2015 Annual Report
HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD.
2015 Annual Report
SECURITIES ABBREVIATION: HIKVISION
SECURITIES CODE：002415.SZ
April 2016
2015 Annual Report
To Shareholders
In 2015, the global security industry was still rapidly upgrading products, involving new
technology and product development. The market shares of Chinese security enterprises are further
increasing in the global market. Under the circumstances of global macroeconomic volatility and
domestic economy downturn, the Company achieved a rapid growth of 46.6% increase in revenue
and 25.8% increase in net profits, compared with previous year’s operating results. Since the
establishment of the Company, we have maintained a growth over 20% annually in revenue and net
profits over the past 13 consecutive years, and a quarter-over-quarter increase in both revenue and
net profits.
It is known to us that the development of the Company is our long term objective, which means
that we need to consider both short-term profits and long-term development and keep a good
balance among revenue, profits and operation capabilities. We are firmly committed to the
client-centered business philosophy, to create value for clients, and to bring long-term investment
returns to our shareholders. We have complete confidence in the Company’s future development.
Our confidence is based on our customers’ demands and trust, our commitment to the
Company’s original management principle and concept, as well as all the supports received from
our shareholders. It is a milestone in the development of the Company that Management Measures
for Core Staff’s Investment in Innovative Business（《核心员工跟投创新业务管理办法》）has been
approved by the shareholders’ meeting. This innovative business mechanism is meant to transform
the Company’s long-term development to a “relay race” among our employees, and integrate the
professional aspirations of the employees with the innovative business of the Company, with the
ultimate goal to utilize our employees’ passion for innovation in the direction the industry is going.
Thus, we can build upon a long-term effective and guaranteed mechanism to maintain a sustainable
healthy development of the Company.
Video surveillance is becoming more digital, network oriented and intelligence focused. We
believe that the video surveillance intelligence would open up new market opportunities for the
security industry. Hikvision has gained a significant achievement in cloud storage technology, cloud
computing and Big Data for the video surveillance market, with the ability to lead further
development of video surveillance industry. Based on the internet-oriented \"EZVIZ\" cloud platform
2015 Annual Report
and products, the Company has explored the consumer market to stay abreast of the market
development trend. Based on the surveillance technology, the Company is expanding to the new
areas of machine vision and robotics. Video surveillance technology can be applied to many
potential fields, and we are committed to making the best business decisions accordingly.
Hikvision is in the progress of becoming a medium-scale enterprise. During the past few years,
the Company has learned from the comparable enterprises and adopted the outstanding management
instruments to establish and improve the operation flow and management processes, in order to
drive the management system revolution. We will take deliberate steps to persistently promote the
continuous improvement in management processes to ensure a steady and healthy development of
the Company to bring long-term investment returns to our shareholders.
In 2016, the global macro economy is still under turmoil, and the domestic economy remains
uncertain. However, we are still looking forward to the growth of our business and have strong
confidence in the Company’s future development.
We are grateful for the consistent supports and trust in the Company’s management team from
all of the shareholders.
Hangzhou Hikvision Digital Technology Co., Ltd.
Board of Directors
April 2016
2015 Annual Report
Section I Important Notes, Contents and Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and
senior management of Hangzhou Hikvision Digital Technology Co., Ltd.
(hereinafter referred to as the “Company”) hereby guarantee that the
information presented in this report shall be together be wholly liable for the
truthfulness, accuracy and completeness of its contents and free of any false
records, misleading statements or material omissions.
Chen ZongNian, the Company's Chairman, Jin Yan, the head of accounting
(Accounting Officer) hereby declare and warrant that the financial statements in
the Report are authentic, accurate and complete.
All directors of the Company attended the Board meeting to review this
Annual Report.
The profit distribution proposal passed upon deliberation at the meeting of
the Board of Directors is set out as follows: Based on the total share capital of
4,068,772,253 shares of the Company, all shareholders will receive a cash
dividend of RMB 7 (tax included) per each 10 shares. The Company proposed
bonus issue of 3 shares for each 10 ordinary shares to the existing shareholders
by way of debiting retained profit and share distribution of 2 shares for each 10
ordinary shares to the existing shareholders through the way of capitalization of
premium shares.
2015 Annual Report
Please read the annual report and pay particular attention to the following risk
factors:
Risk of technology upgrade: With the development of cloud computing, big
data, artificial intelligence, augmented reality/virtual reality and other technologies,
the demand and business models of the industry will change accordingly. If the
Company cannot follow the changes in the cutting-edge technologies to realize the
business innovation rapidly, the risks of future development uncertainties will
increase.
Risk of foreign exchange: The overseas sales ratio increased continuously as a
result of the rapid development abroad. Exporting transactions mostly settled in
United States Dollars (\"USD\"). Meanwhile, the Company has to carry out operations
in different countries with various currencies, as the Company has many
wholly-owned or controlled subsidiaries. Therefore, the fluctuation of the foreign
exchange rate has a potential to affect the profits of the Company.
Risk of product information security: Although the Company has dedicated
resources to prevent the cybersecurity risk for our products, there is still a possibility
of deliberate third-party (including viruses, malicious software, hacker and similar
disruptions) attempts to damage our systems or products, causing the security issues
for storage and information transmission. Although there was no material adverse
effect incurred from attacks or accidents on our products or systems in the past, there
is no guarantee that there is no risk in the future.
Risk of uncertain profitability of new business: Our Internet-based video
business, machine vision and other emerging businesses, which are in the exploration
process, are still in the early development stage. This will deliver substantial
uncertainties as we explore technology development paths, business models and
market development options.
2015 Annual Report
Contents
Section I Important Notes and Definitions ...................................................................................... 4
Section II Corporate Profile and Substantial Financial Indicators .............................................. 8
Section III Corporate Business Summary ..................................................................................... 12
Section IV Management Discussion and Analysis ......................................................................... 17
Section V Significant Events ........................................................................................................... 37
Section VI Changes in Shares and Information about Shareholders.......................................... 49
Section VII Information on Preferred Shares ............................................................................... 58
Section VIII Information on Directors, Supervisors, Senior Management and Employees ..... 59
Section IX Corporate Governance ................................................................................................. 74
Section X Financial Report ............................................................................................................. 85
Section XI Documents Available for Reference ........................................................................... 175
2015 Annual Report
Definitions
Term Definition
Hikvision, our Company, Company Hangzhou Hikvision Digital Technology Co., Ltd
The actual controller, CETC China Electronics Technology Group Corporation
Controlling Shareholders, CETHIK CETHIK Group Co., Ltd.
52nd Institute The 52nd Research Institute at China Electronics Technology Group Corporation
CSRC The China Securities Regulatory Commission
The State-owned Assets Supervision and Administration
SASAC
Commission of the State Council
Shenzhen Stock Exchange The Shenzhen Stock Exchange
Company Law The Company Law of the PRC
Securities Acts The Securities Acts of the PRC
Articles of Association of the Company Articles of Association of Hangzhou Hikvision Digital Technology Co., Ltd
2015 Annual Report
Section II Corporate Profile and Substantial Financial Indicators
I. Corporate Information
Stock abbreviation HIKVISION Stock code
Stock exchange where the shares of the
Shenzhen Stock Exchange
Company are listed
Name of the Company in Chinese 杭州海康威视数字技术股份有限公司
Abbr. of the Company name in Chinese 海康威视
Name of the Company in English (if any) HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD
Abbr. of the Company name in English (if any) HIKVISION
Legal representative Chen Zongnian
Registered address No. 555 Qianmo Road, Binjiang District, Hangzhou
Postal code of Registered address
Business address No. 555 Qianmo Road, Binjiang District, Hangzhou
Postal code of Business address
Company website www.hikvision.com
E-mail market@hikvision.com
II. Contacts and contact information
Board Secretary Securities Affairs Representative
Name Zheng Yibo Li Yi
No. 555 Qianmo Road, Binjiang District, No. 555 Qianmo Road, Binjiang District,
Address
Hangzhou Hangzhou
Tel. 0571-89710492 0571-89710492
Fax 0571-89986895 0571-89986895
E-mail hikvision@hikvision.com hikvision@hikvision.com
III. Information disclosure and place of the report
Newspaper designated by the Company for
Securities Times, Shanghai Securities News and Securities Daily
information disclosure
Website specified by CSRC for release of the Annual
www.cninfo.com
Report
Place where the Annual Report is available for
Office of the Board of Directors of the Company
inspection
2015 Annual Report
IV. Company Registration and Alteration
Organization code 91330000733796106P
Changes in principle business activities since the Company was listed (if any) None
Changes of controlling shareholders of the Company (if any) None
V. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm Pan-China Certified Public Accountants Co., Ltd. (Special General Partnership)
Business address of the accounting firm No. 128 Xixi Road, Hangzhou
Name of accountants for writing signature Cheng Zhigang, Zhang Lin
Sponsors engaged by the Company to continuously perform its supervisory function during the Reporting Period
□ Applicable √ Inapplicable
Financial advisor engaged by the Company to continuously perform its supervisory function during the Reporting
Period
□ Applicable √ Inapplicable
VI. Key Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment to or restatement of accounting data due to changes of
accounting policies and correction of accounting errors
□ Yes √ No
2015 2014 Increase/decrease (%) 2013
Operating income (RMB) 25,271,390,273.42 17,233,114,021.70 46.64% 10,745,907,038.84
Net profits attributable to
5,869,049,646.23 4,665,368,689.94 25.80% 3,066,648,532.90
shareholders of the Company (RMB)
Net profits attributable to
shareholders of the Company
5,604,890,259.09 4,474,975,306.54 25.25% 2,977,541,251.73
excluding non-recurring gains and
losses (RMB)
Net cash flows from operating
3,216,722,169.17 3,706,420,782.04 -13.21% 1,863,365,811.63
activities (RMB)
Basic earnings per share (RMB/share) 1.46 1.17 24.79% 0.77
Diluted earnings per share
1.45 1.16 25.00% 0.77
(RMB/share)
Weighted average ROE 35.28% 36.27% -0.99% 31.21%
At the end of 2015 At the end of 2014 Increase/decrease (%) 2013
Total assets (RMB) 30,316,442,436.17 21,290,520,311.29 42.39% 14,071,528,034.19
Net assets attributable to shareholders
19,253,803,738.78 14,842,243,666.05 29.72% 11,086,638,189.27
of the Company (RMB)
2015 Annual Report
VII. Differences in Accounting Data between Domestic and Overseas Accounting Standards
1. Difference in the financial report of net profits and net assets according to the disclosure of International
Accounting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of
International Financial Reporting Standards and China Accounting Standards in the reporting period.
2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards in the reporting period.
VIII. Key Quarterly Financial Indicators
Unit：RMB
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Operating income 4,287,946,779.70 5,508,434,871.12 6,881,256,828.58 8,593,751,794.02
Net profit attributable to
1,044,641,900.05 1,161,879,834.68 1,563,465,066.72 2,099,062,844.78
shareholders of the Company
Net profit attributable to
shareholders of the Company
999,673,189.96 1,112,638,880.64 1,521,246,146.03 1,971,332,042.46
excluding non-recurring gains and
losses
Net cash flows from operating
-2,610,480,167.95 691,321,041.75 1,233,973,661.78 3,901,907,633.59
activities
Significant difference between the above financial indicators or sum of it with disclosed quarterly report, half-year
report
□ Yes √ No
2015 Annual Report
IX. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Inapplicable
Unit：RMB
Item 2015 2014
Profit or loss from disposal of non-current assets (including the write-off
1,715,423.04 -467,280.37 -205,710.43
for the impairment of assets)
The government subsidies included in the current profits and losses
(excluding the government subsidy closely related to regular course of
business of the Company and governm
