liabilities at fair value through profit or loss andfinancial liabilities at amortized cost.Financial liabilities which meet one of the following conditions will be, when initially measured, designated as financialliabilities at fair value through profit or loss:
1) Such designation may be able to eliminate or significantly reduce the accounting mismatch.
2) The portfolio of financial liabilities or the portfolio of financial assets and financial liabilities shall be subject tomanagement and performance evaluation on the basis of fair value according to the enterprise risk management orinvestment strategy contained in the formal documentations, and a report shall be made to the key managementpersonnel within the enterprise on this basis.
3) Such financial liabilities shall contain embedded derivatives to be split separately.Subject to the conditions above, the Company has no such designated financial liabilities.
(2) Recognition and measurement of financial instruments
① Financial assets at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables, long-term receivablesand creditors investment, which shall be initially measured at fair value, and the relevant transaction expenses should beinitially capitalized; The accounts receivable that do not contain material financing compositions and those for which theCompany decides to not take into account the financing compositions of no more than one year shall be initially measuredat the contract transaction price.The interest calculated by effective interest method during the holding period is recorded into the current profit and loss.At the time of recovery or disposal, the difference between the price obtained and the book value shall be included in thecurrent profit or loss.
② Financial assets measured at fair value and its changes are included in other comprehensive income (debtinstruments)Financial assets measured at fair value and its changes are included in other comprehensive income (debt instruments)include receivables financing and investments in other creditor's rights. They are initially measured at fair value, and the
relevant transaction expenses should be initially capitalized. These financial assets are subsequently measured at fairvalue, and the change in fair value, other than the interest, the impairment loss or profit and the profit or loss on foreignexchange, shall be included in other comprehensive income.Upon derecognition, the cumulative profits or losses previously included in other comprehensive income shall be removedfrom other comprehensive income and included in the profit or loss for the period.
③ Financial assets at fair value through other comprehensive income (equity instruments)Financial assets at fair value through other comprehensive income (equity instruments) include investment in other equityinstruments. They are initially measured at fair value, and the transaction expenses shall be initially capitalized. Thesefinancial assets are subsequently measured at fair value, and the change in fair value shall be included in othercomprehensive income. The dividends obtained shall be included in the profit or loss for the period.Upon derecognition, the cumulative profits or losses previously included in other comprehensive income shall be removedfrom other comprehensive income and included in the carry-forward retained earnings.
④Financial assets at fair value through profit or loss in this period
Financial assets at fair value through profit or loss include trading financial assets, derivative financial assets and othernon-current financial assets. They are initially measured at fair value, and the transaction expenses related to them areincluded in the profit or loss for the period. These financial assets are subsequently measured at fair value, and thechange in fair value shall be included in the profit or loss for the period.
⑤ Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and LossFinancial liabilities at fair value through profit or loss include trading financial liabilities and derivative financial liabilities.They are initially measured at fair value, and the transaction expenses related to them are included in the profit or loss forthe period. These financial liabilities are subsequently measured at fair value, and the change in fair value shall beincluded in the profit or loss for the period.Upon derecognition, the difference between their book value and the consideration paid is included in the profit or loss forthe period.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost include short-term loans, notes payable, accounts payable, other payables, long-termloans, bonds payable, and long-term payables. They are initially measured at fair value, and the transaction expensesshall be initially capitalized.The interest calculated by effective interest method during the holding period is recorded into the current profit and loss.Upon derecognition the difference between the consideration paid and the book value of these financial liabilities isincluded in the current profit or loss.
(3) Derecognition and transfer of financial assets
The Company derecognizes financial assets when any one of the following conditions is satisfied:
The contractual right to receive cash flows of the financial assets has been terminated;The financial asset have been transferred and virtually all the risks and rewards related to the ownership of the financialasset shave been transferred to the transferee;The financial assets have been transferred, and while the Company has neither transferred nor retained virtually all of therisks and rewards related to the ownership of the financial assets, it has not retained control of the financial assets.At the time of the transfer of financial assets, the recognition of the financial assets shall not be terminated if the Companyhas retained virtually all the risks and rewards related to the ownership of the financial assets.The substance-over-form principle shall be adopted while making judgment on whether the transfer of financial assetssatisfies the above conditions for termination of recognition.The transfer of financial assets can be classified into entire transfer and partial transfer. If the transfer of an entire financialasset satisfies the conditions for termination of recognition, the difference between the two amounts below shall be
recorded into profit or loss for the period:
① The book value of the financial asset transferred;
② The consideration received as a result of the transfer, plus the accumulative amount of the change in fair valuepreviously recorded into the owners' equities (in cases where the transferred financial assets are financial assets at fairvalue through other comprehensive income (debt instruments) ).If the partial transfer of financial assets satisfies the conditions for termination of recognition, the overall book value of thetransferred financial asset shall be apportioned according to their respective relative fair value between the recognitionterminated part and the remaining part, and the difference between the two amounts below shall be recorded into profit orloss for the current period:
① The book value of the recognition terminated portion;
② The sum of consideration of the recognition terminated portion and the corresponding portion of accumulated changein fair value previously recorded into owners' equity (in cases where the transferred financial assets are financial assets atfair value through other comprehensive income (debt instruments)).Financial assets will still be recognized if they fail to satisfy the conditions for termination of recognition, with theconsideration received recognized as a financial liability.
(4) Recognition for termination of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, the recognition of the whole orrelevant portion of the liability is terminated; an agreement is entered between the Company and a creditor to replace theoriginal financial liabilities with new financial liabilities with substantially different terms, terminate the recognition of theoriginal financial liabilities as well as recognize the new financial liabilities.If all or part of the contract terms of the original financial liabilities are substantially amended, the recognition of the originalfinancial liabilities will be terminated in full or in part, and the financial liabilities whose terms have been amended shall berecognized as a new financial liability.When recognition of financial liabilities is terminated in full or in part, the difference between the book value of the financialliabilities terminated and the consideration paid (including transferred non-cash assets or new financial liability) isrecognized in profit or loss for the current period.Where the Company repurchases part of its financial liabilities, the book value of such financial liabilities will be allocatedaccording to the relative fair value between the continued recognized part and terminated part on the repurchase date.The difference between the book value of the financial liabilities terminated and the consideration paid (includingtransferred non-cash assets or new financial liability) is recognized in profit or loss for the current period.
(5) Method of determining the fair values of financial assets and liabilities
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the activemarket. The fair value of a financial instrument that is not traded in an active market is determined by using a valuationtechnique. The Company uses the valuation technique when it is applicable under current conditions and there areenough available data and other information to support and the technique should maximize the use of relevant observable.It chooses the inputs which are consistent with the asset or liability's characteristics considered by market participants inthe transaction of the relevant asset or liability and makes the maximum use of relevant observable inputs. Unobservableinputs are used under the circumstance that the relevant observable inputs cannot be obtained or not feasible.
(6) Test method and accounting treatment for impairment of financial assets
The Company estimates the expected credit loss on the financial assets at amortized cost and the financial assets at fairvalue through other comprehensive income (debt instruments), and financial guarantee contracts, either alone or incombination.The Company calculates the probability-weighted amount of the current value of the difference between the cash flowsreceivable under the Contract and the cash flows expected to receive, and recognizes the expected credit loss, by taking
into account all the reasonable and well-founded information, including past events, current condition and forward-lookingeconomic situation, and weighting the risk of default.If the credit risk of this financial instrument has been significantly increased upon initial recognition, the Companymeasures its loss provision in accordance with the amount equivalent to the expected credit loss of the financialinstrument throughout the duration; if the credit risk of this financial instrument is not significantly increased upon initialrecognition, the Company will measure the loss provision of this financial instrument by the amount of its expected creditloss in the 12 months to come. The increased or reversed amount of the loss provision resulting therefrom is included inthe current profit or loss as the impairment loss or profit.The Company recognizes the relative changes in the risk of default within the expected duration of financial instruments,and assesses whether the credit risk of financial instruments has significantly increased since the initial recognition bycomparing the risk of default of financial instruments on the balance sheet date with the risk of default on the initialrecognition date. If the financial instrument becomes overdue for more than 30 days, the Company believes that the creditrisk of this financial instrument has been significantly increased, unless there are concrete evidences that the credit risk ofthis financial instrument has not been significantly increased upon initial recognition.If the financial instrument carries low credit risk at the balance sheet date, the Company believes that the credit risk of thisfinancial instrument is not significantly increased upon initial recognition.If there are objective evidences showing that a certain financial asset has been subject to credit impairment, the Companywill accrue impairment provision for this financial asset on the individual asset basis.The Company will always measure the loss provision for the accounts receivable and contract assets generated bytransactions regulated by Accounting Standards for Enterprises No. 14 - Revenue (2017), whether they contain materialfinancing compositions or not, by the amount of the expected credit loss throughout the duration.The Company will always measure the loss provision for the lease receivable by the amount of the expected credit lossthroughout the duration.The Company shall write down the book balance of a financial asset directly if it no longer reasonably expects that thecontract cash flow of the financial asset can be recovered in whole or in part.
11. Notes receivable
Refer to Financial Report - V. Significant Accounting Polices and Accounting Estimates - 10. Financial Instruments
12. Accounts receivable
Refer to Financial Report - V. Significant Accounting Polices and Accounting Estimates - 10. Financial Instruments
13. Receivables financing
Refer to Financial Report - V. Significant Accounting Polices and Accounting Estimates - 10. Financial Instruments
14. Other receivables
Determination method and accounting treatment for the expected credit loss of other receivablesRefer to Financial Report - V. Significant Accounting Polices and Accounting Estimates - 10. Financial Instruments
15. Inventories
(1) Category of inventory
Inventories are classified as raw materials, turnover materials, commodity stocks, products in progress and materialscommissioned for processing.Inventories are initially measured at cost. Inventory costs include procurement costs, processing costs, and otherexpenses incurred to bring the inventory to its current location and condition.
(2) Determination of cost
Cost of inventories is determined using the weighted average method.
(3) Basis for the determination of net realizable value and different type of inventoriesOn the balance sheet date, inventories shall be measured at the lower of cost and net realizable value. A provision shallbe made for inventory price drops if inventory costs exceed the net realizable value. Net realizable value refers to theamount after deducting the estimated costs to be incurred at the time of completion, the estimated selling expenses andtaxes from the estimated sales price of inventories during daily activities.Net realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock, and held-for-sale rawmaterials, during the normal course of production and operation, shall be determined by their estimated sales less therelated selling expenses and taxes; the net realizable value of material inventories, which need to be processed, duringthe normal course of production and operation, shall be determined by the amount after deducting the estimated cost ofcompletion, estimated selling expenses and relevant taxes from the estimated selling price of finished goods; the netrealizable value of inventories held for execution of sales contracts or labor contracts shall be calculated on the ground ofthe contracted price. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the netrealizable value of the exceeding part shall be calculated on the ground of general selling price.The inventory falling price reserves withdrawn shall be reversed within the amount withdrawn, and the reversed amountshall be included in current profit or loss, if the net realizable value of an inventory is higher than its book value after thewithdrawal due to the disappearance of the factors that influence the writing-down of its value.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization of low-value consumables and packaging materials
① Low-value consumables are amortized using the immediate write-off method;
② Packaging materials are amortized using the immediate write-off method.
16. Contract Assets
Accounting policies as of January 1, 2020
(1) Recognition methods and standards of contract assets
The Company shall show the contract assets or contract liabilities in the balance sheet in accordance with the relationshipbetween the performance of the contract obligations and the Customer payment. The Company shall list its right toreceive consideration due to the transfer of goods or services to the Customer (and such rights are subject to factors otherthan the passage of time) as contractual assets. Contract assets and contract liabilities under the same contract shall beshown on a net basis. The Company’s unconditional right (depending solely on the passage of time) to collectconsideration from the Customer shall be shown separately as a receivable.
(2) Determination method and accounting treatment for the expected credit loss of contract assetsSee Financial Report – V. Important Accounting Policies and Accounting Estimates – No. 10. Financial Instruments forspecified determination method and accounting treatment for the expected credit loss of contract assets.
17. Contract Costs
Accounting policies as of January 1, 2020Contract costs include contract performance costs and contract acquisition costs.The Company recognizes the costs incurred for performing the contract and that not fall within the scope of inventories,fixed assets or intangible assets as stipulated by related standards as an asset when the following conditions are met:
· The cost is directly related to a current or anticipated contract.· The cost increases the Company’s future resources to perform obligations.· The cost is expected to be recovered.The Company regards the incremental cost incurred to acquire the contract and that are expected to be recovered ascontract acquisition costs, and recognizes them as an asset.Assets related to contract costs shall be amortized using the same basis as income recognition of goods or servicesrelated to the asset. However, the Company shall include the amount in current profit or loss if the amortization period ofthe contract acquisition cost is less than one year.The Company shall draw an impairment provision for the excess part when the book value of an asset related to thecontract cost is higher than the difference between the following two items, and recognize it as an impairment loss of theasset:
(1) The remaining consideration expected to be obtained due to the transfer of goods or services related to the asset;
(2) Estimated costs to be incurred for the transfer of goods or services related to the asset.The Company shall reverse the impairment provision withdrawn and include it in current profit or loss if the impairmentfactors of the previous period change and cause the aforementioned difference higher than the book value of the asset.However, the book value of the asset after reverse shall not exceed the book value of the asset on the reverse date underthe assumption that no provision for the impairment is withdrawn.
18. Holding Assets for Sale
An asset whose book value is recovered mainly through the sale (including the exchange of non-monetary assets of acommercial nature) rather than through the continuous use of a non-current asset or disposal group is classified asholding-for-sale.A non-current asset or disposed group is classified by the Company as holding for sale if it meets the following criteria atthe same time:
(1) Immediate sale could be made under the current circumstances in accordance with the convention of selling such kindof assets or disposal groups in similar transactions;
(2) Selling is extremely likely to occur, i.e. the Company has made a resolution on a selling plan and obtained confirmedpurchase commitments, and the selling is predicted to be completed within 1 year. If required by relevant provisions thatselling shall only be made after approved by the relevant competent authority or supervision department of the Company,such approval should have been obtained.For those classified as held-for-sale non-current assets (excluding financial assets, deferred income tax assets, assetsformed by employee compensation) or disposal group, and whose book value is higher than the net amount afterdeducing sales expenses from fair value, the book value shall be written down to the net amount after deducing salesexpenses from fair value. The amount of write-down shall be recognized as assets impairment loss and included incurrent profit or loss. Meanwhile, the impairment provision of assets held for sale shall be withdrawn.
19. Long-term Equity Investment
(1) Joint control or significant influence criterion
Joint control is the contractually agreed sharing of control of an arrangement, and exists only when requiring theunanimous consent of the parties sharing control before making decisions about the relevant activities of the arrangement.The Company together with the other joint venture parties can jointly control over the investee and are entitled to the rightof the net assets of the investee, as the investee is joint venture of the Company.Significant influence refers to the power to participate in making decisions on the financial and operating policies of anenterprise, but not the power to control, or jointly control, the formulation of such policies with other parties. Where theCompany can exercise significant influence over the investee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination of entitiesFor long-term equity investment in a subsidiary generated due to business combinations involving entities under commoncontrol, the share of the book value in the consolidated financial statements of the ultimate controlling party on the date ofcombinations shall be taken as the initial investment cost of the long-term equity investments. For difference between theinitial cost of long-term equity investment and the book value of the consideration paid, adjustments shall be made to theequity premiums in the capital reserve. When the equity premiums in the capital reserve are not sufficient for write-down,the retained earnings shall be adjusted. Where control over the investee under common control is available due toadditional investment or other reasons, for difference between the initial cost of long-term equity investment recognized inaccordance with the above principles, and the sum of the book value of long-term equity investment prior to thecombination and the book value of newly paid consideration for the acquisition of further shares on the date ofcombination, adjustments shall be made to equity premiums. When the equity premiums are not sufficient for write-down,the retained earnings shall be written down.For long-term equity investment in a subsidiary generated due to business combinations involving entities not undercommon control, the cost of the combination recognized on the date of combination shall be taken as the initial investmentcost of the long-term equity investments. In relation to imposing control over the investee not under common control as aresult of additional investment and other reasons, the initial investment shall be the sum of the book value of the equityinvestment originally held and the newly increased investment cost.
② Long-term equity investments acquired by means other than business combinationThe initial cost of a long-term equity investment obtained by cash payment shall be the purchase costs actually paid.The initial cost of investment of a long-term equity investment obtained by means of issuance of equity securities shall bethe fair value of the equity securities issued.
(3) Subsequent measurement and recognition of profit or loss
① Long-term equity investment calculated by cost method
Long-term equity investment in subsidiaries of the company is calculated by cost method, unless the investment meetsthe conditions for holding for sale. except for the actual consideration paid for the acquisition of investment or the declaredbut not yet distributed cash dividends or profits which are included in the consideration, investment gains are recognizedas the Company' shares of the cash dividends or profits declared by the investee.
② Long-term equity investment accounted for by equity method
Long-term equity investments of associates and jointly controlled entities are calculated using equity method. Where theinitial investment cost exceeds the investment, the difference between the share of the fair value of the investee’sidentifiable net assets shall be enjoyed and no adjustment shall be made to the initial investment cost of long-term equityinvestment;where the initial investment cost is less than the investment, the difference between the share of the fair valueof the investee’s identifiable net assets shall be enjoyed and be included in current profit or loss, and adjustments shall be
made to the initial investment cost of long-term equity investment.The Company recognizes the investment income and other comprehensive income according to the shares of net profit orloss and other comprehensive income realized by the investee which it shall be entitled or shared respectively, andsimultaneously makes adjustment to the book value of long-term equity investments; The book value of long-term equityinvestment shall be reduced by attributable share of the profit or cash dividends for distribution declared by the investee.In relation to other changes of owner's equity except for net profits and losses, other comprehensive income and profitdistributions of the investee, the book value of long-term equity investments shall be adjusted and included in owner’sequity.When recognizing the amount of proportion of net profit or loss, other comprehensive income and other changes ofowner’s equity, in the investee which it entitles, fair value of the identifiable assets of the investee at the time when theinvestment is obtained shall be used as basis, and adjustment shall be made to the net profit, other comprehensiveincome and others of the investee in accordance with the accounting policies and accounting period of the Company.The unrealized profit or loss resulting from internal transactions between the Company and its associate or joint ventureshall be offset in portion to its equity interests, based on which investment income shall be recognized, except when theassets invested or sold constitute transaction. Any losses resulting from transactions, which are attributable to impairmentof assets, shall be fully recognized.The Company shall be liable for net loss incurred by the Company to the joint venture or associate, and shall write it downto zero with the book value of the long-term equity investment and other long-term equity which substantially constitute netinvestment in the joint venture or associate. Where a joint venture or associate later realizes net profits, the Companyshall resume recognition of its share of income after the share of income has made up for the unrecognized share of loss.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the book value and the consideration actuallyreceived shall be included in the current profit or loss.For long-term equity investments accounted by partial equity disposal method, the remaining equity is still accounted bythe equity method. Other comprehensive income recognized by the original equity method shall be carried forward in acorresponding proportion on the same basis as the direct disposal of related assets or liabilities by the investee. Changesin the interests of the owners are carried forward to the current profit and loss on a pro ratio basis.When losing joint control or significant influence over the investee due to disposal of equity investment or other reasons,other comprehensive income of the original equity investment recognized accounted by equity method shall be treatedusing the same basis as the direct disposal of related assets or liabilities by the investee upon the termination of the use ofequity methods. Other changes of owner’s equity shall be converted to the current profit or loss upon the termination ofuse of equity methods.When losing the control over the investee due to partially disposal of equity investment and other reasons, the remainingequities after disposal shall be accounted for under equity method in preparation of individual financial statementsprovided that joint control or significant influence over the investee can be imposed, and shall be adjusted as if suchremaining equities has been accounted for under the equity method since they are obtained. Other comprehensiveincome recognized prior to the acquisition of controls over the investee shall be carried over proportionally using the samebasis as the direct disposal of related assets or liabilities by the investee. Other changes of owner’s equity due to the useof equity method shall be carried over into the current profit or loss proportionally. Where the remaining equities afterdisposal cannot impose joint control or significant influence over the investee, it shall be recognized as financial asset, andthe difference between fair value and the book value on the date of losing control shall be included in the current profit orloss. All the other comprehensive incomes and other changes of owners’ equity recognized prior to the acquisition ofcontrols over the investee shall be carried over.When losing control over a subsidiary in step-by-step disposal of its equity interests through multiple transactions is
recognized as a package deals, these transactions shall be in accounting treated as loss of control of a subsidiary indisposal of equity interests. The differences between price on each disposal prior to loss of control and the long-termequity investment book value of the disposed equity shall be recognized as other comprehensive income in individualfinancial statements, and included in the current profit or loss when the control is lost. Transactions not recognized as apackage deal shall be accounted for separately.
20. Investment property
Investment property refers to the real estate held to generate rental income or capital appreciation, or both, includingleased land use rights, land use rights held for transfer after appreciation, and leased buildings (including buildings thatare leased after completion of self-construction or development activities and buildings in construction or developmentthat are used for rental in the future).The Company adopts the cost mode to measure the existing investment property. Subsequent expenditures related tofixed assets shall be included in the cost of fixed assets when the relevant economic benefits are likely to flow in and thecost can be measured reliably. The book value of the replaced part is derecognized. Other subsequent expenditures shallbe included in current profit or loss at the time of occurrence. Investment property measured at cost - buildings held forleasing shall adopt the same depreciation policy for fixed assets of the company, land use rights held for leasing shalladopt the same amortization policy for the intangible assets.
21. Fixed Assets
(1) Conditions for recognition of 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 a service life of more than one accounting year. Fixed asset is recognized when itmeets the following conditions: ① It is probable that the economic benefits associated with the fixed asset will flow to theenterprise; ② Its cost can be reliably measured. Fixed assets are initially measured at cost (with the influence ofexpected disposal costs taken into consideration). Subsequent expenditures related to fixed assets shall be included inthe cost of fixed assets when the relevant economic benefits are likely to flow in and the cost can be measured reliably.The book value of the replaced part is derecognized. Other subsequent expenditures shall be included in current profit orloss at the time of occurrence.
(2) Methods for depreciation
| Category | Depreciation method | Useful lives of depreciation | Residual Ratio | Annual depreciation rate |
| Housing and building | Straight-line method | 20 | 5% | 4.75% |
| Machinery and equipment | Straight-line method | 5-10 | 5% | 19.00%-9.50% |
| Means of transport | Straight-line method | 4-8 | 5% | 23.75%-11.88% |
| Electronic and other equipment | Straight-line method | 3-5 | 5% | 31.67%-19.00% |
Fixed assets are depreciated by categories using the straight-line method, and the annual depreciation rates are
determined by categories based upon their estimated useful lives and their estimated residual values. Where the parts ofa fixed asset have different useful lives or cause economic benefits for the enterprise in different ways, differentdepreciation rates or depreciation methods shall apply, and each part is depreciated separately.For fixed assets leased under finance lease, if it can be reasonably determined that the ownership of the leasedasset can be acquired upon the expiry of the lease term, depreciation policies in line with the fixed assets will be adoptedfor depreciation during the remaining service life of the leased asset. If it cannot be reasonably determined that theownership of the leased asset can be acquired upon the expiry of the lease term, depreciation policies in line with the fixedassets will be adopted for depreciation during the shorter of the lease term and the remaining service life of the leasedasset.
(3) Recognition bases and measurement methods of fixed assets under finance leaseWhere any one of the following conditions is provided in the lease agreement between the Company and the lessee, theleased assets can be recognized as assets acquired under finance leases: ① The ownership of the leased assets, uponthe expiry of lease term, belongs to the Company; ② The Company has the option to purchase the leased assets, andthe price is much lower than the fair value of the assets at the time of exercising the option; ③ The lease term accountsfor the majority of the service life of the leased asset; ④ There is no great difference between the minimum present leasevalue on the lease commencement date and the fair value of the assets;⑤ The leased asset is of a special nature andshall only be used by the lessee if no major modification is made. On the commencement of the lease, the leased assetshall be recorded at an amount equal to the lower of the fair value of the leased asset and the present value of theminimum lease payments, and the minimum lease payments shall be recorded as the carrying amount of long-termpayables. The difference between the recorded amount of the leased asset and the minimum lease payments shall beaccounted for as unrecognized finance charge.
(4) Disposal of fixed assets
Fixed assets being disposed of or not expected to generate economic benefits through use or disposal shall bederecognized. The amount of income from the disposal, transfer, scrapping or damage of fixed assets after deducting itsbook value and related taxes shall be included in the current profit and loss.
22. Projects under Construction
Construction in progress is measured at the actual costs incurred. The actual cost includes construction costs, installationcosts, borrowing costs that meet the capitalization conditions, and other necessary expenditures incurred before theconstruction in progress reaches its intended use status. Construction in progress reaching predetermined serviceableconditions shall be converted to fixed assets and begin counting for depreciation the following month.
23. Borrowing Costs
(1) Criteria for recognition of capitalized borrowing costs
For borrowing costs incurred by the Company that are directly attributable to the acquisition, construction or production ofassets qualified for capitalization, the costs will be capitalized and included in the costs of the related assets. Otherborrowing costs shall be recognized as expense in the period in which they are incurred and included in profit or loss forthe current period.Assets qualified for capitalization are assets (fixed assets, investment property, inventories, etc.) that necessarily take a
substantial period of time for acquisition, construction or production to get ready for their intended use or sale.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation of capitalization ofborrowing costs, excluding the period in which capitalization of borrowing costs is temporarily suspended.Capitalization of borrowing costs begins when the following three conditions are fully satisfied:
① expenditures for the assets (including cash paid, transferred non-currency assets or expenditure for holding debtliability for the acquisition, construction or production of assets qualified for capitalization) have been incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach its intended usable or salablecondition have commenced.Capitalization of borrowing costs shall be suspended during periods in which the qualifying asset under acquisition andconstruction or production ready for the intended use or sale.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production ofa qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months; if theinterruption is a necessary step for making the qualifying asset under acquisition and construction or production ready forthe intended use or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred during suchperiod shall be recognized as profits and losses of the current period. When the acquisition and construction or productionof the asset resumes, the capitalization of borrowing costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
Specific borrowings for the acquisition, construction or production of assets qualified for capitalization, borrowing costs ofthe specific borrowings actually incurred in the current period minus the interest income earned on the unused borrowingloans as a deposit in the bank or as investment income earned from temporary investment will be used to determine theamount of borrowing costs for capitalization.General borrowings for the acquisition, construction or production of assets qualified for capitalization, theto-be-capitalized amount of interests on the general borrowing shall be calculated and determined by multiplying theweighted average asset disbursement of the part of the accumulative asset disbursements minus the specificallyborrowed loans by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated anddetermined according to the weighted average interest rate of the general borrowing.During the period of capitalization, the exchange balance on the principals and interests of special foreign currencyborrowings shall be capitalized and shall be included in the cost of assets eligible for capitalization. The exchange balanceon the principals and interests of foreign currency borrowings other than the special foreign currency borrowings shall beincluded in current profit or loss.
24. Intangible Assets
(1) Valuation method, service life, impairment test
(1) Valuation Method of Intangible Assets
① Intangible assets are initially measured at cost upon acquisition
The costs of an externally purchased intangible asset include the purchase price, relevant taxes and expenses paid,and other expenditures directly attributable to putting the asset into condition for its intended use.
② Subsequent measurement
The service life of intangible assets shall be analyzed and judged upon acquisition.
As for intangible assets with a finite service life, they are amortized using the straight-line method over the term in
which economic benefits are brought to the firm; If the term in which economic benefits are brought to the firm by anintangible asset cannot be estimated, the intangible asset shall be taken as an intangible asset with indefinite service life,and shall not be amortized.
(2) Estimated useful lives for the intangible assets with finite service life:
| Item | Estimated useful lives | Basis |
| Land use rights | 50 years | Land use certificate |
| Non-patented technology | 5-10 years | Expected benefited period |
| Softwares | 2-5 years | Expected benefited period |
| Trademark rights | 6 years | Expected benefited period |
| Software copyright | 10 years | Expected benefited period |
For an intangible asset with a finite service life, review on its service life and amortization method is performed at theend of each end.Upon review, service life and amortization method for the intangible assets are the same with the previous estimateat the end of this period.
(3)The basis for the judgment of intangible assets with uncertain service life and the procedure for reviewingtheir service life
As at the balance sheet date, the Company has no intangible assets with uncertain service life.
(4)Specific criteria for the division of research phase and development phase
The expenses for internal research and development projects of the Company are divided into expenses in the
research phase and expenses in the development phase.
Research phase: Scheduled innovative investigations and research activities to obtain and understand scientific or
technological knowledge.
Development phase: Apply the research outcomes or other knowledge to a plan or design prior to a commercial
production or use in order to produce new or essentially-improved materials, devices, products, etc.
(5)Specific condition for capitalizing expenditure during the development phase
Expenses in the research phase are recorded into the profits and losses for the current period when they occur.Expenditure during the development phase that simultaneously satisfies the following conditions shall be recognized asintangible assets. Otherwise shall be included in current profit or loss:
① It is technically feasible to complete such intangible asset so that it will be available for use or for sale;
② There is intention to complete the intangible asset for use or sale;
③ The intangible asset can produce economic benefits, including there is evidence that the products producedusing the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use,there is evidence that there exists usage for the intangible asset;
④ There is sufficient support in terms of technology, financial resources and other resources in order to complete
the development of the intangible asset, and there is capability to use or sell the intangible asset;
⑤ The expenses attributable to the development stage of the intangible asset can be measured reliably.
The R&D expenditures incurred shall be included in current profit or loss if it is impossible to distinguish expenditure
during the research phase and expenditure during the development phase.
25. Impairment of long-term assets
Long-term assets, such as long-term equity investment, investment properties, fixed assets and construction in progressthat measured at cost, and intangible assets and oil and gas assets with limited service life, are tested for impairment ifthere is any indication that an asset may be impaired on the balance sheet date. If the result of the impairment testindicates that the recoverable amount of the asset is less than its book value, a provision for impairment and animpairment loss are recognized for the amount by which the asset's book value exceeds its recoverable amount. Therecoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flowsexpected to be derived from the asset. Provision for asset impairment is determined and recognized on the individualasset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of agroup of assets to which the asset belongs to is determined. A group of assets is the smallest group of assets that is ableto generate cash inflows independently.Goodwill formed due to business combination, intangible assets with uncertain service life and intangible assets that havenot yet reached serviceable conditions, shall be tested for impairment at least at the end of each year, regardless ofwhether there is any indication of impairment.When the Company carry out impairment test to goodwill, the Company shall, as of the purchasing day, allocate on areasonable basis the book value of the goodwill formed by merger of enterprises to the relevant asset groups, or if there isa difficulty in allocation, to allocate it to the sets of asset groups. The relevant asset group or combination of asset groupsis the asset group or combination of asset groups that can benefit from the synergies of business combination.For the purpose of impairment test on the relevant asset groups or the sets of asset groups containing goodwill, if anyevidence shows that the impairment of asset groups or sets of asset groups related to goodwill is possible, an impairmenttest will be made first on the asset groups or sets of asset groups not containing goodwill, thus calculating the recoverableamount and comparing it with the relevant book value so as to recognize the corresponding impairment loss. Asset groupor combination of group assets containing goodwill are tested for impairment and the book value and recoverable amountshall be compared. If the recoverable amount is less than the book value, the amount of impairment loss shall bededucted and apportioned to the book value of goodwill in asset group or combination of asset groups, before deductingto the book value of all other assets proportionally based on the proportion of the book value of all assets other thangoodwill in the asset group or combination of asset groups. Once the above asset impairment loss is recognized, it will notbe reversed in the subsequent accounting periods.
26. Long-term prepaid expenses
Long-term prepaid expenses are expenses which have occurred but will benefit over 1 year and shall be amortized overthe current period and subsequent periods.The amortization period and method of various expenses are as follows:
| Item | Amortization method | Amortization period |
| Housing rent | Composite life method | Benefit period |
| Improvement expenditure of fixed assets leased by operating lease | Composite life method | Benefit period |
27. Contract liabilities
Accounting policies as of January 1, 2020The Company shall show the contract assets or contract liabilities in the balance sheet in accordance with therelationship between the performance of the contract obligations and the Customer payment. The Company’s obligation totransfer goods or provide services to customers for which consideration has been received or receivable are presented ascontractual liabilities. Contract assets and contract liabilities under the same contract shall be shown on a net basis.
28. Employee remuneration
(1) Accountant arrangement method of short-term remuneration
During the accounting period when the staff provides service, the Company will recognize the short-term remunerationactually incurred as liabilities, and the liabilities would be charged into current profits and loss or costs of assets.The Company will pay social insurance and housing funds, and will make provision of trade union funds and staffeducation costs in accordance with the requirements. During the accounting period when the staff provides service, theCompany will determine the relevant amount of employee benefits in accordance with the required provision basis andprovision ratios.The expenses on employee benefit incurred by the Company shall be included in the current profit or loss or related assetcost based on the actual amount when actually incurred, and the non-monetary benefit shall be measured at its fair value.
(2) Accountant arrangement method of retirement benefit plan
① Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordance with the relevant provisionsof the local government for the staff. During the accounting period when the staff provides service, the Company willcalculate the amount payable in accordance with the local stipulated basis and proportions which will be recognized asliabilities, and the liabilities would be charged into current profits and loss or costs of assets. In addition, the Companyjoins in corporation annuity plan/supplementary pension insurance fund approved by related state departments. TheCompany conducts payment to annuity plan/ local social insurance institution according to certain proportion ofemployees’ wages and corresponding expenditures are included in the current profit or loss or relevant asset costs.
② Defined benefit scheme
The welfare responsibilities generated from defined benefit scheme based on the formula determined by projected unitcredit method would be vested to the service period of the staff and charged into current profits and loss or costs ofassets.
(3) Accountant arrangement method of termination benefits
Where the Company pays termination benefit to employees, the liabilities of employee remuneration generated bytermination benefit shall be recognized at the earlier of the following date and included in the current profit or loss: whenthe company cannot unilaterally withdraw termination benefit provided by labor relationship termination plan or layoffproposal; when the Company recognizes costs or expenses related to a restructuring of the payment of terminationbenefits.
(4) Accountant arrangement method of other long-term employee benefits
29. Estimated liabilities
The Company shall recognize the obligations related to contingencies as estimated liabilities provided that they satisfy thefollowing conditions:
(1) the obligation is a present obligation of the group;
(2)it is probable that an outflow of economic benefits will be required to settle the obligation;
(3)the amount of the obligation can be measured reliably.
Estimated liabilities shall be initially measured at the best estimate of the expenditure required to settle the related presentobligation.Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall be taken into account as awhole in reaching the best estimate. Where the effect of the time value of money is material, the best estimate shall bedetermined by discounting the related future cash outflow.When the expenses required have a successive range, in which the possibilities of occurrence of each result are the same,the best estimate shall be determined by the middle value in the range. In other cases, the best estimates shall bedetermined separately as follows:
· Determined according to the amount most likely to occur if the contingency involves an individual item.· Calculated and determined on the basis of the various possible outcomes and relevant probabilities if the contingencyinvolves multiple items.Where some or all of the expenditure required to settle an estimated liability is expected to be reimbursed by a third party,the reimbursement is separately recognized as an asset when it is virtually certain that the reimbursement will be received.The amount recognized for the reimbursement is limited to the book value of the estimated liability.On the balance sheet date, the Company shall review the book value of the estimated liabilities, and shall adjust the bookvalue on the basis of the current best estimate if there is conclusive evidence showing the book value cannot reflect thecurrent best estimate.
30. Share-based payment
The Company's share-based payment refers to a transaction in which an enterprise determines the liabilities on the basisof equity instruments granting or bearing for the acquisition of service from its employees or other parties. The Company'sshare-based payment is equity-settled.Equity-settled share-based payment and equity instrument:
As to an equity-settled share-based payment in return for services of employees, calculation will be based on the fairvalue of the equity instrument granted to the employees. Equity instruments vested immediately after the date of grant willbe included in the relevant cost or expense based on its fair value on the date of grant, and the capital reserve will beincreased accordingly. For equity instruments to be vested after completing the service during the waiting period after thedate of grant or meeting regulated performance conditions, the Company shall include the services obtained in the currentperiod in relevant costs or expenses and increase capital reserves accordingly on each balance sheet date during thewaiting period on the basis of the best estimate of the number of viable equity instruments to be vested and the fair valueon the grant date.If the terms of the equity-settled share-based payment are amended, the Company shall recognize the services receivedat least based on the situation before the amendment was made. In addition, any amendment resulting in the increase ofthe fair value of the equity instrument granted or changes that are beneficial to the staff on the amendment date, will berecognized as an increase in the service received.
If the equity instrument is cancelled during the waiting period after the date of grant, the Company will treat thecancellation of the equity instrument as accelerated vest, include the amount to be recognized in the remaining waitingperiod in the current profit or loss, and recognize the capital reserves simultaneously. However, if new equity instrumentsare vested and they are verified at the vesting date of new equity instrument as alternatives vested to canceled equityinstruments, the treatment on the new equity instrument is in conformity with the modified treatment on disposal of equityinstrument.
31. Revenue
Accounting policies for revenue recognition and measurementAccounting policies as of January 1, 2020
(1) Accounting policies for revenue recognition and measurement
The Company has fulfilled its contractual obligation to recognize income when the Customer obtains control over therelevant goods or services. Obtaining control over related goods or services means to be able to dominate the use of thegoods or services and obtain virtually all economic benefits from it.Where the Contract contains the performance of two or more obligations, the Company shall, on the commencement dateof the Contract, apportion the transaction price to each individual performance obligation on the basis of the relativeproportion of the individual selling price of the goods or service committed by each individual performance obligation. TheCompany shall measure its income on the basis of the transaction price apportioned to each individual performanceobligation.The transaction price refers to the amount of consideration the Company is expected to be entitled to receive for thetransfer of goods or services to the Customer, excluding payments received on behalf of third parties and the amountsexpected to be refunded to the Customer. The Company determines the transaction price in accordance with Contractterms and by taking into consideration its past practices. In determining the transaction price, it takes into considerationthe impact of variable consideration, material financing elements in the Contract, non-cash consideration, considerationpayable to customers and other factors. The Company determines the transaction price that includes the variableconsideration at an amount not exceeding the amount of accumulated recognized income which is not likely to bematerially reversed when the relevant uncertainty is eliminated. Where there is material financing components in theContract, the Company shall determine the transaction price on the basis of the amount payable based on the assumptionthat the Customer pays in cash upon obtaining control over the goods or services, and shall amortize the differencebetween the transaction price and the Contract consideration by effective interest method during the Contract period.It shall be deemed as fulfilling performance obligation within a certain period of time if one of the following conditions issatisfied. Otherwise, it shall be deemed as fulfilling performance obligation at a certain point in time:
· The Customer obtains and consumes the economic benefits arising from the Company’s performance of obligations atthe same time of that the Company perform its obligations.· The Customer can control the goods under construction during the process that the Company perform its obligations.· The product produced by the Company during the performance of its obligations is irreplaceable in use, and theCompany shall be entitled to receive payment for the accumulated part of the performance completed so far during thewhole Contract period.For obligations performed within a certain period of time, the Company shall recognize income on the basis of theperformance progress during that period, except when the performance progress cannot be reasonably determined. TheCompany will adopt output method or input method to determine the performance progress by taking the nature of thegoods or services into consideration. Where the performance progress cannot be reasonably determined and the costsincurred are expected to be compensated, the Company shall recognize income on the basis of the costs incurred until
the performance progress can be reasonably determined.For obligations performed at a certain point of time, the Company recognizes income at the point when the Customerobtain control over relevant goods or services. The Company takes the following indications into consideration whendetermining whether the Customer has obtained control over relevant goods or services:
· The Company is entitled to collect payment in respect of the goods or services immediately, i.e. the Customer is obligedto make payment in respect of the goods or services immediately.· The Company has transferred legal ownership of the goods to the Customer, i.e. the Customer has legal ownership ofthe goods.· The Company has physically transferred the goods to the Customer, i.e. the Customer has physically possessed thegoods.· The Company has transferred the principal risks and rewards in the ownership of the goods to the Customer, i.e. theCustomer has obtained the principal risks and rewards in the ownership of the goods.· The Customer has received the goods or services, etc.
Accounting policy prior to January 01, 2020
(1) General principles for the recognition of revenue from commodity sales
① Revenue from the sale of goods is recognized when all the significant risks and rewards of ownership of the goodshave been transferred to the buyer;
② The Company does not retain either continuing managerial involvement to the degree usually associated withownership or effective control over the sold goods;
③ The amount of revenue can be reliably measured;
④ It is probable that the economic benefits associated will flow to the Company;
⑤ The relevant amount of costs incurred or to be incurred can be measured reliably.
(2) Specific principles
① Principle for recognizing revenue from the domestic sales of standard products: The Company's security standardproducts are sold, through both direct sale and distribution, to the project clients, dealers and other customers. TheCompany and customers sign sales contracts and send the goods to customers according to the contractual terms ofdelivery, or the customers pick up goods. The revenue is recognized after the customer receives and accepts the goodsand the Company obtains the evidence proving the client's receipt of goods.
② Principle for recognizing revenue from the overseas sales of standard products: If the domestic company makes directexport, the FOB and CIF terms are generally adopted and the Company recognizes the sale income after the product isdeclared and exported. If a foreign subsidiary sells the goods abroad, the goods will be sent to the customer or thecustomer will collect the goods according to the delivery method agreed with the customer, and the income will berecognized when the customer receives and accepts the goods.
③ Principle for recognizing system-integrated sales revenue: The sales of the system-integrated products of theCompany include providing the supporting services such as plan design, supporting products, installation, debugging andsystem trial operation. The sales income will be recognized upon acceptance.
④ Principle for recognizing the income from labor services: The income is recognized when the labor service is provided.Differences in income recognition accounting policies caused by different operation models of the same business
32. Government subsidies
(1) Type
Government grants are monetary assets and non-monetary assets acquired by the Company from the government free of
charge. Government grants are classified into government grants related to assets and government grants related torevenue.Government grants related to assets refer to government grants acquired by the Company for the purpose of purchasingor constructing or otherwise forming long-term assets. Government grants related to revenue refer to the governmentgrants other than those related to assets.
(2) Confirmation of time point
Government grants related to assets will be measured at the actual amount of money received at the time of receipt. Theassets (bank deposits) and deferred income shall be period by period included in the profits and losses of the currentperiod in a reasonable and systematic manner from the time the assets are available for use (those related to theCompany's daily activities shall be included in other income; those unrelated to the Company's daily activities shall berecognized as non-operating income). When the relevant assets are disposed of (sold, transferred, scrapped, etc.) at orbefore the end of their service life, the balance of the deferred income that has not yet been apportioned will betransferred to the current-period income from the disposal of the assets on an one-time manner, and will not be deferred.For government grants related to revenue, they will be recognized as profit and loss of the current period according to theamount receivable for government grants obtained under fixed quota standards, otherwise, they will be recognized asprofit and loss of the current period when it is actually received.
(3) Accounting treatment
Government grants related to assets shall write off the book value of relevant assets or be recognized as deferred income.When recognized as deferred income, the government grant related to assets will be period by period credited to theprofits and losses of the current period in a reasonable and systematic manner within the service life of relevant assets(those related to the Company's daily activities shall be recognized as other income; those unrelated to the Company'sdaily activities shall be recognized as non-operating income).The revenue-related government grants shall be recognized as deferred income if they are used to compensate relevantexpenses or losses in subsequent periods, and they shall be included in profit and loss of the current period (those relatedto Company's routine activities shall be included in other income; those unrelated to the Company's routine activities shallbe included in non-operating income) or used to offset relevant expenses or losses during the recognition of relatedexpenses or losses; the grants used to compensate related expenses or losses incurred shall be included in profit andloss of the current period (those related to Company's routine activities shall be included in other income; those unrelatedto the Company's routine activities shall be included in non-operating income) or used to offset relevant expenses orlosses.The discount interest on policy-based preferential loans obtained by the Company shall be accounted for under thefollowing two situations:
① The financial sector release discount funds to the lending bank, which provides loan to the Company at a interest ratewith policy preference. The Company takes the amount of loan actually received as the book value of the loan, andcalculates relevant borrowing costs on the basis of the loan principal and the interest rate with policy preference.
② Where the financial sector release discount funds directly to the Company, the Company will offset the relatedborrowing costs with the corresponding interest subsidies.
33. Deferred income tax assets/deferred income tax liabilities
Income tax includes current income tax and deferred income tax. The Company will include current income tax anddeferred income tax in the current profit or loss, except for income tax arising from business combination and transactionor event directly included in the owners’ equity (including other comprehensive income).Deferred income tax assets and deferred income tax liabilities shall be calculated and recognized on the basis of the
difference (temporary difference) between the tax basis of the assets and liabilities and their book value.Deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be availableagainst which deductible temporary differences can be utilized. For deductible losses and tax credits that can be reversedin the future period, deferred tax assets shall be recognized to the extent that it is probable that taxable profit will beavailable in the future to offset the deductible losses and tax credits.Save as the exceptions, deferred income tax liabilities shall be recognized for the taxable temporary difference.Special circumstances in which deferred income tax assets or deferred income tax liabilities are not recognized include:
? Initial recognition of goodwill;? Transaction or event that is not a business combination and would not affect accounting profit and taxable income (ordeductible loss) at the time of occurrence.For taxable temporary differences related to investments in subsidiaries, associates and joint ventures, deferred incometax liability is recognized, unless the Company can control the timing of reversal of such temporary differences and suchtemporary differences are not likely to be reversed in the foreseeable future. For deductible temporary differences relatedto the investments of subsidiaries, associates and joint ventures, deferred tax asset is recognized when the temporarydifferences are likely to be reversed in the foreseeable future and the taxable income amount used to offset the deductibletemporary differences is likely to be obtained in the future.On the balance sheet date, deferred income tax assets and deferred income tax liabilities shall be, as stipulated by tax law,measured by the applicable tax rate of the period of expected recovery of the relevant assets or settlement of the relevantliabilities.On the balance sheet date, the Company reviews the book value of the deferred income tax assets. The book value of thedeferred income tax asset will be written down if sufficient taxable income is not likely to be obtained to offset the benefit ofthe deferred income tax asset in the future period. The write-down amount will be reversed when sufficient taxable incomeis likely to be obtained.After granted the legal rights of net settlement and with the intention to use net settlement or obtain assets and repay debtat the same time, the net amount after offsetting its current income tax assets and current income tax liabilities shall berecorded.On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are presented in net amountafter set-off when both of the following conditions are satisfied:
? The taxpayer has the legal right to settle the current income tax assets and current income tax liabilities on a net basis;? Deferred income tax assets and deferred tax liabilities are related to the income tax to be paid by the same entity liableto pay tax to the same tax collection and management authority or related to different entities liable to pay tax. Therelevant entity liable to pay tax is intended to apply net settlement of current income tax assets and liabilities or, at thesame time, obtain assets and repay debt in every future period that deferred income tax assets and liabilities withimportance would be reversed.
34. Lease
(1) Accounting of operating lease
① As the lessee of operating leases, rental payments under operating leases are recognized as costs or expenses on astraight line basis over the lease term (including rent free periods). Initial direct costs that are attributable to an operatinglease incurred by the Company are charged to current profit and loss.When the lesser bears the lease related expenses which should be undertaken by the Company, the Company shalldeduct this part of expense from the rent and amortize the net amount over the lease term.
② Leasing charges received by the Company for the assets leased out shall be amortized in a straight-line basis over thelease term without deducting the rent-free periods, and recognized as leasing income. The initial direct fee related to theleasing transactions paid by the Company shall be charged to current expenses; if the mount is significant, it shall becapitalized and charged to current income evenly on the same basis as the leasing income is recognized over the leaseterm.When the Company bears the lease related expenses which should be undertaken by the lessee, the Company shalldeduct this part of expense from the rent income, and amortize the net amount over the lease term.
(2) Accounting of finance lease
① Assets acquired under finance leases: At the initiation date of the lessee, the leased asset is recorded at the amountsequal to the lower of the fair value of the leased asset and the present value of the minimum lease payments. The balanceis accounted for as unrecognized finance charge and is amortized using the effective interest method over the period ofthe lease. The Company, by means of the real interest method, amortizes the unacknowledged financial charges duringthe lease term of the assets and includes them into financing expenses. Initial direct cost incurred by the Company will beincluded in the assets acquired under finance leases.
② Assets acquired under finance rents: At the initiation date of the lessee, the difference between the recorded amount ofthe leased asset and the minimum lease receivables is accounted for as unrecognized finance income and is recognizedas rental income over the period of the lease. Initial direct costs shall be included in the initial accounting of the leasepayment receivables and deduct by the revenue recognized over the lease term.
35. Other significant accounting policies and accounting estimates
(1) Termination of operation
Termination of business is a separately distinguishable constituent part that satisfies one of the following conditions andthat has been disposed of or classified by the Company as held for sale:
① This constituent part represents an independent primary business or a separate principal operating area;
② This constituent part is part of an associated plan to dispose of for an independent primary business or a separateprincipal operating area;
③ This constituent part is a subsidiary acquired for resale.
(2) Repurchase of the Company's shares
The Company's shares repurchased by the Company for reducing the registered capital or rewarding employees shall betreated as the treasury shares based on the actual amount paid, and shall be checked and registered at the same time. Ifthe repurchased shares are canceled, the difference between the actual amount paid for the repurchase and the total parvalue of shares calculated by the par value of the canceled shares and the number of canceled shares will write off thecapital reserve. If the capital reserve is insufficient, the retained income will be written off; if the repurchased shares areawarded to the employees of the Company, it shall be categorized as equity-settled share-based payment. When theCompany receives the payment made by employees who exercise their rights to purchase such shares, the amount shallbe used to write off the cost of treasury shares delivered to employees and the capital reserve in the waiting period andmeanwhile, the capital reserve (stock premium) shall be adjusted according to the difference.
36. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
√ Applicable □ Not applicable
① Implementation of "Accounting Standards for Business Enterprises No. 14-Revenue" (revised in 2017) (hereinafterreferred to as "New Revenue Standards")a. The Ministry of Finance revised the "Accounting Standards for Business Enterprises No. 14-Revenue" in 2017. Therevised standards stipulate that for the first implementation of the standards, the amount of retained earnings and otherrelated items in the financial statements at the beginning of the year should be adjusted according to the cumulativeeffects, and the information for the comparable period should not be adjusted.b. The company implemented the new revenue standards since January 1, 2020. According to the standards, thecompany only adjusted the retained earnings and other related items in the financial statements at the beginning of theyear 2020 for the cumulative effects of contracts that have not been completed on the date of first implementation, and thecomparative financial statements were not adjusted.c. The company implemented new revenue standards and new leasing standards for the first time since 2020, andadjusted the items related to financial statements at the beginning of the year.
② Implementation of "Accounting Standards for Business Enterprises Interpretation No. 13"The Ministry of Finance issued the "Accounting Standards Interpretation for Business Enterprises No. 13" (CaiKuai [2019]No. 21, hereinafter referred to as "Interpretation No. 13") on December 10, 2019, which came into force on January 1,2020. Retrospective adjustment was not required.a. Identification of related partiesInterpretation No. 13 clarifies that the following circumstances constitute a related party: a joint venture or affiliatedbusiness between an enterprise and other member units (including parent companies and subsidiaries) of the enterprisegroup to which it belongs; a joint venture of the enterprise and other joint ventures or affiliated business. In addition,Interpretation No. 13 also clarifies that only two or more companies that are only significantly affected by one party do notconstitute a related party. It also adds that affiliated business includes affiliated business and their subsidiaries, and jointventures include joint ventures and their subsidiaries.b. Definition of businessInterpretation No. 13 completes the three elements of business composition, refines the judgment conditions of businesscomposition, and at the same time introduces the "concentration ratio test" option to simplify to a certain extent theproblems such as judgment of whether a combination obtained under the same control constitutes a business, etc.The company implemented Interpretation No. 13 since January 1, 2020, and the comparative financial statements werenot adjusted. The implementation of Interpretation No. 13 did not have significant impact on the company’s financial statusand operating results.
③ Implementation of the "Interim Provisions on Accounting Treatment of Carbon Emission Rights Trading"On December 16, 2019, the Ministry of Finance issued the "Interim Provisions on Accounting Treatment of CarbonEmission Rights Trading" (CaiKuai [2019] No. 22), which is applicable to related companies in the key emission units(hereinafter referred to as key emission companies) which operate carbon emission rights trading business in accordancewith the "Interim Measures for the Management of Carbon emission Rights Trading”. This provision came into effect onJanuary 1, 2020, and key emission companies should adopt prospective application to apply this provision.The company implemented this provision since January 1, 2020, and the comparative financial statements were adjusted.The implementation of this provision did not have significant impact on the company’s financial status and operatingresults.
④ Implementation of the "Provisions on accounting treatment of rent concessions related to COVID-19"On June 19, 2020, the Ministry of Finance issued the "Provisions on accounting treatment of rent concessions related toCOVID-19" (CaiKuai (2020) No. 10), which came into effect on June 19, 2020, allowing companies to adjust related rentconcessions that occurred between January 1, 2020 and the implementation date of this provision. According to thisprovision, for rent concessions directly caused by COVID-19 that meet the conditions, for example, rent remission anddeferred payment of rent, companies can choose to adopt simplified methods for accounting treatment.The company chose to adopt simplified methods for accounting treatment for all rent concessions that fell within the scopeof the provision, and adjusted relevant rent concessions that occurred between January 1, 2020 and the implementationdate of this provision accordingly. The implementation of this provision did not have significant impact on the company’sfinancial status and operating results.
(2) Changes in significant accounting estimates
□ Applicable √ Not applicable
(3) Since 2020, the company first implemented the new revenue standards, the new rentstandards, and adjusted related items of the financial statements at the beginning of the yearApplicableWhether the accounts of the balance sheet at the beginning of the year shall be adjusted
√ Yes □ No
Consolidated Balance Sheet
Unit: RMB
| Item | December 31, 2019 | January 1, 2020 | Adjusted amount |
| Current Assets: | |||
| Cash and Bank Balances | 3,084,428,970.43 | 3,084,428,970.43 | |
| Deposit Reservation for Balance | |||
| Loans to Banks and Other Financial Institutions | |||
| Trading Financial Assets | |||
| Derivative Financial Assets | |||
| Notes receivable | |||
| Accounts receivable | 13,241,196,380.65 | 13,184,093,361.32 | -57,103,019.33 |
| Receivables Financing | 1,086,017,357.90 | 1,086,017,357.90 | |
| Prepayments | 128,182,099.47 | 128,182,099.47 |
| Premium Receivable | |||
| Reinsurance Accounts Receivable | |||
| Reinsurance Contract Reserves Receivable | |||
| Other Receivables | 408,776,610.17 | 408,776,610.17 | |
| Including: interest receivable | |||
| Dividends Receivable | |||
| Buying Back the Sale of Financial Assets | |||
| Inventory | 3,839,810,704.33 | 3,839,810,704.33 | |
| Contract Assets | 57,103,019.33 | 57,103,019.33 | |
| Holding for-sale assets | |||
| Non-current Assets Due within 1 Year | 630,717,329.58 | 630,717,329.58 | |
| Other Current Assets | 556,311,770.08 | 569,164,987.09 | 12,853,217.01 |
| Subtotal of Current Assets | 22,975,441,222.61 | 22,988,294,439.62 | 12,853,217.01 |
| Non-current Assets: | |||
| Granting of loans and advances | |||
| Investment in Creditor's Rights | |||
| Investment in Other Creditor's Rights | |||
| Long-term Receivables | 2,568,442,030.19 | 2,568,442,030.19 | |
| Long-term Equity Investment | 490,731,236.85 | 490,731,236.85 | |
| Investment in Other Equity Instruments | |||
| Other Non-current Financial Assets | 67,213,489.43 | 67,213,489.43 | |
| Investment Property | 336,181,589.99 | 336,181,589.99 | |
| Fixed Assets | 1,522,463,368.83 | 1,522,463,368.83 |
| Projects under Construction | 435,757,406.90 | 435,757,406.90 | |
| Productive Biological Assets | |||
| Oil and gas assets | |||
| Right-of-use Assets | |||
| Intangible Assets | 411,758,785.31 | 411,758,785.31 | |
| Development Expenditure | |||
| Goodwill | 42,685,490.30 | 42,685,490.30 | |
| Long-term unamortized expenses | 37,311,198.19 | 37,311,198.19 | |
| Deferred Income Tax Assets | 668,058,558.83 | 668,058,558.83 | |
| Other Non-current Assets | 8,605,835.50 | 8,605,835.50 | |
| Subtotal of Non-current Assets | 6,589,208,990.32 | 6,589,208,990.32 | |
| Total Assets | 29,564,650,212.93 | 29,577,503,429.94 | 12,853,217.01 |
| Current Liabilities: | |||
| Short-term loan | 400,323,888.90 | 400,323,888.90 | |
| Borrowings from the Central Bank | |||
| Borrowings from Banks and Other Financial Institutions | |||
| Transactional financial liabilities | |||
| Derivative Financial Liabilities | |||
| Notes Payable | 3,807,292,795.07 | 3,807,292,795.07 | |
| Accounts Payable | 4,290,253,501.81 | 4,290,253,501.81 | |
| Received Prepayments | 375,521,795.82 | -375,521,795.82 | |
| Contract liabilities | 359,999,133.71 | 359,999,133.71 | |
| Financial Assets Sold for Repurchase |
| Deposit Taking and Interbank Deposit | |||
| Receiving from Vicariously Traded Securities | |||
| Receiving from Vicariously Sold Securities | |||
| Payroll payable | 1,582,368,359.30 | 1,582,368,359.30 | |
| Tax Payable | 813,357,471.37 | 813,357,471.37 | |
| Other Payables | 1,163,915,713.24 | 1,163,915,713.24 | |
| Including: interest payable | |||
| Dividends Payable | 9,454,479.13 | 9,454,479.13 | |
| Service Charge and Commission Payable | |||
| Reinsurance Accounts Payable | |||
| Holding for-sale liabilities | |||
| Non-current Liabilities Due within 1 Year | 26,993,755.57 | 26,993,755.57 | |
| Other Current Liabilities | 71,233,107.93 | 112,709,157.49 | 41,476,049.56 |
| Subtotal of Current Liabilities | 12,531,260,389.01 | 12,557,213,776.46 | 25,953,387.45 |
| Non-current Liabilities: | |||
| Insurance Contract Reserves | |||
| Long-term loan | 153,500,000.00 | 153,500,000.00 | |
| Bonds Payable | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Lease Liabilities | |||
| Long-term Payables | |||
| Long-term payroll |
| payable | |||
| Expected Liabilities | 303,670,887.50 | 316,524,104.51 | 12,853,217.01 |
| Deferred Income | 117,210,761.34 | 91,257,373.89 | -25,953,387.45 |
| Deferred Income Tax Liabilities | 50,565,095.68 | 50,565,095.68 | |
| Other Non-current Liabilities | 432,275,367.74 | 432,275,367.74 | |
| Subtotal of Non-current Liabilities | 1,057,222,112.26 | 1,044,121,941.82 | -13,100,170.44 |
| Total Liabilities | 13,588,482,501.27 | 13,601,335,718.28 | 12,853,217.01 |
| Shareholders' Equity: | |||
| Share Capital | 3,003,713,230.00 | 3,003,713,230.00 | |
| Other Equity Instruments | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Capital Reserves | 1,882,855,119.53 | 1,882,855,119.53 | |
| Less: Treasury Share | 1,057,584,258.31 | 1,057,584,258.31 | |
| Other Comprehensive Incomes | 12,308,276.23 | 12,308,276.23 | |
| Special Reserves | |||
| Surplus Reserves | 1,553,691,005.92 | 1,553,691,005.92 | |
| General Risk Reserves | |||
| Undistributed Profits | 10,248,023,654.54 | 10,248,023,654.54 | |
| Total Shareholders' Equity Attributable to the Parent Company | 15,643,007,027.91 | 15,643,007,027.91 | |
| Minority Shareholders' Equity | 333,160,683.75 | 333,160,683.75 | |
| Total Shareholders' Equity | 15,976,167,711.66 | 15,976,167,711.66 | |
| Total Liabilities and Shareholders' Equity | 29,564,650,212.93 | 29,577,503,429.94 | 12,853,217.01 |
Balance Sheet of the Parent Company
Unit: RMB
| Item | December 31, 2019 | January 1, 2020 | Adjusted amount |
| Current Assets: | |||
| Cash and Bank Balances | 890,598,735.62 | 890,598,735.62 | |
| Trading Financial Assets | |||
| Derivative Financial Assets | |||
| Notes receivable | |||
| Accounts receivable | 8,450,364,515.05 | 8,440,177,145.87 | -10,187,369.18 |
| Receivables Financing | 841,427,888.19 | 841,427,888.19 | |
| Prepayments | 30,501,431.44 | 30,501,431.44 | |
| Other Receivables | 5,138,830,912.64 | 5,138,830,912.64 | |
| Including: interest receivable | |||
| Dividends Receivable | |||
| Inventory | 124,904,729.01 | 124,904,729.01 | |
| Contract Assets | 10,187,369.18 | 10,187,369.18 | |
| Holding for-sale assets | |||
| Non-current Assets Due within 1 Year | 53,952,526.19 | 53,952,526.19 | |
| Other Current Assets | 21,919,487.88 | 21,919,487.88 | |
| Subtotal of Current Assets | 15,552,500,226.02 | 15,552,500,226.02 | |
| Non-current Assets: | |||
| Investment in Creditor's Rights | |||
| Investment in Other Creditor's Rights | |||
| Long-term Receivables | 137,284,594.67 | 137,284,594.67 | |
| Long-term Equity Investment | 3,523,259,061.78 | 3,523,259,061.78 | |
| Investment in Other Equity Instruments |
| Other Non-current Financial Assets | 62,979,387.68 | 62,979,387.68 | |
| Investment Property | 187,756,594.11 | 187,756,594.11 | |
| Fixed Assets | 536,909,246.66 | 536,909,246.66 | |
| Projects under Construction | 203,836,998.96 | 203,836,998.96 | |
| Productive Biological Assets | |||
| Oil and gas assets | |||
| Right-of-use Assets | |||
| Intangible Assets | 168,215,377.39 | 168,215,377.39 | |
| Development Expenditure | |||
| Goodwill | |||
| Long-term unamortized expenses | 26,687,122.32 | 26,687,122.32 | |
| Deferred Income Tax Assets | 131,503,372.44 | 131,503,372.44 | |
| Other Non-current Assets | 1,964,757.00 | 1,964,757.00 | |
| Subtotal of Non-current Assets | 4,980,396,513.01 | 4,980,396,513.01 | |
| Total Assets | 20,532,896,739.03 | 20,532,896,739.03 | |
| Current Liabilities: | |||
| Short-term loan | 400,323,888.90 | 400,323,888.90 | |
| Transactional financial liabilities | |||
| Derivative Financial Liabilities | |||
| Notes Payable | 302,168,249.70 | 302,168,249.70 | |
| Accounts Payable | 948,348,622.52 | 948,348,622.52 | |
| Received Prepayments | 181,462,746.37 | -181,462,746.37 | |
| Contract liabilities | 160,586,501.21 | 160,586,501.21 | |
| Payroll payable | 1,078,396,381.39 | 1,078,396,381.39 | |
| Tax Payable | 460,577,509.52 | 460,577,509.52 | |
| Other Payables | 1,363,740,346.75 | 1,363,740,346.75 |
| Including: interest payable | |||
| Dividends Payable | 9,454,479.13 | 9,454,479.13 | |
| Holding for-sale liabilities | |||
| Non-current Liabilities Due within 1 Year | |||
| Other Current Liabilities | 5,892,364.82 | 26,768,609.98 | 20,876,245.16 |
| Subtotal of Current Liabilities | 4,740,910,109.97 | 4,740,910,109.97 | |
| Non-current Liabilities: | |||
| Long-term loan | |||
| Bonds Payable | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Lease Liabilities | |||
| Long-term Payables | |||
| Long-term payroll payable | |||
| Expected Liabilities | 9,735,157.34 | 9,735,157.34 | |
| Deferred Income | |||
| Deferred Income Tax Liabilities | 1,297,719.64 | 1,297,719.64 | |
| Other Non-current Liabilities | 16,155,036.85 | 16,155,036.85 | |
| Subtotal of Non-current Liabilities | 27,187,913.83 | 27,187,913.83 | |
| Total Liabilities | 4,768,098,023.80 | 4,768,098,023.80 | |
| Shareholders' Equity: | |||
| Share Capital | 3,003,713,230.00 | 3,003,713,230.00 | |
| Other Equity Instruments | |||
| Including: Preferred |
| Stocks | |||
| Perpetual Bonds | |||
| Capital Reserves | 1,867,489,901.04 | 1,867,489,901.04 | |
| Less: Treasury Share | 1,057,584,258.31 | 1,057,584,258.31 | |
| Other Comprehensive Incomes | |||
| Special Reserves | |||
| Surplus Reserves | 1,553,691,005.92 | 1,553,691,005.92 | |
| Undistributed Profits | 10,397,488,836.58 | 10,397,488,836.58 | |
| Total Shareholders' Equity | 15,764,798,715.23 | 15,764,798,715.23 | |
| Total Liabilities and Shareholders' Equity | 20,532,896,739.03 | 20,532,896,739.03 |
(4). Explanation of compared data before and after the adjustment according to the firstimplementation of the new revenue recognition standard and the new lease accounting standardin 2020
□ Applicable √ Not applicable
37. Others
Ⅵ. Taxes
1. Major categories of taxes and tax rates
| Tax Type | Taxation basis | Tax rate |
| VAT | According to the provisions of the tax law, the sales tax shall be calculated on the basis of the income by selling goods and taxable services. After deducting the input tax that is allowed to be deducted from the sales tax in the current period, the difference shall be the value added tax | 17%, 16%, 13%, 11%, 10%, 9%, 6%, simple levy 5%, simple levy 3%, 0%, tax exemption |
| Urban Maintenance and Construction Tax | Calculated based on the deduction free amount, actual business tax, VAT, and consumption tax | 7%, 5% |
| Enterprise Income Tax | Calculated based on the taxable income | 12.5%、15%、16.5%、20%、25% |
| Education Surcharges | Calculated based on the deduction free amount, actual business tax, VAT, and consumption tax | 3% |
| Local Education | Calculated based on the deduction free amount, actual | 2% |
| Surcharges | business tax, VAT, and consumption tax |
If there are multiple taxpayers with different enterprise income tax rates, specify the situation
| Name of taxpayer | Income tax rate |
| Zhejiang Dahua Technology Co., Ltd. | 15% |
| Zhejiang Dahua System Engineering Co., Ltd. | 15% |
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 15% |
| Zhejiang Huachuang Vision Technology Co., Ltd. | 15% |
| Zhejiang HuaRay Technology Co., Ltd. | 15% |
| Hangzhou Huacheng Network Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhihe Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhitian Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Huayue Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Xinzhi Information Technology Co., Ltd. | 15% |
| Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. | 15% |
| Guangxi Dahua Zhicheng Co., Ltd. | 15% |
| Zhejiang Huafei Intelligent Technology CO., LTD. | 15% |
| Zhejiang Dahua Ju'an Technology Co., Ltd. | 20% |
| Hangzhou Fuyang Hua'ao Technology Co., Ltd. | 20% |
| Guizhou Huayi Shixin Technology Co., Ltd. | 20% |
| Zhejiang Fengshi Technology Co., Ltd. | 20% |
| Zhejiang Huaxiao Technology Co., Ltd. | 20% |
| Zhejiang Dahua Robot Technology Co., Ltd. | 20% |
| Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. | 20% |
| Zhejiang Zhoushan Digital Development Operation Co., Ltd | 20% |
| Guangxi Dahua Technology Co., Ltd. | 20% |
| Hangzhou Huajuan Technology Co., Ltd. | 20% |
| Beijing Huayue Shangcheng Information Technology Service Co., Ltd. | 20% |
| Shanghai Huashang Chengyue Information Technology Service Co., Ltd. | 20% |
| Hangzhou Huacheng Software Technology Co., Ltd. | 20% |
| Zhejiang Dahua Storage Technology Co., Ltd. | 20% |
| Zhejiang Huakong Software Co., Ltd. | 20% |
| Yunnan Zhili Technology Co., Ltd | 20% |
| Guizhou Dahua Information Technology Co., Ltd. | 20% |
| Henan Dahua Zhilian Information Technology Co., Ltd. | 20% |
| Dahua Technology (HK) Limited | 16.50% |
| Other domestic companies | 25% |
| Other overseas companies | Applicable to local tax rate |
2. Preferential tax rate
(1) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2020" (Guo KeHuo Zi [2020] No. 251) issued by the Office for the Administration of the Certification of National High-tech Enterprises onDecember 29, 2020, the Company was certified as a high-tech enterprise, valid for 3 years. The corporate income tax forthis year was reduced at a rate of 15%.
(2) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2019" (Guo KeHuo Zi [2020] No.32) issued by the Office for the Administration of the Certification of National High-tech Enterprises onJanuary 20, 2020, our subsidiary Zhejiang Dahua System Engineering Co., Ltd. was certified as a high-tech enterprise,valid for 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(3) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2020" (Guo KeHuo Zi [2020] No. 251) issued by the Office for the Administration of the Certification of National High-tech Enterprises onDecember 29, 2020, our subsidiary Zhejiang Dahua Security Network Operations Services Co., Ltd. was certified as ahigh-tech enterprise with the validation for 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(4) According to the “Notice on the List of Zhejiang High-tech Enterprises to be Recognized in 2018” issued by the Officeof National High-tech Enterprise Recognition and Management Leading Group on November 30, 2018, the subsidiaryZhejiang Huachuang Video Technology Co., Ltd. was recognized as high-tech enterprise with a valid period of 3 years.The corporate income tax for this year was reduced at a tax rate of 15%.
(5) According to the "Notice on Publicizing Zhejiang Province's List of Proposed High-tech Enterprises in 2018" issued bythe Office for the Administration of the Certification of National High-tech Enterprises on November 30, 2018, oursubsidiary Zhejiang HuaRay Technology Co., Ltd. was preliminarily certified as a high-tech enterprise with the validationfor 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(6) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2019" (Guo KeHuo Zi [2020] No.32) issued by the Office for the Administration of the Certification of National High-tech Enterprises onJanuary 20, 2020, our subsidiary Hangzhou Huacheng Network Technology Co., Ltd. was certified as a high-techenterprise, valid for 3 years. The corporate income tax for this year was reduced to a rate of 15%.
(7) According to the "Reply on Filing of Zhejiang's First Batch of High-tech Enterprises in 2020" issued by the Office ofNational High-tech Enterprise Recognition and Management Leading Group on December 29, 2020 (G&k fire (2020) No.
251) , the subsidiary Zhejiang Huafei Intelligent Technology Co., Ltd. was recognized as high-tech enterprise with a validperiod of 3 years. The corporate income tax for this year was reduced at a tax rate of 15%.
(8) According to Caishui [2019] No. 13 Notice on the implementation of inclusive tax relief policies for small and microbusinesses, the corporate income tax of subsidiaries Zhejiang Dahua Juan Technology Co., Ltd., Hangzhou FuyangHuaao Technology Co., Ltd., Guizhou Huayi Shixin Technology Co., Ltd., Zhejiang Fengshi Technology Co., Ltd., Zhejiang
Huaxiao Technology Co., Ltd., Zhejiang Dahua Robot Technology Co., Ltd., Sichuan Dahua Optoelectronics TechnologyCo., Ltd., Zhejiang Zhoushan Digital Development Operation Co., Ltd., Guangxi Dahua Technology Co., Ltd. , HangzhouHuacheng Software Technology Co., Ltd., Beijing Huayue Shangcheng Information Technology Service Co., Ltd.,Shanghai Huashang Chengyue Information Technology Service Co., Ltd., Hangzhou Huacheng Software Technology Co.,Ltd., Zhejiang Dahua Storage Technology Co., Ltd., Zhejiang Huakong Software Co., Ltd., Yunnan Zhili Technology Co.,Ltd., Guizhou Dahua Information Technology Co., Ltd. and Henan Dahua Zhilian Information Technology Co., Ltd. shouldbe calculated and paid at the tax rate of 20% of the taxable income.
(9) According to Document 58 of Ministry of Finance, State Administration of Taxation, General Administration of Customs[2011], subsidiaries Xinjiang Dahua Zhixin Information Technology Co., Ltd., Xinjiang Dahua Zhihe InformationTechnology Co., Ltd., Xinjiang Dahua Zhi Tian Information Technology Co., Ltd., Xinjiang Dahua Huayue InformationTechnology Co., Ltd., Xinjiang Dahua Xinzhi Information Technology Co., Ltd., Inner Mongolia Dahua ZhimengInformation Technology Co., Ltd. and Guangxi Dahua Zhicheng Co., Ltd. can enjoy the preferential tax policies forDevelopment of the West Regions from 2011 to 2020, so the corporate income tax was reduced at a tax rate of 15% thisyear.Ⅶ. Notes to the Items in the Consolidated Financial Statement
1. Cash and bank balances
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Cash on Hand | 24,145.51 | 117,289.25 |
| Bank Balance | 7,336,459,974.17 | 2,590,777,015.41 |
| Other Cash and Bank Balances | 135,168,514.98 | 493,534,665.77 |
| Total | 7,471,652,634.66 | 3,084,428,970.43 |
| Including: Total Amount Deposited in Overseas Banks | 1,625,638,746.76 | 875,156,010.72 |
| The total amount restricted for use due to mortgage, pledge or freeze | 101,126,967.62 | 346,461,821.88 |
The amount restricted for use due to mortgage, pledge or freeze:
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Documentary Credit Deposit | 244,167,000.00 |
| Bid/performance bond | 101,126,967.62 | 102,294,821.88 |
| Total | 101,126,967.62 | 346,461,821.88 |
2. Trading Financial Assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Financial assets at fair value through profit or loss in this period | 2,475,680.45 | |
| Including: | ||
| Derivative Financial Assets | 1,005,680.45 | |
| Financial products | 1,470,000.00 | |
| Total | 2,475,680.45 |
3. Notes receivable
(1) Disclosure of notes receivable
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Bank Acceptance Notes | 57,617,340.08 | |
| Commercial Acceptance Notes | 175,240,014.47 | |
| Total | 232,857,354.55 |
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Start of the Period | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Including: | ||||||||||
| Notes receivable with provision for bad debts by combination | 248,409,731.28 | 100.00% | 15,552,376.73 | 6.26% | 232,857,354.55 | |||||
| Including: | ||||||||||
| Bank Acceptance Notes | 58,793,204.17 | 23.67% | 1,175,864.09 | 2.00% | 57,617,340.08 | |||||
| Commercial Acceptance Notes | 189,616,527.11 | 76.33% | 14,376,512.64 | 7.58% | 175,240,014.47 | |||||
| Total | 248,409,731.28 | 100.00% | 15,552,376.73 | 232,857,354.55 | ||||||
Bad debt provision based on combinations
Unit: RMB
| Name | Balance at the End of the Period | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Bank Acceptance Notes | 58,793,204.17 | 1,175,864.09 | 2.00% |
| Commercial Acceptance Notes | 189,616,527.11 | 14,376,512.64 | 7.58% |
| Total | 248,409,731.28 | 15,552,376.73 | -- |
If the provision for bad debts of notes receivable is accrued according to the general model of expected credit losses,please refer to the disclosure ways of other receivables to disclose relevant information of the provision for bad debts:
□ Applicable √ Not applicable
(2) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Bank Acceptance Notes | 1,175,864.09 | 1,175,864.09 | ||||
| Commercial Acceptance Notes | 14,376,512.64 | 14,376,512.64 | ||||
| Total | 15,552,376.73 | 15,552,376.73 | ||||
Significant amount of recovered or reversed bad debt provision in this period:
□ Applicable √ Not applicable
(3) Notes receivable pledged by the Company at the end of the period
Unit: RMB
| Item | Pledged amount by the end of period |
| Bank Acceptance Notes | 805,000.00 |
| Total | 805,000.00 |
(4) Notes receivable that the Company has endorsed or discounted at the end of the period andthat have not yet expired on the balance sheet date
Unit: RMB
| Item | Derecognised amount at the end of period | Not derecognised amount at the end of period |
| Bank Acceptance Notes | 3,650,000.00 | 6,753,436.09 |
| Commercial Acceptance Notes | 2,761,649.42 | |
| Total | 3,650,000.00 | 9,515,085.51 |
4. Accounts Receivable
(1) Categorical disclosure of accounts receivable
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Start of the Period | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Accounts receivables with the bad debt provision accrued based on single item | 669,736,293.01 | 4.53% | 313,697,573.83 | 46.84% | 356,038,719.18 | 64,978,308.37 | 0.44% | 64,978,308.37 | 100.00% | |
| Including: | ||||||||||
| Accounts receivable with insignificant single amount but accrued for separate provision of bad debt | 669,736,293.01 | 4.53% | 313,697,573.83 | 46.84% | 356,038,719.18 | 64,978,308.37 | 0.44% | 64,978,308.37 | 100.00% | |
| Accounts receivables with the bad debt provision accrued based on combinations | 14,106,509,538.15 | 95.47% | 1,605,029,147.17 | 11.38% | 12,501,480,390.98 | 14,578,782,249.83 | 99.56% | 1,394,688,888.51 | 9.57% | 13,184,093,361.32 |
| Including: | ||||||||||
| Portfolio 2: Aging Analysis Portfolio | 14,106,509,538.15 | 95.47% | 1,605,029,147.17 | 11.38% | 12,501,480,390.98 | 14,578,782,249.83 | 99.56% | 1,394,688,888.51 | 9.57% | 13,184,093,361.32 |
| Total | 14,776,245,831.16 | 100.00% | 1,918,726,721.00 | 12,857,519,110.16 | 14,643,760,558.20 | 100.00% | 1,459,667,196.88 | 13,184,093,361.32 | ||
Bad debt provision based on single item
Unit: RMB
| Name | Balance at the End of the Period | |||
| Book balance | Bad debt provision | Accrued proportion | Reason for making bad debt provision | |
| Customer 1 | 329,137,150.36 | 112,570,322.68 | 34.20% | Expected to be difficult to recover in full |
| Customer 2 | 260,153,530.00 | 130,076,765.00 | 50.00% | Expected to be difficult to recover in full |
| Customer 3 | 18,790,253.00 | 9,395,126.50 | 50.00% | Expected to be difficult to recover in full |
| Customer 4 | 51,153,304.27 | 51,153,304.27 | 100.00% | Expected to be unable to recover |
| Customer 5 | 10,502,055.38 | 10,502,055.38 | 100.00% | Expected to be unable to recover |
| Total | 669,736,293.01 | 313,697,573.83 | -- | -- |
Bad debt provision based on combinations
Unit: RMB
| Name | Balance at the End of the Period | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 year (including 1 year) | 10,781,942,502.10 | 539,016,524.81 | 5.00% |
| 1 to 2 years | 1,595,731,725.87 | 159,573,172.59 | 10.00% |
| 2 to 3 years | 869,759,853.19 | 260,927,955.95 | 30.00% |
| 3 to 4 years | 339,213,990.20 | 169,606,995.10 | 50.00% |
| 4 to 5 years | 219,784,840.35 | 175,827,872.28 | 80.00% |
| 5 years or above | 300,076,626.44 | 300,076,626.44 | 100.00% |
| Total | 14,106,509,538.15 | 1,605,029,147.17 | -- |
Please refer to the disclosing methods of other receivables for the information disclosure of bad debts provisions, if thebad debt provisions of accounts receivable are made according to the general model of expected credit losses:
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 10,781,942,502.10 |
| 1 to 2 years | 1,874,675,508.87 |
| 2 to 3 years | 1,198,897,003.55 |
| 3 years or above | 920,730,816.64 |
| 3 to 4 years | 390,367,294.47 |
| 4 to 5 years | 219,784,840.35 |
| 5 years or above | 310,578,681.82 |
| Total | 14,776,245,831.16 |
(2) Provision for bad debts accrued, recovered or reversed in this periodProvision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Bad debt provision | 1,459,667,196.88 | 516,835,732.24 | 2,384,082.35 | 53,213,942.88 | -2,178,182.89 | 1,918,726,721.00 |
| Total | 1,459,667,196.88 | 516,835,732.24 | 2,384,082.35 | 53,213,942.88 | -2,178,182.89 | 1,918,726,721.00 |
(3) Accounts receivable actually written off in this period
Unit: RMB
| Item | Write-off amount |
| Accounts receivable actually written off | 53,213,942.88 |
(4) Accounts receivable of the top five closing balances collected by debtorsThe accounts receivable of the top five closing balances collected by the arrears was summed up to RMB1,315,091,032.99, accounting for 8.90% of the total closing balance of accounts receivable. and the ending balance of theprovision for bad debts accrued was RMB 434,173,698.62.
(5) Accounts receivable derecognized due to the transfer of financial assets
1) According to the non-recourse receivable purchase agreement signed by the subsidiary Dahua Hong Kong and J.P.Morgan Chase in the current period, the company transfers accounts receivable to J.P. Morgan Chase in USD6,459,112.67, equivalent to RMB 42,145,064.26, and makes derecognition of accounts receivable after the transfer.
2) According to the non-recourse receivable purchase agreement signed by the subsidiary Dahua Hong Kong andStandard Chartered Bank of Hong Kong in the current period, the company transfers accounts receivable to StandardChartered Bank of Hong Kong in USD 46,411,980.55, equivalent to RMB 302,833,531.89, and makes derecognition ofaccounts receivable after the transfer.
5. Receivables Financing
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Bank Acceptance Notes | 1,191,810,834.58 | 1,086,017,357.90 |
| Supply chain finance | 16,068,820.00 | |
| Total | 1,207,879,654.58 | 1,086,017,357.90 |
The increase and decrease of accounts receivable financing in the current period and the changes in the fair value.
√ Applicable □ Not applicable
Please refer to the disclosing methods of other receivables for the information disclosure of depreciation provisions, if thedepreciation provisions of accounts receivable financing are made according to the general model of expected creditlosses:
□ Applicable √ Not applicable
(1) Notes receivable pledged by the Company at the end of the period
Unit: RMB
| Item | Pledged amount by the end of period |
| Bank Acceptance Notes | 955,154,908.06 |
| Total | 955,154,908.06 |
(2) Notes receivable that the Company has endorsed or discounted at the end of the period andthat have not yet expired on the balance sheet date
Unit: RMB
| Item | Derecognised amount at the end of period | Not derecognised amount at the end of period |
| Bank Acceptance Notes | 103,498,485.35 | 49,638,153.26 |
| Total | 103,498,485.35 | 49,638,153.26 |
6. Prepayments
(1) Aging analysis of prepayments is as follows
Unit: RMB
| Aging | Balance at the End of the Period | Balance at the Start of the Period | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 148,645,071.53 | 91.62% | 124,497,411.77 | 97.13% |
| 1 to 2 years | 11,346,933.87 | 6.99% | 1,674,410.31 | 1.31% |
| 2 to 3 years | 575,066.34 | 0.35% | 762,597.42 | 0.59% |
| 3 years or above | 1,683,576.31 | 1.04% | 1,247,679.97 | 0.97% |
| Total | 162,250,648.05 | -- | 128,182,099.47 | -- |
(2) Advance payment of the top five closing balances by prepayment parties
The total amount of the top five prepayments at the end of the period aggregated according to the concentration ratio ofprepayment objects is RMB 65,129,278.49, accounting for 40.14% of the total balance of the prepayments at the end ofthe period.
7. Other Receivables
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Other Receivables | 970,427,893.48 | 408,776,610.17 |
| Total | 970,427,893.48 | 408,776,610.17 |
(1) Other Receivables
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening balance |
| Deposits | 149,004,407.45 | 186,488,490.93 |
| Prepaid or advance expense | 107,861,633.49 | 105,487,796.31 |
| Equity transfer fund | 588,000,000.00 | |
| Export refunds | 100,115,398.53 | 40,988,648.13 |
| Employee home loan | 114,008,578.27 | 130,509,023.60 |
| Others | 6,018,587.80 | 6,367,769.53 |
| Total | 1,065,008,605.54 | 469,841,728.50 |
2) Bad debt provision
Unit: RMB
| Bad debt provision | Phase One | Phase Two | Phase Three | Total |
| Expected credit losses in the next 12 months | Expected credit losses for the entire extension (without credit impairment) | Expected credit losses for the entire extension (with credit impairment) | ||
| Balance on January 1, | 44,187,736.10 | 15,678,284.02 | 1,199,098.21 | 61,065,118.33 |
| 2020 | ||||
| Balance of the current period on January 1, 2020 | —— | —— | —— | —— |
| --Transfer to phase two | -6,727,679.75 | 6,727,679.75 | ||
| --Transfer to phase three | -55,192.02 | -31,112.50 | 86,304.52 | |
| Provisions of this period | 39,040,835.09 | 198,609.99 | 39,239,445.08 | |
| Write off in this period | 705,034.37 | 528,754.23 | 1,233,788.60 | |
| Other variations | -3,805,315.62 | -684,747.13 | -4,490,062.75 | |
| Balance on December 31, 2020 | 72,640,383.80 | 21,183,679.76 | 756,648.50 | 94,580,712.06 |
Book balance changes with significant changes in loss provision in the current period
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 879,428,505.09 |
| 1 to 2 years | 92,342,115.75 |
| 2 to 3 years | 43,790,318.05 |
| 3 years or above | 49,447,666.65 |
| 3 to 4 years | 40,655,003.58 |
| 4 to 5 years | 4,410,925.26 |
| 5 years or above | 4,381,737.81 |
| Total | 1,065,008,605.54 |
3) Provision for bad debts accrued, recovered or reversed in this periodProvision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Portfolio 2: Aging Analysis Portfolio | 61,065,118.33 | 39,239,445.08 | 1,233,788.60 | -4,490,062.75 | 94,580,712.06 | |
| Total | 61,065,118.3 | 39,239,445.0 | 1,233,788.6 | -4,490,062.75 | 94,580,712.06 | |
| 3 | 8 | 0 |
4) Accounts receivable actually written off in this period
Unit: RMB
| Item | Write-off amount |
| Other accounts receivable actually written off | 1,233,788.60 |
5) Other receivables of the top five closing balances collected by debtors
Unit: RMB
| Name of Unit | Nature of the funds | Balance at the End of the Period | Aging | As a percentage of total other receivables at the end of the period | Bad debt provision at the end of the period |
| Company 1 | Equity transfer fund | 196,000,000.00 | Within 1 year | 18.41% | 9,800,000.00 |
| Company 2 | Equity transfer fund | 107,800,000.00 | Within 1 year | 10.12% | 5,390,000.00 |
| Company 3 | Export refunds | 100,115,398.53 | Within 1 year | 9.40% | 5,005,769.93 |
| Company 4 | Equity transfer fund | 66,150,000.00 | Within 1 year | 6.21% | 3,307,500.00 |
| Company 5 | Equity transfer fund | 64,680,000.00 | Within 1 year | 6.07% | 3,234,000.00 |
| Total | -- | 534,745,398.53 | -- | 50.21% | 26,737,269.93 |
6) Accounts receivable not related to government subsidies
There are no other accounts receivable related to government subsidies.
7) Other accounts receivable derecognised due to transfer of financial assets
There are no other accounts receivable derecognized due to the transfer of financial assets.
8) Assets and liabilities generated due to other transferred receivables that the Company stillkeeps recourse or retains part of corresponding rights or interestsThere are no assets and liabilities generated due to other transferred receivables that the Company still keeps recourse orretains part of corresponding rights or interests.
8. Inventory
Does the company need to comply with the disclosure requirements of the real estate industryNo
(1) Categories of inventories
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Inventory depreciation provision or contract performance cost impairment provision | Book value | Book balance | Inventory depreciation provision or contract performance cost impairment provision | Book value | |
| Raw materials | 1,775,145,593.83 | 26,591,186.48 | 1,748,554,407.35 | 1,322,280,135.63 | 9,174,244.38 | 1,313,105,891.25 |
| Work-in-progress | 1,230,145,494.18 | 33,254,762.89 | 1,196,890,731.29 | 907,039,528.28 | 11,835,784.37 | 895,203,743.91 |
| Finished goods | 1,904,284,563.26 | 87,368,092.93 | 1,816,916,470.33 | 1,549,317,679.30 | 59,728,540.61 | 1,489,589,138.69 |
| Outsourced work-in-progress | 165,658,229.03 | 165,658,229.03 | 141,911,930.48 | 141,911,930.48 | ||
| Total | 5,075,233,880.30 | 147,214,042.30 | 4,928,019,838.00 | 3,920,549,273.69 | 80,738,569.36 | 3,839,810,704.33 |
(2) Inventory depreciation provision and contract performance cost impairment provision
Unit: RMB
| Item | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | ||
| Accrued | Others | Reversals or write-offs | Others | |||
| Raw materials | 9,174,244.38 | 31,418,782.83 | 14,005,233.77 | -3,393.04 | 26,591,186.48 | |
| Work-in-progress | 11,835,784.37 | 36,740,883.79 | 14,342,936.90 | 978,968.37 | 33,254,762.89 | |
| Finished goods | 59,728,540.61 | 63,231,108.49 | 34,641,863.99 | 949,692.18 | 87,368,092.93 | |
| Total | 80,738,569.36 | 131,390,775.11 | 62,990,034.66 | 1,925,267.51 | 147,214,042.30 | |
9. Contract Assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for decline in value | Book value | Book balance | Provision for decline in value | Book value | |
| Completed and unsettled assets formed by construction contracts | 1,017,240.04 | 28,227.92 | 989,012.12 | 1,017,240.04 | 90,277.61 | 926,962.43 |
| Operation & maintenance service | 33,574,009.14 | 599,464.04 | 32,974,545.10 | |||
| Quality guarantee deposit | 58,308,795.21 | 7,446,517.61 | 50,862,277.60 | 65,491,620.36 | 9,315,563.46 | 56,176,056.90 |
| Total | 92,900,044.39 | 8,074,209.57 | 84,825,834.82 | 66,508,860.40 | 9,405,841.07 | 57,103,019.33 |
If the provision for bad debts of contract assets is accrued according to the general model of expected credit losses,please refer to the disclosure ways of other receivables to disclose relevant information of the provision for bad debts:
□ Applicable √ Not applicable
Provision of contract assets impairment in the current period
Unit: RMB
| Item | Provisions of this period | Reversal in current period | Write-off/charge-off in current period | Causes |
| Completed and unsettled assets formed by construction contracts | 62,049.69 | |||
| Operation & maintenance service | 599,464.04 | |||
| Quality guarantee deposit | 1,869,045.85 | |||
| Total | 599,464.04 | 1,931,095.54 | -- |
10. Non-current Assets Due within 1 Year
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Long-term accounts receivables due within 1 year | 635,956,549.07 | 630,717,329.58 |
| Total | 635,956,549.07 | 630,717,329.58 |
Other notes:
The amount of long-term receivables due within one year pledged by the company at the end of the period is RMB30,575,733.51. For details, please refer to "VII. Consolidated Financial Statement Project Notes/60. Assets with restrictedownership or use rights".
11. Other non-current financial assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Not deducted input tax | 446,980,347.42 | 538,283,444.00 |
| Prepaid enterprise income tax | 91,891,780.90 | 18,028,326.08 |
| Receivable return cost | 19,562,091.61 | 12,853,217.01 |
| Total | 558,434,219.93 | 569,164,987.09 |
12. Long-term Receivables
(1) Long-term receivables
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | Range of discount rate | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | ||
| Installment Payment for Selling Products | 2,250,315,769.50 | 2,250,315,769.50 | 2,568,442,030.19 | 2,568,442,030.19 | |||
| Including: Unrealized Financing Income | 375,421,302.27 | 375,421,302.27 | 413,390,725.32 | 413,390,725.32 | 3.69%-10.93% | ||
| Total | 2,250,315,769.50 | 2,250,315,769.50 | 2,568,442,030.19 | 2,568,442,030.19 | -- | ||
Book balance changes with significant changes in loss provision in the current period
□ Applicable √ Not applicable
(2) Long-term receivables derecognised due to transfer of financial assetsThere are no long-term receivables derecognised due to transfer of financial assets.
(3) Assets/liabilities generated due to transferred long-term receivables that the Company stillkeeps recourse or retains part of corresponding rights or interestsThere are no assets/liabilities generated due to transferred long-term receivables that the Company still keeps recourse orretains part of corresponding rights or interests.Other notesThe amount of long-term receivables pledged by the company at the end of the period is RMB 175,530,696.65. For details,please refer to "VII. Consolidated Financial Statement Project, Note/60, Assets with Restricted Ownership or Right of Use".
13. Long-term equity investments
Unit: RMB
| The invested entity | Balance at the Start of the Period (book value) | Decrease/Increase in the current period | Balance at the End of the Period (book value) | Closing balance of provision for decline in value | |||||||
| Investments increased | Investment decreased | Investment profit and loss recognized under the equity method | Adjustment on other comprehensive income | Other changes in equity | Cash dividends or profit declared to distribute | Provision for impairment accrued | Others | ||||
| Ⅰ. Joint ventures | |||||||||||
| Ⅱ. Affiliates | |||||||||||
| Intelbras S.A. | 337,365,815.19 | 999,538.20 | 41,039,145.78 | 2,532,871.68 | -42,231.91 | 376,829,395.58 | |||||
| Zhongruixin Digital Technology Co., Ltd. | 64,000,000.00 | -6,055,888.52 | 57,944,111.48 | ||||||||
| China Standard Intelligent Security Technology Co., Ltd. | 10,567,309.66 | -901,910.59 | 9,665,399.07 | ||||||||
| Zhejiang Dahua Zhian Internet of | 3,954,685.12 | 448,537.57 | 4,403,222.69 | ||||||||
| Things Technology Co., Ltd. | |||||||||||
| Zhejiang Leapmotor Technology Co., Ltd. | 123,065,033.65 | -215,531,552.93 | 92,466,519.28 | ||||||||
| Digital Dongyang Technology Operation Co. Ltd | 2,400,000.00 | 2,400,000.00 | |||||||||
| Hangzhou Juhuanyan Information Technology Co., Ltd. | 811,197.09 | 500,000.00 | -162,234.89 | 1,148,962.20 | |||||||
| Ningbo Dahua Anbang Security Services Co., Ltd. | 1,102,372.36 | 34,370.88 | 1,136,743.24 | ||||||||
| Wenzhou Dahua Security Services Co., Ltd. | 806,173.85 | 39,213.30 | 845,387.15 | ||||||||
| Zhoushan Dahua Technology Co., Ltd. | 692,565.83 | 43,785.57 | 736,351.40 | ||||||||
| Shaoxing Dahua Security Services Co., Ltd. | 570,258.76 | -46,252.31 | 524,006.45 | ||||||||
| Taizhou Dahua Security Services Co., Ltd. | 364,239.13 | 83,281.65 | 120,000.00 | 327,520.78 | |||||||
| Lishui Dahua Intelligent Technology | 5,549.81 | 10,966.31 | 16,516.12 |
| Co., Ltd. | |||||||||||
| Guangdong Dahua Zhishi Technology Co., Ltd. | -167,839.13 | 167,839.13 | |||||||||
| Shenzhen Conwin Security Electronics CO., Ltd. | 11,426,036.40 | 11,313,591.67 | -112,444.73 | ||||||||
| Subtotal | 490,731,236.85 | 67,899,538.20 | 11,313,591.67 | -181,278,822.04 | 92,466,519.28 | 2,652,871.68 | 125,607.22 | 455,977,616.16 | |||
| Total | 490,731,236.85 | 67,899,538.20 | 11,313,591.67 | -181,278,822.04 | 92,466,519.28 | 2,652,871.68 | 125,607.22 | 455,977,616.16 |
14. Other non-current financial assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Financial assets at fair value through profit or loss in this period | 360,087,786.34 | 67,213,489.43 |
| Among which: Investment in equity instrument | 360,087,786.34 | 67,213,489.43 |
| Total | 360,087,786.34 | 67,213,489.43 |
15. Investment real estate
(1) Investment properties measured by cost method
√ Applicable □ Not applicable
Unit: RMB
| Item | Buildings and constructions | Land use rights | Projects under Construction | Total |
| Ⅰ. Original book value | ||||
| 1. Opening Balance | 366,256,418.69 | 9,422,118.33 | 375,678,537.02 | |
| 2. Increased in the Current Period | 21,280,345.01 | 470,898.94 | 21,751,243.95 | |
| (1) Purchase | ||||
| (2) Inventory\Fixed assets\Construction in progress roll in | 21,280,345.01 | 470,898.94 | 21,751,243.95 | |
| (3) Acquisition | ||||
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | 387,536,763.70 | 9,893,017.27 | 397,429,780.97 | |
| Ⅱ. Accumulated Depreciation and Amortization | ||||
| 1. Opening Balance | 38,163,932.99 | 1,333,014.04 | 39,496,947.03 | |
| 2. Increased in the Current Period | 21,697,624.65 | 226,340.16 | 21,923,964.81 |
| (1) Accrual or Amortization | 17,344,277.53 | 152,715.36 | 17,496,992.89 | |
| (2) Transfer of fixed assets\intangible assets | 4,353,347.12 | 73,624.80 | 4,426,971.92 | |
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | 59,861,557.64 | 1,559,354.20 | 61,420,911.84 | |
| Ⅲ. Provision for Impairment | ||||
| 1. Opening Balance | ||||
| 2. Increased in the Current Period | ||||
| (1) Accrual | ||||
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | ||||
| Ⅳ. Book value | ||||
| 1. Closing Balance on Book Value | 327,675,206.06 | 8,333,663.07 | 336,008,869.13 | |
| 2. Opening Balance on Book Value | 328,092,485.70 | 8,089,104.29 | 336,181,589.99 |
(2) Investment properties measured at fair value
□ Applicable √ Not applicable
16. Fixed assets
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Fixed Assets | 1,515,594,629.97 | 1,522,463,368.83 |
| Total | 1,515,594,629.97 | 1,522,463,368.83 |
(1) Fixed assets
Unit: RMB
| Item | Housing and building | Machinery and equipment | Means of transport | Electronic and other equipment | Total |
| Ⅰ. Original book value: | |||||
| 1. Opening Balance | 1,229,211,545.48 | 293,050,750.13 | 35,697,923.61 | 789,678,550.06 | 2,347,638,769.28 |
| 2. Increased in the Current Period | 2,274,744.18 | 3,517,074.73 | 16,030,167.21 | 276,453,128.72 | 298,275,114.84 |
| (1) Purchase | 3,517,074.73 | 16,030,167.21 | 276,453,128.72 | 296,000,370.66 | |
| (2) Transferred From Construction in Progress | 2,274,744.18 | 2,274,744.18 | |||
| (3) Acquisition | |||||
| 3. Decreased in the Current Period | 21,280,345.01 | 712,185.79 | 1,913,198.74 | 71,175,024.27 | 95,080,753.81 |
| (1) Disposal or Scrapping | 511,828.91 | 1,913,198.74 | 47,179,633.78 | 49,604,661.43 | |
| (2) Transfer to investment real estate | 21,280,345.01 | 21,280,345.01 | |||
| (3) Disposal of subsidiaries | 200,356.88 | 23,995,390.49 | 24,195,747.37 | ||
| 4. Currency Translation Difference | 83,171.50 | 51,111.83 | -187,049.58 | -368,672.01 | -421,438.26 |
| 5. Closing Balance | 1,210,289,116.15 | 295,906,750.90 | 49,627,842.50 | 994,587,982.50 | 2,550,411,692.05 |
| II. Accumulated depreciation | |||||
| 1. Opening Balance | 223,283,902.05 | 71,753,769.77 | 28,598,213.53 | 501,539,515.10 | 825,175,400.45 |
| 2. Increased in the Current Period | 55,657,963.72 | 26,192,792.17 | 2,337,600.42 | 161,251,192.25 | 245,439,548.56 |
| (1) Accrual | 55,657,963.72 | 26,192,792.17 | 2,337,600.42 | 161,251,192.25 | 245,439,548.56 |
| 3. Decreased in the Current Period | 4,353,347.12 | 329,741.69 | 1,714,006.83 | 29,066,891.23 | 35,463,986.87 |
| (1) Disposal or Scrapping | 323,276.63 | 1,714,006.83 | 26,107,690.61 | 28,144,974.07 | |
| (2) Transfer to investment real estate | 4,353,347.12 | 4,353,347.12 | |||
| (3) Disposal of subsidiaries | 6,465.06 | 2,959,200.62 | 2,965,665.68 | ||
| 4. Currency Translation | 11,228.15 | 42,970.14 | -115,264.37 | -272,833.98 | -333,900.06 |
| Difference | |||||
| 5. Closing Balance | 274,599,746.80 | 97,659,790.39 | 29,106,542.75 | 633,450,982.14 | 1,034,817,062.08 |
| Ⅲ. Provision for Impairment | |||||
| 1. Opening Balance | |||||
| 2. Increased in the Current Period | |||||
| (1) Accrual | |||||
| 3. Decreased in the Current Period | |||||
| (1) Disposal or Scrapping | |||||
| 4. Closing Balance | |||||
| Ⅳ. Book value | |||||
| 1. Closing Balance on Book Value | 935,689,369.35 | 198,246,960.51 | 20,521,299.75 | 361,137,000.36 | 1,515,594,629.97 |
| 2. Opening Balance on Book Value | 1,005,927,643.43 | 221,296,980.36 | 7,099,710.08 | 288,139,034.96 | 1,522,463,368.83 |
17. Projects in construction
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period |
| Projects under Construction | 1,164,130,453.03 | 435,757,406.90 |
| Total | 1,164,130,453.03 | 435,757,406.90 |
(1) Details of construction in progress
Unit: RMB
| Item | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for decline in value | Book value | Book balance | Provision for decline in value | Book value | |
| Phase I, Urban Intelligent Information Industry Construction Project | 33,127,985.19 | 33,127,985.19 | 25,497,962.29 | 25,497,962.29 | ||
| The phase II construction project of the smart manufacturing base in Hangzhou | 449,783,408.47 | 449,783,408.47 | 122,432,129.02 | 122,432,129.02 | ||
| Construction Project of Xi'an R & D Center | 173,768,994.86 | 173,768,994.86 | 55,188,924.03 | 55,188,924.03 | ||
| The construction project of the marketing center in Xi'an | 66,257,152.93 | 66,257,152.93 | 25,256,304.13 | 25,256,304.13 | ||
| Project of Smart IoT Solution R & D and Industrialization | 428,273,059.98 | 428,273,059.98 | 195,019,175.01 | 195,019,175.01 | ||
| Others | 12,919,851.60 | 12,919,851.60 | 12,362,912.42 | 12,362,912.42 | ||
| Total | 1,164,130,453.03 | 1,164,130,453.03 | 435,757,406.90 | 435,757,406.90 | ||
(2) Changes in significant construction in progress
Unit: RMB
| Item Name | Budget | Balance at the Start of the Period | Increased in the current period | Transfer amounts in this period | Other amounts decreased in current period | Balance at the End of the Period | Project accumulative investment as a percentage of the budget | Project Progress | Accumulated capitalized interest amount | Including: capitalized interest amount in the current period | Capitalization rate of the interest in the current period | Capital Source |
| Project of Smart IoT | RMB 912 | 195,019,175.0 | 233,253,884.9 | 428,273,059.98 | 46.96% | 46.96% | Equity |