Hangzhou Hikvision Digital Technology Co., Ltd.
2017 Annual Report
April 21st 2018
Hikvision 2017 Annual Report
To shareholders
In 2017, Hikvision maintained steady and healthy growth, reporting sales revenue of RMB
41.91 billion, representing year-over-year growth of 31.22%, and net profit attributable to the listed
company of RMB 9.41 billion, representing year-over-year growth of 26.77%.
In 2017, the Company focused on Hikvision-developed products, notably its intelligent
products, enhancing solution through product innovation and creating more value for customers.
For the overseas market, the Company continues to expand from a channel distribution market to a
project-based market. Despite a significant increase in the selling expense ratio, the Company
continued to strengthen its investments in the project-based market. After several years of
exploration, our innovative businesses saw certain growth. EZVIZ, business based on internet
application, reported its first-ever annual profit, with sales revenue in excess of RMB 1 billion.
In the window period for development of the artificial intelligence industry, the Company has
enhanced its investment in artificial intelligence technology research and development to ensure its
industry leadership in niche areas. Capital-driven innovation leads to increasing competition for
talent, rising housing prices, cost of living, and personnel costs have contributed to a rapid increase
in operating costs of the Company. With enterprise growth, internal management of the enterprise
becomes much more complex, and diseconomy problems resulting from increased scale increase
are more prominent. Continuing to improve the internal management ability of the Company
becomes more important. At the same time, rewarding shareholders with current profits is also the
responsibility and obligation of the Company. The Company is working hard to balance technology
accumulation, market expansion, employee stability, improvement of internal management ability
and current reward to shareholders. We understand that customers come first and that the
continuous development of the company, greater room for employees’ growth and continuous
rewards for shareholders can be secured only by creating more value for customers through
continuous product innovation and providing convenient services to customers through
improvement in the marketing system.
In 2017, the Company put forward the concept of AI Cloud aligning with the Internet of
Things (IoT) industry development under the artificial intelligence (AI) era. The Company defined
Hikvision 2017 Annual Report
a three-layered architecture incorporating the edge node, edge domain and cloud center of AI Cloud,
and proposed the core principle of “Edge perception, on-demand (data) convergence, multi-layered
cognition, multi-tier application” of AI Cloud. Over the next few years, the Company will focus on
AI Cloud open platforms and cooperate with numerous partners to promote development of the IoT
industry.
In spite of uncertainties in operation, especially uncertainties arising out of trade protectionism,
we look forward to the Company maintaining a steady and healthy development in 2018: The trend
of artificial intelligence is just getting started, the global marketing network of the Company
becomes more and more balanced, and the development speed of innovative businesses will
accelerate, all of which will further stabilize the operation of the Company. The Company will
further enhance its management ability, pay more attention to profitable growth, continue to
promote sustainable and healthy development, and provide long-term rewards for shareholders.
In closing, we would like to express our heartfelt gratitude to all shareholders for trusting,
understanding and supporting the Company’s operation and management team.
See far, go further.
Board of Hangzhou Hikvision Digital Technology Co., Ltd.
April 2018
Hikvision 2017 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, and will undertake individual and joint legal liabilities.
Chen ZongNian, the Company's legal representative; Jin Yan, the person in charge of the
Company’s accounting work and the head of accounting department, hereby declare and warrant
that the financial statements in this report are authentic, accurate and complete.
The Company’s chairman Chen Zongnian, and director Gong Hongjia, Qu Liyang, Hu
Yangzhong, Wu Weiqi, independent director Cheng Tianzong , Lu Jianzhong, Wang Zhidong attend
the board meeting to review this report in person. Independent director Hong Tianfeng was on a
business trip and not able to attend the board meeting in person, and Hong authorized independent
director Cheng Tianzong to attend and exercise the voting right for him.
The profit distribution proposal passed upon deliberation at the meeting of the Board of
Directors is set out as follows: Based on the Company’s current total share capital of 9,227,270,473
shares, the Company proposed to distribute cash dividend of RMB 5 (tax inclusive) per each 10
shares to all shareholders, bonus share and share distribution from capital reserve is nil.
Note:
This document is a translated version of the Chinese version 2017 Annual Report (“2017 年年度报
告”), and the published announcements in the Chinese version shall prevail. The complete
published Chinese 2017 Annual Report may be obtained at www.cninfo.com.cn.
Hikvision 2017 Annual Report
Please read the annual report and pay particular attention to the following risk factors:
1) Risk of technology upgrade: With the development of cloud computing, big data, artificial intelligence, 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, or fail to realize the business innovation rapidly,
the risks of future development uncertainties will increase.
2) Risk of cyber-security: Risk of cyber-security: The Company has always attached importance and taken
active measures to enhance security performance of our products and systems, but under the Internet
application environment, there is still a possibility of deliberate attempts，including computer viruses,
malicious software, hacker and similar disruptions，to damage our systems or products, causing the security
issues.
3) Risk of exchange rate fluctuation: At the overseas market, the Company carries out operations in various
countries and regions with different currencies. The risk of exchange rate mainly comes from foreign
exchange exposures arising out of sales, purchase and financing that not settled in RMB (mainly in USD) as
well as the exchange rate fluctuations, which may probably affect the profitability level of the Company.
4) Risk of internal management: The continual expansion of business scale, the continuous increase of new
products and new businesses, the sustained growth in total number of employees and the significant rise of
internal management complexity have posed challenges to the Company’s management work and raised
higher requirements on the Company's management team. The Company’s sustainable development will face
certain risks if the management level fails to match up with the Company’s business expansion.
5) Risk of global market expansion: The Company’s business covers more than 150 countries and regions
worldwide. If various situations such as trade protectionism, debt problem or political conflict occur in the
country where our business is carried out, adverse impact may be caused to the Company’s business
development.
6) Risk of local debt: In the government-related project field, the Company has been maintaining a prudent
attitude towards PPP (Public-Private Partnership) and other construction modes, and endeavors to reduce risks
in the course of management and control for signing the project and implementing project. However, the risk
of extension of project schedule and failure of capital recovery might still appear if some government policies
change or the financial payment ability reduces.
7) Risk of intellectual property (IP) rights: The Company continues to maintain the relative large scale of
R&D investment, and produces considerable technical achievements. At the same time, the Company
implements well-organized intellectual property right (IPR) protection measures, however, the risk of
provoking IPR disputes and suffering from IPR infringements still exists.
The above notices might not be all-inclusive of all other potential risks, please pay attention to the potential
investment risks
Hikvision 2017 Annual Report
CONTENTS
To shareholders .................................................................................................................................................... 1
Section I Important Notes, Contents and Definitions ........................................................................................... 3
Section II Corporate Profile & Key Financial Data .............................................................................................. 7
Section III Corporate Business Summary ........................................................................................................... 13
Section IV Operation Discussion and Analysis .................................................................................................. 35
Section V Significant Events .............................................................................................................................. 57
Section VI Changes in Shares and Information about Shareholders................................................................... 76
Section VII Information of Preferred Shares ...................................................................................................... 87
Section VIII Information about Directors, Supervisors, Senior Management and Staffs ................................... 88
Section IX Corporate Governance .................................................................................................................... 105
Section X Corporate Bonds............................................................................................................................... 118
Section XI Financial Report .............................................................................................................................. 119
Section XII Documents Available for Reference .............................................................................................. 233
Hikvision 2017 Annual Report
Definitions
Term Definition
Reporting Period From January 1st 2017 to December 31st 2017
Articles of Associations Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd
Hikvision, our Company, the
Hangzhou Hikvision Digital Technology Co., Ltd
Company
CETHIK CETHIK Group Co., Ltd. Controlling Shareholder of the Company
Innovative Co-investment Partnership Hangzhou Hikvision Equity Investment Partnership (Limited Partnership)
Ezviz, Ezviz Network Inc. Hangzhou Ezviz Network Co., Ltd. (According to the context, also refers to the corresponding business)
Hangzhou Hikvision Robtics Technology Co., Ltd. (According to the context, also refers to the corresponding
Hikvision Robotics
business)
Hangzhou Hikvision Automotive Technology Co., Ltd. (According to the context, also refers to the
Hikvision Automotive Technology
corresponding business)
Hangzhou Hikvision Weiying Sensor Technology Co., Ltd. (According to the context, also refers to the
Hikvision Weiying
corresponding business)
Hikvision Storage Wuhan HIK Storage Technology Co., Ltd. (According to the context, also refers to the corresponding business)
Located in Tonglu economic development area, Hangzhou, Zhejiang province, purposes for production
factories, warehousing logistics center. Initially disclosed in Announcement about the Company’s Investment in
Security Industrial Base (Tonglu)
Tonglu to Set up Wholly Owned Subsidiary and New Hikvision Security Industry Base (Tonglu) Project(《关于
在桐庐投资设立全资子公司及新建海康威视安防产业基地（桐庐）项目的公告》) (NO. 2014-044).
Located in Binjiang district, Hangzhou, Zhejiang province, purposes for the office building. Initially disclosed
Internet Security Industry Base in Announcement about the Company’s New Construction of Internet Security Industry Base Project (《关于新
建海康威视互联网安防产业基地项目的公告》)(NO. 2014-035).
Located in Chongqing, purposes for manufacturing facility, initially disclosed in Announcement about
Chongqing Manufacture Base
Resolution of the 20th Meeting of the 3rd Session Board（No：2016-068）
A long investment cycle, business prospects uncertain, has the high risk and uncertainty, in need for direct or
indirect investment in exploration, in order for the Company to timely enter into new areas of business. Initially
disclosed in Announcement about Management Measures for Core Staff Investment in Innovative Business (《核
Innovative Business
心员工跟投创新业务管理办法》) (www.cninfo.com.cn)
In this report, innovative business also refers to Ezviz, Hikvision Robtics, Hikvision Automotive Technology,
Hikvision Weiying, Hikvision Storage, and their related business or products.
The Company publicly issued the bond with nominal value amounting to Euro 400 million; and the bond was
settled, listed and traded on the Irish Stock Exchange on February 18 th 2016. For details, please refer to
Euro Bond
Announcement about Issuing Foreign Currency Bond (《关于境外发行外币债券的进展公告》) (NO.
2016-004)
Hikvision 2017 Annual Report
Section II Corporate Profile & Key Financial Data
I. Corporate Information
Stock abbreviation HIKVISION Stock code
Stock exchange where the shares of the Company
Shenzhen Stock Exchange
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; ir@hikvision.com
II. Contacts and contact information
Board Secretary Securities Affairs Representative
Name Huang Fanghong 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 information disclosure Securities Times, China Securities Journal
Website specified by CSRC for release of the Annual Report www.cninfo.com.cn
Place where the Annual Report is available for inspection Office of the Board of Directors of the Company
Hikvision 2017 Annual Report
IV. Company Registration and Alteration
Organization code 91330000733796106P
During the reporting period, the Company operating range newly added
electronic technology consulting service, training service (excluding the
organizational training). After the change, the Company's business scope is:
the electronic products (including explosion-proof electrical products,
communication equipment and related ancillary equipment, multimedia
equipment), aircrafts, robots, intelligent equipment, auto parts and accessories,
Changes in principle business activities since the research and development (R&D) and production of automotive electrical
Company was listed (if any) signal equipment; Sales of self-produced products; provide technical services,
electronic technology consulting service, training service (excluding the
organizational training), electronic equipment installation; electrical
engineering, design, construction and maintenance of intelligent system
projects. (except country prohibited and restricted items, relating to the
specific mandatory license certificate) (subject to ratification in accordance
with the project, approved by the relevant departments to operate)
Changes of controlling shareholders of the
No change during the reporting period
Company (if any)
V. Other Relevant Information
Accounting firm engaged by the Company
Name of the accounting firm Deloitte Touche Tohmatsu Certified Public Accountants LLP
Business address of the accounting firm 30F Bund Center 222 Yan An Road East Shanghai
Name of accountants for writing signature Mou Zhenfei, Zhang Shushu
Sponsor institution engaged by the Company to continuously perform its supervisory function during the
Reporting Period
□ Applicable √ Inapplicable
Financial advisor engaged by the Company to perform the duties of continuous supervision during the reporting
period
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
VI. Key accounting data and Financial Indicators
Whether the Company performed a retroactive adjustment or restatement of previous accounting data
√ Yes □ No
The reason for retroactive adjustment or restatement of previous accounting data:
Accountant arrangement method for business merger involving enterprises under the common control
Unit: RMB
2016 YoY Change (%)
Before Adjustments After Adjustments After Adjustments Before Adjustments After Adjustments
Operating income (RMB) 41,905,476,572.07 31,924,020,872.44 31,934,544,088.82 31.22% 25,271,390,273.42 25,285,784,528.15
Net profits attributable to shareholders of the
9,410,855,084.82 7,422,261,983.16 7,423,683,960.91 26.77% 5,869,049,646.23 5,869,119,852.19
Company (RMB)
Net profits attributable to shareholders of the
Company excluding non-recurring gains and 9,177,116,964.06 7,270,742,762.47 7,270,742,762.47 26.22% 5,604,890,259.09 5,604,890,259.09
losses (RMB)
Net cash flows from operating activities
7,373,160,250.68 6,213,692,160.56 6,216,364,642.05 18.61% 3,216,722,169.17 3,216,816,901.02
(RMB)
Basic earnings per share (RMB/share) 1.030 0.818 0.818 25.92% 0.651 0.651
Diluted earnings per share (RMB/share) 1.024 0.817 0.817 25.34% 0.649 0.649
Weighted average ROE 34.96% 34.56% 34.58% 0.38% 35.28% 35.28%
Hikvision 2017 Annual Report
At December 31st 2016 YoY Change (%) At December 31st 2015
At December 31st 2017
Before Adjustments After Adjustments After Adjustments Before Adjustments After Adjustments
Total assets (RMB) 51,570,963,466.61 41,339,007,814.83 41,348,428,750.40 24.72% 30,316,442,436.17 30,325,728,486.51
Net assets attributable to shareholders of the
30,358,072,874.22 24,288,634,890.08 24,285,707,211.82 25.00% 19,253,803,738.78 19,249,454,082.77
Company (RMB)
Hikvision 2017 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
Financial Reporting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of International Financial
Reporting Standards (IFRS) and China Accounting Standards in the reporting period.
2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas Accounting
Standards and China Accounting Standards in the reporting period.
VIII. Key Quarterly Financial Indicators
Unit：RMB
st nd rd th
1 Quarter 2 Quarter 3 Quarter 4 Quarter
Operating income 7,043,724,101.73 9,403,815,634.79 11,282,202,421.66 14,175,734,413.89
Net profit attributable to shareholders of the
1,480,780,632.01 1,810,765,424.69 2,861,268,129.82 3,258,040,898.30
Company
Net profit attributable to shareholders of the
Company excluding non-recurring gains 1,440,574,125.37 1,749,292,093.49 2,819,127,478.83 3,168,123,266.37
and losses
Net cash flows from operating activities -3,035,286,557.20 1,092,485,754.78 2,038,650,373.18 7,277,310,679.92
Whether there is significant difference between the above individual or aggregate financial indicators and that of
what disclosed in the quarterly report, half-year report
□ Yes √ No
Hikvision 2017 Annual Report
IX. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Inapplicable
Unit：RMB
Item 2017 2016
Profit or loss from disposal of non-current assets (including
1,585,222.50 -736,149.02 1,715,423.04
the write-off for the impairment of assets)
The government subsidies1 included in the current profits and
losses (excluding the government subsidy closely related to
regular course of business of the Company and government 184,557,043.27 171,321,088.31 169,279,486.81
subsidy based on standard quota or quantitative continuous
application according to the state industrial policy.)
Net gains and losses from beginning of the reporting period to
the merge date for the subsidiary merged involving enterprises -42,070.90 3,949,938.20 195,016.56
under common control
Held-to-maturity financial assets, profits and losses of fair
value held-for-trading financial liabilities, and investment
income in disposal of held-for-trading financial assets and
86,740,196.23 321,708.86 132,518,794.00
liabilities and available-for sale financial assets excluding the
effective hedging business related to the regular business
operation of the Company.
Other non-operating income and expenditures except the
30,044,820.52 18,276,871.37 15,481,300.69
items mentioned above
Less: Impact of income tax 50,405,620.44 36,000,258.26 54,882,891.58
The impact of the minority interests (after tax) 18,741,470.42 4,192,001.02 77,536.42
Total 233,738,120.76 152,941,198.44 264,229,593.10
Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to the definition in the , or classifies any non-recurring gain/loss item mentioned in the aforementioned note as a recurrent gain/loss item
□ Applicable √ Inapplicable
In the reporting period, the Company did not classify an item as a non-recurring gain/loss according to the definition in the
into a recurrent gain/loss item
1
Please refer to Note (V) 48 for details about government subsidy (Value-added Tax Rebate for Software Product), which is closely
related to daily operations of the Company.
Hikvision 2017 Annual Report
Section III Corporate Business Summary
I. The principal business of the Company during the reporting period
1. Main Business and industry position
Hikvision is a provider of video-centered IoT solutions, which provides security, intelligence business and
big data services to customers around the world. As the world's largest security manufacturer, Hikvision is the
witness, practitioner and important promoter of video surveillance revolutions in digitalization, HD networking,
and intelligence. Global research firm IHS Markit has ranked Hikvision as global No.1 in the video surveillance
industry for six consecutive years, with 21.4% of the global video surveillance market share.
First established as an audio-video compression board provider, Hikvision has gradually developed into a
provider of a broad range of products and solutions covering the demands of security and visualized management
of the entire video surveillance industry. In 2017, Hikvision led the intelligent application trend based on the
fusion of cloud and edge computing, innovatively launching the three-tier AI Cloud architecture of edge node,
edge domain and cloud center, and vigorously promoting the development and application of AI in the IoT field.
2. Main Products and Solutions
2.1 Hikvision’s AI Cloud Architecture
Cloud computing is a commonly used in the Internet industry, but the pure cloud computing mode based on
Internet does not apply to IoT. Massive heterogeneous data has been generated as the IoT scale continues to
expand. If all of such data is converged to the cloud center for centralized processing, swift business response will
not be able to fulfilled, and network bandwidth, storage resources, computing power, etc. will also be exposed to
tremendous pressure. Take a video network with 100,000 cameras as an example: approximately 30PB video
data can be generated every month, and if all of the original data is converged to the cloud center for processing,
the construction cost will be significantly increased, and the business response agility will be affected as well,
making it unfeasible. Coping with the bottleneck in the course of IoT development is a challenge faced by the
whole industry.
In the opinion of Hikvision, the fusion of edge and cloud computing is the reasonable architecture to better
solve the current practical problems related to IoT. For example, video surveillance not only requires proximal
Hikvision 2017 Annual Report
storage and intelligent analysis of the original data flow, on-demand convergence and big data analysis of
structured data, but also needs to conduct uniform management, operation and maintenance of various IoT and IT
equipment. It's similar to the human body, where connecting sensory nerve endings with the brain to enable
orderly operation is a very complicated meridian system, rather than a simple information channel. Therefore, we
need an intelligent architecture capable of realizing both edge computing and on-demand centralized processing of
massive heterogeneous data, so as to achieve organic fusion of AI, big data, cloud computing and terminal
equipment. With this in mind, Hikvision launched the AI Cloud architecture incorporating cloud and edge
computing.
Hikvision’s AI Cloud architecture consists of three levels, which are edge node, edge domain and cloud center.
Edge node focuses on the acquisition of multi-dimensional perception data and front-end intelligent processing of
such data; edge domain focuses on convergence, storage, processing and intelligent application of perception data;
cloud center focuses on the fusion of business data and multi-dimensional analysis and application of big data.
From edge node to edge domain, data from edge nodes is processed in real time and converged to edge domains;
from edge domain to cloud center, data from edge nodes and edge domains is converged to the cloud center on
demand to support multi-dimensional big data analysis. The edge domain and cloud center architecture could
consists of multiple layers and tiers, and according to different applications, the data converged and uploaded to
the cloud center from edge domain will be different in format and content. The edge domain serves like a football
“midfield”, as it is responsible to determine the time, type and processing degree of the data transmitted to the
Hikvision 2017 Annual Report
cloud center and achieve “on-demand data convergence”.
In summary, cloud-edge fusion of Hikvision AI Cloud is neither the simple cloud + edge, nor to simply
divide into numerous so-called “little clouds” and converged to a larger scale cloud; but instead it is a new
architecture that can practically solve a series of problems in real application, data processing and management
incurred from edge to cloud. AI Cloud adheres to the core concept of “edge perception, on-demand data
convergence, multi-layered cognition and multitier application”, designs and constructs a multi-dimensional
intelligent service system. In short, AI Cloud is not Cloud Computing, but an aggregation of infrastructure, data
resources, platform services and application software.
2.2 Product Innovation in the Era of Intelligence
In 2017, the Company completed the core product layout of edge node, edge domain and cloud center based
on the AI Cloud architecture, injects AI into the products, and continuously leading the market by virtue of
technology and product innovation.
The rapid development of AI technology unfolds a new chapter of intelligent products. Hikvision’s intelligent
products, represented by the “DeepInview”( 深 眸 ) series intelligent video cameras, DeepinMind Traffic
Management Server, intelligent traffic products (神捕), DeepinMind open platform (深思) series intelligent
servers, and “DeepinGo”(明眸) series swing barrier turnstile with facial recognition terminal, have been widely
applied in the government market, enterprise market and consumer market.
Hikvision 2017 Annual Report
Front-End Products
In 2017, Hikvision comprehensively integrated deep intelligence into front-end products, and endeavored to
facilitate the iterative upgrade of products through the increasingly diversified intelligent chips. For example,
Hikvision “DeepinView” series intelligent video camera is a typical representative of edge perception, which
achieves intelligent perception and understanding functions such as object detection and feature extraction in edge
nodes by \"intelligentizing\" the edge, which makes perception and understanding more efficient and more accurate.
Attributable to the breakthroughs in wide scenario, long distance and HD object capture, it can obtain clearer,
more effective, richer and more valued video data information; as for the complicated environment like serious
backlight and side mount, the camera has a special algorithm to optimize face recognition scenarios, which can
achieve a higher face capture rate; Hikvision’s “DeepinView” Darkfighter X (深眸黑光) camera uses the
proprietary dual lighting fusion technology, and enables users to capture the HD full-color visual perception effect
under extremely low illumination circumstances; Hikvision’s ”DeepinView” AR series camera lays a solid
foundation for three-dimensional security control and achieves the visualization of business management and
control.
Back-End Products
In 2017, Hikvision realized comprehensive intelligence of the back-end products. The product system
Hikvision 2017 Annual Report
consists of storage and computing all-in-one integrated equipment and GPU video image intelligent computing
equipment with better adaptability to IT environment, showing higher cost-effectiveness and being dedicated to
video perception computing, as well as data center equipment with higher universalization, better openness, and
better openness, and that can achieve free switching of algorithms and pooled deployment of computing and
storage resources.
For example, Hikvision’s DeepinMind NVR ( 超 脑 ) adopts the embedded design, integrates with
high-performance GPU chips, builds in the deep learning algorithm, combines video storage with intelligent
analysis, and achieves facial analysis, perimeter protection, video structuring and other analysis applications while
taking into account the conventional NVR video storage. For different markets, Hikvision caters to customer
demand by launching intelligent products for scattered scenarios such as financial ATM security protection,
student campus security protection, academic analysis, vehicle analysis in gas stations, safety helmet-wearing
monitoring, etc., thereby providing competitive solutions for various industries. Hikvision’s DeepinMind NVR
products have been recognized for high quality and innovative intelligent applications, and we were honored as
2017 China Top Ten New Prominent Security Products.2
In terms of the enterprise-level intelligent server, Hikvision has launched “Falcon” (猎鹰), a video cloud
structuring server, “Blade” (刀锋), an image cloud structuring server, DeepinMind Face Recognition server（脸谱）
for intelligent facial analysis, behavioral trend analysis server etc., integrated the industry-leading deep learning
algorithm, and deeply developed the public security, traffic and other industries. As a result, we’ve successfully
developed the first generation of intelligent servers for practical business applications in the industry.
Based on open architecture and pooled resource application, Hikvision launched the DeepinMind open
platform (深思) image fusion intelligent analysis system product. Open architecture and open data are one of the
core concepts of the DeepinMind open platform. It opens the algorithm engine to allow all kinds of algorithm
vendors to develop, train and commercially operate different algorithms on it. Meanwhile, the data generated by
DeepinMind open platform through fusion with video analysis can be opened to the outside via standard interface
and protocol, and any platform vendors with certain development capability can use such data for upper-level
business applications, thereby supporting the industry to develop an AI ecological environment.
2
2017 China Top Ten New Prominent Security Products was selected and issued by China Public Security Magazine, together with
competent authorities like Ministry of Public Security, the Science Research Institute, and the Security Industry Association.
Hikvision 2017 Annual Report
Display Products
In 2017, Hikvision created multi-layer products of cloud center, edge domain and edge node incorporating
AI Cloud strategy, and continues to expand the central display business field, and achieve interactive access to
information, intelligent delivery of information, and comprehensive presentation of big data through diversified
display approaches such as seamless splicing, transparent, curved surface and holographic display. For example,
Hikvision’s central decoding and splicing control system, which is based on the technologies of video-audio
processing, multimedia data integration, UHD display, AI, clustering and scattering, \"intelligentizes\" products
such as universal decoder, splicing controller, multifunction video center, etc., diversifies the application of
monitoring center and command center, and maintains the leadership position in the industry.
Access Control and Alarm Products
In 2017, Hikvision launched various kinds of innovative application products in the access control and alarm
product field by applying AI technology. For example, Hikvision “DeepinGo”(明眸) series close-range facial
recognition product, which covers numerous edge devices for access control, attendance checking, visitors,
consumption, elevator control, personnel access, visual intercom, etc., has greatly expanded the application
scenarios of facial recognition technology with rapid response speed, a friendly interactive interface, and support
for massive face matching and picture anti-faking. “DeepinGo” (明眸) series products have not only upgraded the
traditional one-card access control system to the AI era, but more importantly enhanced the security and usability
effectively by combining with intelligent surveillance products. It has also laid a foundation for the smart
Hikvision 2017 Annual Report
communities and campuses to improve their access control solutions. Moreover, based on its fast, accurate and
convenient features, facial recognition technology is highly accepted by users in such scenarios as face and
identity matching in hotels, real-name attendance checking on construction sites, face, identity and ticket
verification in high-speed railway stations and bus stations, school dormitory management, and more.
Intelligent Traffic Products
In 2017, Hikvision further enriched its intelligent traffic deep learning products, and launched a series of
intelligent traffic products based on AI Cloud and incorporating the concept of edge node and edge domain. The
intelligent traffic product line helps technical bottlenecks, builds in new IoT applications by virtue of IT
approaches, lays out the ecological road environment, and achieves sustainable development.
For example, Hikvision’s DeepinMind series intelligent traffic management server ( 神 捕 ) has been
extensively applied to urban areas with such intelligent functions as “pedestrian jaywalking”, “vehicles not being
courteous to pedestrians”, “high beam light detection”, etc.
In terms of road perception, the Company took the lead in upgrading the new generation of intelligent traffic
products, switched the sensor of road capture camera from CCD to CMOS for the first time, and designed the
900-megapixel (MP) intelligent tollgate and off-site traffic law enforcement products. The brand-new sensor has
contributed to qualitative leaps in high frame rate and low illumination level night view, and explored into many
business types including off-site traffic law enforcement.
In terms of road cognition, the Company launched terminal products such as “Intelligent Cube” (智能魔方)
series, “ALL IN ONE”, adaptive intelligent signal controller, etc. As a typical product of the edge domain, the
intelligent road terminal enables unified management of the data within the domain and proximal agile business
responses. The “ALL IN ONE” comprehensive integrated management and control machine has further simplified
the construction wiring cost at the crossroad, and helped simplify design of crossroads by virtue of excellent
structural composition and thermal design.
Transmission Products
Hikvision’s transmission products support the access and networking of all kinds of IoT terminal equipment,
and achieve the all-weather, all-region reliable transmission. Such products include the optical transmission
products such as video optical transceivers and network optical transceivers, as well as network transmission
products such as network switches, industrial switches, wireless bridges, wireless AP (access point) and AC
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(access point controller), and etc. In 2017, the Company launched the remote POE switch product series and
wireless bridge product series for elevators, making a more rapid and convenient network access for
perception-end equipment.
2.3 AI Cloud Boosting Intelligent Applications to Industries
According to the AI Cloud architecture, Hikvision is devoted to enhancing its top four capability in AI
resources schedulability, on-demand data convergence, scenario-based application and integrated operation and
maintenance services for public security, transportation, law enforcement, education and healthcare, energy,
finance, intelligent building, etc., in an attempt to empower various industries to realize intelligent transformation.
For example, in the public security field, AI Cloud helps to combat crime and maintain a stable civil life; in the
public service field, AI Cloud serves intelligent transportation and creates a green and harmonious ecological
environment; in the commerce field, AI Cloud helps owners optimize products and services, and enhance
operational efficiency; in the finance field, AI Cloud enables precision marketing and improves customer
experience; and in the education field, AI Cloud will help achieve intelligent education and innovate upon
teaching management.
2.3.1 Public Security ---- Taking XueLiang Project (雪亮工程) Solution as an Example
Hikvision XueLiang Project Solution regards “multi-dimensional and stereoscopic mode, distributed
intelligence, and global sharing” as the core concept, focuses on networking application construction of public
security video surveillance, takes the five-level comprehensive treatment centers covering village (community),
town (street), county (district), city and province as the command platform, bases on grid management, and
applies technologies such as video surveillance, face matching, license plate recognition, intelligent pre-alert,
radio frequency identification and Big Dipper Navigation System, so as to build up the stereoscopic security
prevention and control system, improve the refined and intelligent level in comprehensive treatment of social
security, and get through the “last mile” of convenience service for the public.
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Through hierarchical establishment of the public security video image information sharing platform,
XueLiang Project converges massive governmental, industrial and social video image resources, so as to promote
the sharing of video resources, and provide visualized support services in real-time monitoring, access to videos,
etc. Meanwhile, based on AI capability, it converts video image resources into data resources, and maximizes the
extraction of valued information; and based on massive valued data, it carries out in-depth analysis and mining by
big data technology, and provides data and service support for deep business application of government sectors
and industries, so as to enhance public safety and security
2.3.2 Public Services ---- Taking Intelligent Traffic Comprehensive Management and Control Solution as an
Example
In the intelligent traffic field, Hikvision considers the big traffic data platform as the commanding height, and
converges the data of urban bus, taxi, online car-hailing service, “passenger transport coach, tourism transport
coach and dangerous goods transport vehicle”, highway passenger transportation, railway passenger transportation,
freeway traffic flow, urban parking lot, etc. Based on the construction concept of “AI Cloud + urban traffic
intelligent management”, the Company has achieved front-end side intelligent advancement, on-demand data
convergence, layered autonomy and traffic management on cloud, and provided integrated solutions and services
for business applications of transportation management and urban traffic control, in order to safeguard the road
traffic security, alleviate traffic flow pressure, optimize the external traffic services, enhance the traffic operation
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efficiency, and promote the industry business innovation and the application transformation and upgrade.
Making full use of the advanced technologies of AI, Augmented Reality (AR) and 3D positioning, etc.,
Hikvision provides users with a command platform for holographic perception, precision analysis, real scene
operation and efficient scheduling, and acquires panoramic videos of the monitoring points via the AR PanoVu
camera. Meanwhile, the AR PanoVu camera can interlink with low-position cameras within the field of view in
the form of virtual tags, and demonstrate the video data of low-position cameras, tollgate capture data, road traffic
data, abnormal traffic incident data and other information by means of Picture-in-Picture. This can achieve the
linkage between three-dimensional management and control and multi-businesses, which focuses on both the
general situation and the details, facilitates inquiry, search, positioning, description, alarming and linkage, and
enhances operational command efficiency.
2.3.3 Boosting Commercial Development ---- Taking Hikvision Cloud Visualized Management Platform (云
眸) System Solution as an Example
Hikvision Cloud Visualized Management Platform (云眸) system solution is a large video networking and
structured could platform solution constructed by Hikvision specially for commercial users under great chain
business era on the basis of Hikvision EZVIZ (萤石) public cloud under the AI Cloud architecture. It can realize
remote video inspection nationwide based on Internet technology, conduct unified management of processes and
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deliver results of video inspection according to management requirements. Meanwhile, through the front-end
intelligent device, it can collect structured data in multiple aspects such as customer flow, human body attributes,
etc., and provide management and operation data by combining the scenario-based demands, such as terminal
customer analysis, customer group analysis, targeted advertising push, facial attendance system, etc. In addition,
the Cloud Visualized Management Platform (云眸) has optimized the overall product design in terms of
convenient operation and efficient management, and greatly enhanced the usability and friendliness of the mobile
APP terminal while intensifying the service capability of cloud data in the central terminal, thereby providing
efficient technical tools for commercial users to improve their overall operation.
For example, Hikvision’s Cloud Visualized Management Platform (云眸) helps to achieve precise marketing
in the chain retail industry. Through the store traffic statistics device, it collects customer traffic data in and
around the store; by combining the transaction settlement data via POS system, users can see the sales turnover
rate of products in the focus areas, which is helpful for retail analysis and decision making.
In the catering industry, it enhances management efficiency and quality intensity by jointly establishing a
operation and management cloud platform. Through Hikvision’s Cloud Visualized Management Platform (云眸),
users can achieve services such as hygienic supervision on kitchens, management of store personnel, regular
inspection on stores, upgrade supervision models, and streamline management of multi-site businesses. .
Meanwhile, it allows enterprises to provide an open interface linked with the WeChat Official Account, which
makes the store management more transparent and healthy.
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2.3.4 Intelligentizing Finance ---- Taking Intelligent Financial Branch Solution as an Example
Hikvision considers “AI intelligentizing the edge, integrating cloud and edge computing, and enhancing
business agility” as the design philosophy, and organically integrates with various scenarios of the finance
industry by relying on deep learning algorithm model and the full series of intelligent products, to establish a
brand new customer identification and interactive marketing mode.
Facial identification technology enables better control of marketing, customer service as well as better design
of bank branch facilities by identifying customers and the dynamic flow of customers in the offices. The
information release and display technology is designed to engage customers with information about financial
products. Intelligent branches provide a differentiated experience for customers, and according to the standardized
and regulated service requirements, Hikvision applies intelligent products to business channels such as counter,
e-banking, self-service equipment, etc., to provide financial customers with a safer identification matching
approach, to prevent operational risks such as internal and external fraud, and to enhance overall business
processing efficiency.
2.3.5 Facilitating Campus Management ---- Taking Smart Education Solution as an Example
Hikvision Smart Education provides a full series of intelligent applications based on various businesses
scenarios for users like schools, education bureaus and education groups. With respect to the current situation of
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numerous campus security protection subsystems, and to meet management requirements, Hikvision has launched
a comprehensive integrated system for education security protection by integrating multiple subsystems including
video surveillance, alarming management, personnel management and control, vehicle management and control,
door access control management, dormitory management, school bus management and emergency response and
command. This has deeply integrated the core work of safeguarding and achieving the “three-in-one” of security
information system consisting of unified business planning, unified authority management and unified resource
scheduling.
Through real-time identification of personnel information, the school gate personnel control system can
achieve the functions of risk early-warning of blacklist personnel, high-frequency appearance early-warning of
strangers, face and identification matching of visitors, and management of restricted range of areas; the dormitory
management system deploys the facial capture camera at the entrance and exit of a student dormitory, which can
simultaneously identify the faces of all personnel entering the dormitory, and help the dormitory administrator
identify and check the identification of personnel while also ensuring access efficiency; based on the advanced
analysis algorithm, the 4K teaching recording and broadcasting system can complete automatic broadcasting
switching, achieve HD recording of routine teaching courses, and carry out teaching management and educational
administration, such as analysis of class performance, attendance rate statistics, routine classroom inspection, etc.
Based on the development of deep learning technology, and by identification and analysis of face and vehicle,
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as well as the innovation in teaching and campus management, Hikvision Smart Education System further
achieves the fusion, secondary refining and value adding of data. It is designed for comprehensive IoT perception
and efficient and collaborative campus management, thus providing safe and convenient campus life services for
teachers and students.
To sum up, Hikvision “AI Cloud” strategy centers on user demands, and integrates AI, big data, cloud
computing, edge computing, and other technologies into an IoT application covering perception, transmission,
cognition and application, in an effort to lead the intelligent IoT development based on the fusion of cloud and
edge computing concepts. Hikvision continues to develop the market, provides customized solutions, products and
services for various industries, and establishes new business development modes co-existing and co-developing
with intelligent applications of various industries.
2.4 Pursuing Prosperity Together with Industry Users and Building the New Ecosystem of AI Cloud
AI Cloud involves numerous aspects of the industry, requires multiple factors such as algorithm, computing
power, product, data, training system, software platform and application software to jointly participate. Hikvision
adheres to the principle of “openness, cooperation and win-win”, establishes a complete system with open
capabilities by opening the infrastructure, data resources, platform services and application interface, and
collaborates with partners to build the new ecosystem of AI Cloud.
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Meanwhile, it promotes and implements industry solutions based on AI Cloud architecture in various industries,
cultivates and develops professional partners in segment industries and fields, and establishes an industrial
ecological cooperation system; besides, Hikvision will also continue paying attention to the extension
development of industry chain, and the construction of service ecosystems such as consultancy, operation and
maintenance, security protection, etc.
3. Hikvision’s Innovative Businesses
Centered on video technology, Hikvision has deployed five new innovative businesses.
3.1 EZVIZ Guiding the Growth of Innovation Business and Laying a Foundation for Commercial
Intelligence
Hikvision EZVIZ Internet Business serves the smart home and intelligent commercial fields, and over five
years’ development, it realized the revenue of more than RMB 1 billion and achieved profitability in 2017.
In terms of smart home, EZVIZ continues to improve the user experience by advanced technologies,
products and services, and provide home users with intelligent security services. The new products debuted in
2017 include the active defense Wi-Fi camera C3W, smart entry kit with a smart door viewer DP1 and intelligent
fingerprint lock, human-shape-detection smart Wi-Fi bullet camera C5Si, etc.. Together with EZVIZ cloud
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platform and by combining IoT cloud platform and big data technology, these new products have effectively
integrated home demands and scenarios such as intelligent control of household equipment, home environment
perception, home security perception as well as information communication, consumption service, etc., so as to
create a safe and convenient home, and provide users with the one-stop intelligent service solutions.
In terms of intelligent commerce, EZVIZ has many types of security equipment for business purposes, which
provide video services for business operation and management through video analysis by combining the
globalized video cloud service platform --- EZVIZ Cloud and by centering on the video content, and extend
diversified applications. EZVIZ cloud can be connected to massive IoT equipment to support large-scale
concurrence, achieve the interconnection between equipment and users, and interconnection between different
equipment, and efficiently realize equipment networking. EZVIZ cloud provides rich and well-organized API
interfaces, including the support of multiple platforms like Windows, Android, iOS and Linux, so as to achieve
cross-industry cooperation. With the operation nodes covering throughout the globe, EZVIZ Cloud can provide
borderless real-time data transmission and application services for both domestic and overseas users, and has
gradually become a public cloud platform carrying commercial intelligence.
3.2 The Rapid Growth in Other Innovative Businesses Laying the Foundation for the Company’s
Long-term and Sustainable Development
Based on the Company’s technical accumulation in the multi-dimensional perception and system control
fields, Hikvision Robotics is mainly engaged in intelligent manufacturing, and developing mobile robots, machine
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vision and industrial-level unmanned aerial vehicle (UAV). In the mobile robot field, Hikvision continues to
launch reliable AGV (Auto Guided Vehicle) products and solutions, and help JD.COM, SF EXPRESS and other
partners to reduce operating costs and improve business efficiency. In 2017, the Company released the carrying
robot (forklift) and carrying robot (compound robot) based on laser navigation, which has further enriched the
product choices for customers. In the machine vision field, Hikvision endows the machine with perceptual ability
by virtue of image identification, uses cameras to measure and judge in place of human eyes, and facilitates
industrial automation; and it achieves stronger resolving power, larger sensitivity range and higher observation
accuracy, and greatly enhances productivity. As the UAV influence on the consumer market increases, the
application of industrial-level UAV is also increasing. For this purpose, the Company has presented various
products such as the Falcon Series quad-rotor and hex-rotor aerial vehicles, Commander-Series All-In-One
Ground Station, and Defender-Series Unmanned Aerial Vehicle Jammer, etc., which help extend the security
industry solutions from two-dimensional surface to three-dimensional space.
Attributable to the increase in perception and computing power of semiconductor devices and the iterative
development of network technology, automotive intelligence is emerging. The Company extends the advantages
of video technology to the automotive electronics field, and provides powerful protection for the driving safety of
both industrial-level and consumer-level users by using advanced image capture technology and video analysis
technology. The Company has developed various intelligent automotive electronics products and solutions
including the intelligent vehicle-mounted rearview mirror ( 云 镜 ), 360° panoramic view system and
vehicle-mounted intelligent surveillance system, which covers double chips of both the industrial-level image
processor and the intelligent processor. The Company has also launched the Advanced Driver Assistance Systems
(ADAS) integrating the functions of vehicle front detection, lane departure warning (LDW), vehicle driver
behavior analysis and right side blind area detection, etc., so as to facilitate intelligent, comfortable and safe
driving in future.
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The data size of data generated by the video surveillance industry reaches ZB level every year. As a leader in
the video surveillance industry, Hikvision has deployed the business of solid state disks (SSD) and intelligent
storage solutions by combining the development prospects of AI and big data. In 2017, the Company launched a
number of industrial-level, industry-level, data center-level and consumer-level products based on SSD as the
carrier, as well as personal portable NAS, private cloud and other storage application solutions to meet the data
storage demands of personal and home users.
Hikvision Weiying ( 海 康 微 影 ) is a provider of far infrared (IR) sensors centered on MEMS
(Micro-electromechanical Systems) technology. Based on the deep understanding of security applications,
Hikvision lays out the uncooled infrared (IR) sensors, and has launched thermal imaging sensors applicable to
multiple fields such as security surveillance, driving assistance, disaster forecast, industrial temperature
measurement, medical inspection and quarantine, consumer electronics, etc.
The Company’s innovative businesses are carried out on the basis of video technology and based on users’
demands. Hikvision will continuously expand the new technologies and new applications, look for more market
opportunities, and lay a solid foundation for the Company’s long-term and sustainable development.
4. Market Demands and Technology Motivation
Security is a priority in countries and regions worldwide, and the continual improvement of security
protection capability is in demand. Governments, enterprises and families in various countries want security
products, and complex business demands further promotes the diversity of products and the development of
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overall solutions. Meanwhile, growth of the existing market and the increasing new demands have contributed to
video surveillance industry growth.
In terms of technical R&D for satisfying and leading customer demands, the long-term planning and
continual investment contribute to the Company’s sustainable development and innovation in technical fields, as
technical innovation is the powerful impetus driving corporate development. Along with the application of
Artificial Intelligence (AI) technology in the video field, video as the perception dimension with the richest
information content is gradually becoming an important method for supporting transformation and upgrading of
traditional industries. The combination of AI, video technologies and business demands is promoting development
of video technologies from an application focusing on security assurance to an important application for
improving business management efficiency in more and more industries.
Based on our accumulation in products, software, solutions and industry applications, we’ve constructed a
three-dimensional IoT-based intelligent system architecture --- AI Cloud, which puts forward the core concept of
“edge perception, on-demand (data) convergence, multi-layer cognition and multi-tier application”, responds to
the basic construction ideas for IoT infrastructure, data resources, platform services and application software, goes
beyond R&D at specific scheme level, forms into a systematically theoretic architecture and guideline, and
provides the direction for industry development.
II. Significant changes in main assets
1. Major Changes in Main Assets
Major assets Explanation on Major Changes
Equity Assets Increased by 31.08%, mainly due to investment to Maxio Technology (Hangzhou) Ltd.
Fixed Assets No significant changes
Intangible Assets No significant changes
Increased by 353.84%, mainly due to the investment to Internet Security Industry Base and Security
Construction in Progress
Industrial Base (Tonglu) project-phase 2.
2. Major Overseas Assets
□ Applicable √ Inapplicable
III. Core Competitiveness
As an industry leader, Hikvision insists on technology leadership, centers on customer demands, widely
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converges the talents and builds global comprehensive competitive advantages by virtue of strong R&D, sales,
production and service integration capabilities as well as software, hardware and system integration capabilities.
1. Closely Focusing on Customer Demands to Develop the Segment Industry
Hikvision promotes R&D by centering on meeting the market demands; based on customer demands,
Hikvision carries out in-depth development and customization close to the industry, ensuring the products and
solutions comply with and properly guide the market demands, and helps users to create value.
The video application scenarios are scattered. Customers of various industries have their respective and rich
business scenarios of different business logics, and they have very different demands for video applications. In
terms of hardware, the Company has more than 10,000 product models available for sale, and provides rich
product types and segmented product models for differentiated scenario demands to achieve the best performance
requirements. In terms of solutions, the Company has multiple scenario-based software platform solutions for the
seven industries of public security, transportation, law enforcement, education and healthcare, finance, energy and
intelligent building, and provides software and hardware combination solutions and business operation modes
specific to different business demands.
All of our actions from supplying products to providing solutions and launching the strategy of “platform +
ecosystem” are based on the Company’s deep understanding and confidence of the market. Hikvision will closely
center on the customer demands to promote the concept of “industry segmentation, regional grass-roots marketing
and end-to-end business development” continuously, always listening to customers to continue improving the
solution customization capability and consultative selling capability, and constantly transforming technology into
market value.
2. Optimizing the R&D System and Enhancing the R&D Efficiency
Hikvision has established a R&D center system, which is headquartered in Hangzhou and covers Beijing,
Shanghai, Chongqing, Wuhan, Xinjiang, and Montreal in Canada, Silicon Valley in the United States and
Liverpool in Britain, and plans to establish new R&D bases in Xi’an, Wuhan, Chengdu, Chongqing and
Shijiazhuang.
Hikvision has established a three-in-one hierarchical R&D system consisting of the technology platform,
product platform and solution platform. Technology platform is the foundation of product platform and solution
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platform. Innovation and growth of the technology platform, products and solutions ensures continual
competitiveness; without the support of product platform and solution platform, the technology would be prone to
remaining at the academic research level. The Company’s three R&D platforms are subject to different functions
and mutual cooperation at the same time, enabling the technology, product and solution platforms to integrate and
complement each other, thereby jointly facing and quickly satisfying the users’ needs. A sound operation system
enables the R&D team to achieve continual innovation and launch the products and applications leading the
industry, and meanwhile, to summarize and adjust the R&D priorities according to market feedbacks, enhance
product functions and performance, and form effective, market-oriented R&D.
3. Improving Manufacturing Flexibility and Enhancing Product Delivery Capability
The fragmentation of video application scenarios leads to a relatively scattered market. The Company
receives more than 1,000 product orders every day, and each order contains more than 10 types of product items
on average. Effectively and accurately conducting demand forecasts and management for raw materials, and
flexibly and efficiently coordinating plans and organizing production are key for the Company’s supply chain to
cope with the diversified demands, optimize costs and enhance efficiency.
Hikvision currently has three manufacturing bases in Hangzhou, Tonglu and Chongqing, and has a
large-scale production expansion plan in Tonglu, Wuhan and Chongqing, so as to ensure steady and rapid
development of the Company’s business. So far, the Company has gradually launched more than 800 intelligent
warehouse robots (阡陌) at the Tonglu Production Base, so as to comprehensively implement the warehousing
and internal logistics automation, reducing the labor cost by approximately 50% and improving efficiency by
nearly 80%. The Company will continue implementing the intelligent factory construction to strengthen the
intelligence level of the design and manufacturing system with the support of a comprehensive information
system and by virtue of the IoT technology and automation technology. Based on the Tonglu Production Base
template, we’ll build up more agile, flexible and scaled intelligent factories, develop the leading production,
manufacturing and service capability, and further enhance production efficiency.
4. Optimizing the Marketing Service System to Better Serve the Users
Hikvision’s marketing service network spreads all over the world to achieve resource allocation worldwide.
The Company owns 35 branches and more than 200 liaison offices in Mainland China; and has established 37
overseas sales branches, forming a marketing network covering more than 100 countries and regions in overseas
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markets, with the independently branded products being sold to more than 150 countries and regions.
In addition to the self-built marketing network, Hikvision has also established a three-tier service system,
which comprises the Global Customer Service Center, the Branch Customer Service Department and the
Authorized Customer Service Station. Through cooperating with tens of thousands of partners, such as
engineering contractors, distributors and outsourced service providers, the Company provides multi-dimensional
services including product delivery, project delivery, software deployment, system operation and maintenance, etc.
to customers in various industries and different regions. Moreover, the Company continuously improves the
product and technical service standards, provides an all-round certification and training system for partners, and
enhancing their professional qualifications to serve the users together.
5. Establishing a Long-term Talent Training and Incentive System to Support the Company’s Sustainable
Development
Talent training is the top priority of the Company. A well-organized talent development and training system
helps the employees grow and gain the sense of accomplishment and sense of belonging, and is the impetus for
the Company’s sustainable and sound development. The Company has always adhered to the \"talent-focused,
growing together\" employment concept, and has set up a dual career development path consisting of management
sequence and professional sequence, established a professional qualification evaluation system and a talent
assessment system, and implemented a multi-level training mechanism, so as to continuously cultivate the core
talents and back-up talents for the Company.
In addition to providing employees comprehensive welfare and compensation benefits, which are
competitive in the industry, the Company has implemented three restricted share incentive schemes since 2012,
awarding nearly 5,000 employees, covering the core talent team from the management staffs and business
backbones of various levels and focusing on business backbones as the main incentive objects, thereby
maintaining the stability and motivation of core talents.
In 2016, the Company implemented the innovative business co-investment mechanism for core staffs, under
which employees can become a shareholder of our innovative businesses. Such innovative businesses have
become an incubator for entrepreneurship and growth of employees, while the employee co-investment
mechanism is becoming a significant system guarantee for the Company's sustainable development.
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Section IV Operation Discussion and Analysis
I. Overview
In 2017, the global economy recovered slowly in fluctuation, the increasing protectionist tendency in
developed economies led to continuously rising uncertainty risks. The video surveillance industry benefited from
the overall stability in domestic economic environment and the development of AI technology, but also suffered
from the pressure due to changes in trade protection and increased cross-industry competition. Hikvision
continued to maintain solid growth through our own operations and efforts.
Facing the complicated domestic and overseas environment, the Company took a targeted regional strategy,
and insisted on guidance by customer demands and stimulation by technological innovation, thereby promoting
the profitable growth. During the reporting period, the Company achieved total operating income of RMB 41.91
billion, increased by 31.22% on a year-over-year basis; and net profit attributable to shareholders of the listed
company of RMB 9.41 billion, increased by 26.77% on a year-over-year basis. The Company’s overall gross
profit margin was 44.00% in 2017, increased by 2.41% on a year-on-year basis.
II. Core business analysis
1. Overview
（1）Leading the Industry Development by Technological Innovation
In 2017, the Company’s research and development (R&D) investment reached RMB 3.19 billion, accounting
for 7.62% of its total sales volume. The Company maintains a relatively large scale R&D investment, with the
number of R&D and technical service personnel in excess of 13,000.
The Company considered the construction of intelligent product systems and solutions as the strategic
direction, completed the core product layout of edge node, edge domain and cloud center based on the AI Cloud
architecture, developed numerous industry intelligent application solutions, injected AI into the products and
solutions, formed the competitive edges in video intelligence, and continued to maintain the leading position by
virtue of technology, product innovation and solution innovation.
The Company has kept continual investment and innovation in technology, and maintained the
competitiveness in products and solutions through the three-in-one R&D system consisting of the technology
platform, product platform and solution platform. Meanwhile, the Company constantly strengthened the inputs in
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systematic work such as R&D management, quality management and cyber-security management, and helped
enhance the systematic, standard and security level of R&D.
（2）Optimizing Marketing Strategy and Continuing Expand the Market
For the domestic market, the Company constantly promoted the marketing strategy of “industry segmentation,
regional grass-roots marketing and end-to-end business development”, enabled regional sales branches to
cooperate closely with the business departments of vertical industries, and further optimized the coverage of the
marketing network. The Company continued to improve the product and technical service system, and
continuously enhanced the technical service capability while providing high-quality products and solutions to
users. As for the channel market, the Company established partnerships with multiple channel partners,
strengthened sales supervision and standardized the channel market; the Company continued improving the
Internet marketing platform, promoted product standardization and market transparency, and facilitated
well-organized competition and healthy development of the industry.
For the overseas market, the Company established seven overseas subsidiaries in Kenya, Uzbekistan,
Hungary, New Zealand, Czech, Malaysia and Germany and two new offices respectively in Indonesia and
Vietnam in 2017; with 37 overseas branches, 106 overseas service points and 77 authorized repair centers, the
Company’s overseas sales network has been further improved. The Company continued expanding from channel
distribution market to project market, strengthened the input in overseas project market, improved the product
influence in overseas markets, and better served local customers. In 2017, the Company achieved major project
breakthroughs in Singapore, and made some progress in the project markets of many countries and regions.
（3）Development of Innovative Businesses to Create Innovation Impetus
EZVIZ business continued to develop rapidly. By the end of 2017, the devices connected to EZVIZ Cloud
reached 28 million, and the number of EZVIZ Cloud APP users exceeded 20 million. In 2017, EZVIZ launched
new products such as smart door viewer and smart door lock to enrich the product choices of medium-to-small
and micro enterprises, families and individual users. Based on the growing opening platform of EZVIZ Cloud
business, the Company has carried out new types of business such as Hikvision Cloud Visualized Management
Platform (云眸) to provide SaaS-based comprehensive services of video analysis and big data information
management for business users, which integrated with traditional security business of the Company to
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complement each other and promote the rapid development of intelligence in the industry. In 2017, EZVIZ
recorded operating revenue of more than RMB 1 billion and succeeded in making profits, thereby becoming the
first innovation business of the Company to achieve profitability.
The robot business of Hikvision made rapid breakthroughs. In 2017, Hikvision Robotics launched the carrying
robot (forklift) and carrying robot (compound robot) based on laser navigation, as well as the more advanced
industrial camera products and platform software, to further enrich the product choices for customers. Hikvision
Robotics succeeded in helping JD.com, SF EXPRESS and other logistics industry customers to complete the
implementation and application of complicated automation projects, and developed a number of successful cases
with great influence. In the UAV field, the Company has developed full product lines covering the Falcon Series
quad-rotor and hex-rotor aerial vehicles, Commander-Series All-In-One Ground Station, and Defender-Series
Unmanned Aerial Vehicle Jammer, etc., indicating that the industrial-level UAV market is being gradually opened
up.
The automotive electronics business has developed comprehensively. The Company continuously diversified
the post-mounted product types such as video and millimeter wave radar, and launched the intelligent automotive
electronics products and solutions including the intelligent vehicle-mounted rearview mirror (云镜), 360°
panoramic view system and vehicle-mounted intelligent surveillance system. In terms of systems, the Company
has also launched the Advanced Driver Assistance Systems (ADAS) integrating the functions of vehicle front
detection, lane departure warning (LDW), vehicle driver behavior analysis and right side blind area detection, etc.,
and applied the product to the pre-mounted customers and industry customers and markets.
Hikvision Smart Storage launched a number of industrial-level and consumer-level storage products and
household storage center products, achieving rapid market breakthrough. Hikvision Weiying accumulated
imaging technology, and promoted thermal imaging products to develop from the industrial-level application to
the public market by virtue of better cost performance advantages.
（4）Increasing Infrastructure Investment and Deploying R&D and Manufacturing Sub-Centers
In 2017, the Company disclosed the investment plan of more than RMB 10 billion to prepare the construction
of four R&D bases in Xi’an Wuhan, Chengdu and Shijiazhuang, expand Hangzhou R&D center, as well as
construct two manufacturing bases in Chongqing and Wuhan. The investment will provide office space and help
ensure productivity needed to meet Hikvision's current and future business demands, and help the Company
Hikvision 2017 Annual Report
expand the market.
（5）Management Reform and Optimizing Internal Management
In 2017, the Company continuously strengthened process construction and optimization under the leadership
of the Reform Management Committee; continuously promoted the system constructions such as BLM (Business
Leadership Model) and IPD (Integrated Product Development) systems; continuously constructed the flat
organization by implementing the policies of decentralization, disintermediation, downward shift of
decision-making focus, etc.; and enhanced the internal management efficiency by continually promoting
improvement and optimization of internal management.
2. Operating incomes and operating costs
1) Operating income structure
Unit：RMB
2017
YoY Change
Proportion to Proportion to (%)
Amount Amount
operating income operating income
Total operating income 41,905,476,572.07 100.00% 31,934,544,088.82 100.00% 31.22%
Classified by industry
Video products and video
41,905,476,572.07 100.00% 31,934,544,088.82 100.00% 31.22%
services
Classified by product
Front-end equipment 21,090,230,299.49 50.33% 15,881,528,158.70 49.73% 32.80%
Back-end equipment 6,151,038,063.70 14.68% 5,197,388,761.80 16.28% 18.35%
Central control equipment 5,073,899,931.95 12.11% 3,988,683,952.14 12.49% 27.21%
Constructions 2,540,799,165.58 6.06% 1,451,424,275.00 4.54% 75.06%
Others 5,394,298,987.25 12.87% 4,757,562,355.69 14.90% 13.38%
Subtotal 40,250,266,447.97 96.05% 31,276,587,503.33 97.94% 28.69%
Smart home business 1,090,629,830.13 2.60% 507,566,718.33 1.59% 114.87%
Other innovative businesses 564,580,293.97 1.35% 150,389,867.16 0.47% 275.41%
Subtotal 1,655,210,124.10 3.95% 657,956,585.49 2.06% 151.57%
Hikvision 2017 Annual Report
2017
YoY Change
Proportion to Proportion to (%)
Amount Amount
operating income operating income
Classified by region
Domestic 29,661,186,316.32 70.78% 22,574,159,436.75 70.69% 31.39%
Overseas 12,244,290,255.75 29.22% 9,360,384,652.07 29.31% 30.81%
Note: in the category classified by product, “smart home business” under innovative businesses was listed separately starting from
this reporting period, and the “other innovative businesses” includes corresponding business products of innovative business
subsidiaries - Hikvision Robotics, and Hikvision Automotive Technology, Hikvision Weiying, Hikvision Storage, and Similar
hereinafter.
2) Industries, products or regions accounting for more than 10% of the Company’s operating income or
operating profit
√ Applicable □ Inapplicable
Unit: RMB
YoY Change (%)
Gross YoY Change (%) YoY Change (%)
Operating income Operating cost of operating
margin of operating cost of gross margin
income
Classified by industry
Video products and
41,905,476,572.07 23,467,310,590.76 44.00% 31.22% 25.81% 2.41%
video services
Classified by product
Front-end equipment 21,090,230,299.49 10,354,906,543.30 50.90% 32.80% 26.49% 2.45%
Back-end equipment 6,151,038,063.70 3,164,186,804.35 48.56% 18.35% 16.96% 0.61%
Central control
5,073,899,931.95 2,320,570,446.43 54.26% 27.21% 12.15% 6.14%
equipment
Constructions 2,540,799,165.58 2,280,617,025.82 10.24% 75.06% 71.66% 1.78%
Others 5,394,298,987.25 4,293,560,908.63 20.41% 13.38% 8.27% 3.76%
Subtotal 40,250,266,447.97 22,413,841,728.53 44.31% 28.69% 22.78% 2.68%
Smart home business 1,090,629,830.13 708,022,298.25 35.08% 114.87% 114.86% 0.01%
Other innovative
564,580,293.97 345,446,563.98 38.81% 275.41% 408.84% -16.04%
businesses
Subtotal 1,655,210,124.10 1,053,468,862.23 36.35% 151.57% 165.07% -3.25%
Classified by region
Domestic 29,661,186,316.32 17,196,669,563.86 42.02% 31.39% 25.09% 2.92%
Overseas 12,244,290,255.75 6,270,641,026.90 48.79% 30.81% 27.84% 1.19%
Hikvision 2017 Annual Report
Adjusted statistics of principal business are based on the caliber at the end of the reporting period of last year, if the statistics caliber
of principal business has been changed during the reporting period
□ Applicable √ Inapplicable
(3) If revenue from physical products sales greater than revenue from providing services
√ Yes □ No
Industry Item Unit 2017 2016 YoY Change (%)
Sales volume Per unit 98,345,860 68,801,020 42.94%
Video products and
Output volume Per unit 100,205,025 70,402,646 42.33%
video services
Inventory Per unit 6,883,937 5,024,772 37.00%
Explanation on why the related data varied by more than 30% on a YOY basis
√ Applicable □Inapplicable
During the reporting period, the Company’s sales volume, output volume and inventory grew with the steady and healthy increase of
the operating performance.
(4) Fulfillment of signed significant sales contracts by the reporting period
□ Applicable √ Inapplicable
(5) Operating cost structure
Classified by industry and products
Unit: RMB
2017 2016 Increase/
Industry Item Proportion to Proportion to decrease over
Amount Amount
operating cost operating cost previous year
Video products
and video Operating cost 23,467,310,590.76 100.00% 18,652,707,155.56 100.00% 25.81%
services
Unit: RMB
2017 2016 Increase/
Product Item Proportion to Proportion to decrease over
Amount Amount
operating cost operating cost previous year
Front-end
Operating cost 10,354,906,543.30 44.12% 8,186,413,345.14 43.89% 26.49%
equipment
Back-end
Operating cost 3,164,186,804.35 13.48% 2,705,461,109.51 14.50% 16.96%
equipment
Central control
Operating cost 2,320,570,446.43 9.89% 2,069,135,295.77 11.09% 12.15%
equipment
Constructions Operating cost 2,280,617,025.82 9.72% 1,328,601,510.98 7.12% 71.66%
Others Operating cost 4,293,560,908.63 18.30% 3,965,672,628.93 21.26% 8.27%
Subtotal Operating cost 22,413,841,728.53 95.51% 18,255,283,890.33 97.86% 22.78%
Smart home
Operating cost 708,022,298.25 3.02% 329,534,759.28 1.77% 114.86%
business
Hikvision 2017 Annual Report
2017 2016 Increase/
Product Item Proportion to Proportion to decrease over
Amount Amount
operating cost operating cost previous year
Other innovative
Operating cost 345,446,563.98 1.47% 67,888,505.95 0.37% 408.84%
businesses
Subtotal Operating cost 1,053,468,862.23 4.49% 397,423,265.23 2.14% 165.07%
(6) Any change in consolidation scope during the reporting period
√Yes □ No
During the reporting period, the Company has newly set up eight wholly-owned subsidiaries and eight holding
subsidiaries, acquired one company, and cancelled one company, which have caused the changes in consolidation
scope. For more details, please refer to note (VI) “Changes in consolidation scope” of the financial statement.
(7) Significant change or adjustment of the Company’s business, products or services during the reporting
period:
□ Applicable √ Inapplicable
(8) Major customers and suppliers:
Sales to major customers of the Company
Sales to top five customers (RMB) 2,224,928,412.84
Total sales to top five customers as a percentage of the total sales for the year (%) 5.31%
Total sales to the related parties in top five customers as a percentage of the total
1.90%
sales of the year (%)
Information on top five customers
No. Name of Customer Sales Amount (RMB) Percentage of total sales for the year
1 First 817,548,444.32 1.95%
2 Second (related party) 796,423,974.48 1.90%
3 Third 225,764,450.52 0.54%
4 Fourth 221,821,004.78 0.53%
5 Fifth 163,370,538.74 0.39%
Total -- 2,224,928,412.84 5.31%
Other information of major customers
√Applicable □ Inapplicable
The Company’s second customer regarding sales amount is a related party: branch research institute and
subsidiary of CETC (under the common control of CETC, consolidated as required)
Hikvision 2017 Annual Report
Major suppliers of the Company
Total purchases from top five suppliers (RMB) 7,162,069,353.84
Total purchases from top five suppliers as a percentage of the total purchases for the year 29.23%
Total purchases from the related parties in the top five suppliers as a percentage of the total
0.00%
purchases for the year
Information on top five suppliers of the Company
No. Supplier Name Purchase Amount (RMB) Percentage of total purchase for the year
1 First 3,800,476,717.20 15.51%
2 Second 1,257,751,104.57 5.13%
3 Third 783,310,867.67 3.20%
4 Fourth 738,069,618.85 3.01%
5 Fifth 582,461,045.55 2.38%
Total -- 7,162,069,353.84 29.23%
Other information on major suppliers
□ Applicable √ Inapplicable
3. Expenses
Unit: RMB
Increase/decrease
2017 2016 over previous Note of significant change
year
Improve sales network, increase
Sales expenses 4,430,220,065.13 2,991,273,819.81 48.10%
personnel contribution
Expansion of the scale of operation,
Administrative expenses 4,205,437,565.45 3,109,309,837.05 35.25%
increase of R&D expense
Financial expenses 265,411,287.66 -225,305,567.12 -217.80% Increase of exchange losses
4. R&D Investment
√Applicable □Inapplicable
Benefited from the professional intellectual property management system, the Company has newly added
684 patents (including 93 patents for invention, 148 utility models and 443 product design patents), and newly
added 165 software copyrights. As of the end of 2017, the Company had accumulatively owned 1959 patents
(including 397 invention patents, 471 utility models and 1091 product design patents), and owned 769 software
copyrights.
During the reporting period, the Company invested RMB 3.19 billion in R&D, which accounted for 7.62% of
the operating income. Owing to the continuous relatively high level R&D investment and continuous innovation,
the Company is able to keep and enhance its technology leading position and rapidly transform technical
Hikvision 2017 Annual Report
advantage to product superiority, so as to continually promote the growth of the Company’s performance.
R&D investment of the Company
2017 2016 Change Percentage
Number of Engineers (ppl) 13,085 9,366 39.71%
Percentage of Total headcount 49.70% 46.80% 2.90%
Amount of R&D expenses (RMB) 3,194,223,108.16 2,433,400,645.23 31.27%
R&D investment as a percentage of
7.62% 7.62% 0.00%
operating income
Capitalized R&D expenses (RMB) 0.00 0.00 0.00%
Capitalized R&D expenses as a
0.00% 0.00% 0.00%
percentage of R&D expenses
Reason of significant change of total R&D expenses as a percentage of operating income as compared to last year
□ Applicable √ Inapplicable
Reason and explanation of its reasonableness of significant change of the capitalized R&D expenses
□ Applicable √ Inapplicable
5. Cash flow
Unit: RMB
Increase/decrease over
Item 2017
previous year
Subtotal of cash inflows from
45,403,833,925.46 35,756,663,658.06 26.98%
operating activities
Subtotal of cash outflows from
38,030,673,674.78 29,540,299,016.01 28.74%
operating activities
Net cash flows from operating
7,373,160,250.68 6,216,364,642.05 18.61%
activities
Subtotal of cash inflows from
10,418,044,681.02 5,071,127,419.52 105.44%
investing activities
Subtotal of cash outflows from
11,626,742,349.71 8,454,293,960.61 37.52%
investing activities
Net cash flows from investing
-1,208,697,668.69 -3,383,166,541.09 64.27%
activities
Subtotal of cash inflows from
3,642,688,936.06 8,480,182,623.37 -57.04%
financing activities
Subtotal of cash outflows from
7,044,435,588.93 8,037,387,072.16 -12.35%
financing activities
Net cash flows from financing
-3,401,746,652.87 442,795,551.21 -868.24%
activities
Net increase in cash and cash
2,506,847,571.89 3,488,868,947.09 -28.15%
equivalents
Explanation of why the related data varied significantly on a YoY basis
√ Applicable □ Inapplicable
The fluctuation of net cash flows from operating activities is mainly due to the increase in sales collection;
Hikvision 2017 Annual Report
the fluctuation of net cash flows from investing activities is mainly due to the increase in the net recovery amount
of principal-guaranteed financial products; the fluctuation of net cash flows from financing activities is mainly
due to the euro bonds financing in prior year, versus no similar fund-raising activity in this year.
Explanation of reasons leading to the material difference between cash flow from operating activities during the
reporting period and net profit for the year
□ Applicable √ Inapplicable
III. Non-Core Business Analysis
□Applicable √Inapplicable
Hikvision 2017 Annual Report
IV. Analysis of assets and liabilities
1. Material changes of asset items
Unit：RMB
December 31st 2017 December 31st 2016
YoY Change
Note of significant change
Percentage of Percentage of (%)
Amount Amount
total assets total assets
Cash and bank balances 16,468,430,702.64 31.93% 13,638,078,139.56 32.98% -1.05% Increase in sales collection
Accounts receivable 14,705,210,072.81 28.51% 11,243,843,324.90 27.19% 1.32% Increase follows the increase in sales revenue
Inventory 4,940,332,311.65 9.58% 3,829,947,876.75 9.26% 0.32% Inventory increases as sales increase
Long-term equity investment 130,474,733.58 0.25% 35,000,000.00 0.08% 0.17% Mainly due to investments in associates
No significant change in fixed assets during the
Fixed assets 3,024,025,496.31 5.86% 2,853,913,621.12 6.90% -1.04%
current period
Mainly due to increase of investments in projects
Construction in process 1,436,319,118.30 2.79% 316,482,522.36 0.77% 2.02% i.e. Internet Security Industry Base ,Security
Industrial Base (Tonglu) Project Phase 2, and etc.
Increase due to increasing demand in temporary
Short-term loans 97,114,655.91 0.19% 32,291,324.85 0.08% 0.11%
capital turnover
Long-term loans 490,000,000.00 0.95% 1,722,207,584.33 4.17% -3.22% Long-term loans due within one year were
transferred to non-current liabilities due within
Non-current liabilities due within one year 1,546,407,270.89 3.00% 15,340,813.03 0.04% 2.96% one year.
Hikvision 2017 Annual Report
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB
Difference in Provision for
Profit or loss
conversion of decline in Purchase Sales
Opening from change in Closing
Item foreign value during during the during the
balance fair value during balance
currency the current period period
the period
statements period
Financial assets
1.Financial assets at fair
value through profits and
15,547,537.34 -11,752,575.40 305,695.60 4,100,657.54
losses(exclude derivative
financial assets)
Subtotal of financial
15,547,537.34 -11,752,575.40 305,695.60 4,100,657.54
assets
Financial Liabilities 69,789,502.97 53,842,666.51 15,946,836.46
Whether there were any material changes on the measurement attributes of major assets of the Company during
the Reporting Period:
□ Yes √ No
3. Assets right restrictions as of the end of reporting period
Unit: RMB
Item Closing Book Value Reasons for being restricted
Monetary fund 439,245,433.47 Various cash deposits and deposit pledge for long-term loan
Notes receivable 99,091,810.24 Pledge for issuance of bank acceptance
Accounts receivable 60,646,697.33 Pledge for long-term loan
Total 598,983,941.04
V. Analysis of Investments
1. Overview
√Applicable □ Inapplicable
Investment during 2017 (RMB) Investment during 2016 (RMB) Fluctuation (%)
1,804,851,313.86 884,389,030.00 104.08%
2. Significant equity investment during the reporting period
□Applicable √Inapplicable
Hikvision 2017 Annual Report
3. Significant non-equity investment during the reporting period
√ Applicable □ Inapplicable
Unit: RMB
Fixed assets Cumulative amount of
Invest Project Investment during the Source of Project
Project name investment investment by the end of
method industry current reporting period funds schedule
or not reporting period
Video
Internet Security
Self-built YES product and 675,744,837.71 914,014,265.08 Bond 71%
Industry Base
video service
Security Video
Industrial Base Self-built YES product and 297,975,685.07 300,688,913.96 Bond 32%
(Tonglu) phase 2 video service
Chongqing Video
Manufacture Self-built YES product and 87,310,592.95 89,393,611.81 Self-fund 17%
Base video service
Total -- -- -- 1,061,031,115.73 1,304,096,790.85 -- --
4. Financial assets measured at fair values
√ Applicable □ Inapplicable
Unit: RMB
Current Cumulative Sales
profits or fair value Purchase during during Cumulative
Initial investment Source of
Category losses on the change the reporting the investment Closing balance
cost funds
changes in charged to period reporting income
fair value equity period
Derivative Company's
2,485,985,565.37 42,090,091.11 0.00 4,769,836,134.05 0.00 15,885,274.53 1,400,293,692.23
instruments own funds
Total 2,485,985,565.37 42,090,091.11 0.00 4,769,836,134.05 0.00 15,885,274.53 1,400,293,692.23 --
5. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund
Hikvision 2017 Annual Report
VI. Disposal of significant assets and equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable
During the reporting period, there was no disposal of significant assets
2. Sale of significant equity:
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
VII. Analysis of major subsidiaries and investees
√ Applicable □ Inapplicable
Information about major subsidiaries, and investees that contribute above 10% of the Company’s Net Profit
Unit：RMB
Company Registered
Company name Principal business Total assets Net assets Operating revenue Operating profit Net profit
type capital
Technology development and service: computer
system integration, electronic product,
Hangzhou
communication product; service: the installation of
Hikvision
electric security engineering, the design,
System Subsidiary 600 million 3,221,059,335.96 1,141,353,846.43 3,333,441,412.17 -1,201,888.82 21,765,952.09
construction and maintenance of intelligent
Technology.
system; manufacturing: video surveillance system,
Co., Ltd.
selling its self-produced products, import and
export its own products and technology.
Manufacturing: security electronic product,
intelligent hardware electronic products,
explosion-proof electric products., IC card and IC
card RW device, mobile phone, cordless phone,
handheld wireless police terminal, hand held
mobile police terminal; technology development,
technology consulting, results transferring:
Hangzhou computer software, electronic product,
Hikvision communication product, digital security product;
Science and Subsidiary wholesale: security electronic product and its 1000 million 21,355,691,123.68 1,991,103,008.73 39,233,313,930.37 695,206,278.08 535,840,371.64
Technology auxiliary equipment, intelligent hardware
Co. Ltd. electronic product, explosion-proof electrics,
security electronic product and its auxiliary
equipment, intelligent hardware electronic
product, explosion-proof electrics, IC card and IC
card RW device, mobile phone, cordless phone,
handheld wireless police terminal, hand held
mobile police terminal;；import and export
business
Hikvision 2017 Annual Report
Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable
Equity acquisition and disposal
Company name Impact on overall production results
method during the reporting period
Hangzhou Haikang Ximu Intelligent Technology Co., Business merger involving
Business development
Ltd. enterprises under common control
Hikvision New Zealand Limited Cash contribution Expand overseas sales channels
Wuhan Hik Storage Technology Co., Ltd. Cash contribution Business development
Urumchi Hai Shi Xin An Electronics Technology Co.,
Cash contribution Business development
Ltd.
Chengdu Hikvision Digital Technology Co., Ltd. Cash contribution Business development
Hangzhou Hik Automotive Software Co., Ltd. Cash contribution Business development
Hangzhou Haikang Intelligent Technology Co., Ltd. Cash contribution Business development
Wuhan Hik Storage Software Co., Ltd. Cash contribution Business development
Hangzhou EZVIZ Software Co., Ltd. Cash contribution Business development
PiShanHaiShi Yong’An Electronic Technology Co., Business development
Cash contribution
Ltd.
MoYuHaiShi Electronic Technology Co., Ltd. Cash contribution Business development
Hikvision Kenya (Pty) Ltd. Cash contribution Expand overseas sales channels
Hikvision Tashkent LLC Cash contribution Expand overseas sales channels
Hikvision Hungary Kft Cash contribution Expand overseas sales channels
Hikvision (Malaysia) SDN. BHD. Cash contribution Expand overseas sales channels
Hikvision Czech s.r.o. Cash contribution Expand overseas sales channels
Hikvision Deutschland GmbH Cash contribution Expand overseas sales channels
Adjustments of organizational
Wuhan Hikvision System Technology Co., Ltd. Liquidation
framework
VIII. Structural entities controlled by the Company
□ Applicable √ Inapplicable
IX. Outlook for the Future Development of the Company
1. Industry developing trends
1.1 Continual Growth in Traditional Comprehensive Security Needs with Emerging Intelligent Business
Demands
Hikvision 2017 Annual Report
Security is the basis of a happy life, so continuously enhancing the security and protection capability is an
inevitable requirement for development. The security needs of governments, enterprises and families in various
countries will increase continually, while the demand for traditional comprehensive security business will
maintain stable growth.
Along with the application of AI technology in video field, video surveillance has become an important
approach to facilitate transformation and upgrade of the traditional industry, and the segment markets of various
industries have generated substantial demands for video intelligence; the intelligence business cases of various
industries are being implemented and copied, and the new market growth space is opening up.
1.2 Expansion of the Industry Pattern with new competition format emerges
The application of AI technology has enabled the video surveillance industry to transform from post
investigation to pre-warning and interim management, and greatly expanded the feasibility of video technology
application in business management. As the industry pattern further opens, video surveillance industry starts to
have has cross-business with high-tech, Internet and other industries, forming into a new competition pattern,
which brings both opportunities and challenges.
1.3 Continuously Increasing Uncertainty Factors of the Global Market Leading to both Opportunities and
Challenges
The competition of Chinese companies at the overseas market was restricted by economic and political
environment of respective countries and regions, and the uncertainty risk of overseas market increased
continuously, leading to further higher uncertainty in business development.
2. Development Strategy of the Company
Hikvision is an IoT solution provider with video as its core competence. The Company adheres to the
business philosophy of \"professionalism, honesty, and integrity”, is dedicated to core corporate value of “clients’
success, value-oriented, integrity and down-to-earth, pursuit of excellence” The Company provides high-quality
products and services for global customers and create greater values for customers worldwide through continuous
innovation.
With the corporate mission of “exploring innovative ways to better perceive and understand the world,
empowering vision for decision-makers and practitioners and work together to enhance safety and advance
sustainable development of the world” (“善见致知、同行致远”), the Company is committed to developing new
Hikvision 2017 Annual Report
vision for the security.
3. Key Operation Priorities in 2018
(1) Effectively promote the AI Cloud and boost the rapid development of intelligent applications. The
Company will follow up the development of new technologies such as AI, big data, cloud computing, edge
computing, etc., grasp the market opportunities in public security upgrade, urban treatment upgrade and corporate
management upgrade, and lead the intelligent development direction of the industry.
(2) Continuously increase R&D investment and constantly promote technological innovation. Based on the
R&D system advantages of technology platform, product platform and solution platform, the Company will
maintain its leading level in core technology fields including video technology, multi-dimensional perception, AI,
big data analysis, etc., and conduct research and development of more excellent products and solutions to lead,
response to and fulfill the customer demands.
(3) Optimize the marketing system and listen to the customers’ voice. The Company will continuously
construct and adjust the marketing system according to regional market features, and establish the sales and
service system closer to customers.
(4) Orient on both products and solutions and constantly expand the overseas project market. The Company
will accelerate the upgrade and iteration of overseas products, enrich the product lines for overseas markets, and
enlarge the market share of overseas channels; and expand the overseas project market for more breakthroughs by
focusing on key regions and industries.
(5) Constantly develop innovative business and cultivate more development opportunities. The Company
will continue to develop EZVIZ, robotics, automotive electronics, intelligent storage, Hikvision Weiying and
other innovative businesses, and continue to deploy the emerging business with a promising prospect and the key
technical segments.
(6) Continuously deepen organizational reform and enhance management efficiency. The Company will
continue to learn from the world-class enterprises about the successful practical experience, improve the internal
management level, and enhance the management efficiency.
Hikvision 2017 Annual Report
X. Reception of activities including research, communication and interviews during the report period
√ Applicable □ Inapplicable
(1) Reception of research activities during the reporting period.
Time of reception Method of reception Type of reception object Basic situation of the research
From January 3rd, 2017 to Site Research and CNINF, Investor Relations Activity Record: From January 3rd,
Institutional investors
January 20th, 2017 telephone communication 2017 to January 20th, 2017
From February 6th, 2017 to Site Research and CNINF, Investor Relations Activity Record: From February 6th,
Institutional investors
th
February 10 , 2017 telephone communication 2017 to February 10th, 2017
From February 13th, 2017 Site Research and CNINF, Investor Relations Activity Record: From February 13th,
Institutional investors
to February 24th, 2017 telephone communication 2017 to February 24th, 2017
From February 27th, 2017 Site Research and CNINF, Investor Relations Activity Record: From February 27th,
Institutional investors
to March 10th, 2017 telephone communication 2017 to March 10th, 2017
Annual performance result Institutional and individual
April 14th, 2017 CNINF, Investor Relations Activity Record: April 14th, 2017
Conference Call investors
From April 17th, 2017 to Site Research and CNINF, Investor Relations Activity Record: From April 17th, 2017
Institutional investors
April 28th, 2017 telephone communication to April 28th, 2017
Institutional and individual
May 4th, 2017 Investor Reception Day CNINF, Investor Relations Activity Record: May 4th, 2017
investors
From May 8th, 2017 to May Site Research and CNINF, Investor Relations Activity Record: From May 8th, 2017 to
Institutional investors
19th, 2017 telephone communication May 19th, 2017
From May 22nd, 2017 to Site Research and CNINF, Investor Relations Activity Record: From May 22nd, 2017
Institutional investors
May 27th, 2017 telephone communication to May 27th, 2017
From June 5th, 2017 to June Site Research and CNINF, Investor Relations Activity Record: From June 5th, 2017 to
Institutional investors
9th, 2017 telephone communication June 9th, 2017
From June 12th, 2017 to Site Research and CNINF, Investor Relations Activity Record: From June 12th, 2017
Institutional investors
rd
June 23 , 2017 telephone communication to June 23rd, 2017
Performance result Institutional and individual
July 24th 2017 CNINF, Investor Relations Activity Record: July 24th 2017
Conference Call investors
From July 25th ,2017 to Site Research and CNINF, Investor Relations Activity Record: From June 25th, 2017
Institutional investors and media
August 4th,2017 telephone communication to August 4th, 2017
From August 7th,2017 to Site Research and CNINF, Investor Relations Activity Record: From August 7th, 2017
Institutional investors
August 25th, 2017 telephone communication to August 25th, 2017
From August 28th,2017 to Site Research and CNINF, Investor Relations Activity Record: From August 28th, 2017
Institutional investors
th
September 8 ,2017 telephone communication to September 8th, 2017
From September 11th, 2017 Site Research and Institutional and individual CNINF, Investor Relations Activity Record: From September 11th,
to September 29th, 2017 telephone communication investors 2017 to September 29th, 2017
Performance result Institutional and individual
October 31st, 2017 CNINF, Investor Relations Activity Record: October 31st, 2017
Conference Call investors
From November 1st, 2017 Site Research and CNINF, Investor Relations Activity Record: From November 1st,
Institutional investors
to November 10th, 2017 telephone communication 2017 to November 10th, 2017
From November 13th, 2017 Site Research and CNINF, Investor Relations Activity Record: From November 13th,
Institutional investors
to December 1st, 2017 telephone communication 2017 to December 1st, 2017
Hikvision 2017 Annual Report
Time of reception Method of reception Type of reception object Basic situation of the research
From December 4th, 2017 Site Research and CNINF, Investor Relations Activity Record: From December 4th,
Institutional investors
to December 15th, 2017 telephone communication 2017 to December 15th, 2017
From December 18th, 2017 Site Research and CNINF, Investor Relations Activity Record: From December 18th,
Institutional investors
to December 29th, 2017 telephone communication 2017 to December 29th, 2017
(2) Participation of conferences for investor relationship activities during 2017.
Time of
Location Conference Name Type of reception object Method of reception
conference
Morgan Stanley China Technology, Media & One-on-One, One-on-multi, small
January 2017 Beijing Institutional and individual investors
Telecoms Conference group Meetings, and etc.
One-on-One, One-on-multi, small
January 2017 Shanghai UBS Greater China Conference 2017 Institutional and individual investors
group Meetings, and etc.
One-on-One, One-on-multi, small
January 2017 Beijing Deutsche Bank Access China Conference 2017 Institutional and individual investors
group Meetings, and etc.
One-on-One, One-on-multi, small
February 2017 Hangzhou ZhongTai Securities 2017 Capital Market Summit Institutional and individual investors
group Meetings, and etc.
GuangFa Securities Innovation and Recovery One-on-One, One-on-multi, small
March 2017 Shanghai Institutional and individual investors
Summit group Meetings, and etc.
BoA Merrill Lynch 2017 Asia Pacific Telecom, One-on-One, One-on-multi, small
March 2017 Taibei Institutional and individual investors
Media & Technology Conference group Meetings, and etc.
One-on-One, One-on-multi, small
April 2017 Hongkong Jefferies GetSmart Experts Summit on AI Institutional and individual investors
group Meetings, and etc.
Guosen Securities 2017 Spring Leading Listed One-on-One, One-on-multi, small
April 2017 Hangzhou Institutional and individual investors
Company Forum group Meetings, and etc.
CITI
One-on-One, One-on-multi, small
April 2017 Hongkong HK/China Corporate day – AI and Emerging Institutional and individual investors
group Meetings, and etc.
Technologies
Haitong Securities 2017 Spring A-share Corporation One-on-One, One-on-multi, small
April 2017 Hangzhou Institutional and individual investors
Forum group Meetings, and etc.
One-on-One, One-on-multi, small
April 2017 Hongkong Macquarie 2017 Greater China Conference Institutional and individual investors
group Meetings, and etc.
One-on-One, One-on-multi, small
April 2017 Hongkong HongKong NDR – via Macquarie Institutional and individual investors
group Meetings, and etc.
GF Securities Spring Listed Company One-on-One, One-on-multi, small
April 2017 Hangzhou Institutional and individual investors
Non-disclosure Investment Forum group Meetings, and etc.
One-on-One, One-on-multi, small
May 2017 New York UBS 2nd China A-Share Conference Institutional and individual investors
group Meetings, and etc.
Credit Suisse SZ-HK Connection Investment One-on-One, One-on-multi, small
May 2017 Shenzhen Institutional and individual investors
Summit group Meetings, and etc.
One-on-One, One-on-multi, small
May 2017 Shenzhen HSBC Annual China Investment Summit Institutional and individual investors
group Meetings, and etc.
Hikvision 2017 Annual Report
Time of
Location Conference Name Type of reception object Method of reception
conference
One-on-One, One-on-multi, small
May 2017 Tianjin CLSA 2017 China Forum Institutional and individual investors
group Meetings, and etc.
One-on-One, One-on-multi, small
May 2017 Hongkong BNP Paribas 8th Asia Pacific TMT Conference Institutional and individual investors
group Meetings, and etc.
One-on-One, One-on-multi, small
May 2017 Hongkong CICC TMT Summit-AI Forum Institutional and individual investors
group Meetings, and etc.
Goldman Sachs TechNet Conference Asia Pacific One-on-One, One-on-multi, small
May 2017 Hongkong Institutional and individual investors
2017 group Meetings, and etc.
One-on-One, One-on-multi, small
May 2017 Beijing Morgan Stanley’s Third Annual China Summit Institutional and individual investors
group Meetings, and etc.
Bank of America Merrill Lynch 2017 Innovative One-on-One, One-on-multi, small
June 2017 Shenzhen Institutional and individual investors
China Forum group Meetings, and etc.
One-on-One, One-on-multi, small
June 2017 Beijing J.P. Morgan Global China Summit 2017 Institutional and individual investors
group Meetings, and etc.
One-on-One, One-on-multi, small
June 2017 Singapore Nomura Investment Forum Asia (NIFA) 2017 Institutional and individual investors
group Meetings, and etc.
Haitong Securities 2017 Mid-year A-share One-on-One, One-on-multi, small
June 2017 Qingdao Institutional and individual investors
Corporation Conference group Meetings, and etc.
Merchants Securities 2017 Mid-year Conference and One-on-One, One-on-multi, small
June 2017 Guangzhou Institutional and individual investors
Investment Summit group Meetings, and etc.
NYC One-on-One, One-on-multi, small
June 2017 USA NDR-via CITI Institutional and individual investors
-Chicago group Meetings, and etc.
Huatai Securities 2017 Summer Investment One-on-One, One-on-multi, small
June 2017 Hangzhou Institutional and individual investors
Conference group Meetings, and etc.
One-on-One, One-on-multi, small
June 2017 Shanghai CICC 2017 2nd Half Year Investment Conferenc Institutional and individual investors
group Meetings, and etc.
Industrial Securities 2017 Greater China Mid-year One-on-One, One-on-multi, small
June 2017 Shanghai Institutional and individual investors
Investment Conference group Meetings, and etc.
One-on-One, One-on-multi, small
June 2017 Hongkong DB Access China Industrials Corporate Day Institutional and individual investors
group Meetings, and etc.
One-on-One, One-on-multi, small
July 2017 Shenzhen Macquarie 2017 A-share Annual Investor Forum All kinds of investors
group Meetings, and etc.
London One-on-One, One-on-multi, small
July 2017 UK NDR – via BNP Paribas All kinds of investors
-Edinburgh group Meetings, and etc.
Singapore Singapore & Hong Kong NDR-via BoA Merrill One-on-One, One-on-multi, small
August 2017 All kinds of investors
-Hongkong Lynch group Meetings, and etc.
One-on-One, One-on-multi, small
September 2017 Shenzhen UBS 2017 A-Share Conference All kinds of investors
group Meetings, and etc.
One-on-One, One-on-multi, small
September 2017 Shenzhen Goldman Sachs 2017 China Conference All kinds of investors
group Meetings, and etc.
Credit Suisse 18th Annual Asian Technology One-on-One, One-on-multi, small
September 2017 Taibei All kinds of investors
Conference group Meetings, and etc.
Hikvision 2017 Annual Report
Time of
Location Conference Name Type of reception object Method of reception
conference
One-on-One, One-on-multi, small
September 2017 Shanghai Nomura China Investor Forum 2017 All kinds of investors
group Meetings, and etc.
One-on-One, One-on-multi, small
September 2017 London Morgan Stanley 2017 Asia Corporate Day All kinds of investors
group Meetings, and etc.
One-on-One, One-on-multi, small
September 2017 London 2017 CICC London Forum All kinds of investors
group Meetings, and etc.
One-on-One, One-on-multi, small
September 2017 Hongkong 24th CLSA Investors’ Forum All kinds of investors
group Meetings, and etc.
One-on-One, One-on-multi, small
November 2017 Hongkong Jefferies 7th Annual Greater China Summit All kinds of investors
group Meetings, and etc.
One-on-One, One-on-multi, small
November 2017 Beijing BoA Merrill Lynch 2017 China Conference All kinds of investors
group Meetings, and etc.
Morgan Stanley Sixteenth Annual Asia Pacific One-on-One, One-on-multi, small
November 2017 Singapore All kinds of investors
Summit group Meetings, and etc.
One-on-One, One-on-multi, small
November 2017 Beijing Macquarie Asia Internet and Media Conference 2016 All kinds of investors
group Meetings, and etc.
One-on-One, One-on-multi, small
November 2017 Shenzhen CITIC Securities 2018 Capital Market Conference All kinds of investors
group Meetings, and etc.
One-on-One, One-on-multi, small
December 2017 Seoul Mirae Asset Daewoo 2H2017 Corporate Day All kinds of investors
group Meetings, and etc.
(3) Investor relations activity statistics during the current year
Number of daily research received (Site and telephone conference, times)
Number of institutional investors received (ppl)
Number of individual investors received (ppl)
Number of investor relations conference participated
Hikvision 2017 Annual Report
Section V Significant Events
I. Profit distribution of ordinary shares and capitalization of capital reserves
Profit distribution policy of ordinary shares in the reporting period, especially the formulation, implementation
and adjustment of cash dividend policy
□ Applicable √ Inapplicable
Profit distribution policy (proposal) and capitalizing of capital reserves policy (proposal) in last three years
(including the current reporting period)
(1) Profit distribution for the year 2015: Based on the total share capital of 4,068,772,253 shares of the
Company on December 31st 2015, the Company distributed cash dividend of RMB 7 (tax inclusive)
and 3 bonus shares (tax inclusive) per each 10 ordinary shares to all shareholders, and further
distributed 2 shares per each 10 ordinary shares to all shareholders from capital reserves.
(2) Profit distribution for the year 2016：Based on the total share capital of 6,152,576,743 shares on the
actual date of record when implementing the 2016 profit distribution proposal, the Company
distributed cash dividend of RMB 6 (tax inclusive) and 5 bonus shares (tax inclusive) per each 10
shares to all shareholders; share distribution from capital reserve is nil.
(3) Profit distribution proposal for the year 2017： Based on the Company’s total share capital of
9,227,270,473 shares, the Company proposed to distribute cash dividend of RMB 5 (tax inclusive)
per each 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil.
Cash dividend of ordinary shares in last 3 years (including the current reporting period)
Unit: RMB
Net profit attributable Ratio of net profit
to shareholders of attributable to shareholder Amount of cash Ratio of cash
Cash dividends
Year listed Company in of Company in dividends in other dividends in
(including tax)
consolidated consolidated financial methods other methods
statements statements (%)
2017 4,613,635,236.50 9,410,855,084.82 49.02% 0.00 0.00%
2016 3,691,546,045.80 7,423,683,960.91 49.74% 0.00 0.00%
2015 2,848,140,577.10 5,869,119,852.19 48.53% 0.00 0.00%
During the reporting period, the company was profitable and the distributable profits to ordinary shareholders of
the parent company was positive, but the Company did not propose a cash dividend distribution plan of ordinary
shares.
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
II. Profit distribution and capitalizing of capital Reserves proposal for the current reporting
period
Bonus issue per 10 shares (share)
Cash dividend per 10 shares (RMB) (tax
5.00
inclusive)
Additional shares converted from capital reserves
for 10 shares (share)
Total shares as the basis for the distribution plan
9,227,270,473
(share)
Total cash dividend (RMB) (tax inclusive) 4,613,635,236.50
Distributable profits (RMB) 15,148,443,735.14
Percentage of cash dividends in the total
30.46%
distributed profit (%)
Cash dividend policy:
The Company is in the development stage and has a substantial plan of cash expenditure. In profit distribution, cash dividends shall
account for at least 20%.
Details about the plan for profit distribution and capitalizing capital reserves into share capital
As audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, in 2017, the parent company of the Company realized
net profit of RMB 8,683,050,963.77，after deducting the statutory surplus reserve of RMB 868,305,096.3, which was provided at
10% of the net profits, adding the undistributed profit of the parent company at the beginning of the year of RMB
14,138,569,341.95, deducting the cash dividends of RMB 3,728,583,103.20 and stock dividend of RMB 3,076,288,371.00 in 2016,
as of December 31st 2017, the profits attributable to shareholders of the parent company amounted to RMB 15,148,443,735.14.As
of December 31st 2017, the profits attributable to shareholders in the consolidated statement were RMB 16,598,328,692.63
(consolidated). To sum up, according to the principle of “whichever is lower”, the profits attributable to shareholders this year was
RMB 15,148,443,735.14.
Based on the Company’s total share capital of 9,227,270,473 shares, the Company proposed to distribute cash dividend of RMB 5
(tax inclusive) per each 10 shares to all shareholders, bonus share and share distribution from capital reserve is nil. The above
scheme will distribute a total cash dividend of RMB 4,613,635,236.50, and the remaining undistributed profits will be transferred
to the next year.
III. Performance of commitments
1. Complete and incomplete commitments of the Company and its actual controller, shareholders, related
parties, acquirers, and other related parties for the commitments.
√ Applicable □ Inapplicable
Hikvision 2017 Annual Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
1. Commitments in non-competition
within the industry: In the period as
controlling shareholders of the
Hikvision, CETHIK and its controlling
subsidiaries (excluding Hikvision and
its subsidiaries, the same below) will
not be engaged in such business that is
competitive to Hikvision and its
subsidiaries directly or indirectly.
2. Commitments in decrease and
regulation of transactions with related
party: Zhejiang Haikang Group Co., Ltd
(hereinafter referred to as Haikang
Group or actual controller) as the
controlling shareholders of Hangzhou
Hikvision Digital Technology Co., Ltd
(hereinafter referred to as \"Hikvision\"
or \"Listed Company\") are commited as
below for the transactions with
Hikvsion:
(1) Haikang Group will not make use of
the controlling power to offer more
favorable conditions to Hikvision than
those to any independent third party in
Commitments in any fair market transactions in the
offering cooperation with Hikvision.
October 29th Strict
documents or CETHIK Group Co., Ltd. (2) Haikang Group will not make use of Long-term
2013 performance
shareholding the controlling power to obtain the prior
alterations right to complete the transaction with
Hikvision.
(3) Haikang Group will not deal with
Hikvsion in not fair terms comparing to
the market prices to prejudice the
Company’s interests.
For unavoidable related transactions,
the Company will observe the principles
of justice and fairness to deterimine
prices according to the market on the
basis of equality, voluntarily. The
Company will obey the Articles of
Association and other regulatory
documents related to the avoiding of
issues about related transactions. The
related transactions will go through
approval procedures in accordance with
related rules and complete legal
procedures, fulfilling the information
disclosure obligations in respect to the
related transactions
3. Commitment to the maintenance of
the independence of the listed Company
3.1 Commitment to Personnel
Independence of the listed Company
Hikvision 2017 Annual Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
(1) Commitment that our general
manager, deputy general manager, chief
financial officer, secretary of the board
and other members of senior
management shall not assume any
positions other than directors and
supervisors or get any remuneration in
CETHIK and/or any of its controlled
entities; (2) Commitment in keeping the
management of labor, human resources
and issues related to remuneration of the
listed Company independent from that
of CETHIK;
3.2 Commitment to the independence of
the asset of the listed Company
(1) Commitment to independent and
complete asset of the listed Company
(2) Commitment free of unlawful use of
cash and asset of the listed Company by
the controlling shareholders
3.3 Commitment to financial
independence of the listed Company
(1) Commitment to an independent
finance department with a team and
accounting system;
(2) Commitment to a regulated,
independent accounting system and
financial management system of the
branches and subsidiaries
(3) Commitment to maintaining
accounts with banks independently of
and not sharing any bank account with
our controlling shareholders
(4) Commitment that the financial staff
shall not assume any positions in
CETHIK
(5) Commitment to paying taxes
independently according to the law;
(6) Commitment to implementing
financial decisions independently
3.4 The Company has set up an
independent organizational structure
which maintains its independent
operations which is independent from
that of CETHIK.
3.5 Commitment to business
Independence of the listed Company
(1) The Company has the asset,
personnel, aptitude and management
capability for independent and complete
business operation. The Company has
the ability to operate independently in
Hikvision 2017 Annual Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
the market.
(2) Commitment in independence in
both business and operations
4. Regarding plans for the development
and relevant commitment for the listed
Company, Haikang Group has
committed as below for the subsequent
development of Hikvsion according to
the Securities Acts and relevant laws
and rules,
4.1 Currently the Company has no plan
to change or make significant
adjustments for principal business in the
next 12 months;
4.2 Currently the Company has no plan
to sell, merge or operate with another
Company for the assets and business of
the listed Company or its subsidiaries in
the next 12 months.
4.3 Currently the Company has no plan
to alter the Board of the Directors and
senior management and no agreement
with other shareholders about the
appointment and removal of the
directors or senior management. The
team of Board of Directors and senior
management will remain unchanged for
the foreseeable future.
4.4 Currently the Company has no plan
to make significant changes to the
Articles of Association for the listed
Company.
4.5 Currently the Company has no plan
to make significant changes to the
existing employee recruitment for the
listed Company.
4.6 Currently the Company has no plan
to make significant changes for the
dividend distribution plan for the listed
Company.
4.7 Currently the Company has no plan
to make significant changes for business
Hikvision 2017 Annual Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
and organizational structure for the
listed Company.
During Hu Yangzhong, Wu Weiqi,
JiangHaiqing, Zhou Zhiping, Xu
Lirong, Cai Dingguo, He Hongli, Zheng
Yibo, Hu Dan,、Jiang Yufeng, Liu
Xiang, Wang Ruihong, Chen Junke’s
Hangzhou Weixun
tenure of the Company’s board of
Investment Management
directors, supervisors and senior
Limited Partnership（later May 17th Strict
management personnel, the annual Long term
renamed as Xinjiang Weixun 2010 performance
transfer of Hikvision’s total shares
Investment Management
should not exceed 25% of total number
Limited Partnership）
of shares held under Weixun; within 6
months after abovementioned
personnel’s dimission, should not
transfer Hikvision’s shares held under
Weixun.
During Hu Yangzhong, Wu Weiqi, Gong
Hongjia’s tenure of the Company’s
board of directors, supervisors and
Commitments in Hangzhou Pukang Investment senior management personne, the
Initial Public Limited Partnership（later annual transfer of Hikvision’s total
Offering or May 17th Strict
re-financing renamed as Xinjiang Pukang shares should not exceed 25% of total Long term
2010 performance
Investment Limited number of shares held under Pukang;
Partnership） whithin 6 months after abovementioned
personnel’s dimission, should not
transfer Hikvision’s shares held under
Pukang.
The Company's directors,
During their tenure of the Company’s
supervisors and executive:
board of directors, supervisors and
HuYangzhong,Wu Weiqi,
senior management personnel, the
Jiang Haiqing, Zhou
annual shares transfer should not exceed May 17th Strict
Zhiping，Xu Lirong, Cai Long term
25% of total number of shares held 2010 performance
Dingguo, He Hongli, Zheng
under Weixun; whthin 6 months after
Yibo, Hu Dan, Jiang Yufeng,
their dimission, they should not transfer
Liu Xiang, Wang Ruihong,
their shares held under Weixun.
Chen Junke
During their tenure of the Company’s
Directors, executive officers
board of directors, supervisors and May 17th Strict
of the Company: Long term
senior management personnel, the 2010 performance
Hu Yangzhong, Wu Weiqi
annual shares transfer should not exceed
Hikvision 2017 Annual Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
25% of total number of shares held
under Pukang; whthin 6 months after
their dimission, they should not transfer
their shares held under Pukang.
During Gong Hongjia’s tenure of the
Company’s board of directors,
supervisors and senior management
The Company’s director personnel, Chen’s annual shares transfer
May 17th Strict
Gong Hongjia’s spouse, Chen should not exceed 25% of total number Long-term
2010 performance
Chunmei of shares held under Pukang; whthin 6
months after the dimission of Gong
Hongjia,Chen should not transfer her
shares held under Pukang.
To avoid any loss of the Company and
other shareholders arising from any
China Electronics Technology
competing business, China Electronics
Group Corporation（later September Strict
Technology Group Corporation, the th
Long term
renamed as China Electronics 18 2008 performance
actual controller of the Company, issued
Technology Group Co., Ltd.）
Letters of non-competition on 18
September, 2008.
Gong Hongjia；
Hangzhou Weixun To avoid any loss of the Company and
Investment Management other shareholders arising from any
Limited Partnership（later competing business, Gong Hongjia,
renamed as Xinjiang Weixun Hangzhou WeiXun Investment
Investment Management Management Limited Partnership,
Limited Partnership）； ZheJiang Orient Holdings Co., Ltd and Strict
Long term
Hangzhou Pukang Investment Hangzhou KangPu Investment July 10th 2008 performance
Management Limited Partnership, the
Limited Partnership（later
promoters of the Company, issued
renamed as Xinjiang Pukang Commitment Letters of non-competition
Investment Limited in the same industry on 10 July, 2008.
Partnership）；ZheJiang Orient
Holdings Co., Ltd.
Whether the
undertaking is Yes
fulfilled in time
2. Where any profit forecast was made for any of the Company’s assets or projects and the current
reporting period is still within the forecast period, the Company shall explain whether the performance of
the asset or project reaches the profit forecast and why:
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
IV. The Company’s funds used by the controlling shareholder or its related parties for
non-operating purposes.
□ Applicable √ Inapplicable
No such case in the reporting period.
V. Explanation given by the board of directors, supervisory committee and independent directors
(if applicable) regarding the “non-standard auditor’s report” issued by the CPA firm for the
current reporting period
□ Applicable √ Inapplicable
VI. For changes in accounting policies, accounting estimates and accounting methods as compared
to the financial report for the prior year
√ Applicable □Inapplicable
1. Changes in accounting policies
On April 28th 2017, the Ministry of Finance (MOF) issued the Notice on Printing and Distributing the
Accounting Standards for Business Enterprises No. 42 --- Non-Current Assets and Disposal Groups Held for Sale
and Termination of Business Operation (Finance and Accounting No. 13 [2017]), which came into effect on May
28th 2017. It standardizes the classification, measurement and reporting of non-current assets or disposal groups
held for sale and the reporting of termination of business operation, and stipulates that the non-current assets or
disposal groups held for sale and the termination of business operation by enterprises on the date when the
Accounting Standards hereto are implemented shall be disposed of by prospective applicable methods.
On May 10th 2017, the Ministry of Finance issued the Notice on Printing and Distributing the Accounting
Standards for Business Enterprises No. 16 --- Government Subsidies (Finance and Accounting No. 15 [2017]),
which came into effect on June 12th 2017. According to the Standards, government subsidies related to the
enterprise’s daily operations shall be booked into other income or offset related cost/expense according to the
substance of economic transactions; those not related to the enterprise’s daily operations shall be booked into
non-operating income; and the enterprise shall separately list the item of “Other Income” under the column of
“Operating profit” in the Income Statement, reflecting the government subsidies booked in other income. For
government subsidies available as of January 1st 2017 shall be disposed of by prospective application methods;
while those newly increased from January 1st 2017 to the date of implementation of the Standards hereto shall be
Hikvision 2017 Annual Report
adjusted according to the Standards.
On December 25th 2017, the Ministry of Finance issued the Notice on Revising, Printing and Distributing the
Format of Financial Statements of General Enterprises (Finance and Accounting No. 30 [2017]), requiring the
non-financial enterprises that execute the Accounting Standards for Business Enterprises shall compile the annual
financial statements of 2017 and the later periods according to the requirements in the Notice.
The Company started to execute the foregoing three accounting standards and policies according to the time
required by the Ministry of Finance, and changed relevant accounting policies.
2. Influence of the changes in accounting policies on the Company
Such changes in accounting policies were reasonably conducted by the Company according to the
requirements of relevant documents issued by the Ministry of Finance, and were in compliance with the
Accounting Standards for Business Enterprises and related provisions. Such changes only involved the
presentation and adjustment of items in the financial statements, had no influence on the Company’s total assets,
net assets, operating income or net profit, and caused no damage to interests of the Company and shareholders.
VII. Explanation for retrospective restatement of major accounting errors during the reporting
period
□ Applicable √ Inapplicable
No such case in the reporting period.
VIII. Explanation for changes in scope of the consolidated financial statements as compared to the
financial report for the prior year
√ Applicable □ Inapplicable
During the reporting period, the Company has newly set up eight wholly-owned subsidiaries and eight
holding subsidiaries, acquired one company, and cancelled one company, which have caused the change in
consolidation scope. For more details, please refer to note (VI) “Changes in consolidation scope” of the financial
statement.
IX. Engagement and disengagement of the CPA firm
Hikvision 2017 Annual Report
CPA firm engaged at present
Name of the domestic CPA firm Deloitte Touche Tohmatsu Certified Public Accountants LLP
Remuneration for the domestic CPA firm (RMB’0000)
Consecutive years of the audit service provided by the
domestic CPA firm
Name of the certified public accountants from the Mou Zhengfei has provided audit service for 2 consecutive years;
domestic CPA firm Zhang Shushu has provided audit service for 1 consecutive year.
Whether the CPA firm was changed in the current period
□ Yes √ No
Engagement of internal control audit CPA firm, financial advisor or sponsor
√ Applicable □ Not applicable
During the reporting period, the Company engaged Deloitte Touche Tohmatsu Certified Public Accountants LLP as internal control
audit CPA firm, with remuneration of RMB 600,000.
X. Listing suspension and termination after disclosure of this annual report
□ Applicable √ Inapplicable
XI. Bankruptcy and restructuring
□ Applicable √ Inapplicable
No such case in the reporting period.
XII. Material litigation and arbitration
Material litigation and arbitration
□ Applicable √ Inapplicable
No such case in the reporting period.
XIII. Punishments and rectifications
□ Applicable √ Inapplicable
No such case in the reporting period.
XIV. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
XV. The implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or other incentive
plans
√Applicable □Inapplicable
1) During the reporting period, the Company completed the first time unlocking, repurchasing and
cancelling shares for 2014 Restricted Share Incentive Scheme.
On December 6th 2016, Resolution for the fulfillment of the unlocking conditions of the first unlock period for
the 2014 Restricted Share Incentive Schemes and the Resolution for the first repurchase and cancelation of the
locked shares that already granted for 2014 Restricted Share Incentive Schemes were approved by the 19th
meeting of the third Board. Authorized by the first extraordinary general meeting for 2014，a total of 30,687,650
restricted shares of 1087 grantees were vested and circulated on January 9th 2017. Meanwhile, 2,457,000 restricted
shares held by a portion of grantees not fulfilling the incentive conditions were repurchased and cancelled. On
April 27th 2017, repurchase and cancelation process of the restricted shares was complete. Thereafter, there are
1094 grantees left for 2014 Restricted Share Incentive Schemes, granted and locked shares leftover are 46,220,473
shares
For details, please refer to in the “Indicative notice of the unlocking conditions of the third unlock period for
the first batch of 2014 Restricted Share Incentive Schemes” (No. 2017-001) and the “Notice of the completion of
repurchase and cancelation of a portion of locked shares that already granted to personnel not fulfilling the
incentive conditions for 2014 Restricted Share Incentive Schemes” (No. 2017-021) issued on January 5th 2017 and
April 28th 2017 respectively.
2) During the reporting period, the Company has completed the proposed grants of 2016 Restricted Share
Incentive Scheme
On December 23rd 2016, Resolution for granting restricted shares to planned grantees for 2016 Restricted
Shares Incentive Scheme was approved by the 20th Meeting of the third board. According to the Listed Company
Equity Incentive Measures and other administration or relevant laws, regulations and departmental rules and
regulated documents, as well as 2016 Restricted Shares Incentive Scheme (edited draft) and authorizations
approved by the 2016 2nd extraordinary general meeting, the Company has completed granting and registration of
2016 Restricted Shares Incentive Scheme, with 2936 granted personnel, and 52,326,858 granted shares which
were listed on January 20th 2017.
For details, please refer to in the “Indicative notice of completion of granting of 2016 Restricted Share
Hikvision 2017 Annual Report
Incentive Schemes” (No. 2017-005) issued on January 19th 2017.
3) During the reporting period, unlocked restricted shares amount were adjusted according to the
implementation of 2016 Equity Distribution.
On May 16th 2017, the Company implemented the profit distribution proposal of s bonus issue of 5 shares for
each 10 ordinary shares and distribute cash dividend of RMB 6 per each 10 shares. Therefore, the granted and
locked shares of 2014 Restricted Shares Incentive Scheme were adjusted to 69,330,709 shares accordingly, and
2016 Restricted Shares Incentive Scheme were adjusted to 78,490,287 shares accordingly
By the end of the reporting period, the Company has 147,820,996 granted and locked shares in total,
accounts for 1.60% of the Company’s total capital shares.
4) The accounting treatment in relation to the Restricted Share Incentive Schemes and impact on the
Company’s operating results due to share incentive expenses
The Company followed the Accounting Standard for Business Enterprises No. 11 – Share-based Payment
and other accounting standards in relation to accounting treatment for Restricted Share Incentive Schemes. Costs
in relation to the shares granted under 2014 and 2016 Restricted Share Incentive Schemes are amortized over the
waiting period for vesting.
During the reporting period, costs amortized in relation to the 2014 and 2016 Restricted Share Incentive
Schemes of the Company have no material impact on the financial position and operating results of the Company.
For details, please refer to Note (XI) - Share-based Payments.
Hikvision 2017 Annual Report
XVI. Significant related-party transaction
1. Related-party transactions arising from routine operation
√ Applicable □ Inapplicable
Whether Market
Type of Content of Amount Proportion to the Approved
Trading above price of Disclosure
Related party Relationship related related Valuation （0’000 amount of similar trading quota Settlement Disclosure reference
price approved similar date
transaction transaction RMB） transactions. (0’000 RMB）
quota transaction
Under the common Purchase Agreed on
Research institutes
control of the materials, price, Payment on
or subsidiaries of Procurement -- 21,505.09 0.88% 40,000 No --
Company’s actual receiving reference delivery
CETC
controller. services market price
Announcement on
The Company’s Purchase Agreed on
Shanghai Fullhan projections on 2017
director or his/her materials, price, Payment on
th
Microelectronics Procurement -- 21,930.69 0.90% 30,000 No -- April 14 2017 related transactions
relative is the director receiving reference delivery
Co., Ltd. (No：2017-
of the related party services market price
012）
Under the common Agreed on
Research institutes Selling goods
control of the price, Payment on
or subsidiaries of Sales and providing -- 79,642.40 1.90% 80,000 No --
Company’s actual reference delivery
CETC services
controller. market price
Total -- -- 123,078.18 -- 150,000 -- -- -- -- --
Details on significant sales return None
Total amount of related transactions projected based on different categories, Routine related transaction amount between the Company and the related parties did not exceed the total approved amount of related transactions
actual performance during the current reporting period (if any) projected based on different categories.
Reasons on significant difference between trading price and market
Not applicable
referencing price
Hikvision 2017 Annual Report
2. Related-party transactions regarding purchase and disposal of assets or equity
□Applicable √Inapplicable
No such case in the reporting period.
3. Significant related-party transactions arising from joint investments on external parties
□Applicable √Inapplicable
No such case in the reporting period.
4. Related-parties’ creditor's rights and debts
□ Applicable √Inapplicable
No non-operational related-parties’ creditor’s rights or debts during the reporting period.
5. Other significant related party transactions
√ Applicable □ Inapplicable
Pursuant to the Proposal about the Company’s subsidiary Hangzhou Hikvision Automotive Technology Co.,
Ltd.’s acquisition of assets and equity and related transactions with CETC approved by the 21st meeting of the 3rd
session of the Board of Directors held on January 8th 2017, the Company’s subsidiary Hangzhou Hikvision
Automotive Technology Co., Ltd. is approved to acquire and integrate the Company’s controlling shareholder
CETHIK’s automotive electronic related business subsidiaries: 1) the Company’s subsidiary Hangzhou
Hikvision Automotive Technology Co., Ltd. acquired the asset group of CETHIK’s Intelligent Automotive
Department with acquisition target price of RMB 68.02 million. During the transitional period, the acquisition
price was audited and adjusted up with RMB 11.39 million, and the final settlement price was RMB 79.41 million;
2) Hangzhou Haikang Ximu Intelligent Technology Co., Ltd.(hereinafter refer to “Haikang Ximu”), CETHIK’s
holding subsidiary, was acquired with RMB 16.30 million, 100% equity; of which RMB 9.78 million was for
acquiring 60% shares of Haikang Ximu held by CETHIK, and RMB 6.52 million was for acquiring 40% shares of
Haikang Ximu held by 7 individual shareholders including Yang Feng. As of the end of the reporting period,
Hikvision Automotive Technology has completed the acquisition and integration of the asset group of CETHIK’s
Intelligent Automotive Department, and the changes in registration related to acquisition of Haikang Ximu. For
details, please refer to Note (VI) 2-Business merger involving enterprises under common control.
Pursuant to the Proposal of Investment and Establishment of Wuhan Hik Storage Technology Co., Ltd.
(temporary name) approved by the 22nd meeting of the 3rd session of the Board of Directors held on April 12th
Hikvision 2017 Annual Report
2017, Hikvision and Co-investment Partnership enterprise jointly invested RMB 100 million to establish Wuhan
Hik Storage Technology Co., Ltd.; Hikvison will contribute cash capital of RMB 60 million, holding 60% of the
equity of Hik Storage; Co-investment Partnership enterprise will contribute cash capital of RMB 40 million,
holding 40% of the equity of Hik Storage. On April 17th 2017, Hik Storage’s industrial and commercial
establishment registration was completed.
Disclosure website for provisional reports on significant related transactions:
Title of provisional reports Disclosure date Disclosure website
Proposal about Acquisition of assets and equity, and related transactions January 19th 2017 www.cninfo.com.cn
Proposal about investment and establishment of innovative business
April 14th 2017 www.cninfo.com.cn
subsidiary and related transactions
XVII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such case in the reporting period.
(2) Contracting
□ Applicable √ Inapplicable
No such case in the reporting period.
(3) Leasing
□ Applicable √ Inapplicable
No significant leasing during the reporting period.
2. Significant guarantees
√Applicable □ Inapplicable
Hikvision 2017 HY Report
(1) Details of guarantees
Unit: RMB’0000
Guarantees provided by the Company for subsidiaries
Disclosure date of Actual occurrence Actual Guarantee
Guarantee Type of
Guaranteed party announcement of date (date of signing guaranteed Term of guarantee Due or not for a related
Cap guarantee
the guarantee cap agreement) amount party or not
Hangzhou Hikvision Science and Technology 2016.05.16-
April 14th 2017 750,000 May 16th 2016 275,849.38 Joint guarantee No Yes
Co. Ltd. 2020.12.31
2017.10.10-
Hangzhou Hikvision System Technology Co., Ltd April 14th 2017 80,000 October 10th 2017 1,203.63 Joint guarantee No Yes
2018.06.29
2016.12.07-
HIKVISION INTERNATIONAL CO., LTD. April 14th 2017 300,000 December 7th 2016 25,748.67 Joint guarantee No Yes
2019.01.24
Hangzhou Haikang Zhicheng Investment and 2017.06.13-
April 14th 2017 10,000 June 13th 2017 1,200.00 Joint guarantee No Yes
Development Co. Ltd. 2018.06.13
Chongqing Hikvision Science and Technologies Co.,
April 14th 2017 70,000 Not happened during the reporting period
Ltd.
Hangzhou Hikvision Electronics Co., Ltd. April 14th 2017 100,000 Not happened during the reporting period
Chongqing Hikvision System Technology Co., Ltd. April 14th 2017 30,000 Not happened during the reporting period
Hangzhou Hikvision Communication Technology Co.,
April 14th 2017 10,000 Not happened during the reporting period
Ltd.
Urumchi Hai Shi Xin An Electronics Technology
April 14th 2017 55,000 Not happened during the reporting period
Co., Ltd.
Total guarantee cap for subsidiaries approved during the reporting period(B1) 1,405,000 Total actual guarantee amount for subsidiaries during the reporting period(B2) 415,941.18
Total approved guarantee cap for subsidiaries at the end of the reporting Total actual guarantee balance for subsidiaries at the end of the reporting
1,405,000 304,001.69
period(B3) period(B4)
Hikvision 2017 HY Report
Guarantees provided by the Company for subsidiaries
Disclosure date of Actual occurrence Actual Guarantee
Guarantee Type of
Guaranteed party announcement of date (date of signing guaranteed Term of guarantee Due or not for a related
Cap guarantee
the guarantee cap agreement) amount party or not
Total guarantee amount provided by the Company (total of the above-mentioned kinds of guarantees) (During the reporting period, there was no such case as guarantee provided for external
parties, or guarantees between subsidiaries, therefore, there is only item B, item A or C is nil)
Total guarantee cap approved during the Total actual guarantee amount during the
1,405,000 415,941.18
reporting period (A1+B1+C1) reporting period (A2+B2+C2)
Total approved guarantee cap at the end of Total actual guarantee balance at the end
1,405,000 304,001.69
reporting period (A3+B3+C3) of the reporting period (A4+B4+C4)
Portion of the total actual guarantee amount (A4+B4+C4) in net assets of the Company 10.01%
Of which
The balance of guarantee for shareholders, actual controllers and their affiliates. (D)
Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset ratio over 70% (E) 301,598.05
Total amount of guarantee exceeding 50% of net assets (F)
Total guarantee amount of the above-mentioned 3 kinds of guarantees (D+E+F) 301,598.05
Illustration of compound method guarantee
As required by the project owner, China Electronics Technology Group Co., Ltd. (CETC) has provided a joint guarantee to responsibility and duties of
projects of “Safe Chongqing, Emergency Control System Digital Construction Project”, including 41 districts/counties construction projects, signed by
Chongqing Hikvision System Technology Co., Ltd. Meanwhile, the Company provides a counter guarantee to CETC’s joint responsibilities above.
Hikvision 2017 Annual Report
(2) Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
No such case in the reporting period.
3. Entrusting others to execute any cash asset management
(1) Entrusted finances
√Applicable □ Inapplicable
Entrusted finance during the reporting period
Unit: 0,000 RMB
Type Capital Source Actual Amount Undue Balance Amount overdue
Bank Financial Products Self-fund 382,000 339,000
Total 382,000 339,000
Details about entrusted finances that are individually significant or low security level, with low liquidity, and high risk
without principal guaranteed.
□ Applicable √ Inapplicable
Entrusted finances that projected to be impossible to recover principal, or involving in situations that could possibly
lead to decline in value
□ Applicable √ Inapplicable
(2) Entrusted loans
□ Applicable √ Inapplicable
No such case in the reporting period.
4. Other significant contracts
□ Applicable √ Inapplicable
No such case in the reporting period.
XVIII. Social responsibility
1．Fulfillment of other social responsibilities
While seeking for economic benefits and protecting shareholders’ interests, Hikvision proactively fulfilled
corporate social responsibilities by treating suppliers, customers and consumers in good faith, caring employees’
remuneration benefits, professional development and other legal rights, and actively engaging in environment
Hikvision 2017 Annual Report
protection and affairs for public welfare, in order to make contribution to the sustainable development of society,
economy and environment.
For details, please refer to the Company’s 2017 Annual Social Responsibility Report disclosed on CNINFO
(www.cninfo.com.cn)
2．Fulfillment of the social responsibility of targeted poverty alleviation
The Company did not conduct any targeted poverty alleviation during the reporting period and had no future
arrangement for targeted poverty alleviation.
3. Environmental protection
The Company is not a critical pollutant enterprises disclosed by national environmental protection
department
XIX. Other significant events
□ Applicable √ Inapplicable
No such case in the reporting period.
XX. Significant events of the Company’s subsidiaries
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
Section VI Changes in Shares and Information about Shareholders
I. Changes in Share Capital
1. Table of changes in share capital
Unit: Share
Before the change Changes in the period (+, -) After the change
Share
New Shares Bonus transferred
Shares Ratio Issued Others Sub-total Shares Ratio
share from capital
reserve
1. Shares subject to conditional
1,417,926,033 23.23% 52,326,858 657,071,365 -156,106,406 553,291,817 1,971,217,850 21.36%
restriction(s)
3) Other domestic shares 580,944,783 9.52% 52,281,658 284,111,265 -65,000,156 271,392,767 852,337,550 9.24%
Including: held by
420,578,437 6.89% 194,164,218 -32,250,000 161,914,218 582,492,655 6.31%
domestic enterprises
Including: held by
160,366,346 2.63% 52,281,658 89,947,047 -32,750,156 109,478,549 269,844,895 2.92%
domestic natural person
4) Foreign shares 836,981,250 13.71% 45,200 372,960,100 -91,106,250 281,899,050 1,118,880,300 12.12%
Including: held by overseas
836,981,250 13.71% 45,200 372,960,100 -91,106,250 281,899,050 1,118,880,300 12.12%
natural person
2. Shares without restriction 4,684,780,852 76.77% 2,419,217,006 153,649,406 2,572,866,412 7,257,647,264 78.64%
1) RMB ordinary shares 4,684,780,852 76.77% 2,419,217,006 153,649,406 2,572,866,412 7,257,647,264 78.64%
3. Total 6,102,706,885 100.00% 52,326,858 3,076,288,371 -2,457,000 3,126,158,229 9,228,865,114 100.00%
Reason for the changes in share capital
√ Applicable □ Inapplicable
（1）Grants of 2016 Restricted Share Incentive Scheme
On December 23rd 2016, Resolution for granting restricted shares to planned grantees for 2016 Restricted Shares
Incentive Scheme was approved by the 20th Meeting of the third board. According to the Listed Company Equity
Incentive Measures and other administration or relevant laws, regulations and departmental rules and regulated
documents, as well as 2016 Restricted Shares Incentive Scheme (edited draft) and authorizations approved by the
Hikvision 2017 Annual Report
2016 2nd extraordinary general meeting, the Company has completed granting and registration of 2016 Restriced
Shares Incentive Scheme, with 2936 granted personnel, and 52,326,858 granted shares which were listed on January
20th 2017. The Company’s total capital shares were increased by 52,326,858 shares to 6,155,033,743 shares from
6,102,706,885 shares.
（2）First share repurchase and cancellation for 2014 Restricted Share Incentive Scheme.
On December 6th 2016, Resolution for the first repurchase and cancellation of a portion of locked shares that
already granted for 2014 Restricted Share Incentive Schemes were approved by the 19th meeting of the third
session Board. Authorized by the first extraordinary general meeting for 2014，the Board agreed to repurchase and
cancel 2,457,000 restricted shares held by a portion of grantees not fulfilling the incentive conditions. On April
27th 2017, the Company completed the above-mentioned repurchase and cancellation procedures, the Company’s
total capital shares were decreased by 2,457,000 shares from 6,155,033,743 shares to 6,152,576,743 shares.
（3）Implementation of 2016 Equity Distribution
According to the 2016 Profit Distribution Scheme approved on 2016 Annual General Meeting, based on total
capital shares of 6,152,576,743 shares, the Company distributed to all shareholders cash dividend of RMB 6 (tax
inclusive) and bonus issue of 5 shares (tax inclusive) per each 10 shares; share distribution from capital reserve is
nil. The ex-dividend date of this equity distribution is May 16th 2017; the total Company’s capital shares were
increased by 3,076,288,371 shares from 6,152,576,743 shares to 9,228,865,114 shares.
Approval for changes in share capital
√ Applicable □ Inapplicable
（1）Grants of 2016 Restricted Share Incentive Scheme
On December 23rd 2016, Resolution for granting restricted shares to planned grantees for 2016 Restricted Shares
Incentive Scheme was approved by the 20th Meeting of the third session of the Board. According to the
authorizations approved by the 2016 2nd extraordinary general meeting, the board agreed to grant 2989 personnel
with 53,557,028 shares. The granting day was December 23rd 2016. In the payment process of capital, part of the
grantees partially or completely renounce the subscription of the incentive shares, resulted in an actual granted
2936 personnel, with 52,326,858 granted shares.
（2）First Repurchasing and Cancelling shares for 2014 Restricted Share Incentive Scheme.
On December 6th 2016, Resolution for the first repurchase and cancellation of a portion of locked shares that
already granted to personnel for 2014 Restricted Share Incentive Schemes were approved by the 19th meeting of the
third session of the Board. Authorized by the first extraordinary general meeting for 2014，the Board agreed to
repurchase and cancel 2,457,000 restricted shares held by a portion of grantees not fulfilling the incentive
conditions.
（3）Implementation of 2016 Equity Distribution
On April 12th 2017, 2016 Profit Distribution Scheme was approved by the 22nd meeting of the 3rd board; on May
4th 2017, 2016 Profit Distribution Scheme was approved by 2016 Annual General Meeting.
Hikvision 2017 Annual Report
Transfer for changes in share capital
√ Applicable □ Inapplicable
（1）Grants of 2016 Restricted Share Incentive Scheme
2016 granted restricted incentive shares were listed on January 20th 2017. The Company’s total capital shares
were increased by 52,326,858 shares to 6,155,033,743 shares from 6,102,706,885 shares.
（2）First Repurchasing and Cancelling shares for 2014 Restricted Share Incentive Scheme.
On April 27th 2017, the Company completed the procedures of first Repurchasing and Cancelling shares for 2014
Restricted Share Incentive Scheme, the Company’s total capital shares were decreased by 2,457,000 shares from
6,155,033,743 shares to 6,152,576,743 shares.
（3）Implementation of 2016 Equity Distribution
The ex-dividend date of 2016 annual equity distribution is May 16th 2017; the total Company’s capital shares were
increased by 3,076,288,371 shares from 6,152,576,743 shares to 9,228,865,114 shares.
Effects of changes in share capital on the basic earnings per share (\"EPS\"), diluted EPS, net assets per share attributable
to common shareholders of the Company, and other financial indexes over the last year and last period
√ Applicable □ Inapplicable
2017 2017 Quarter 4
Before After Before After Before After
Item
changes in changes in changes in changes in changes in changes in
share capital share capital share capital share capital share capital share capital
Basic Earnings per
1.545 1.030 0.544 0.363 1.227 0.818
Share(RMB/share)
Diluted Earnings per
1.536 1.024 0.541 0.361 1.221 0.817
Share (RMB/share)
2017 September 30th 2017 December 31st 2016
Before After Before After Before After
Item
changes in changes in changes in changes in changes in changes in
share capital share capital share capital share capital share capital share capital
Net assets per share
attributable to 4.934 3.289 4.376 2.917 3.979 2.653
shareholders of the
Company (RMB/Share)
Other contents that the Company considers necessary or required by the securities regulatory authorities to
disclose
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: Share
Opening Vested in Increased in Closing
Name of shareholder Note for restricted shares Date of unlocking
restricted shares current period current period restricted shares
According to the relevant
Gong Hongjia 1,255,246,875 136,434,375 0 1,118,812,500 Executives locked shares provisions of executives
shares management
Xinjiang Weixun
Investment
486,607,500 48,375,000 0 438,232,500 Institution restricted share before IPO February 13th 2017
Management Limited
Partnership
Xinjiang Pukang
Investment Limited 144,260,155 0 0 144,260,155 Institution restricted share before IPO Not applicable
Partnership
Restricted incentive shares + 2016
Grantees of restricted
proposed granting of restricted shares
share incentive plan 119,047,684 46,031,475 78,490,287 147,820,996 January 9th 2017
that were listed and became restricted
(summary statistic)
incentive equity shares
Executives locked shares+ partial of the
Hu Yangzhong 91,750,112 73,130 117,000 91,793,982 unlocked restricted shares turning into
executives locked shares
Executives locked shares+ partial of the
Wu Weiqi 8,221,418 65,252 104,400 8,260,566 unlocked restricted shares turning into
executives locked shares
Executives locked shares+ partial of the
Jiang Haiqing 8,222,163 56,252 90,000 8,255,911 unlocked restricted shares turning into
executives locked shares
According to the relevant
Executives locked shares+ partial of the provisions of executives
Zhou Zhiping 5,326,407 48,375 77,400 5,355,432 unlocked restricted shares turning into shares management
executives locked shares
Jia Yonghua 4,118,809 2 0 4,118,807 Executives locked shares
Li Pan 4,042,926 0 0 4,042,926 Executives locked shares
partial of the unlocked restricted shares
Huang Fanghong 45,000 45,000 70,875 70,875
turning into executives locked shares
Partial of the unlocked restricted shares
Zheng Yibo 0 0 30,375 30,375
turning into executives locked shares
Partial of the unlocked restricted shares
Jiang Yufeng 0 0 30,375 30,375
turning into executives locked shares
Hikvision 2017 Annual Report
Opening Vested in Increased in Closing
Name of shareholder Note for restricted shares Date of unlocking
restricted shares current period current period restricted shares
Partial of the unlocked restricted shares
Cai Dingguo 0 0 30,375 30,375
turning into executives locked shares
Partial of the unlocked restricted shares
Fu Baijun 0 0 29,025 29,025
turning into executives locked shares
Partial of the unlocked restricted shares
He Hongli 0 0 29,025 29,025
turning into executives locked shares
Partial of the unlocked restricted shares
Xu Lirong 0 0 29,025 29,025
turning into executives locked shares
Increased shareholdings turning into
Wang Qiuchao 0 0 15,000 15,000
executive locked shares
Total 2,126,889,049 231,128,861 79,143,162 1,971,217,850 -- --
Note:
1. In respect of changes in shares due to the implementation of equity distribution for 2016, the number of shares at beginning
balance, number of shares unlocked during the current period, and number of restricted shares increased during the current period
have been adjusted accordingly.
2. Executives who are grantees under incentive restricted shares scheme, his/her holding incentive restricted shares are counted
within the total incentive restricted shares (consolidated statistics) on the fourth row.
3. The difference of 3,685,500 shares between total incentive restricted shares (consolidated statistics) for grantees under incentive
restricted shares scheme and the calculated balance (opening balance - unlocked shares + increased restricted shares) was due to
repurchasing and cancelling of 2,457,000 shares (adjusted to 3,685,500 shares in consideration of dividend distribution) on April 27th
2017.
II. Issuance and listing of securities
1. Securities (exclude preferred share) issued during the reporting period
√ Applicable □ Inapplicable
Amount Date of
Shares and its Issue price (or issuance
Issuance date Listing date approved for transaction
derivative securities interest rate) amount
listing termination
Restricted shares January 20th 2017 12.63 52,326,858 January 20th 2017 52,326,858
Explanation for Securities (exclude preferred share) issued during the reporting period
On December 23rd 2016, Resolution for granting restricted shares to planned grantees for 2016 Restricted
Hikvision 2017 Annual Report
Shares Incentive Scheme was approved by the 20th Meeting of the third board. According to the Listed Company
Equity Incentive Measures and other administration or relevant laws, regulations and departmental rules and
regulated documents, as well as 2016 Restricted Shares Incentive Scheme (edited draft) and authorizations
approved by the 2016 2nd extraordinary general meeting, the Company has completed granting and registration of
2016 Restricted Shares Incentive Scheme, with 2936 granted personnel, and 52,326,858 granted shares which
were listed on January 20th 2017.
For details, please refer to in the Indicative notice of completion of granting of 2016 Restricted Share
Incentive Schemes (No. 2017-005) issued on January 19th 2017.
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and
liabilities
√ Applicable □ Inapplicable
During the reporting period, the Company completed the grants of 2016 Restricted Share Incentive Scheme,
the total capital shares increased by 52,326,858 shares from 6,102,706,885 shares to 6,155,033,743 shares. Total;
the Company completed the first repurchasing and cancelling shares for 2014 Restricted Share Incentive Scheme,
the total capital shares were decreased by 2,457,000 shares from 6,155,033,743 shares to 6,152,576,743 shares;
the Company completed the implementation of 2016 Equity Distribution, the total capital shares were increased
by 3,076,288,371 shares from 6,152,576,743 shares to 9,228,865,114 shares. The structure of shareholder
structure, assets and liabilities of the Company did not change significantly after the above mentioned items.
3. Existent shares held by internal staff of the Company
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: Share
Total number of common shareholdrs at the end of the reporting Total number of common shareholders at the end of the previous month before
167,039 137,437
period the disclosure date of the annual report
Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them
Share- Pledged or frozen
Increase/ Number of
Nature of holding Total shares held at the Number of tradable
Name of shareholder decrease during the non-tradable
shareholder percentage period-end shares held Share Status Amount
reporting period shares held
(%)
China Electronics Technology State-owned
39.59% 3,653,674,956 - - 3,653,674,956 Pledged 50,000,000
HIK Group Co., Ltd. corporation
Overseas
Gong Hongjia 15.01% 1,385,056,700 -106,693,300 1,118,812,500 266,244,200
individual
Hong Kong Securities Clearing Overseas
9.77% 901,210,447 +861,634,924 - 901,210,447
Company Ltd.(HKSCC) corporation
Domestic
Xinjiang Weixun Investment non-state-
5.74% 529,720,876 -54,589,124 438,232,500 91,488,376 Pledged 130,435,000
Management Limited Partnership owned
corporation
Domestic
Xinjiang Pukang Investment non-state-
2.08% 192,346,874 - 144,260,155 48,086,719 Pledged 177,760,000
Limited Partnership owned
corporation
The 52nd Research Institute at
State-owned
China Electronics Technology 1.96% 180,775,044 - - 180,775,044
corporation
Group Corporation
CITIC Securities Company Domestic 1.69% 155,982,629 +88,044,501 - 155,982,629
Hikvision 2017 Annual Report
Limited non-state-
owned
corporation
Domestic
Hu Yangzhong 1.33% 122,786,477 +160,500 30,656,495 92,129,982 Pledged 60,080,000
Individual
Overseas
UBS AG 1.18% 108,923,450 -76,050,056 - 108,923,450
corporation
State-owned
Central Huijin Investment Ltd. 0.71% 65,818,800 - - 65,818,800
corporation
China Electronics Technology HIK Group Co., Ltd. and The 52nd Research Institute at China Electronics Technology Group Co., Ltd. are
all subject to control of China Electronics Technology Group Corporation. Ms. Chen Chunmei, limited partner of Xinjiang Pukang
Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong,
Explanation on associated relationship or concerted domestic individual, is holding shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang
actions among the above-mentioned shareholders: Investment Limited Partnership.
Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-concert
parties in accordance with the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the Listed
Company.
Particulars about shares held by the Top 10 shareholders holding shares that are not subject to trading restriction(s)
Type of shares
Name of shareholder Number of tradable shares held at the period-end
Type Number
China Electronics Technology HIK Group Co., Ltd. 3,653,674,956 RMB ordinary shares 3,653,674,956
Hong Kong Securities Clearing Company RMB ordinary shares
901,210,447 901,210,447
Ltd.(HKSCC)
Gong Hongjia 266,244,200 RMB ordinary shares 266,244,200
The 52nd Research Institute at China Electronics RMB ordinary shares
180,775,044 180,775,044
Technology Group Corporation
CITIC Securities Company Limited 155,982,629 RMB ordinary shares 155,982,629
Hikvision 2017 Annual Report
Particulars about shares held by the Top 10 shareholders holding shares that are not subject to trading restriction(s)
Type of shares
Name of shareholder Number of tradable shares held at the period-end
Type Number
UBS AG 108,923,450 RMB ordinary shares 108,923,450
Xinjiang Weixun Investment Management Limited RMB ordinary shares
91,488,376 91,488,376
Partnership
Central Huijin Investment Ltd. 65,818,800 RMB ordinary shares 65,818,800
Zhejiang Orient Holdings Co., Ltd. 48,161,900 RMB ordinary shares 48,161,900
Xinjiang Pukang Investment Limited Partnership 48,086,719 RMB ordinary shares 48,086,719
China Electronics Technology HIK Group Co., Ltd. and The 52nd Research Institute at China Electronics Technology Group Co., Ltd. are
all subject to control of China Electronics Technology Group Corporation. Ms. Chen Chunmei, limited partner of Xinjiang Pukang
Explanation on associated relationship and Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong,
concerted actions among top ten shareholders without domestic individual, is holding shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang
trading restrictions, and among top ten shareholders Investment Limited Partnership.
and top ten shareholders without trading restrictions Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-concert
parties in accordance with the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the Listed
Company.
Any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conducted any agreed buy-back in the reporting period?
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
2. Particulars about change in controlling shareholder or actual controller
Nature of the controlling shareholder: Central State-owned
Type of the actual controller: Corporation
Legal
Name of controlling Date of
Representative Organization code Business scope
shareholder establishment
Industrial investment; R&D of environmental
protection products, network products, intelligent
China Electronics
Chen November products and electronic products; technology
Technology HIK 9133000014306073XD
Zongnian 29th, 2002 transfer, technical services, manufacturing and sales;
Group Co., Ltd.
business consulting services, rental services of
self-owned real estate; import and export businesses.
Shares held by the controlling shareholder
Indirect control of domestic listed company Phoenix
in other listed companies
Optical Co. LTD.,
through controlling or holding during the reporting period
Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
3. Particulars about the actual controller
Nature of the actual controller: Central State-owned assets management agency
Type of the actual controller: Corporation
Name of the Legal
Date of Organization
actual Representative Business scope
establishment code
controller
The Company is responsible for the military electronic
equipment and systems integration, the development and
manufacturing weapons platform electronic equipment,
military software and electronic basic products, and the
construction of national defense electronic information
infrastructure and safeguard conditions; construction of
national major electronic information system; the
China
Electronics research, development, production and sales of civil
February 25th
Technology Xiong Qunli 91110000710929498G electronic information software, materials, components,
Group machine and system integration and related common
Corporation
technology; the self-management and agency of import
and export business of all types of goods and
technology; the operation of feed processing and
\"processing and compensation trades\"; the operation of
counterpart trade and re-export trade; industrial
investment; asset management; engages in e-commerce
information services; and organizes enterprises in the
Hikvision 2017 Annual Report
Name of the Legal
Date of Organization
actual Representative Business scope
establishment code
controller
industry to participate in and hold overseas exhibitions.
China Electronics Technology Group Co., Ltd is the actual controller of eight domestic listed
Shares held by the actual
controlling shareholder in companies including An’hui Sun Create Electronic Co., Ltd, Shanghai East China Computer Co.,
other listed companies through Ltd, Chengdu Westone Information Industry Co., Ltd., GCI Science & Technology Co., Ltd., Tai’ji
controlling or holding during Computer Corporation Limited, GLARUN Technology Co., Ltd. , Phenix Optics Co., Ltd., and
the reporting period CETC Microwave Communication (Shanghai) Co., Ltd.
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
The ownership and controlling relationship between the actual controller of the Company and the Company is
detailed as follows:
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Inapplicable
4. Particulars about other corporate shareholders with shareholding proportion over 10%
□ Applicable √ Inapplicable
5. Particulars on shareholding decrease restrictions for the controlling shareholders, actual controller,
restructurer or other committing parties
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
Section VII Information of Preferred Shares
□ Applicable √ Inapplicable
No existed preferred shares for the Company during the reporting period.
Hikvision 2017 Annual Report
Section VIII Information about Directors, Supervisors, Senior Management and Staffs
I. Shareholding changes of directors, supervisors, senior management personnel
√Applicable □ Inapplicable
Shares increased Shares decreased Shares held at the
Shares held at the
Commencement of term of Termination of term
Name Title Tenure status Gender Age beginning of the Period during the Period during the Period end of the Period
office of office
(Shares) (shares) (Shares) (Shares)
Chen Zongnian Chairman Incumbent M 53 June 19th, 2008 0 0 0
Gong Hongjia Vice Chairman Incumbent M 53 June 19th, 2008 1,491,750,000 0 106,693,300 1,385,056,700
Liu Xiang Director Incumbent M 46 May 24th, 2014 March 7th 2018 0 0 0
Director,
Hu Yangzhong Incumbent M 53 December 28th, 2001 122,625,977 160,500 0 122,786,477
General Manager
Director,
Wu Weiqi Standing Deputy Incumbent M 54 March 1st, 2003 11,222,889 148,500 0 11,371,389
General Manager
Independent
Cheng Tianzong Incumbent M 66 March 6th, 2015 0 0 0
Director
Independent
Lu Jianzhong Incumbent M 64 March 6th, 2015 0 0 0
Director
Independent
Wang Zhidong Incumbent M 51 March 6th, 2015 0 0 0
Director
Hikvision 2017 Annual Report
Shares increased Shares decreased Shares held at the
Shares held at the
Commencement of term of Termination of term
Name Title Tenure status Gender Age beginning of the Period during the Period during the Period end of the Period
office of office
(Shares) (shares) (Shares) (Shares)
Independent
Hong Tianfeng Incumbent M 52 December 22nd, 2016 0 0 0
Director
Cheng Huifang Supervisor Chairman Incumbent F 65 March 6th, 2015 0 0 0
Wang Qiuchao Supervisor Incumbent M 67 March 6th, 2015 0 20,000 0 20,000
Chen Junke Supervisor Incumbent M 47 June 19th, 2008 March 21st 2018 0 0 0
Jiang Haiqing Deputy General Manager Incumbent M 49 March 1st, 2003 11,187,882 123,000 0 11,310,882
Deputy General Manager
Zheng Yibo Incumbent M 56 June 30th,0 2004 March 21st 2018 202,500 0 33,600 168,900
Cai Dingguo Deputy General Manager Incumbent M 51 December 18th, 2005 March 21st 2018 202,500 109,500 0 312,000
He Hongli Deputy General Manager Incumbent F 45 December 18th, 2005 193,500 138,000 0 331,500
Fu Baijun Deputy General Manager Incumbent M 46 January 20th, 2009 193,500 196,500 0 390,000
Xu Lirong Deputy General Manager Incumbent M 55 March 1st, 2007 March 21st 2018 193,500 109,500 0 303,000
Zhou Zhiping Deputy General Manager Incumbent M 53 December 18th, 2005 March 21st 2018 7,295,376 109,500 0 7,404,876
Hikvision 2017 Annual Report
Shares increased Shares decreased Shares held at the
Shares held at the
Commencement of term of Termination of term
Name Title Tenure status Gender Age beginning of the Period during the Period during the Period end of the Period
office of office
(Shares) (shares) (Shares) (Shares)
Jiang Yufeng Deputy General Manager Incumbent M 47 December 18th, 2005 202,500 123,000 0 325,500
Jin Duo Deputy General Manager Incumbent M 53 March 10th, 2015 0 109,500 0 109,500
Deputy General Manager,
Jin Yan Incumbent F 39 July 22th, 2015 0 174,000 0 174,000
Person in charge of finance
Jia Yonghua Deputy General Manager Incumbent M 41 July 22th, 2015 5,491,744 109,500 0 5,601,244
Li Pan Deputy General Manager Incumbent M 40 July 22th, 2015 5,390,568 109,500 0 5,500,068
Cai Changyang Deputy General Manager Incumbent M 47 April 8th, 2016 0 109,500 0 109,500
Deputy General Manager,
Board Secretary, person in
Huang Fanghong Incumbent F 36 April 8th, 2016 292,500 0 0 292,500
charge of
internal audit
Xu Ximing Deputy General Manager Incumbent M 45 October 11th, 2016 0 0 0
Bi Huijuan Deputy General Manager Incumbent F 47 October 11th, 2016 0 150,000 0 150,000
Total -- -- -- -- -- -- 1,656,444,936 2,000,000 106,726,900 1,551,718,036
Hikvision 2017 Annual Report
Note:
(1) Number shares held at the beginning of the period, shares increased during the period, shares decreased during the period for directors, supervisors, and senior
management personnel above are all shares directly held by them accordingly, including restricted shares.
(2) During the reporting period, in respect of changes in the number of shares due to the implementation of equity distribution for 2016, the number of shares at the
beginning, increased, and reduced has been adjusted accordingly.
II. Changes of directors, supervisors and senior management personnel
√Applicable □Inapplicable
Name Position Type Date Reasons
Qu Liyang Director Appointment and dismissal March 7th 2018 The general election of the board of directors
Liu Xiang Director Leave the post when terms were up March 7th 2018 Termination on term of office
The general election of the workers and staff
Xu Lirong Employee Supervisor Appointment and dismissal March 21st 2018
congress
Chen Junke Employee Supervisor Leave the post when terms were up March 21st 2018 Termination on term of office
Pu Shiliang Senior management personnel Appointment and dismissal March 21st 2018 Appointment
Chen Junke Senior management personnel Appointment and dismissal March 21st 2018 Appointment
Zheng Yibo Senior management personnel Leave the post when terms were up March 21st 2018 Termination on term of office
Cai Dingguo Senior management personnel Leave the post when terms were up March 21st 2018 Termination on term of office
Zhou Zhiping Senior management personnel Leave the post when terms were up March 21st 2018 Termination on term of office
Xu Lirong Senior management personnel Leave the post when terms were up March 21st 2018 Termination on term of office
III. Positions and Incumbency
The professional background of the Company's current directors, supervisors, senior management, and their major work experience and current responsibilities in the
Company
Hikvision 2017 Annual Report
1. Directors
Mr Chen Zongnian (陈宗年): Born in 1965, Chen holds a PhD of business administration and has served as
deputy general manager Shenzhen Gao Ke Run Electronics, director and general manager of Zhejiang Haikang
Information Technology Co., Ltd. and Zhejiang Haikang Group Co., Ltd. He also served as an assistant of the
head, deputy head, and the head of 52nd Research Institute at China Electronics Technology Group Corporation
(52nd Research Institute). Chen currently serves as the chairman of China Electronics Technology HIK Group Co.,
Ltd. (CETHIK) and chairman of the Company.
Mr. Gong Hongjia (龚虹嘉): Born in 1965, Hong Kong permanent resident. Gong holds a bachelor degree of
engineering, technology entrepreneur, and angel investor. He has established and invested over 10 enterprises
including TECSUN Co. Ltd., AsiaInfo Dekang, Funian Technology, and Woqi Data, and etc. He took part in the
establishment of the Company in November 2001 and served as a director and vice chairman of the Company.
Gong currently serves as a vice chairman of the Company.
Mr. Liu Xiang (刘翔): Born in 1972, master degree of business administration and economist. Liu served as a
deputy general manager, secretary of the board and chief financial officer of Hikvision since June 2007. Liu has
been appointed as a director of the Company since May 2015 (he left the post on March 7th 2018 when terms up),
and currently serves as a deputy general manager of CETHIK, and Chairman of Phenix Optical Co. Ltd.
Mr. Hu Yangzhong (胡扬忠): Born in 1965, master degree of engineering, senior research engineer. He served
as an engineer of the 52nd Research Institute from June 1989 to December 2001. He has been appointed as a
director of the Company and general manager of the company since January 2002. Hu currently serves as a
director and the general manager of the Company.
Mr. Wu Weiqi (邬伟琪): Born in 1964, bachelor degree of engineering, senior engineer. Wu held various
positions at the 52nd Research Institute, including technician, engineer associate, engineer and senior engineer,
from July 1986 to December 2001. Since December 2001, He has been appointed as a deputy general manager, a
standing deputy general manager, and a director of Hikvision. Wu currently serves as a director and standing
deputy general manager of the Company.
Mr. Cheng Tianzong (程天纵): Born in 1952, Taiwanese, master degree in business administration. Cheng
served as president and a director of Hewlett-Packard Development Company, L.P. (China) from 1992 to 1997;
served as the president of the Asia Pacific of Texas Instruments Incorporated (德州仪器) from 1997 to 2007;
served as a vice-president of Hon Hai Corporation (鸿海集团) from July 2007 to 2012, and the chief executive
officer of FIH Mobile Limited, a subsidiary of Hon Hai Corporation (鸿海集团), a company listed on the Hong
Kong Stock Exchange in 2011. He retired in June 2012 and devoted himself to China Maker Campaign (中国创
客运动) to help and guide those start-up companies in September 2013. Cheng currently serves as an independent
director of the Company.
Hikvision 2017 Annual Report
Mr. Lu Jianzhong (陆建忠): Born in 1954, holds bachelor degree in economics and CPA certificate. Lu served
as a lecturer and an associate professor of finance and accounting department at Shanghai Maritime University (上
海海事大学) from September 1986 to September 1997; he was a CPA and a partner of the auditing department of
PricewaterhouseCoopers, from October 1997 to June 2012; he was a chartered accountant of Shanghai De’an
Certified Public Accountants LLP (上海德安会计师事务所) from July 2012 to July 2013; he was a chartered
accountant of the Shanghai branch of PKF Daxin Certified Public Accountants LLP (大信会计师事务所上海分
所), from August 2013 to July 2014；He was a partner and a chartered accountant and a partner of Zhongxinghua
Certificated Public Accountants LLP (中兴华会计师事务所) from August 2014 to January 2016. Lu currently
serves as a chartered accountant of Dahua Certificated Public Accountants LLP ( 大 华 会 计 师 事 务 所 ),
MPAcc/Maud Enterprise Mentor of Antai College of Economics & Management,Shanghai Jiao Tong University
(上海交通大学安泰管理学院), and an independent director of Hikvision.
Mr. Wang Zhidong (王志东): Born in 1967, Hong Kong permanent resident, bachelor degree in engineering. He
served as a deputy general manager and chief engineer of Beijing Suntendy Electronic Technology Research
Institute (北京新天地电子信息技术研究所) from April 1992 to August 1993; He served as a general manager of
Richwin Information Technology Co., Ltd. (四通利方信息技术有限公司), and served as chief executive officer
and a director of SINA Corporation (新浪网) from December 1993 to June 2001; He served as chairman and chief
executive officer of Beijing Dianji Technology, Ltd. (北京点击科技有限公司) from December 2001 to July 2013.
Mr. Wang currently serves as chairman and chief executive officer of Beijing Yilianyisheng Techonology Co.
Ltd.(北京易连忆生科技有限公司), and an independent director of the Company.
Mr. Hong Tianfeng (洪天峰): Born in 1966, master degree in engineering. Hong was an engineer in Nanjing
University of Posts and Telecommunication (南京邮电大学) from July 1990 to June 1993; He served as an
executive deputy general manager, chief executive of Operation and Delivery, chairman of investment decision
committee, and vice chairman of Huawei Technologies Co., Ltd. (华为技术有限公司) from July 1993 to
September 2011；Hong currently serves as a managing partner of Suzhou Fangguang Venture Investment
Management (Limited Partnership)(苏州方广创业投资管理合伙企业（有限合伙）), an executive director of
Shanghai Fangguang Venture Investment Management Co., Ltd. (上海方广创业投资管理有限公司), and an
independent director of the Company.
2. Supervisors
Ms. Cheng Huifang (程惠芳): Born in 1953, PhD in international finance. She was a member of the 8th and 9th
Zhejiang CPPCC (浙江省政协). Cheng currenly serve as dean of the Global Development Research Institute of
Zhejiang Businesses under Zhejiang University of Technology (浙江工业大学全球浙商发展研究院), president
of Zhejiang Yangtze River Delta of the Institute of Innovation Management (浙江长三角创新管理研究院),
president of the Zhejiang Financial Engineering Society (浙江省金融工程学会), and a supervisor of the
Company.
Mr. Wang Qiuchao (王秋潮): Born in 1951, a professional lawyer with bachelor degree in history and master
degree in law. Wang served as chairman of the Zhejiang Lawyers Association ( 浙江省律师协会) and
vice-president of the Zhejiang Law Society (浙江省法学会). Wang currently serves as arbitrator of the China
International Economic and Trade Arbitration Commission (中国国际经济贸易仲裁委员会, “CIETAC”) , an
Hikvision 2017 Annual Report
arbitrator of Shanghai International Arbitration Center (上海国际仲裁中心) and South China International
Economic and Trade Arbitration Commission (华南国际仲裁中心), and a supervisor of the Company.
Mr. Chen Junke (陈军科): Born in 1971, bachelor degree in engineering, senior engineer. Chen began to work
since 1994 and held various positions in the 52nd Research Institute, including assistant engineer, engineer and
senior engineer. He joined the Company in 2001 and has been appointed as the technology director of the Digital
Video Recorder (DVR) Division of the Technology Management Center, general manager of supply chain
management center, employee representative supervisor (left the post on March 21st 2018 when terms up). Chen
currently serves as senior deputy general manager of Hikvision (appointed by the first general meeting of the 4th
session of the board on March 21st 2018).
3. Senior management personnel
Mr. Hu Yangzhong (胡扬忠): Please refer to his profile in preceding part of the report.
Mr Wu Weiqi (邬伟琪): Please refer to his profile in preceding part of the report.
Mr. Jiang Haiqing (蒋海清): Born in 1969, bachelor degree in engineering, a senior engineer. He joined the
Company in November 2001 and served as an assistant of the general manager and a deputy general manager. Mr.
Jiang currently serves as a senior deputy general manager of the Company (appointed by the first general meeting
of the 4th session of the board on March 21st 2018).
Mr. Zheng Yibo (郑一波): Born in 1962, bachelor degree in engineering, a senior engineer. He joined Hikvision
in June 2004 and served as board secretary and the person in charge of finance and accounting department, and a
deputy general manager of the Company (left the post when terms up on March 21st 2018).
Mr. Cai Dingguo (蔡定国): Born in 1967, master degree in business administration. He joined Hikvision in May
2002 and served as a manager of the Marketing Division, an assistant to the general manager, and a deputy
general manager of the Company (left the post when terms up on March 21st 2018).
Ms. He Hongli (何虹丽): Born in 1973, master degree in business administration. She joined Hikvision in
December 2001 and served as an assistant to the general manager and a deputy general manager. Ms. He currently
serves as a senior deputy general manager of the Company (appointed by the first general meeting of the 4th
session of the board on March 21st 2018).
Mr. Fu Baijun (傅柏军): Born in 1972, bachelor degree in economics, Chinese Certificated Public Accountant,
professor-level senior accountant. He served as an accountant of the accounting division of the 52nd Research
Institute and a deputy general manager of Zhejiang Haikang Information Co. Ltd. (浙江海康信息技术股份有限
公司) from July 1996 to December 2008. He joined Hikvision in January 2009, and served as a deputy general
manager and the person in charge of finance and accounting department, and a deputy general maanger. Mr. Fu
currently serves as a senior deputy general manager of the Company (appointed by the first general meeting of the
4th session of the board on March 21st 2018).
Hikvision 2017 Annual Report
Mr. Xu Lirong (徐礼荣): Born in 1963, master degree in engineering, a senior engineer. He joined Hikvision in
January 2002 and served as a manager of the department of development under R&D Center, board secretary and
a deputy general manager (left the post due to terms up on March 21st 2018). Mr. Xu currently serves as the
employee supervisor (elected by the 2018 2nd employee representative meeting on March 21st 2018), the person in
charge of internal audit (appointed by the first general meeting of the 4th session of the board on March 21st 2018).
Mr. Zhou Zhiping (周治平): Born in 1965, master degree in engineering, a senior engineer. He joined Hikvision
in January 2002 and served as the chief technology officer and a deputy general manager (left the post when terms
up on March 21st 2018).
Mr. Jiang Yufeng (蒋玉峰): born in 1971, bachelor degree in engineering, an engineer. He joined Hikvision in
January 2005 and held various positions in the Company, including general manager of Beijing branch, director of
marketing, assistant to the general manager, a deputy general manager and marketing director, and a deputy
general manager. Mr. Jiang currently serves as a senior deputy general manager of the Company (appointed by the
first general meeting of the 4th session of the board on March 21st 2018).
Mr. Jin Duo (金铎): born in 1965, bachelor degree in engineering, a senior engineer. He served as a technician,
assistant to engineers, an engineer and a senior engineer of the 52nd Research Institute from July 1986 to June
2004. He joined Hikvision in July 2004 and served as general manager of Hangzhou Branch, and a deputy general
manager of the Company. Mr. Jin currently serves as a senior deputy general manager of the Company (appointed
by the first general meeting of the 4th session of the board on March 21st 2018).
Ms. Jin Yan (金艳): born in 1979, master degree in management, an accountant. She joined Hikvision in 2004
and held various positions at the Company, including financial manager, the general manager of the Financial
Management Center, and a deputy general manager and the person in charge of finance and accounting. Ms. Jin
currently serves as a senior deputy general manager and the person in charge of finance and accounting of the
Company (appointed by the first general meeting of the 4th session of the board on March 21st 2018).
Mr. Jia Yonghua (贾永华): born in 1977, bachelor degree in engineering, a senior engineer. He joined Hikvision
in January 2002 and held various positions at the Company, including director of Image Process and Analysis
Division under the R&D Center, director of Strategy and Marketing Division, a deputy general manager of the
Supply Chain Management Center, and a deputy general manager of the Company. Mr. Jia currently serves as a
senior deputy general manager of the Company (appointed by the first general meeting of the 4th session of the
board on March 21st 2018).
Mr. Li Pan (礼攀): born in 1978, master degree in engineering, and is a senior engineer. He served as an engineer
of the 52nd Research Institute from August 2000 to December 2001. He joined Hikvision in December 2001 and
held various positions at the Company, including engineer, product manager, R&D manager, the general manager
of the Transportation Division, the general manager of Hangzhou Branch, a deputy general manager of the
Company. Mr. Li currently serves as a senior deputy general manager of the Company (appointed by the first
general meeting of the 4th session of the board on March 21st 2018).
Hikvision 2017 Annual Report
Ms. Huang Fanghong (黄方红): born in 1982, master degree in law. She joined Hikvision in June 2009 and held
various positions at the Company including legal department manager, internal audit manager, internal control
director, and a deputy general manager and the board secretary. Ms. Huang currently serves as a senior deputy
general manager, and board secretary of the Company (appointed by the first general meeting of the 4th session of
the board on March 21st 2018).
Mr. Cai Changyang (蔡昶阳): born in 1971, bachelor degree in engineering. He joined Hikvision in 2004, and
held various positions of the Company, including general manager of Beijing branch, director for government and
enterprise corporation department, director of investment department, director of strategy and marketing
department, and a deputy general manager of the Company. Mr. Cai currently serves as senior deputy general
manager of the Company (appointed by the first general meeting of the 4th session of the board on March 21st
2018).
Mr. Xu Ximing (徐习明): born in 1973, bachelor degree in engineering. From July 1996 to September 2016, he
held various positions in IBM, including engineer, department manager, director，partner of consulting service,
senior partner of consulting service, and a deputy general manager. He joined Hikvision in September 2016, and
served as a deputy general manager of the Company. Mr. Xu currently serves as a senior deputy general manager
of the Company (appointed by the first general meeting of the 4th session of the board on March 21st 2018).
Ms. Bi Huijuan (毕会娟): born in 1971, PhD in engineering, senior research engineer. From April 1999 to
August 2016, she held various positions in the 15th Research Institute at China Electronics Technology Group
Corporation (CETC), including engineer, senior engineer, senior research engineer, head of R&D department,
vice chief engineer, and deputy director. She joined Hikvision in August 2016, and served as a deputy general
manager of the Company. Ms. Bi currently serves as a senior deputy general manager of the Company (appointed
by the first general meeting of the 4th session of the board on March 21st 2018).
Position held in shareholders’ entities
√Applicable □ Inapplicable
Position in shareholders’ Commencement of the Compensation and allowance
Name Shareholder's entity
entities term from the shareholders' entity
China Electronics
Chen Chairman, Secretary of party
Technology HIK Group November 2013 Y
Zongnian committee
Co., Ltd.
China Electronics
Liu Xiang Technology HIK Group Deputy General Manager December 2013 Y
Co., Ltd.
China Electronics
Hu Yangzhong Technology HIK Group Director December 2013 N
Co., Ltd.
China Electronics Supervisor, Member of
Xu Lirong Technology HIK Group Commission for Discipline December 2013 N
Co., Ltd. Inspection
China Electronics
Member of the party
Zheng Yibo Technology HIK Group December 2015 N
committee
Co., Ltd.
Hikvision 2017 Annual Report
Positions held in other entities
√Applicable □ Inapplicable
Compensation
Position in other Commencement of Termination of and allowance
Name Name of other Entity
entity the term the term from the other
entities
Cheng Zongnian Zhejiang New Computer Magazine Legal Representative February 1st 2004 N
Cheng Zongnian CETC Finance Co., Ltd. Director December 2012 N
Zhejiang Wuzhen Street Technology N
Cheng Zongnian Chairman May 2016
Co. Ltd.
Gong Hongjia Furong Technology Co., Ltd. Director October 1999 N
Gong Hongjia Hangzhou FunVio Co., Ltd. Chairman February 2004 N
Chairman of the
Gong Hongjia Funian Technology Co., Ltd. October 2007 N
Board
Gong Hongjia Beijing Funian Technology Co., Ltd. Chairman November 2011 N
Shanghai Fullhan Microelectronics N
Gong Hongjia Director April 2013
Co., Ltd.
Gong Hongjia Shenzhen Innovation Valley
Director July 2014 N
Investment Management Co., Ltd.
Gong Hongjia Shanghai Pukun Information
Director September 2014 N
Technology Co., Ltd.
Gong Hongjia FuCe Holdings Co., Ltd. Director October 2014 N
Chuangjia Venture Capital N
Gong Hongjia Director October 2014
Investment Co., Ltd
Shenzhen Jiadao Valley Investment
Gong Hongjia General Manager October 2014 Y
Management Co., Ltd.
Shenzhen Jiadao Gongcheng Equity N
Executive Partner &
Gong Hongjia Investment Fund (Limited November 2014
delegate
Partnership)
Gong Hongjia JiuBaYao Health Technology Co., Director N
November 2014
Ltd.
Gong Hongjia Beijing JiaBoWen Biotechnology
Director March 2015 N
Co., Ltd.
Gong Hongjia Wuhan YouXinGuang Director N
January 2016
communication equipment co., LTD
Gong Hongjia Shenzhen JiadaoFangzhi Education Executive Partner & N
Industry Investment Enterprise delegate June 2017
(Limited Partnership)
Gong Hongjia Shenzhen Jiadao Successful Executive Partner & August 2017 N
Hikvision 2017 Annual Report
Compensation
Position in other Commencement of Termination of and allowance
Name Name of other Entity
entity the term the term from the other
entities
Investment Enterprise (Limited delegate
Partnership)
Gong Hongjia Shanghai AoYuan Medical Supplies N
Chairman September 2017
Co., Ltd.
Xinjiang Weixun Investment N
Liu Xiang Executive Partner May 2011
Management Limited Partnership
Liu Xiang Phoenix Optical Co. LTD Chairman July 2015 N
Liu Xiang Phoenix Optical Holding Co. LTD Chairman July 2015 N
Liu Xiang Beijing LeiShengQiangShi N
Director January 2017
Technology Co. Ltd.
Liu Xiang CETHIK Wuxi Technology Co., Ltd. Chairman January 2018 N
Xinjiang Pukang Investment N
Wu Weiqi Executive Partner May 2011
Management Limited Partnership
Wu Weiqi Wuhu Sensor Tech Intelligent Director N
January 2017
Technology Co., Ltd.
Wu Weiqi Maxio Technology (Hangzhou) Co., Director N
May 2017
Ltd.
Beijing Yilian Yisheng Technology
Wang Zhidong Chairman, CEO July 2013 Y
Co., Ltd.
Cheng Tianzong Hechun Technology Co., Ltd. Director June 2014 Y
Cheng Tianzong Zuozhen Co., Ltd. Director January 2015 Y
Cheng Tianzong Wenhui Technology Co., Ltd. Independent Director June 2016 Y
Lu Jianzhong Shanghai Jiao Tong University- Antai Mentor for N
December 2013
College of Management, enterprises
Lu Jianzhong Dahua Certificated Public N
Chartered Accountant January 2016
Accountants LLP
Lu Jianzhong ChangShu FengFan Electric Power Independent Director Y
September 2015
Equipment Co., Ltd.
Lu Jianzhong Ningbo Lehui International Independent Director Y
March 2016
Construction Equipment Co., Ltd.
Lu Jianzhong Shanghai Mingzhi Electric Co., Ltd. Independent Director October 2017 Y
Lu Jianzhong COSCO Maritime Transport Independent Director Y
January 2018
Development Co., Ltd.
Hong Tianfeng Shanghai Fangguang Investment Executive Director February 2012 Y
Hikvision 2017 Annual Report
Compensation
Position in other Commencement of Termination of and allowance
Name Name of other Entity
entity the term the term from the other
entities
Management Co., Ltd.
Hong Tianfeng Shanghai Fangguang Venture N
Investment Management Partnership Managing Partner February 2012
Enterprise (Limited Partnership)
Hong Tianfeng Shanghai Fangguang Venture
N
Investment Partnership Enterprise Managing Partner August 2012
(Limited Partnership)
Hong Tianfeng Shanghai Fangguang Erqi Venture
N
Investment Partnership Enterprise Managing Partner September 2016
(Limited Partnership)
Hong Tianfeng Suzhou Fangguang Venture
N
Investment Management Partnership Managing Partner September 2012
Enterprise (Limited Partnership)
Hong Tianfeng Suzhou Fangguang Venture
N
Investment Partnership Enterprise Managing Partner September 2012
(Limited Partnership)
Hong Tianfeng Suzhou Fangguang Venture
N
Investment Phase 2 Partnership Managing Partner July 2016
Enterprise (Limited Partnership)
Hong Tianfeng Shenzhen Pengfenghui Venture Executive Director &
June 2014 N
Investment Co., Ltd. General Manager
Hong Tianfeng Shenzhen Fangguang Enterprise Executive Director &
May 2016 N
Management Consulting Co., Ltd. General Manager
Hong Tianfeng Sannuo Biology Sensor Co., Ltd. Director September 2013 Y
Hong Tianfeng Shenzhen YunZhiXun Network Director N
May 2014
Technology Co., Ltd.
Hong Tianfeng Shanghai Chuangyuan Equipment Director N
August 2014
Technology Co., Ltd.
Hong Tianfeng Jiangsu JiTaiKe Electrics Co., Ltd. Director July 2015 N
Hong Tianfeng Shanghai Baishitong Information Director N
September 2016
Technology Co., Ltd.
Hong Tianfeng Zhongwei Dahe Cloud Connection
Director November 2016 N
Network Technology Co., Ltd.
Hong Tianfeng Shenzhen DongFengMingTu N
Supervisor August 2016
Enterprise Management Co., Ltd.
Hikvision 2017 Annual Report
Compensation
Position in other Commencement of Termination of and allowance
Name Name of other Entity
entity the term the term from the other
entities
Hong Tianfeng Changjiang Shidai Mobile Resale September
Director June 2014 N
Communication Co., Ltd.
Hong Tianfeng Shanghai HuaCe Navigation N
Director February 2015 January 2018
Technology Co., Ltd.
Hong Tianfeng Shenzhen Fuzhi Software Technology Director N
November 2016 May 2017
Co., Ltd.
Cheng Huifang Kings Resources Group Co., Ltd Independent Director March 2014 Y
Cheng Huifang Zhejiang FuRun Co., Ltd Independent Director April 2014 Y
Cheng Huifang Hangzhou HangYang Co., Ltd. Independent Director January 2016 Y
Cheng Huifang Zhejiang HuaCe Media Co., Ltd. Independent Director February 2016 Y
Cheng Huifang Zhejiang Commercial Bank Co., Ltd. External Supervisor June 2016 Y
Cheng Huifang Quzhou NanGaoFeng Chemical Co., Independent Director Y
March 2017
Ltd.
Wang Qiuchao Zhejiang T&C Law Firm Partner - Y
Wang Qiuchao SanBian Sci-Tech Co., Ltd. External Supervisor August 2014 Y
Wang Qiuchao Zhejiang JingSheng Mechanical & Independent Director Y
April 2015
Electrical Co.,ltd
Wang Qiuchao Zhejiang KaiShan Compressor Co., Independent Director Y
May 2015
Ltd.
Wang Qiuchao Hanjia Design Group Co., Ltd. Independent Director July 2015 Y
Jia Yonghua Hangzhou Confirmwaref Technology Director N
November 2016
Co., Ltd.
Zheng Yibo Zhejiang TuXun Technology Co., Director N
December 2016
Ltd.
Incumbent and off-office directors, supervisors and senior management personnel during the reporting period that
have been imposed administrative penalties by the CSRC during the last three years.
□ Applicable √ Inapplicable
IV. Remuneration of directors, supervisors and senior management personnel
The decision-making program, determination basis and actual remuneration payment of directors, supervisors and
senior management personnel:
The remuneration of directors, supervisors and senior management personnel will be received preliminarily by
the Remuneration and Appraisal Committee of the Board, among them, remuneration of independent directors
and external supervisors would be further reviewed and approved by general meeting of shareholders. As for
Hikvision 2017 Annual Report
those directors (exclude independent directors), supervisors (exclude external supervisors) and senior
management personnel who receive remuneration from the Company directly, they will receive remuneration
according to the Company’s current Salary System and Performance Appraisal Schemes.
Remuneration of directors, supervisors and senior management personnel
Unit: RMB 0,000
Total remuneration Remuneration
Name Title Gender Age Tenure status from the Company from related
(RMB'0,000) parties (Y/N)
Chen Zongnian Chairman M 53 Incumbent 0 Y
Gong Hongjia Vice Chairman M 53 Incumbent 0 Y
Liu Xiang Director M 46 Incumbent 0 Y
Hu Yangzhong Director, General Manager M 53 Incumbent 300.00 N
Director, Standing Deputy M Incumbent N
Wu Weiqi 54 283.75
General Manager
Cheng Taizong Independent Director M 66 Incumbent 15.00 N
Lu Jianzhong Independent Director M 64 Incumbent 15.00 N
Wang Zhidong Independent Director M 51 Incumbent 15.00 N
Hong Tianfeng Independent Director M 52 Incumbent 15.00 N
Cheng Huifang Supervisor Chairman F 65 Incumbent 10.00 N
Wang Qiuchao External Supervisor M 67 Incumbent 10.00 N
Chen Junke Employee Supervisor M 47 Incumbent 180.52 N
Jiang Haiqing Deputy General Manager M 49 Incumbent 240.00 N
Zheng Yibo Deputy General Manager M 56 Incumbent 165.00 N
Cai Dingguo Deputy General Manager M 51 Incumbent 201.00 N
He Hongli Deputy General Manager F 45 Incumbent 205.50 N
Fu Baijun Deputy General Manager M 46 Incumbent 208.33 N
Xu Lirong Deputy General Manager M 55 Incumbent 171.00 N
Zhou Zhiping Deputy General Manager M 53 Incumbent 171.00 N
Jiang Yufeng Deputy General Manager M 47 Incumbent 232.92 N
Jin Duo Deputy General Manager M 53 Incumbent 208.33 N
Deputy General Manager, Incumbent N
Jin Yan person in charge of finance F 39 219.33
and accounting
Jia Yonghua Deputy General Manager M 41 Incumbent 205.17 N
Hikvision 2017 Annual Report
Total remuneration Remuneration
Name Title Gender Age Tenure status from the Company from related
(RMB'0,000) parties (Y/N)
Li Pan Deputy General Manager M 40 Incumbent 205.17 N
Cai Changyang Deputy General Manager M 47 Incumbent 219.33 N
Deputy General Manager N
Huang Fanghong Board Secretary F 36 Incumbent 219.33
Internal audit director
Xu Ximing Deputy General Manager M 45 Incumbent 391.20 N
Bi Huijuan Deputy General Manager F 47 Incumbent 245.00 N
Share incentives for directors, supervisors and senior executives in the Reporting Period
√ Applicable □ Inapplicable
Unit: share
Price for
Restricted
Shares vested in Shares newly restricted Restricted
Shares held at
Name Title the current granted in the shares granted Shares held at
the beginning
period current period (RMB per period-end
of the period
share)
Director, General
Hu Yangzhong 292,500 117,000 160,500 12.63 336,000
Manager
Director, Standing Deputy
Wu Weiqi 261,000 104,400 148,500 12.63 305,100
General Manager
Jiang Haiqing Deputy General Manager 225,000 90,000 123,000 12.63 258,000
Zheng Yibo Deputy General Manager 202,500 81,000 0 12.63 121,500
Cai Dingguo Deputy General Manager 202,500 81,000 109,500 12.63 231,000
He Hongli Deputy General Manager 193,500 77,400 138,000 12.63 254,100
Fu Baijun Deputy General Manager 193,500 77,400 196,500 12.63 312,600
Xu Lirong Deputy General Manager 193,500 77,400 109,500 12.63 225,600
Zhou Zhiping Deputy General Manager 193,500 77,400 109,500 12.63 225,600
Jiang Yufen Deputy General Manager 202,500 81,000 123,000 12.63 244,500
Jin Duo Deputy General Manager 0 0 109,500 12.63 109,500
Jin Yan Deputy General Manager 0 0 174,000 12.63 174,000
Jia Yonghua Deputy General Manager 0 0 109,500 12.63 109,500
Li Pan Deputy General Manager 0 0 109,500 12.63 109,500
Cai Changyang Deputy General Manager 0 0 109,500 12.63 109,500
Bi Huijuan Deputy General Manager 0 0 150,000 12.63 150,000
Total -- 2,160,000 864,000 1,980,000 -- 3,276,000
Hikvision 2017 Annual Report
Note：
(1) This personnel listed above are executives who were included in 2014 restricted shares incentive plan and 2016 restricted shares
incentive plan.
(2) The 2016 restricted incentive shares proposal was completed during the reporting period. The granted date of 2016 restricted
incentive shares scheme was December 23rd, 2016, and the listing date of the granted restricted shares was January 20th 2017.
(3) During the reporting period, in respect of changes in the number of shares due to the implementation of equity distribution for
2016, the number of shares at the beginning of the period, number of shares vested during the current period, and shares granted
during the current period in the above chart have been adjusted accordingly.
V. Staff in the Company
1. Statistics of employees, professional structure of the staff, and educational background
Number of incumbent employees in the parent Company 12,758
Number of incumbent employees in major subsidiaries 13,572
Number of incumbent employees 26,330
Number of employees receiving salaries in current period 26,330
Number of retired employees requiring the parent Company and its subsidiaries to bear costs
Professional structure
Tier Number of employees (ppl)
Administrative staff
Engineers 13,085
Sales staff 4,999
Functional staff
Production staff 6,945
Total 26,330
Educational background
Education background Number of employees (ppl)
Master and/or doctor/or above 3,818
Bachelor 13,838
Junior College (professional training) 2,067
Other 6,607
Total 26,330
2. Staff remuneration policy
Hikvision applies scientific talent cultivation methods, effective talent incentive mechanisms and fair
competition platforms to recruit talents, and continuously optimizes the talent structure. The Company provides
Hikvision 2017 Annual Report
employees with remuneration packages which are competitive in the industry. In addition to endowment insurance,
medical insurance, unemployment insurance, employment injury insurance, maternity insurance and housing
provident funds, the Company provides employees with the supplementary commercial insurance, medical
subsidies, travel and communication allowances and other special allowances, and offers interest-free housing
loans to qualified employees. It creates a fairer and more humanized working environment for each employee so
that each employee is able to demonstrate his/her value, and creates value to satisfy increasing demands for a
good life.
3. Staff training plans
The Company is committed to create a viable training system, focus on key personnel training and cultural
transmission, and establish learning organizations. In terms of key items such as systematic training of new
employees, leader fostering and reserve, the Company has carried out continuous key construction and investment.
In 2017, the Company continuously optimized and upgraded new employee training and gradually improved the
three-tier management and control model, with the new employee training coverage rate exceeding 95%. In terms
of manager training, the Company has established a sound hierarchical management project training system,
comprehensively changed the grass-roots manager projects, promoted improvement in the ability of managers at
different levels, with the accumulated coverage rate of management training projects reaching 80%; in addition, in
terms of improvement and development of internal learning resources, the Company has developed specific
characteristic courses and cases of Hikvision according to the competency model, connected business modules
and realized uniformization of competency training; in terms of improvement in lecturer team building, the
Company has used standardized selection, education, employment and retention processes to establish a lecturer
team. Through scientific selection, systematic training and rigorous certification, the lecturer team begins to take
shape and carries forward the excellent management heritage of Hikvision.
In the future, the Company will still insist on the target of building of a viable training system, construct a
competency training system covering personnel ranging from new employees to grass-roots managers and then to
senior and middle-level managers. It will take professionalism as the primary requirement for teams and provide
Hikvision employees with more support in learning and development.
4. Labor outsourcing
□ Applicable √ Inapplicable
Hikvision 2017 Annual Report
Section IX Corporate Governance
I. Basic situation of corporate governance
During the reporting period, in accordance relevant laws and regulations, and regulatory and regulatory
documents from supervision department, i.e. Company Law（公司法）, Securities Law（证券法）, Code of
Corporate Governance for Listed Companies in China（上市公司治理规则）, Listing Rules of Shenzhen Stock
Exchange Stock（深圳证券交易所股票上市规则）, Guidelines of the Shenzhen Stock Exchange for the Standard
Operation of Listed Companies on the Small and Medium-sized Enterprise Board （深圳证券交易所中小板上市
公司规范运作指引） , the Company constantly improved its corporate governance, optimized the internal
management, improved the standardized operation level, fulfilled the obligation of information disclosure, and
strengthened and protected the legal rights and interests of investors.
During the reporting period, the improvement of corporate governance is mainly reflected in the following
aspects:
1. The Company continuously optimizes internal management systems to take into consideration its business
development and market environment change. It has successively optimized internal management systems,
amended, improved and enhanced Standardization of the Employee Code of Business Conduct. It has created a
healthy, orderly external and internal operating environment and sufficiently maintained its excellent brand image
and reputation. It has comprehensively amended the Fund Payment and Settlement System, so as to enhance
capital efficiency and internal control, define approval authority procedures and effectively control costs, expenses
and risks. It has optimized and adjusted the Performance Management System, in order to effectively support
decomposition and achievement of the strategic target of the Company, continuously enhance the performance of
employees and organizations and maintain the sustainable competitiveness of the company.
2. Continuous enhancement of internal control and process management. External audit and the Company’s
internal audit team jointly and comprehensively reviewed internal control and management systems, and
identified imperfections in management and system implementation in a timely manner. They continuously
followed up treatment and promoted improvement in internal control of the Company. Strategy oriented, the
Company adopted procedure revolution management based on business and business support, defined the process
architecture, organization fit and management mechanisms, continuously optimized processes and realized
Hikvision 2017 Annual Report
structure management of business processes.
3. Continuous improvement on good interactions for investor relations. After each periodic financial report
disclosure, the Company took the initiative to hold a public performance briefing (including conference call,
Web-meeting), hosted periodic investor receptions; actively listened to investors' opinions and suggestions to form
good interactions between the Company and investors, forming a positive interaction. After the above events, the
Company also timely released Investor Relations Activity Record Form to ensure that all investors have fair access
to the Company’s information. In routine duties, the company also communicates with investors through various
channels such as telephone, email and interactive platform in order to maintain long-term trust relationship between
investors and Company.
During the reporting period, the Company's information disclosure was approved by the regulatory authorities: the
Company has been awarded A-level appraisal by Shenzhen Stock Exchange information disclosure evaluation for
small-medium enterprises for 7 consecutive years. The company has also received some honors in the capital
market: “Chinese Listed Companies Investor Relations Tianma Award - Best Board of Directors in China Small and
Medium Board Listed Company Investor Relations” by Securities Times and China Fund; \"Golden Bull 2016
Listed Companies-Valuable Investment\", \"Golden Bull Best Management for Investor Relations” in the 19th
Golden Bull Award for listed companies by China Securities News; \"Top 10 of the Top 50 Chinese Small and
Medium Board Listed Companies in Value\", \"Top 10 Management Team of Chinese Small and Medium Board
Listed Companies (Top 3)\" in the 11th Chinese Listed Companies Value Award by Securities Times and China
Fund; “A-share Listed Company Industry Champion” and “Best A-share Listed Companies” by “Future Value
Ranking of A-share Listed Companies in 2017”sponsored by Value Line Magazine and China Economic Net.
\"Best Board of Directors” in the 7th reputation ranking of Chinese listed companies sponsored by National Business
Daily; and “CCTV China’s Top Ten Listed Companies in 2017\" by China Central Television.
Any significant incompliance for the relevant regulatory documents issued by China Securities Regulatory
Commission in respect of corporate governance:
□ Yes √ No
II. Company’s Independence in Businesses, Management, Assets, Institutions and Finance from
Controlling Shareholders
The Company is completely independent in business, management, assets, organization, and finance from its
Hikvision 2017 Annual Report
shareholders. The Company has established a sound internal control system, being capable of operating
independently with its complete and independent business.
(1) Business independence: The Company has its own production, purchases and sales systems, which
are completely independent from controlling shareholders. Therefore, there is no competition among
the Company, controlling shareholders, and related parties.
(2) Personnel independence: The Company has independent personnel. The management has set up
various independent departments, including R&D, production, administration, finance and operation
management divisions, etc., and established complete management methods for labor, personnel,
and salary management. Personnel of the Company are independent from controlling shareholders,
e.g. the Chairman is elected through the general meetings of the Board. In addition, the General
Manager, Deputy General Managers, the Secretary of the Board, CFO, and other senior management
personnel of the Company are only employed and remunerated by the Company, and do not hold
any position in controlling shareholders and is not remunerated by controlling shareholders.
Directors, Supervisors and Senior Management Personnel are appointed through legal procedures
strictly in accordance with relevant regulations stipulated in Company Law and Articles of
Association. There is no controlling shareholder intervention in the Company’s personnel decisions
in general meetings of the Board or shareholders.
(3) Asset Completeness: The property rights of assets are explicitly between the Company and the
controlling shareholders, and no assets, funds, or other resources owned by the Company are
illegally and irregularly occupied or controlled by the controlling shareholders. Assets of the
Company are integrated, including complete property rights of fixed assets for production,
supporting assets for production, and intangible assets of patents, etc. The Company has the full
control and ownership of all assets.
(4) Independence in organizations: The Company’s Board, Supervisor Committee, Management and
other internal organizations operates independently, and each functional department is independent
from controlling shareholders in duty and personnel. There is no superior-subordinate relation
between functional departments of controlling shareholders and those of the Company, which would
have an impact on the Company’s independent operations.
(5) Financial Independence: The Company has established an independent financial department, as
well as a sound and independent financial and accounting system. The Company makes financial
decisions independently. There is no controlling shareholder intervention in the Company’s financial
and accounting activities. The Company has maintained accounts with banks independently of and
do not share any bank account with our Controlling Shareholders. The Company has undertaken
independent tax registration in accordance with applicable laws, and paid tax independently.
Hikvision 2017 Annual Report
III. Horizontal competition
□ Applicable √ Inapplicable
IV. Annual General Meeting and Extraordinary General Meetings convened during the
Reporting Period
1. Annual General Meeting convened during the reporting period
Proportion
of
Meeting Nature Convened Date Disclosure Date Disclosure Index
participating
investors
Annual General Public Announcement:
2016 Annual General Meeting 70.01% May 4th 2017 May 5th 2017
Meeting No. 2017-022
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ Inapplicable
V. Performance of duties by independent directors during the reporting period
1. Attendance of independent directors in board meetings and general meetings
Attendance of independent directors in board meetings and general meetings
Presence of
Board meeting Board Board meeting Board meeting
independent
Name of presence meeting presence by Board meeting Board meeting not attend in
directors in
Independent required in the presence telecom- presence through absence person for two
general
Director reporting on site communication a proxy (times) (times) consecutive
meetings
period (times) (times) (times) times
(times)
Cheng Tianzong 6 1 5 0 0 N
Lu Jianzhong 6 1 5 0 0 N
Wang Zhidong 6 1 5 0 0 N
Hong Tianfeng 6 1 5 0 0 N
2. Objections from independent directors on related issues of the Company
Were there any objections on related issues of the Company from independent directors?
□ Yes √ No
Hikvision 2017 Annual Report
3. Other details about the performance of duties by independent directors
Were there any suggestions from independent directors accepted by the Company?
√ Yes □ No
Details: During the Reporting Period, independent directors strictly followed related rules, regulations,
including Company Act(《公司法》), Guidance of Board of Directors for Listed Compaies (《关于在上市公司建
立 独 立 董 事 的 指 导 意 见 》 ), Shenzhen Stock Exchange Place Standardized Operational Guidance on
Small-and-Medium Size Listed companies 《深圳证券交易所中小企业板上市公司规范运作指引》), the Articles
Association (《公司章程》), and Regulations on Independent Directors (《独立董事工作条例》). They focused
on the Company operation, carried out their duties independently and imparted considerable professional advice on
improving the Company’s systems, daily operations and decision making. They provided fair advice during the
Reporting Period and played an effective role in improving the Company supervisory systems and protecting the
legal rights of the Company and the shareholders as a whole. For details, please refer to Independent Directors’
2017 Debriefings disclosed on www.cninfo.com.cn.
VI．Performance of duties by special committees under the Board during the Reporting Period
1. Strategy Committee
During the reporting period, the Strategy Committee has studied and put forward a proposal regarding to
significant investment decisions, and carried out inspection and evaluation on the implementation situation of the
above matters. Meanwhile, the Strategy Committee listened carefully to the senior management’s report on the
operation and development of each module of the Company, actively discussed long-term strategic development
plans of the Company in the future in accordance with industrial characteristics and developmental stage combing
with production and operation situation of the Company, and provided valuable and constructive suggestions for
steady development of the Company.
2. Audit Committee
During the reporting period, the Audit Committee carefully audited financial information of the Company
and disclosure of such information, proposed selection and appointment of external audit organizations, took
charge of communication between internal and external auditors and supervised construction and implementation
of internal audit systems of the Company. During the reporting period, the Audit Committee carefully considered
Hikvision 2017 Annual Report
the annual audit summary report of the external audit organization, carefully listened to relevant reports of the
internal audit department, audited the scientificity, rationality, effectiveness and implementation of internal
control systems of the Company, branches and subsidiaries, and put forward guiding opinions for diligence and
performance assessment of internal auditors.
3. Nomination Committee
During the reporting period, the Nomination Committee carefully reviewed the selection standard and
procedure of directors and senior management members. Upon expiry of the term of office of the third session of
the Board of Directors, it communicated with relevant departments of the Company, investigated requirements of
new directors and senior management members, and actively reviewed resumes and qualifications of candidates
for directors and senior management members, and practically performed responsibilities as nomination
committee.
4. Remuneration and Appraisal Committee
During the reporting period, the Remuneration and Appraisal Committee carefully reviewed remuneration
policies of directors and senior management members and put forward professional opinions on appraisal
standards for the aforesaid personnel; reviewed and considered the remuneration and performance assessment
scheme for 2017, followed up and supervised implementation of the scheme; considered matters relating to
second unlocking of restricted shares for 2014 and put forward guiding opinions.
VII. Performance of duties by the Supervisory Committee
Were there any risks to the Company identified by Supervisory Committee when performing its duties during the
Reporting Period?
□ Yes √ No
The Supervisory Committee of the Company will strictly abide by provisions of the Company Law, Standard
Operation Guidelines on Enterprises Listed on SMEs Board at Shenzhen Stock Exchange, Articles of Association,
Rules of Procedures of Supervisory Committee, and relevant laws, regulations and rules, diligently perform its
duties, supervise the legalization and standardization of the corporate finance and directors and senior
management personnel when executing their positions, and practically safeguard the legitimate rights and interests
of the Company, staff and shareholders.
In 2017, the Company's Board of Supervisors convoked a total of 4 meetings, and reviewed a total of 14
proposals which mainly involved in aspects of the Company’s daily operation, financial information and its
Hikvision 2017 Annual Report
disclosure, and vesting of restricted incentive share plan, and etc., for details or Supervisory Committee
resolutions, please refer to www.cninfo.com.cn. Meanwhile, the Company’s Supervisory Committee also
organized one special meeting, performed on-site research on Tonglu manufacture base, listened to the senior
management’s report on the operation and development of each module of the Company, deeply understood the
measures of Company's operational and financial situation, the establishment and implementation of internal
control system, and protection of employees’ rights and interests, etc.
Supervisory Committee’s opinions on relevant matters in 2017:
1. Normative Operation Conditions of the Company
During the reporting period, the Supervisory Committee members have supervised the Company's daily
operation situation by means of attending the board meeting and the shareholders' meeting, listening to and review
special report, interview and other forms. The Board of Supervisors believes that the Company has established a
fairly sophisticated internal control system, all significant decisions are scientific and reasonable, and
decision-making processes are legal. Directors and senior management personnel of the Company are diligent and
responsible when executing duties; and behaviors of violating laws and regulations, damaging interests of the
Company and legitimate rights and interests of shareholders were not found.
2. Checking the financial situation of the Company
During the reporting period, the Supervisory Committee carefully listened to reports of annual financial
works by person in charge of finance and accounting, understood audit work arrangement of external auditors, and
the Supervisory Committee believes that preparation and deliberation procedure of the Company's periodic report
conforms to provisions of laws, administrative regulations and CSRC (China Securities Regulatory Commission)
regulations, the report contents truly, correctly and completely reflects actual conditions of the Company, and is
free of any false record, misleading statement or significant omission. There is no behavior violating
confidentiality provisions founded for personnel who participated in preparation and deliberation procedure of
periodic reports.
3. Self-evaluation report about internal control of year 2017
During the reporting period, the Supervisory Committee has listened to reports regarding construction and
implementation situations for the internal control system of the Company and its branches and subsidiaries by
Internal Audit Department, Process Management Department and other relevant departments. After a careful
study and discussion, the Supervisory Committee believes that the Company has established a fairly sophisticated
Hikvision 2017 Annual Report
internal control system which conforms to relevant national laws and regulations and fulfills the actual demand of
the Company's production and operation management, obtained effective implementation, and has played a role in
risk prevention and control effect on each section of the Company's production and operation management. The
Board of Directors’ self-evaluation report about internal control can truthfully and objectively reflect the internal
control system construction and operation conditions of the Company.
4. External Guarantee Situation of the Company
During the reporting period, the Supervisory Committee has carefully listened to the reports by the person in
charge of finance and accounting, understood about demand of guarantees items and relevant implementation
situations of the Company and its subsidiaries, and researched and reviewed relevant proposals regarding
guarantees provided for subsidiaries by the Company. The Supervisory Committee believes that: The Company
provides guarantees for subsidiaries, which fully meets fund demand for its production and management, and is
beneficial to further improve its production and operation abilities. The financial risk of the guarantee provided by
the Company is in the controllable scope of the Company, and has no significant impact on normal operation of
the Company. For guarantees provided to subsidiaries not wholly-owned by the Company, the minority
shareholders will not provide proportional guarantees, however, those subsidiaries all have good business
prospects and the Company has control power on the subsidiaries’ operation and finance, So there's basically no
risk in providing a guarantee. There is no contravention between relevant provisions of CSRC and Articles of
Association. The guarantee conforms to interests of the Company and general shareholders, and won't have any
adverse effect on the Company.
5. Related-party transactions of the Company
During the reporting period, the Supervisory Committee has supervised decision-making process and
follow-up performance of daily related-party transactions of the Company by means of attending board meetings
and interviewing the senior management personnel. The Supervisory Committee believes that related-party
transactions happened to the Company are subject to the principles of voluntariness, fairness and reasonableness,
and consensus of the transaction parties, and conform to relevant laws and regulations and provisions of Articles
of Association. The Board of Directors reviewed related-party transactions according to legal procedures, related
directors avoid votes; and the decision-making processes of related-party transactions are legal and compliant.
There is no situation damaging interests of the Company and medium and small shareholders.
6. Implementation of resolutions of shareholders' meeting
Hikvision 2017 Annual Report
During the reporting period, the Supervisory Committee has carefully reviewed each proposal of the
shareholders' meeting submitted by the Board of Directors, and further inspected practical implementation of each
proposal. The Supervisory Committee believes that the Company's Board of Directors can diligently perform
relevant resolutions of the Shareholders' Meeting.
7. Restricted share plan of the Company
During the reporting period, the Supervisory Committee has researched and reviewed relevant proposals of
the 2nd vesting of 2014 restricted share plan. The Supervisory Committee believes that pursuant to the relevant
provisions in the Company’s 2014 Restricted Share Proposal, vesting conditions for the 2nd vesting period of
2014 Restricted Share Proposal were fulfilled; and it agrees to conduct 2nd vesting of 2014 Restricted Share in
accordance with relevant provisions in 2014 Restricted Share Proposal.
The Supervisory Committee inspected and verified the reasons, quantity, and price of the Company’s repurchase
and cancellation of restricted shares, and believes that: pursuant to the relevant provisions in the Company’s 2014
Restricted Share Proposal, due to various reasons i.e. demission of partial grantees and fail to qualify for 2016
personal performance appraisal results, the Company decided to repurchase and cancel entire or partial of the
granted and unvested restricted shares, totaled in 1,594,641 shares. The above repurchase and cancellation of
restricted shares is legal and effective, complying with the Company’s 2014 Restricted Share Proposal and
relevant laws, regulations and provisions.
At the same time, the Supervisory Committee conducted special review on the List of Grantees Qualified for
the 2nd Unlocking Period of 2014 Restricted Share proposal, and believes: the Company’s 1068 grantees are
qualified for the 2nd Unlocking Period of 2014 Restricted Share proposal; and the Supervision Committee agreed
that the Company could process unlocking procedures for the above grantees.
During the Reporting Period, the Company strictly followed relevant rules and regulations, strengthened
registration management of information insiders and inside information confidentiality management in preparation
of periodic reports, resolution and disclosure, and planning, implementation and announcement of significant
affairs, and other matters related to the Company’s inside information. The Company truthfully filled in and
submitted the Registration Form for Information Insiders, and reported to Shenzhen Stock Exchange Place in a
timely manner.
Hikvision 2017 Annual Report
VIII. Assessment and incentive mechanism for the senior management
The Company has established a fairly sophisticated mechanism on employees’ evaluation and incentive
restraint, and has established a fair and transparent appraisal and incentive mechanism on senior management
personnel and other various level management personnel and employees. The Company’s board of directors has
carried out annual appraisals of senior management members mainly based on annual target achievement index.
The Board is responsible for appraisals of the general manager on the general manager’s duty, capacity and
performance of operation; and the general manager carried out appraisals of other senior management members on
their operational management and implementation of relevant assignments.
In the year 2017, senior management personnel carried out their duties diligently with good performance, and
fairly completed their objectives and missions set out at the beginning of the year.
Hikvision 2017 Annual Report
IX. Evaluation report on internal control
1. Any significant internal control deficiencies during the reporting period
□ Yes √ No
2. Self-evaluation report on internal control
Disclosure date of full text of self-evaluation report on internal control April 21st 2018
Disclosure index of full text of self-evaluation report on internal control www.cninfo.com.cn
Proportion of assets evaluated in total assets 100.00%
Proportion of revenue evaluated in total revenue per consolidated financial statement 100.00%
Recognition standard of deficiencies
Nature Financial report level Non-financial report level
Significant deficiency:
A deficiency or a combination of deficiencies in internal control may prevent significant Internal control deficiencies at non-financial report level are
errors in financial reports from being identified or prevented, e.g.: mainly identified by the likelihood of occurrence and the
A. Invalid internal control environment; extent of impacts on operating effective in business.
B. Fraud of directors, supervisors and senior management personnel on the financial report ; Significant deficiency: the high likelihood leading to
C. Significant errors identified by external auditors but not identified during the Company is significant reduction of working efficiency, or significant
operating; increase of uncertainty, or significant deviation from the
D. Invalid supervision of audit committee and internal audit system; expected target;
Qualitative criteria E. Other deficiencies that may lead to the wrong judgement of financial statement reporter. Important deficiency: a higher likelihood leading to
Important deficiency: remarkable reduction of working efficiency, or remarkable
A deficiency or a combination of deficiencies in internal control may prevent errors in increase of uncertainty, or remarkable deviation from the
financial report from being identified or prevented, although such deficiency is not expected target;
significant, but require attention of the Board and Management, e.g.: Normal deficiency: a low likelihood leading to reduction of
A. Application of accounting policies does not follow the enterprise accounting standard; working efficiency, or increase of uncertainty, or deviation
B. No internal control systems for fraud; from the expected target;
C. No control systems or system not effective for unusual or special transactions or no
compensatory relevant control;
Hikvision 2017 Annual Report
D. One or more deficiencies which prevent the preparation of true and fair financial
statements.
Normal deficiency: Not significant and not important deficiency.
Significant deficiency potential errors 5% or more of total profits direct losses of assets is 5% or more of total profits
potential errors 2% or more but below 5% of total
Quantitative criteria Important deficiency: direct losses of assets is over 2% but below 5% of total profits
profits
Normal deficiency: potential errors is 2% or less of total profits direct losses of assets is below 2% of total profits
Number of significant deficiencies in financial report level
Number of significant deficiencies in non-financial report level
Number of important deficiencies in financial report level
Number of important deficiencies in non-financial report level
Hikvision 2017 Annual Report
X．Audit report or assurance report on internal control
□ Applicable √ Inapplicable
Audit Report on Internal Control
Audit Opinion paragraph in Audit Report on Internal Control
We believe that, as of December 31st 2017, Hangzhou Hikvision Digital Technology Co., Ltd. has maintained effective internal
control on financial reports in accordance with Basic Norms for Enterprise Internal Control and relevant regulations.
Disclosure of Audit Report on Internal Control Disclosed
Date of disclosure for full text Audit Report on Internal Control April 21st 2018
Disclosure index of full text of Audit Report on Internal Control 2017 Internal Audit Report on www.cninfo.com.cn
Opinion on Internal Control Audit Report standard and unqualified opinion
Whether there is significant deficiencies regarding non-financial reports NO
Whether the CPA Firm issued modified audit opinions on Internal Control Audit Report.
□ Yes √ No
Whether the opinions in Internal Control Audit Report issued by CPA firm is consistent with the opinions in the self-evaluation report
on internal control issued by board of directors
√ Yes □ No
Hikvision 2017 Annual Report
Section X Corporate Bonds
Whether the Company has publicly issued corporate bonds on stock exchange place, which has not terminated or terminated but fail
to collect the full payment before the annual report authorized disclosure date.
No
Hikvision 2017 Annual Report
Section XI Financial Report
I. Audit report
Audit Opinion Unmodified unqualified audit opinion
Audit Report sign-off Date April 19th 2018
Audit Institution Name Deloitte Touche Tohmatsu Certified Public Accountants LLP
Audit Report Number Deloitte Auditors’ Report (Audit) No. 18-P02957
Certified Public Accounts Name Mou Zhengfei, Huang Yan
To all shareholders of Hangzhou Hikvision Digital Technology Co., Ltd.:
I. Audit Opinion
We have audited the accompanying financial statements of Hangzhou Hikvision Digital Technology
Co., Ltd. (hereinafter referred to as “Hikvision\"), including consolidated and parent company's balance
sheet as of December 31st 2017, consolidated and parent company's income statement, cash flow
statement and statement of changes in owners’ equity of 2017 as well as relevant financial notes to
financial statements.
In our opinion, the financial statements annexed have been prepared in accordance with Accounting
Standards for Business Enterprises in all material respects and they present fairly the consolidated and
parent company’s financial position of Hikvision as of December 31st 2017 and consolidated and
parent company’s financial performance and cash flows of 2017.
II. Basis of Opinion
We have conducted our audit in accordance with the Auditing Standards for Chinese Certified Public
Accountants. “Responsibilities of Certified Public Accountants for Financial Statements Audit” in the
Audit Report further states our responsibilities under the standards. As per the code of ethics of
Chinese certified public accountants, we are independent from Hikvision and have implemented other
responsibilities as required by the code of ethics. We believe that the audit evidence we have acquired
is sufficient and appropriate to provide a basis for our audit opinion.
III. Key Matters
Key matters are matters we deem the most significant to the financial statements audit for the current
period based on our professional judgment. These matters are handled based on the financial
statements audit as a whole and the audit opinion formed accordingly. We don’t present opinions
separately on these matters. We confirm that the following matters are key matters to be communicated
through in the audit report.
(I) Recognition of Sales Revenues
Hikvision 2017 Annual Report
Description:
As shown in Note (V) (40) and Note (XIV) (1), the operating revenue in 2017 in the consolidated
financial statements of the Group for the year ended December 31st 2017 is RMB 41,905.48 million.
The product sales revenue, a key performance indicator, reaches RMB 39,364.68 million, which is a
significant amount, accounting for 93.94% of the operating revenue, and has a significant influence on
results of operations. The product sales revenue models include internal and external sales of products,
etc. There may be relevant risks of revenue recognition, as the point in time at which risks and rewards
are transferred is different under different revenue models. Therefore, we treat sales revenue
occurrence and cutoff as key audit matters.
Audit Measures:
Main audit procedures that we perform for the aforesaid key audit matters include:
(1) Understanding and evaluating design and implementation of key internal control in relation to
revenue recognition, and testing the effectiveness of its operation;
(2) For revenues under different sales models, selecting a sample to check a sales contract, reviewing
its main transaction terms, evaluating whether revenue recognition complies with requirements of
accounting policies of the Group and the Accounting Standards for Business Enterprises;
conducting a background investigation of important customers to check whether there is any
indication of existence of abnormal customers or transactions;
(3) Analyzing revenues and gross profits, based on product types, to understand whether there are
abnormal fluctuations in the revenues and gross profits for the year, and conducting a test of details
for identified specific transactions, through systematic analysis of revenue data, and reviewing
relevant supporting documents;
(4) Selecting sample(s) from product sales revenues recorded for the year, checking invoices, sales
contracts or orders, shipping orders, signature forms or customs declarations and other supporting
documents; carrying out an additional check of sample(s) under the selected external sales model
for customs declaration records; critically focusing on occurrence of sales revenue recognition and
whether they are recorded in the correct accounting period.
(II) Provision for Decline in Value of Inventories
Description:
As shown in Note (V) (7), as of December 31st 2017, the carrying amount of inventories in the
consolidated financial statements of the Group was RMB 5,134.64 million, and the provision for
diminution in value of inventories was RMB 194.30 million. The carrying value of the Group’s
inventories is relatively high, so the provision for diminution in value of inventories has a relatively
significant influence on the financial statements. As shown in Note (III) 11.3 and Note (III) 26 to the
financial statements, inventories are measured at the lower of cost and net realizable value, on the
balance sheet date. The provision for impairment of inventories is made when the net realizable value
is lower than the cost. Net realizable value is the estimated selling price for inventories less estimated
costs of completion to be incurred, estimated costs to make the sale and relevant taxes. As the
Hikvision 2017 Annual Report
management needs to use critical accounting estimates in determining the net realizable value of
inventories and the amount is significant, we treat the provision for diminution in value of inventories
as a key audit matter.
Audit Measures
Main audit procedures that we perform for the aforesaid key audit matters include:
(1) Understanding and evaluating design and implementation of key internal control in relation to
provision for diminution in value of inventories by the Company’s management, and testing the
effectiveness of its operation;
(2) Understanding the Group’s accounting policies for the provision for diminution in value of
inventories, evaluating whether identification of inventories by the management for which the
provision for diminution in value of inventories should be made is appropriate, and evaluating the
reasonableness of estimation of the net realizable value by the management;
(3) Testing the completeness and accuracy of data in the list of inventories for which the provision for
diminution in value of inventories should be made, based on which the Company’s management
estimates the provision for diminution in value of inventories, and recalculating the provision for
diminution in value of inventories;
(4) Selecting sample(s) from inventories to test the net realizable value. For the finished product selected
as a sample, comparing the book cost of the finished product with recent or subsequent actual selling
price; for raw materials and unfinished products selected as samples, comparing costs of completion
for the same type of raw materials and unfinished products and costs to make the sale for the period,
and evaluating the reasonableness of estimated cost of completion to be incurred, costs to make the
sale and relevant taxes;
(5) Performing the supervision procedure for inventory-taking of the Group, with focus on defective,
obsolete or slow-moving inventories, and checking whether there are inventories with an indication of
impairment which are not recorded.
IV. Other Information
Management of Hikvision shall be responsible for other information. Other information includes the
information covered in the annual report, excluding the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information and we do not express
any form of authentication conclusion on other information.
In connection with our audit of the financial statements, our responsibility is to read other information
and to consider whether other information is significantly misstated or materially inconsistent with the
financial statements or the information we learned during the audit.
Based on the works we have performed, if we determine that there is a material misstatement in other
information, we should report the fact. In this respect, we have nothing to report.
Hikvision 2017 Annual Report
V. Responsibility of the Management and Governance for the Financial Statements
The management of Hikvision is responsible for the preparation of financial statements in accordance
with Accounting Standards for Business Enterprises to achieve fair presentation, and design,
implementation and maintenance of necessary internal control to enable the financial statements are
free from material misstatement, whether due to fraud or error.
When preparing the financial statements, the management is responsible for assessing the
going-concern ability of Hikvision, disclosing issues related to going-concern as applicable, and
applying going-concern assumptions, unless the management plans to liquidate Hikvision, terminate
operation or has no other realistic choice.
The governance is responsible for supervising financial reporting processes of Hikvision.
VI. Responsibility of Certified Public Accountants on Audit of the Financial Statements
Our objective is to obtain reasonable assurance as to whether the overall financial statements are free
from material misstatement, whether due to fraud or error, and to issue audit report that contain audit
opinions. Reasonable assurance is a high level of assurance, but could not guarantee that an audit
performed in accordance with the Auditing Standards can always figure out any existing material
misstatements. Misstatements may be caused by fraud or error. Misstatement is generally considered to
be material if it is reasonably expected that the misstatement, alone or aggregated, may affect the users’
financial decisions based on the financial statements.
In performing the audit in accordance with the Auditing Standards, we applied professional judgment
and maintained professional skepticism. Meanwhile, we also perform the following duties:
(1) Identify and evaluate the risk of material misstatement of financial statements due to fraud or
error; design and implement audit procedures to cope with these risks, and obtain adequate
and appropriate audit evidence as the basis for expressing audit opinions. As fraud may
involve collusion, forgery, willful omission, misrepresentation or override of internal control,
the risk of not discovering a material misstatement due to fraud is higher than the risk of not
discovering a material misstatement due to error.
(2) Understand the internal control related to auditing as a way to design appropriate audit
procedures.
(3) Evaluate the properness of accounting policy selected by the management and the rationality of
accounting estimate and related disclosure.
(4) Reach a conclusion on whether the going concern assumption adopted by the management is
appropriate. Meanwhile, based on the audit evidence obtained, reach a conclusion on whether
there are material uncertainties in the events or conditions that may cast significant doubts on
Hikvision's ability to continue as a going concern. If we reach a conclusion that there is a
material uncertainty, the Auditing Standards require us to call the attention of the users of the
report to the relevant disclosures in the financial statements in the audit report. If the disclosure
is insufficient, we should issue modified audit opinions. Our conclusion is based on the
information available up to the date of the audit report. However, future events or conditions
may result in the failure of Hikvision to continue as a going concern.
Hikvision 2017 Annual Report
(5) Evaluate the overall presentation, structure and content (including the disclosure) of the financial
statements and evaluate whether the financial statements fairly reflect the related transactions
and events.
(6) Obtain adequate and appropriate audit evidence on the financial information of entity or business
activities of Hikvision so as to express audit opinions on the financial statements. We are
responsible for directing, supervising and executing the audit on the Group, and assume full
responsibility for the audit opinions.
We communicated with the governance about the scope of the audit, the schedule and major audit
findings, including the notable shortcomings of internal control identified during the auditing.
We also provide statement to the governance on the independence-related work ethics we follow, and
communicate with the governance on all relations and other matters that might be reasonably deemed
to influence our independence as well as relevant precautionary measures (as applicable).
We determine which of the matters we communicated with the governance are of the greatest
importance to the audit of financial statements of the current period so as to make them key matters.
We describe the matters in the audit report. We decide not to communicate on such matters in the audit
report unless the laws and regulations forbid the public disclosure of such matters, or, in rare
circumstances, if the negative consequence of communication of matters in the audit report is
reasonably expected to exceed the benefit of the public interest.
Hikvision 2017 Annual Report
At December 31st 2017
Consolidated Balance Sheet
Unit: RMB
Item Notes Closing balance Opening balance （Restated）
Current Assets:
Cash and bank balances (V)1 16,468,430,702.64 13,638,078,139.56
Financial assets at fair value through
(V)2 4,100,657.54 15,547,537.34
profit or loss
Notes receivable (V)3 3,636,961,616.03 2,843,404,415.52
Accounts receivable (V)4 14,705,210,072.81 11,243,843,324.90
Prepayments (V)5 527,576,857.11 279,023,207.91
Other receivables (V)6 583,681,240.81 528,639,081.79
Inventories (V)7 4,940,332,311.65 3,829,947,876.75
Non-current assets due within one
(V)8 66,566,230.12 -
year
Other current assets (V)9 3,720,449,532.88 4,153,992,276.78
Total Current Assets 44,653,309,221.59 36,532,475,860.55
Non-current Assets:
Available-for-sale financial assets (V)10 287,466,813.00 283,836,013.00
Long-term receivables (V)11 23,375,680.61 251,588,919.15
Long-term equity investment (V)12 130,474,733.58 35,000,000.00
Fixed assets (V)13 3,024,025,496.31 2,853,913,621.12
Construction in progress (V)14 1,436,319,118.30 316,482,522.36
Intangible assets (V)15 429,160,982.63 410,456,789.63
Goodwill (V)16 248,964,102.97 248,364,401.47
Deferred tax assets (V)17 479,070,649.49 375,310,938.70
Other non-current assets (V)18 858,796,668.13 40,999,684.42
Total Non-current Assets 6,917,654,245.02 4,815,952,889.85
Total Assets 51,570,963,466.61 41,348,428,750.40
Hikvision 2017 Annual Report
At December 31st, 2017
Consolidated Balance Sheet - continued
Unit: RMB
Item Notes Closing balance Opening balance (Restated)
Current Liabilities:
Short-term borrowings (V)19 97,114,655.91 32,291,324.85
Financial liabilities at fair value
(V)20 15,946,836.46 69,789,502.97
through profit or loss
Notes payable (V)21 845,397,427.92 876,804,536.72
Accounts payable (V)22 10,039,943,012.26 7,009,322,028.13
Receipts in advance (V)23 570,573,208.60 469,804,837.45
Payroll payable (V)24 1,391,291,256.90 1,084,951,139.10
Taxes payable (V)25 1,453,515,065.77 1,205,710,722.22
Dividends payable (V)26 94,857,139.16 20,105,831.16
Other payables (V)27 401,861,078.67 1,049,164,707.44
Non-current liabilities due within
(V)28 1,546,407,270.89 15,340,813.03
one year
Other current liabilities (V)29 744,583,627.22 300,177,750.17
Total Current Liabilities 17,201,490,579.76 12,133,463,193.24
Non-current Liabilities:
Long-term borrowings (V)30 490,000,000.00 1,722,207,584.33
Bonds payable (V)31 3,120,920,000.00 2,954,449,528.77
Long-term payables 2,437,038.62 7,000,000.00
Provisions (V)32 63,068,638.49 41,933,212.54
Deferred income (V)33 88,925,771.65 10,833,745.99
Total non-current liabilities 3,765,351,448.76 4,736,424,071.63
Total liabilities 20,966,842,028.52 16,869,887,264.87
Owners’ Equity
Share capital (V)34 9,228,865,114.00 6,102,706,885.00
Capital reserve (V)35 1,819,397,715.63 1,048,320,853.66
Less: Treasury stock (V)36 744,583,627.22 300,177,750.17
Other comprehensive income (V)37 (27,677,939.35) (41,230,777.21)
Surplus reserve (V)38 3,483,742,918.53 2,615,437,822.15
Retained profits (V)39 16,598,328,692.63 14,860,650,178.39
Total owners' equity attributable to
30,358,072,874.22 24,285,707,211.82
owner of the Company
Minority equity 246,048,563.87 192,834,273.71
Total owners' equity 30,604,121,438.09 24,478,541,485.53
Total liabilities and owners' equity 51,570,963,466.61 41,348,428,750.40
The accompanying notes form part of the financial statements.
The financial statements were signed by the following:
Legal Representative: Chen Zongnian；Chief Accountant: Jin Yan;
Person in Charge of the Accounting Organization: Jin Yan
Hikvision 2017 Annual Report
At December 31st, 2017
Balance sheet of the company
Unit: RMB
Item Notes Closing balance Opening balance
Current Assets:
Cash and bank balances 12,304,090,713.99 10,249,118,159.19
Financial assets at fair value through
- 5,284,890.86
profit or loss
Notes receivable 345,651,612.11 221,542,747.41
Accounts receivable (XV)1 12,505,683,317.78 10,128,753,520.42
Prepayments 94,545,948.67 8,256,040.04
Dividend receivables 2,550,000.00 -
Other receivables (XV)2 709,592,493.72 417,963,245.46
Inventories 376,776,045.69 566,168,466.17
Other current assets 3,296,055,941.42 3,889,519,711.57
Total Current Assets 29,634,946,073.38 25,486,606,781.12
Non-current Assets:
Available-for-sale financial assets 287,456,813.00 283,221,700.00
Long-term receivables - 72,153,363.60
Long-term equity investment (XV)3 3,367,076,734.95 1,714,688,703.42
Fixed assets 1,757,777,870.77 1,720,579,461.05
Construction in progress 914,859,063.00 248,447,641.34
Intangible assets 154,604,755.69 131,566,733.76
Deferred tax assets 200,147,031.89 177,568,964.27
Other non-current assets 16,925,712.83 10,782,858.00
Total Non-current Assets 6,698,847,982.13 4,359,009,425.44
Total Assets 36,333,794,055.51 29,845,616,206.56
Hikvision 2017 Annual Report
At December 31st, 2017
Balance sheet of the company - continued
Unit: RMB
Item Notes Closing balance Opening balance
Current Liabilities:
Financial liabilities at fair value
- 58,858,697.43
through profit or loss
Accounts payable 286,629,255.35 138,851,152.86
Receipts in advance 216,747,866.68 233,831,105.17
Payroll payable 946,587,240.01 811,701,475.85
Taxes payable 1,219,102,007.88 998,754,860.91
Dividends payable 92,407,139.16 20,105,831.16
Other payables 708,051,044.04 787,861,780.95
Non-current liabilities due within
33,614,018.51 -
one year
Other current liabilities 744,583,627.22 300,177,750.17
Total Current Liabilities 4,247,722,198.85 3,350,142,654.50
Non-current Liabilities:
Bonds payable 3,120,920,000.00 2,954,449,528.77
Provisions 43,024,784.70 28,799,848.84
Deferred Income 62,903,600.00 -
Total non-current liabilities 3,226,848,384.70 2,983,249,377.61
Total liabilities 7,474,570,583.55 6,333,392,032.11
Owners’ Equity
Share capital 9,228,865,114.00 6,102,706,885.00
Capital reserve 1,742,755,331.51 955,687,875.52
Less: Treasury stock 744,583,627.22 300,177,750.17
Surplus reserve 3,483,742,918.53 2,615,437,822.15
Retained profits 15,148,443,735.14 14,138,569,341.95
Total owners' equity 28,859,223,471.96 23,512,224,174.45
Total liabilities and owners' equity 36,333,794,055.51 29,845,616,206.56
Hikvision 2017 Annual Report
For the year ended on December 31st 2017
Consolidated Income Statement
Unit: RMB
Amount for the current Amount for the prior
Item Notes
period period
I. Total operating income (V)40 41,905,476,572.07 31,934,544,088.82
Less：Total operating costs (V)40 23,467,310,590.76 18,652,707,155.56
Business taxes and levies (V)41 370,993,824.45 255,279,115.16
Selling expenses (V)42 4,430,220,065.13 2,991,273,819.81
Administrative expenses (V)43 4,205,437,565.45 3,109,309,837.05
Financial expense (V)44 265,411,287.66 (225,305,567.12)
Impairment losses of assets (V)45 484,568,899.16 317,564,256.35
Add: Gains (losses) from changes in fair values (V)46 42,090,091.11 (40,171,578.80)
Investment income (V)47 44,650,105.12 40,493,287.66
Including: Investment gains (losses) in associated
(2,525,266.42) -
enterprise and joint-venture enterprise
Asset disposal income (loss) 1,585,222.50 (736,149.02)
Other Income (V)48 1,673,251,852.26 -
II. Operating profit 10,443,111,610.45 6,833,301,031.85
Add: Non-operating income (V)49 46,729,250.63 1,510,721,773.05
Less: Non-operating expenses (V)50 3,020,378.72 29,911,242.56
III. Total profit 10,486,820,482.36 8,314,111,562.34
Less: Income tax expenses (V)51 1,109,318,842.54 889,888,483.70
IV. Net profit 9,377,501,639.82 7,424,223,078.64
4.1 Classification by continuous operation
(a) Net profit on continuous operation 9,377,501,639.82 7,424,223,078.64
(b) Net loss on terminated operation - -
4.2 Classification by attribution of ownership
(a) Profit or loss attributable to minority
(33,353,445.00) 539,117.73
shareholders
(b) Net profit attributable to owners of parent
9,410,855,084.82 7,423,683,960.91
company
V. Other comprehensive income, net of income tax 13,852,652.33 (12,687,807.98)
Other comprehensive income attributable to owners of
13,552,837.86 (13,570,759.51)
the Company, net of tax
(I) Items that will not be reclassified subsequently
- -
to profit or loss
(II) Other comprehensive income to be
13,552,837.86 (13,570,759.51)
reclassified to profit or loss in subsequent periods
1. Exchange differences arising on conversion of
financial statements denominated in foreign 13,552,837.86 (13,570,759.51)
currencies
Other comprehensive income attributable to minority
299,814.47 882,951.53
interests, net of tax
VI. Total comprehensive income 9,391,354,292.15 7,411,535,270.66
Total comprehensive income attributable to owners of
9,424,407,922.68 7,410,113,201.40
the parent company
Total comprehensive income attributable to minority
(33,053,630.53) 1,422,069.26
shareholders
Hikvision 2017 Annual Report
Amount for the current Amount for the prior
Item Notes
period period
VII. Earnings per share
(I) Basic earnings per share (XVI)2 1.030 0.818
(II) Diluted earnings per share (XVI)2 1.024 0.817
There is business merger under the common control during the current reporting period; the merged party realized net loss of 42,070.90
RMB before the merge, and 3,949,939.20 RMB net profits for the previous reporting period.
Hikvision 2017 Annual Report
For the year ended on December 31st 2017
Income statement of the Company
Unit: RMB
Amount for the Amount for the prior
Item Notes
current period period
I. Total operating income (XV)4 19,167,979,291.38 17,165,449,311.27
Less: Operating Cost (XV)4 6,100,951,920.79 5,967,138,876.83
Business taxes and levies 258,550,741.27 222,640,567.03
Selling expenses 1,987,923,082.04 1,923,037,271.14
Administrative expenses 2,907,178,112.56 2,331,920,426.33
Financial expense (187,143,169.54) (67,337,491.29)
Impairment losses of assets 107,602,826.75 151,838,196.39
Add: Gains (losses) from changes in fair values 53,573,806.57 (53,573,806.57)
Investment income (XV)5 34,502,356.33 57,191,401.59
Including: Investment gain (loss) in associated enterprise
(2,525,266.42) -
and joint-venture enterprise
Asset disposal income (loss) 2,755,085.52 (215,830.09)
Other income 1,435,381,243.67 -
II. Operating profit 9,519,128,269.60 6,639,613,229.77
Add: Non-operating income 50,858,016.62 1,372,068,887.62
Less: Non-operating expenses 1,489,124.20 7,603,290.76
III. Total profit 9,568,497,162.02 8,004,078,826.63
Less: Income tax expenses 885,446,198.25 800,310,646.06
IV. Net profit 8,683,050,963.77 7,203,768,180.57
V. Other comprehensive income, net of income tax - -
VI. Total comprehensive income 8,683,050,963.77 7,203,768,180.57
Hikvision 2017 Annual Report
For the year ended on December 31st 2017
Consolidated Cash Flow Statement
Unit: RMB
Amount for the Amount for the
Item Notes
current period prior period
I. Cash flows from operating activities:
Cash received from sale of goods or rendering of services 42,136,145,087.13 32,675,031,364.22
Receipts of tax refunds 2,733,759,603.00 2,592,008,277.39
Other cash receipts relating to operating activities (V)52(1) 533,929,235.33 489,624,016.45
Sub-total of cash inflows from operating activities 45,403,833,925.46 35,756,663,658.06
Cash payments for goods purchased and services received 25,634,553,120.83 20,894,272,079.39
Cash paid to and on behalf of employees 5,036,917,567.98 3,409,777,616.92
Payments of various types of taxes 3,557,905,236.73 2,915,732,989.62
Other cash payments relating to operating activities (V)52(2) 3,801,297,749.24 2,320,516,330.08
Sub-total of cash outflows from operating activities 38,030,673,674.78 29,540,299,016.01
Net Cash Flow from Operating Activities (V)53(1) 7,373,160,250.68 6,216,364,642.05
II. Cash Flows from Investing Activities:
Cash receipts from recovery of investments 10,300,303,620.25 4,989,550,266.43
Cash receipts from investment income 31,290,097.01 48,773,447.48
Net cash receipts from disposals of fixed assets, intangible assets and other
23,086,294.46 19,404,765.15
long-term assets
Other cash receipts relating to investing activities (V)52(3) 63,364,669.30 13,398,940.46
Sub-total of cash inflows from investing activities 10,418,044,681.02 5,071,127,419.52
Cash payments to acquire or construct fixed assets, intangible assets and
1,692,193,203.99 911,399,245.87
other long-term assets
Cash paid to acquire investments 9,921,049,145.72 7,335,420,926.25
Net cash payments for acquisitions of subsidiaries and other business units (V)53(2) - 172,473,788.49
Other cash payments relating to investing activities 13,500,000.00 35,000,000.00
Sub-total of cash outflows from investing activities 11,626,742,349.71 8,454,293,960.61
Net Cash Flow from Investment Activities (1,208,697,668.69) (3,383,166,541.09)
III. Cash flows from financing activities:
Cash receipts from capital contributions 92,089,826.67 247,269,466.66
Including: cash receipts from capital contributions from minority
92,089,826.67 247,269,466.66
owners of subsidiaries
Cash receipts from borrowings 3,550,599,109.39 4,668,904,940.17
Cash receipts from issuing of bonds - 2,903,120,000.00
Other cash receipts relating to financing activities (V)52(4) - 660,888,216.54
Sub-total of cash inflows from financing activities 3,642,688,936.06 8,480,182,623.37
Cash repayments of borrowings 3,205,532,364.13 5,104,870,545.06
Cash payments for distribution of dividends or profits or settlement of
3,800,451,724.80 2,930,913,722.75
interest expenses
Including: payments for distribution of dividends or profits to minority
3,062,500.00 -
owners of subsidiaries
Other cash payments relating to financing activities (V)52(5) 38,451,500.00 1,602,804.35
Sub-total of cash outflows from financing activities 7,044,435,588.93 8,037,387,072.16
Net Cash Flow from Financing Activities (3,401,746,652.87) 442,795,551.21
IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents (255,868,357.23) 212,875,294.92
V. Net Increase in Cash and Cash Equivalents (V)53(1) 2,506,847,571.89 3,488,868,947.09
Add: Opening balance of Cash and Cash Equivalents (V)53(1) 13,522,337,697.28 10,033,468,750.19
VI. Closing Balance of Cash and Cash Equivalents (V)53(3) 16,029,185,269.17 13,522,337,697.28
Hikvision 2017 Annual Report
For the year ended on December 31st 2017
Cash Flow Statements of the Company
Unit: RMB
Amount for the Amount for the
Item Notes
current period prior period
I. Cash Flows from Operating Activities::
Cash receipts from the sale of goods and the rendering of services 19,722,915,694.68 18,882,254,702.72
Receipts of tax refunds 1,439,270,404.56 1,284,036,478.69
Other cash receipts relating to operating activities 339,663,486.81 322,630,474.75
Sub-total of cash inflows from operating activities 21,501,849,586.05 20,488,921,656.16
Cash payments for goods acquired and services received 7,025,548,254.61 7,375,020,750.77
Cash payments to and on behalf of employees 2,598,154,101.03 1,998,015,491.73
Payments of all types of taxes 2,868,678,724.73 2,349,110,778.76
Other cash payments relating to operating activities 1,742,871,959.31 2,003,975,502.85
Sub-total of cash outflows from operating activities 14,235,253,039.68 13,726,122,524.11
Net Cash Flow from Operating Activities (XV)8(1) 7,266,596,546.37 6,762,799,132.05
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of investments 5,279,892,396.70 3,871,026,616.63
Cash receipts from investment income 34,474,342.25 49,164,784.96
Net cash receipts from disposals of fixed assets, intangible assets and other
18,569,173.19 3,129,852.68
long-term assets
Other cash receipts relating to investing activities 8,014,628,629.24 3,389,327,585.78
Sub-total of cash inflows from investing activities 13,347,564,541.38 7,312,648,840.05
Cash payments to acquire or construct fixed assets, intangible assets and
612,742,341.37 255,328,076.51
other long-term assets
Cash payments to acquire investments 6,280,754,974.91 6,996,128,459.52
Other cash payments relating to investing activities 8,280,364,802.77 3,403,968,158.86
Sub-total of cash outflows from investing activities 15,173,862,119.05 10,655,424,694.89
Net Cash Flow from Investment Activities (1,826,297,577.67) (3,342,775,854.84)
III. Cash Flows from Financing Activities
Cash receipts from borrowings 300,000,000.00 -
Cash receipts from issuing of bonds - 2,903,120,000.00
Other cash receipts relating to financing activities 2,415,734,336.55 1,334,260,247.19
Sub-total of cash inflows from financing activities 2,715,734,336.55 4,237,380,247.19
Cash repayments of borrowings 300,000,000.00 597,065,694.74
Cash payments for distribution of dividends or profits or settlement of
3,734,122,697.15 2,898,933,448.56
interest expenses
Other cash payments relating to financing activities 1,855,669,510.90 654,145,840.87
Sub-total of cash outflows from financing activities 5,889,792,208.05 4,150,144,984.17
Net Cash Flow from Financing Activities (3,174,057,871.50) 87,235,263.02
IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents (208,127,567.22) 190,636,781.99
V. Net increase in cash and cash equivalents (XV)8(1) 2,058,113,529.98 3,697,895,322.22
Add: Beginning balance of cash and cash equivalents (XV)8(1) 10,245,969,003.13 6,548,073,680.91
VI. Closing Balance of Cash and Cash Equivalents (XV)8(2) 12,304,082,533.11 10,245,969,003.13
Hikvision 2017 Annual Report
For the year ended on December 31st 2017
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
Amount for the current period
Owner’s Equity Attributable to owners of the Company
Item Other Minority Total owners'
Less: Treasury
Share capital Capital reserves comprehensive Surplus reserve Retained profits interests equity
share
income
I. Closing balance of the preceding period 6,102,706,885.00 1,045,440,853.66 300,177,750.17 (41,230,777.21) 2,615,437,822.15 14,866,457,856.65 198,039,035.07 24,486,673,925.15
Add: Business merger under common control - 2,880,000.00 - - - (5,807,678.26) (5,204,761.36) (8,132,439.62)
II. Opening balance of the current period (restated) 6,102,706,885.00 1,048,320,853.66 300,177,750.17 (41,230,777.21) 2,615,437,822.15 14,860,650,178.39 192,834,273.71 24,478,541,485.53
III. Increase or decrease in the current period 3,126,158,229.00 771,076,861.97 444,405,877.05 13,552,837.86 868,305,096.38 1,737,678,514.24 53,214,290.16 6,125,579,952.56
(I) Total comprehensive income - - - 13,552,837.86 - 9,410,855,084.82 (33,053,630.53) 9,391,354,292.15
(II) Owners’ contributions and reduction in capital 49,869,858.00 771,076,861.97 536,813,016.21 - - - 91,780,420.69 375,914,124.45
1. Capital contribution from shareholders 52,326,858.00 608,561,358.54 660,888,216.54 - - - 92,089,826.67 92,089,826.67
2. Share-based payment recognized in owners’
- 186,951,885.95 - - - - 4,248,711.50 191,200,597.45
equity
3. Others (2,457,000.00) (24,436,382.52) (124,075,200.33) - - - (4,558,117.48) 92,623,700.33
(III) Profit distribution 3,076,288,371.00 - (92,407,139.16) - 868,305,096.38 (7,673,176,570.58) (5,512,500.00) (3,641,688,464.04)
1. Transfer to surplus reserve - - - - 868,305,096.38 (868,305,096.38) - -
2. Distributions to shareholders - - (92,407,139.16) - - (3,728,583,103.20) (5,512,500.00) (3,641,688,464.04)
3. Others 3,076,288,371.00 - - - - (3,076,288,371.00) - -
IV. Closing balance of the current period 9,228,865,114.00 1,819,397,715.63 744,583,627.22 (27,677,939.35) 3,483,742,918.53 16,598,328,692.63 246,048,563.87 30,604,121,438.09
Hikvision 2017 Annual Report
For the year ended December 31st 2017
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
Amount for the same period of last year (restated)
Owner’s Equity Attributable to owners of the Company
Item Other Minority
Less: Treasury Total owners' equity
Share capital Capital reserves comprehensive Surplus reserve Retained profits interests
share
income
I. Closing balance of the preceding
4,068,772,253.00 1,639,607,652.22 518,074,596.90 (27,660,017.70) 1,895,061,004.09 12,196,097,444.07 43,647,140.92 19,297,450,879.70
period
Add: Business merger under common
- 2,880,000.00 - - - (7,229,656.01) (7,732,721.81) (12,082,377.82)
control
II. Opening balance of the current
4,068,772,253.00 1,642,487,652.22 518,074,596.90 (27,660,017.70) 1,895,061,004.09 12,188,867,788.06 35,914,419.11 19,285,368,501.88
period (restated)
III. Increase or decrease in the
2,033,934,632.00 (594,166,798.56) (217,896,846.73) (13,570,759.51) 720,376,818.06 2,671,782,390.33 156,919,854.60 5,193,172,983.65
current period
(I) Total comprehensive income - - - (13,570,759.51) - 7,423,683,960.91 1,422,069.26 7,411,535,270.66
(II) Owners’ contributions and
(451,494.00) 219,587,651.44 (217,896,846.73) - - - 155,497,785.34 592,530,789.51
reduction in capital
1. Capital contribution from
- 97,768,537.96 - - - - 155,497,785.34 253,266,323.30
shareholders
2. Share-based payment
- 122,970,423.83 - - - - - 122,970,423.83
recognized in owners’ equity
3. Others (451,494.00) (1,151,310.35) (217,896,846.73) - - - - 216,294,042.38
(III) Profit distribution 1,220,631,676.00 - - - 720,376,818.06 (4,751,901,570.58) - (2,810,893,076.52)
1. Transfer to surplus reserve - - - - 720,376,818.06 (720,376,818.06) - -
2. Distributions to shareholders - - - - - (2,810,893,076.52) - (2,810,893,076.52)
3. Others 1,220,631,676.00 - - - - (1,220,631,676.00) - -
(IV) Transfers within owners’ equity 813,754,450.00 (813,754,450.00) - - - - - -
1. Capitalization of capital reserve 813,754,450.00 (813,754,450.00) - - - - - -
IV. Closing balance of the current
6,102,706,885.00 1,048,320,853.66 300,177,750.17 (41,230,777.21) 2,615,437,822.15 14,860,650,178.39 192,834,273.71 24,478,541,485.53
period (restated)
Hikvision 2017 Annual Report
For the year ended on December 31st 2017
Statement of Changes in Owners' Equity of the Company
Unit: RMB
Amount for the current period
Item
Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits Total owners' equity
I. Opening balance of the current period 6,102,706,885.00 955,687,875.52 300,177,750.17 2,615,437,822.15 14,138,569,341.95 23,512,224,174.45
II. Increase or decrease in the current year 3,126,158,229.00 787,067,455.99 444,405,877.05 868,305,096.38 1,009,874,393.19 5,346,999,297.51
(I) Total comprehensive income - - - - 8,683,050,963.77 8,683,050,963.77
(II) Owners’ contributions and reduction in capital 49,869,858.00 787,067,455.99 536,813,016.21 - - 300,124,297.78
1. Capital contribution from shareholders 52,326,858.00 608,561,358.54 660,888,216.54 - - -
2. Share-based payment recognized in owners’ equity - 191,200,597.45 - - - 191,200,597.45
3. Others (2,457,000.00) (12,694,500.00) (124,075,200.33) - - 108,923,700.33
(III) Profit distribution 3,076,288,371.00 - (92,407,139.16) 868,305,096.38 (7,673,176,570.58) (3,636,175,964.04)
1.Transfer to surplus reserve - - - 868,305,096.38 (868,305,096.38) -
2. Distributions to shareholders - - (92,407,139.16) - (3,728,583,103.20) (3,636,175,964.04)
3. Others 3,076,288,371.00 - - - (3,076,288,371.00) -
III. Closing balance of the current year 9,228,865,114.00 1,742,755,331.51 744,583,627.22 3,483,742,918.53 15,148,443,735.14 28,859,223,471.96
Amount for the same period of last year
Item
Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits Total owners' equity
I. Opening balance of the current period 4,068,772,253.00 1,647,623,212.04 518,074,596.90 1,895,061,004.09 11,686,702,731.96 18,780,084,604.19
II. Increase or decrease in the current year 2,033,934,632.00 (691,935,336.52) (217,896,846.73) 720,376,818.06 2,451,866,609.99 4,732,139,570.26
(I) Total comprehensive income - - - - 7,203,768,180.57 7,203,768,180.57
(II) Owners’ contributions and reduction in capital (451,494.00) 121,819,113.48 (217,896,846.73) - - 339,264,466.21
1.Share-based payment recognized in owners’ equity - 122,970,423.83 - - - 122,970,423.83
2. Others (451,494.00) (1,151,310.35) (217,896,846.73) 216,294,042.38
(III) Profit distribution 1,220,631,676.00 - - 720,376,818.06 (4,751,901,570.58) (2,810,893,076.52)
1.Transfer to surplus reserve - - - 720,376,818.06 (720,376,818.06) -
2. Distributions to shareholders - - - - (2,810,893,076.52) (2,810,893,076.52)
3. Others 1,220,631,676.00 - - - (1,220,631,676.00) -
(IV) Transfers within owners’ equity 813,754,450.00 (813,754,450.00) - - - -
1. Capitalization of capital reserve 813,754,450.00 (813,754,450.00) - - - -
III. Closing balance of the current year 6,102,706,885.00 955,687,875.52 300,177,750.17 2,615,437,822.15 14,138,569,341.95 23,512,224,174.45
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
I. Basic Information about the Company
Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as \"Company\" or \"the Company\"), is a
Sino-foreign equity joint venture company, formerly known as \"Hangzhou Hikvision Digital Technology Ltd\",
established on November 30th 2001 in Hangzhou upon the approval letter of Hangzhou High-tech No. 604[2001] issued
by Hangzhou High-tech Industrial Development Zone Management Committee. On June 25th 2008, with approval of
document No. 598[2008] issued by the MOFCOM (The Ministry of Commerce of the People's Republic of China), the
company was renamed as “Hangzhou Hikvision Digital Technology Co., Ltd.”, headquartered in Hangzhou, and
obtained the business license of enterprise No.91330000733796106P. On May 28th 2010, the Company was listed on the
Shenzhen Stock Exchange.
On December 23rd 2016, pursuant to the Articles of Association of the Company revised by the resolution of 20th
Meeting of the 3rd session Board of Directors authorized by the 2nd extraordinary general meeting in 2016, the
Company granted 52,326,858 restricted incentive shares to the incentive grantees, The Company completed the
registration procedure for business changes on January 20th 2017, adjusted the Company’s total capital share to
6,155,033,743 shares.
As of April 27th 2017, authorized by the first Extraordinary General Meeting in 2014, the Company repurchased
and cancelled 2,457,000.00 granted but restricted treasury share, and the total share capital of the Company was adjusted
to 6,152,576,743 shares. For details of share capital, please refer to Note (V) 34.
On May 4th 2017, 2016 Profit Distribution Scheme was approved on 2016 Annual General Meeting. On May 16th
2017, based on total capital shares of 6,152,576,743 shares on the date of interest distribution, the company issued bonus
shares for 3,076,288,371 shares, which adjusted the Company’s total capital share to 9,228,865,114 shares.
As of December 31st 2017, the Company’s total registered capital is RMB 9,228,865,114，with total capital shares
of 9,228,865,114 shares (face value RMB 1per share), of which restricted A-shares were 1, 971,217,850 shares, A-shares
without restriction are 7,257, 647,264 shares.
The Company is engaged in other electronic equipment manufacturing business under electronics industry.
Business scope of the Company includes development and production of electronic products (including explosion-proof
electrical products, tele-communication equipment and its ancillary equipment, multimedia equipment), aircraft, robot,
intelligent equipment, auto parts and accessories, and electrical signal equipment for vehicle; sales of self-manufactured
products, electronic technology consulting service, training service (excluding class training), electronic equipment
installation, electronic engineering and design of intelligent systems, construction and maintenance. For details about
business scope of the Company and its subsidiaries, please refer to Note (VII) 1.
The Company’s and consolidated financial reports were approved for issuance by the 2nd meeting of the fourth
session Board of Directors of the Company on April 19th 2018.
For consolidation scope of the financial statements, please refer to Note (VII) “Interest in other entities”. For
changes in consolidation scope of the financial statements, please refer to “changes in the consolidation scope” in Note
(VI).
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
II. Basis of preparation of financial statements
Basis of preparation of financial statements
The Company and its subsidiaries (hereinafter referred to as \"the Group\") have adopted the Accounting
Standards for Business Enterprises (\"ASBE\") and relevant provisions issued by the Ministry of Finance
(\"MoF\"). In addition, the Group has disclosed relevant financial information in accordance with
Information Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15－
General Provisions on Financial Reporting (revised in 2014).
Bookkeeping base and valuation principles
The Group measures the accounting elements in accordance with the accrual accounting basis. Except
certain financial instruments are measured by fair value, these financial statements are prepared in
accordance with the measurements basis of historical costs. If the asset decreases in value, the provision
for impairment of assets should be made according to relevant regulations.
According to the historical cost measurement, the assets shall be measured as per the amount of cash or
cash equivalent paid at the time of purchase, or the fair value of consideration paid for the purchase of
such assets. The liabilities shall be measured in accordance with the amount of funds or assets actually
received when undertaking current obligations, or the contract amount when undertaking the current
obligations, or the amount of cash or cash equivalents required for paying back the debts in daily
activities.
The fair value is a price received by the market participants from selling asset or transferring liability
during orderly transaction at the measurement date. No matter the fair value is observable or estimated by
using valuation technique, the measured and disclosed fair value in the financial statement shall be
determined on this basis.
Based on the observable extent of the input value of the fair value, and the importance of such input value
to the fair value measurement, the fair value measurement is divided into three levels:
Level 1: The input value is the unadjusted offer of the same assets or liabilities on active market
acquired on measurement date;
Level 2: The input value is the input value of relevant assets or liabilities observable directly or
indirectly in addition to level 1 input value;
Level 3: The input value is the non-observable input value of relevant assets or liabilities.
Going concern
The Group has evaluated its going concern for 12 months going forward starting from December 31st
2017, and there is no factor that may cast significant doubt on the entity's ability to continue as a going
concern. Therefore, the financial statements have been prepared on a going concern basis.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
III. Significant accounting policies and accounting estimates
1. Statement for Compliance with Accounting Standards for Business Enterprises (ASBE)
The financial statements of the Company have been prepared in accordance with ASBE, and present truly
and completely, the Company's and consolidated financial position as of December 31st 2017, and the
Company's and consolidated results of operations and cash flows for the year then ended.
2. Accounting Period
The Group has adopted the calendar year as its accounting year from January 1st to December 31st each
year.
3. Business Cycle
The business cycle refers to the period from purchase of assets used for processing to realization of cash
or cash equivalents. The Group business cycle is usually 12 months.
4. Functional currency
Renminbi (“RMB”) is the currency in the primary economic environments in which the Company and its
domestic subsidiaries are operated. The Company and its domestic subsidiaries take RMB as their
functional currency. Overseas subsidiaries of the Company determine their functional currency on the
basis of the primary economic environment in which it operates. For functional currency of overseas
subsidiaries of the Company, see Note (V) 55. The Group adopts RMB to prepare its financial statements.
5. The accounting treatment of business combinations involving enterprises under common control
and business combinations not involving enterprises under common control
Business combinations are classified into business combinations involving enterprises under common
control and business combinations not involving enterprises under common control.
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which
all of the combining enterprises are ultimately controlled by the same party or parties both before and
after the combination, and that control is not transitory.
Assets and liabilities obtained shall be measured at their respective carrying amounts as recorded by the
combining entities at the date of the combination. The difference between the carrying amount of the net
assets obtained and the carrying amount of the consideration paid for the combination (the aggregate face
value of shares issued as consideration) is adjusted to the share premium in capital reserve. If the share
premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period in which
they are incurred.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
5.2 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in
which all of the combining enterprises are not ultimately controlled by the same party or parties before
and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given,
liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the
acquiree. The intermediary expenses incurred by the acquirer in respect of auditing, legal services,
valuation and consultancy services, etc. and other associated administrative expenses attributable to the
business combination are recognized in profit or loss when they are incurred.
The acquiree’s identifiable assets, liabilities and contingent liabilities, acquired by the acquirer in a
business combination, that meet the recognition criteria shall be measured at fair value at the acquisition
date.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, the difference is treated as an asset and recognized as goodwill, which is measured
at cost on initial recognition. Where the cost of combination is less than the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets, the acquirer firstly reassesses the measurement of the fair
values of the acquiree’s identifiable assets, liabilities and contingent liabilities and measurement of the
cost of combination. If after that reassessment, the cost of combination is still less than the acquirer’s
interest in the fair value of the acquiree’s identifiable net assets, the acquirer recognizes the remaining
difference immediately into profit or loss for the current period.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and
is presented separately in the consolidated financial statements.
6. Preparation method of consolidated financial statements
6.1 Preparation method of consolidated financial statements
The scope of consolidated financial statements shall be confirmed based on the control. Control right
means that an investor may control an investee; the investor may participate in relevant activities of the
investee to obtain variable rewards and also be able to use the control rights for the investee to influence
its amount of returns. The Group will re-evaluate, if the change of the relevant facts and circumstances
leading to the change of the relevant elements involved in the above definition of control.
The merger of subsidiary starts from the Group obtaining the control power of the subsidiary, and
terminates when the Group loses the control power of the subsidiary.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
As for subsidiaries disposed by the Group, operating results and cash flow prior to the disposal date (the
date of losing control right) have been properly included in the consolidated profit statement and
consolidated cash flow statement.
For a subsidiary acquired through a business combination not involving enterprises under common
control, the operating results and cash flows from the acquisition date (the date when control is obtained)
are included in the consolidated income statement and consolidated statement of cash flows.
No matter when the business combination occurs in the reporting period, subsidiaries acquired through a
business combination involving enterprises under common control are included in the Group's scope of
consolidation as if they had been included in the scope of consolidation from the date when they first
came under the common control of the ultimate controlling party. Their operating results and cash flows
from the beginning of the earliest reporting period are included in the consolidated income statement and
consolidated statement of cash flows, as appropriate.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined
based on the uniform accounting policies and accounting periods set out by the Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests
and presented as \"minority equity\" in the consolidated balance sheet. The portion of net profits or losses
of subsidiaries for the period attributable to minority interests is presented as \"minority interests\" in the
consolidated income statement below the \"net profit\" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds
the minority shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess
amount are still allocated against minority interests.
Acquisition of minority interests or disposal of interest in a subsidiary that does not result in the loss of
control over the subsidiary is accounted for as equity transactions. The carrying amounts of the total
owners' equity attributable to owner of the Company and minority equity are adjusted to reflect the
changes in their relative interests in the subsidiary. The difference between the amount by which the
minority interests are adjusted and the fair value of the consideration paid or received is adjusted to
capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference, the
excess are adjusted against retained earnings.
7. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents
are the Group's short-term, highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
8. Conversion of transactions and financial statements denominated in foreign currencies.
8.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying an exchange rate that
approximates the actual spot exchange rate on the date of transaction; The exchange rate that
approximates the actual spot exchange rate on the date of transaction is calculated according to the
middle price of market exchange rate at the beginning of the month in which the transaction happened.
At the balance sheet date, foreign currency monetary items are translated into [RMB] using the spot
exchange rates at the balance sheet date. Exchange differences arising from the differences between the
spot exchange rates prevailing at the balance sheet date and those on initial recognition or at the previous
balance sheet date are recognized in profit or loss for the period, except for exchange differences related
to a specific-purpose borrowing denominated in foreign currency that qualify for capitalization are
capitalized as part of the cost of the qualifying asset during the capitalization period.
When the consolidated financial statements include foreign operation(s), if there is foreign currency
monetary item constituting a net investment in a foreign operation, exchange difference arising from
changes in exchange rates are recognized as \"exchange differences arising on conversion of financial
statements denominated in foreign currencies \" in other comprehensive income, and in profit and loss for
the period upon disposal of the foreign operation.
Foreign currency non-monetary items measured at historical cost are converted to the amounts in
functional currency at the spot exchange rates on the dates of the transactions. Foreign currency
non-monetary items measured at fair value are re-converted at the spot exchange rate on the date the fair
value is determined. Difference between the re-converted functional currency amount and the original
functional currency amount is treated as changes in fair value (including changes of exchange rate) and is
recognized in profit and loss or as other comprehensive income.
8.2 Conversion of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a foreign
operation are converted from the foreign currency into RMB using the following method: assets and
liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date;
shareholders' equity items are converted at the spot exchange rates at the dates on which such items arose;
all items in the income statement as well as items reflecting the distribution of profits are translated at
exchange rates that approximate the actual spot exchange rates on the dates of the transactions; The
difference between the converted assets and the aggregate of liabilities and shareholders' equity items is
recognized into other comprehensive income and shareholders’ equity.
Cash flows arising from a transaction in foreign currency and the cash flows of a foreign subsidiary are
converted at an exchange rate which approximates the spot exchange rate on the date of the cash flows.
The effect of exchange rate changes on cash and cash equivalents is regarded as a reconciling item and
presented separately in the cash flow statement as \"effect of exchange rate changes on cash and cash
equivalents\".
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
The foreign currency cash flow and cash flow of overseas subsidiaries adopt the exchange rate similar to
the spot rate at the date of cash flow for conversion. The affected amount of cash and cash equivalents
due to the change of exchange rate, as an adjustment item, shall be separately listed as \"the impact of cash
and cash equivalents due to the change of exchange rate\" in the cash flow statement.
The opening balances and the comparative figures of previous year are presented at the converted
amounts in the previous year's financial statements.
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over a foreign
operation due to disposal of certain interest in it or other reasons, the Group transfers the accumulated
exchange differences arising on conversion of financial statements of this foreign operation attributable to
the owners' equity of the Company and presented under shareholders' equity, to profit or loss in the period
in which the disposal occurs.
In case of a disposal or other reason that does not result in the Group losing control over a foreign
operation, but only a decrease in proportion of overseas business interests, the proportionate share of
accumulated exchange differences arising on conversion of financial statements are re-attributed to
minority interests and are not recognized in profit and loss under current period. For partial disposals of
equity interests in foreign operations which are associates or joint ventures, the proportionate shares of
the accumulated exchange differences arising on conversion of financial statements of foreign operations
is reclassified to profit or loss under current period.
9. Financial Instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the
contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at
fair value. For financial assets and financial liabilities at fair value through profit or loss, transaction costs
are immediately recognized in profit or loss. For other financial assets and financial liabilities, transaction
costs are included in their initial recognized amounts.
9.1 Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a financial asset or a
financial liability (or a group of financial assets or financial liabilities) and of allocating the interest
income or interest expense over the relevant period, using the effective interest rate. The effective interest
rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial
asset or financial liability, or a shorter period if appropriate, to the current net carrying amount of the
financial asset or financial liability.
When calculating the effective interest rate, the Group estimates future cash flows considering all
contractual terms of the financial asset or financial liability (without considering future credit losses), and
also considers all fees paid or received between the parties to the contract giving rise to the financial asset
and financial liability that are an integral part of the effective interest rate, transaction costs, and
premiums or discounts, etc.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
9.2 Classification, Confirmation and Measurement of the Financial Assets
On initial recognition, the Group’s financial assets are classified into one of the four categories, including
financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables,
and available-for-sale financial assets. All purchases or sales of financial assets through regular methods
are recognized and derecognized on a trade date basis.
9.2.1 Financial Assets at Fair Value through Profit or Loss (\"FVTPL\")
Financial assets at FVTPL include financial assets held for trading and those designated as financial
assets at fair value through profit or loss.
A financial asset is classified as held for trading if one of the following conditions is satisfied: (1) It has
been acquired principally for the purpose of selling in the near term; or (2) On initial recognition it is part
of a portfolio of identified financial instruments that the Group manages together and there is objective
evidence that the Group has a recent actual pattern of short-term profit-taking; or (3) It is a derivative that
is not designated and effective as a hedging instrument, or a financial guarantee contract, or a derivative
that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price
in an active market) whose fair value cannot be reliably measured.
Financial assets at FVTPL are subsequently measured at fair value. Any gains or losses arising from
changes in the fair value and any dividend or interest income earned on the financial assets are
recognized in profit or loss.
9.2.2 Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturity dates that the Group's management has the positive intention and ability to hold to
maturity.
Held-to-maturity investments are subsequently measured at amortized cost using the effective interest
method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit or
loss.
9.2.3 Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Financial assets classified as loans and receivables by the Group include
notes receivable, accounts receivable, other receivables, other current assets, long-term receivables, and
etc.
Loans and receivables are subsequently measured at amortized cost using the effective interest method.
Gain or loss arising from derecognition, impairment or amortization is recognized in profit or loss.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
9.2.4 Available-for-sale Financial Assets
Available-for-sale financial assets include non-derivative financial assets that are designated on initial
recognition as available for sale, and financial assets that are not classified as financial assets at fair value
through profit or loss, loans and receivables or held-to-maturity investments.
Available-for-sale financial assets are subsequently measured at fair value, and gains or losses arising
from changes in the fair value are recognized as other comprehensive income, except that impairment
losses and exchange differences related to amortized cost of monetary financial assets denominated in
foreign currencies are recognized in profit or loss, until the financial assets are derecognized, at which
time the gains or losses are released and recognized in profit or loss.
Interests obtained and the dividends declared by the investee during the period in which the
available-for-sale financial assets are held, are recognized in investment gains.
For investments in equity instruments that do not have a quoted market price in an active market and
whose fair value cannot be reliably measured, and derivative financial assets that are linked to and must
be settled by delivery of such unquoted equity instruments, they are measured at cost.
9.3 Impairment of financial assets
The Group assesses at each balance sheet date the carrying amounts of financial assets other than those at
fair value through profit or loss. If there is objective evidence that a financial asset is impaired, the Group
determines the amount of any impairment loss. Objective evidence that a financial asset is impaired is
evidence that, arising from one or more events that occurred after the initial recognition of the asset, the
estimated future cash flows of the financial asset, which can be reliably measured, have been affected.
Objective evidence that a financial asset is impaired includes the following observable events:
(1) Significant financial difficulty of the issuer or obligor;
(2) A breach of contract by the borrower, such as a default or delinquency in interest or principal
payments;
(3) The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting a
concession to the borrower;
(4) It becoming probable that the borrower will enter bankruptcy or other financial reorganizations;
(5) The disappearance of an active market for that financial asset because of financial difficulties of the
issuer;
(6) Upon an overall assessment of a group of financial assets, observable data indicates that there is a
measurable decrease in the estimated future cash flows from the group of financial assets since the initial
recognition of those assets, although the decrease cannot yet be identified with the individual financial
assets in the group. Such observable data includes:
- Adverse changes in the payment status of borrower in the group of assets;
- Economic conditions in the country or region of the borrower which may lead to a failure to pay the
group of assets;
(7) Significant adverse changes in the technological, market, economic or legal environment in which the
issuer operates, indicating that the cost of the investment in the equity instrument may not be recovered
by the investor;
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
(8) A significant or prolonged decline in the fair value of an investment in an equity instrument below its
cost;
(9) Other objective evidence indicating there is an impairment of a financial asset.
- Impairment of financial assets measured at amortized cost
If financial assets carried at amortized cost are impaired, the carrying amounts of the financial assets are
reduced to the present value of estimated future cash flows (excluding future credit losses that have not
been incurred) discounted at the financial asset's original effective interest rate. The amount of reduction
is recognized as an impairment loss in profit or loss. If, subsequent to the recognition of an impairment
loss on financial assets carried at amortized cost, there is objective evidence of a recovery in value of the
financial assets which can be related objectively to an event occurring after the impairment is recognized,
the previously recognized impairment loss is reversed. However, the reversal is made to the extent that
the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the
amortized cost would have been had the impairment not been recognized.
For a financial asset that is individually significant, the Group assesses the asset individually for
impairment. For a financial asset that is not individually significant, the Group assesses the asset
individually for impairment or includes the asset in a group of financial assets with similar credit risk
characteristics and collectively assesses them for impairment. If the Group determines that no objective
evidence of impairment exists for an individually assessed financial asset (whether significant or not), it
includes the asset in a group of financial assets with similar credit risk characteristics and collectively
reassesses them for impairment. Assets for which an impairment loss is individually recognized are not
included in a collective assessment of impairment.
- Impairment of available-for-sale financial assets
When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair
value previously recognized directly in other comprehensive income is reclassified from other
comprehensive income to profit or loss. The amount of the cumulative loss that is reclassified from other
comprehensive income to profit or loss is the difference between the acquisition cost (net of any principal
repayment and amortization) and the current fair value, less any impairment loss on that financial asset
previously recognized in profit or loss.
If, subsequent to the recognition of an impairment loss on available-for-sale financial assets, there is
objective evidence of a recovery in value of the financial assets which can be related objectively to an
event occurring after the impairment is recognized, the previously recognized impairment loss is reversed.
The amount of reversal of impairment loss on available-for-sale equity instruments is recognized as other
comprehensive income, while the amount of reversal of impairment loss on available-for-sale debt
instruments is recognized in profit or loss.
- Impairment of financial assets measured at cost
If an impairment loss has been incurred on an investment in unquoted equity instrument (without a
quoted price in an active market) whose fair value cannot be reliably measured, or on a derivative
financial asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the
carrying amount of the financial asset is reduced to the present value of estimated future cash flows
discounted at the current market rate of return for a similar financial asset. The amount of reduction is
recognized as an impairment loss in profit or loss. The impairment loss on such financial asset is not
reversed once it is recognized.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
9.4 Transfer of Financial Assets
The Group derecognizes a financial asset if one of the following conditions is satisfied: (1) the
contractual rights to the cash flows from the financial asset expire; or (2) the financial asset has been
transferred and substantially all the risks and rewards of ownership of the financial asset is transferred to
the transferee; or (3) although the financial asset has been transferred, the Group neither transfers nor
retains substantially all the risks and rewards of ownership of the financial asset but has not retained
control of the financial asset.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a
financial asset, and it retains control of the financial asset, it recognizes the financial asset to the extent of
its continuing involvement in the transferred financial asset and recognizes an associated liability. The
extent of the Group’s continuing involvement in the transferred asset is the extent to which it is exposed
to changes in the value of the transferred asset.
For a transfer of a financial asset in its entirety that satisfies the recognition criteria, the difference
between (1) the carrying amount of the financial asset transferred; and (2) the sum of the consideration
received from the transfer and any cumulative gain or loss that has been recognized in other
comprehensive income, is recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the
transferred financial asset is allocated between the part that continues to be recognized and the part that is
derecognized, based on the respective fair values of those parts. The difference between (1) the carrying
amount allocated to the part derecognized; and (2) the sum of the consideration received for the part
derecognized and any cumulative gain or loss allocated to the part derecognized which has been
previously recognized in other comprehensive income, is recognized in profit or loss.
9.5 Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Group are classified into financial liabilities or equity on the
basis of the substance of the contractual arrangements with the relevant reflected economic essence (not
only in the form of law) and definitions of financial liability and equity instrument.
On initial recognition, financial liabilities are classified into financial liabilities at fair value through
profit or loss and other financial liabilities.
9.5.1 Financial liabilities at fair value through profit or loss (FVTPL)
Financial liabilities at FVTPL consist of financial liabilities held for trading and those designated as at
FVTPL.
A financial liability is classified as held for trading if one of the following conditions is satisfied: (1)
undertake the purpose of financial liability, it has been acquired principally for the purpose of
repurchasing in the near term; or (2) On initial recognition it is part of a portfolio of identified financial
instruments that the Group manages together and there is objective evidence that the Group has a recent
actual pattern of short-term profit-taking; or (3) It is a derivative, except for a derivative that is a
designated and effective hedging instrument, or a financial guarantee contract, or a derivative that is
linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price in an
active market) whose fair value cannot be reliably measured.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
A financial liability may be designated as at FVTPL upon initial recognition only when one of the
following conditions is satisfied: (1) Such designation eliminates or significantly reduces a measurement
or recognition inconsistency that would otherwise result from measuring liabilities or recognizing the
gains or losses on them on different bases; or (2) The financial liability forms part of a group of financial
liabilities or a group of financial assets and financial liabilities, which is managed and its performance is
evaluated on a fair value basis, in accordance with the Group's documented risk management or
investment strategy, and information about the grouping is reported to key management personnel on that
basis.; or (3) qualified hybrid tool with inclusion of embedded derivatives.
Financial liabilities at FVTPL are subsequently measured at fair value. Any gains or losses arising from
changes in the fair value or any dividend or interest expenses related to the financial liabilities are
recognized in profit or loss.
9.5.2 Other financial liabilities
For a derivative liability that is linked to and must be settled by delivery of an unquoted equity instrument
(without a quoted price in an active market) whose fair value cannot be reliably measured, it is
subsequently measured at cost. Other financial liabilities, except for financial guarantee contracts, are
subsequently measured at amortized cost using the effective interest method, with gain or loss arising
from derecognition or amortization recognized in profit or loss.
9.5.3. Financial Guarantee Contracts
A financial guarantee contract is a contract by which the guarantor and the lender agree that the guarantor
would settle the debts or bear obligations in accordance with terms of the contract in case the borrower
fails to settle the debts. Financial guarantee contracts that are not designated as financial liabilities at fair
value through profit or loss, are initially measured at their fair values less the directly attributable
transaction costs. Subsequent to initial recognition, they are measured at the higher of: (i) the amount
determined in accordance with Accounting Standard for Business Enterprises No. 13 – Contingencies;
and (ii) the amount initially recognized less cumulative amortization recognized in accordance with the
principles set out in Accounting Standard for Business Enterprises No. 14 – Revenue.
9.6 Derecognition of Financial Liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation (or part
of it) is discharged. An agreement between the Group (an existing borrower) and an existing lender to
replace the original financial liability with a new financial liability with substantially different terms is
accounted for as an extinguishment of the original financial liability and the recognition of a new
financial liability.
When the Group derecognizes a financial liability or a part of it, it recognizes the difference between the
carrying amount of the financial liability (or part of the financial liability) derecognized and the
consideration paid (including any non-cash assets transferred or new financial liabilities assumed) in
profit or loss.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
9.7 Derivative Instruments and Embedded Derivative Instruments
Derivative financial instruments include forward exchange contracts, currency swaps, interest rate swaps
and foreign exchange options, etc. Derivatives are initially measured at fair value at the date when the
derivative contracts are entered into and are subsequently re-measured at fair value. The resulting gain or
loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not
designated as a financial asset or financial liability at fair value through profit or loss, and treated as a
standalone derivative if 1) the economic characteristics and risks of the embedded derivative are not
closely related to the economic characteristics and risks of the host contract; and 2) a separate instrument
with the same terms as the embedded derivative would meet the definition of a derivative. If the Group is
unable to measure the embedded derivative separately either at acquisition or at a subsequent balance
sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair value
through profit or loss.
9.8 Offsetting financial assets and financial liabilities
Where the Group has a legal right that is currently enforceable to set off the recognized financial assets
and financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and
settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the
net amount is presented in the balance sheet. Except for the above circumstances, financial assets and
financial liabilities shall be presented separately in the balance sheet and shall not be offset.
9.9 Equity instrument
An equity instrument is any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities. That the group issues (including refinancing), repurchases, sells or cancels
equity instruments is taken as the treatment of changes in equities. The group does not confirm the
changes of fair value of equity instruments. Transaction fees relevant to the equity transaction shall be
deducted from the equity.
The Group considers the allocation of the equity holder as the allocation of profits; issued share dividends
do not influence the total equity of the shareholders.
10. Receivables
10.1 Receivables that are individually significant and for which bad debt provision is individually
assessed
A receivable that exceeds RMB 4 million (inclusive) and accounting
Basis or monetary criteria for determining an
for more than 10% of the receivables book balance is deemed as an
individually significant receivable
individually significant receivable by the Group.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
For receivables that are individually significant, the Group assesses
the receivables individually for impairment. For account receivables
Method of determining provision for and other receivables that is not impaired individually, the Group
receivables that are individually significant and includes the receivables in a group of financial assets with similar
for which bad debt provision is individually credit risk characteristics and collectively assesses them for
assessed impairment. Account receivables and other receivables for which an
impairment loss is individually recognized are not included in a
collective assessment of impairment.
10.2 Receivables for which bad debt provision is collectively assessed on a portfolio basis
Method of recognizing bad debt provisions for receivables based upon collective assessment on a portfolio basis.
Accounts receivables with insignificant single
amount and significant single amount but no Aging analysis
single test impairment
Portfolios that aging analysis is used for bad debt provision:
Provision as a proportion of Provision as a proportion of other
Aging (over credit period)
accounts receivable (%) receivables (%)
Within 1 year (inclusive, the same below) 5
1-2 years 10
2-3 years 30
3-4 years 50
4-5 years 80
More than 5 years 100
10.3 Accounts receivable that are not individually significant but for which bad debt provision is
individually assessed:
There are significant differences between the present value of
Reasons for making individual bad debt future cash flow of the receivables and the present value of
provision future cash flow of the receivables portfolio based on aging
analysis as credit risk feature.
Through individual impairment test, determine the bad debts
Bad debt provision methods provisions according to the difference of the amount that the
present value of future cash flows lower than carrying value.
11. Inventories
11.1 Categories of inventories
The Group's inventories mainly include finished goods or commodities held for sale in the daily activities,
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
completed outstanding assets formed in the construction contract, products in the production process,
materials and supplies used in the production process or in the process of proving labor service.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of
conversion and other expenditures incurred in bringing the inventories to their present location and
condition.
11.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the mobile weighted average method.
11.3 Basis for determining net realizable value of inventories
The inventory is according to cost and net realizable value low metering on the date of balance sheet.
When the net realizable value is lower than cost, withdraw inventory falling price reserves. The net
realizable value refers to the amount derived by deducting the potential cost, estimated selling expense
and relative taxes to the completion date from the estimated sales price of inventory in daily activities.
When determining net realizable value of inventories, take the obtained conclusive evidence as basis and
consider the purposes of holding inventories and influence of events after the balance sheet date.
Provision for decline in value of inventories is made based on the excess of cost of inventory over its net
realizable value on an item-by-item basis.
After provision for inventory depreciation reserves is made, if the factors resulting in the write-down of
inventory impairment have disappeared and causing the net realizable value higher than its book value,
such inventory impairment provision are recovered and reversed, and the reversed amount recorded in
profits and losses of the current period.
11.4 Inventory count system
The perpetual inventory system is maintained for stock system.
11.5 Amortization method for low cost and short-lived consumable items and packaging materials
Packaging materials and low cost and short-lived consumable items are amortized using the immediate
write-off method.
12. Long-term Equity Investment
12.1 Basis for determining joint control and significant influence over investee
Control is the power to govern an entity through participating in relevant activities of the investee; the
investor is able to obtain variable benefits from its activities, and at same time, to use the control rights on
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
the investee to influence the amount of returns. Joint control means that joint control for certain
arrangement in accordance with relevant agreements; activities relevant to the arrangement cannot be
decided until obtaining the unanimous consent of parties sharing control right. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or
joint control over those policies. When determining whether an investing enterprise is able to exercise
control or significant influence over an investee, the effect of potential voting rights of the investee, such
as current convertible debts, current executable warrants, etc., held by the investing enterprises or other
parties shall be considered.
12.2 Determination of initial investment cost
For a long-term equity investment acquired through a business combination involving enterprises under
common control, the shares of merged party's book value of owners' equity in the final controlling party
consolidated financial statements obtained on the merger date shall be considered as the initial investment
cost of long-term equity investment. The differences between the initial investment cost of long-term
equity investment and the paid cash, the transferred non-cash assets and the book value of the assumed
debts are adjusted against the capital surplus; if the capital surplus is not sufficient to be offset, the
remaining balance is adjusted against retained earnings. In the case of issued equity securities treated as
consolidation consideration, share of book value of owner's equity of merged party in the final controlling
party consolidated financial statements is regarded as initial investment cost of long-term equity
investments on the date of consolidation; capital reserve shall be adjusted in accordance with taking total
nominal value of issued share as capital share, the difference between the initial investment cost of
long-term equity investments and total book value of issued shares; In case the capital reserve is not
enough for writing down, the retained earnings shall be adjusted.
For a long-term equity investment acquired through business combination not involving enterprises under
common control, and the merging cost confirmed on the purchased date are regarded as the initial
investment cost.
The intermediate expenses made by the combining party or purchaser for audit, legal service, assessment
and other management related expenses during the business merger should be included into the current
profit and loss as it happens.
Conduct initial measurement according the cost for other equity investment other than the long-term
equity investment formed in business merger. In case that the investor may post a significant impact on
the investee or execute joint control but not constitute the control right, long-term equity investment cost
is the sum of fair value of original-held equity investment plus newly-added investment cost in
accordance with No. 22 Accounting Standards for Business Enterprises----Recognition and Measure of
the Financial Instruments.
12.3 Subsequent measurement and recognition of profit or loss
12.3.1 Long-term equity investment accounted for using the cost method
Long-term equity investments in subsidiaries are accounted for using the cost method in the Company's
financial statements. A subsidiary is an investee that is controlled by the Group.
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
The long-term equity investment accounted by the cost method shall be measured at its initial investment
cost. If there are additional investments or disinvestments, the long-term equity investment cost shall be
adjusted. Income from the investment in the current period shall be recognized in accordance with the
cash dividends or profits declared and issued by the investee.
12.3.2 Long-term equity investment accounted for using the equity method
The Group accounts for investment in associates and joint ventures using the equity method. An associate
is an entity over which the Group has significant influence and a joint venture is an entity over which the
Group can only exercise joint control along with other investors on the investee’s net assets.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the
Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, no
adjustment is made to the initial investment cost. Where the initial investment cost is less than the
Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the
difference is recognized in profit or loss for the period, and the cost of the long-term equity investment is
adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive
income of the investee for the period as investment income or loss and comprehensive income for the
period, meanwhile, the book value of the long-term equity investment shall be adjusted; The Company
shall accordingly reduce the book value of the long-term equity investment in terms of the part that shall
be enjoyed according to the profit or cash dividends declared by the invested unit to be distributed; For
other changes in the owners' equity of the invested unit other than net profits and losses, other
comprehensive incomes and the profit distribution, the book value of long-term equity investment shall
be adjusted and be included into the capital reserves. The Company shall, on the ground of the fair value
of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable
share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity.
If the accounting policies and accounting periods adopted by the invested unit are different from those
adopted by the Company, the adjustment shall be made for the financial statements of the invested unit in
accordance with the accounting policies and accounting periods of the Company to recognize the
investment income and other comprehensive incomes. For the transaction incurred between the group and
associated enterprises and joint ventures, invested or sold assets don't constitute a business, the part that
doesn't achieve internal transaction profit or loss or belongs to the group calculated according to the
enjoyed ratio will be offset, and the profit or loss on investment will be confirmed on this basis. But for
the unrealized loss arising from the internal transaction between the group and the invested unit, if such
transaction loss is defined as the impairment loss of the transferred asset, they cannot be offset.
When the Company determines the net loss of the invested unit which shall be shared, it is necessary to
write-down the book value of the long-term equity investment and other long-term equities substantially
constituting the net investment of the invested unit to zero as a limit. Besides, if the group is obliged to
bear extra loss for the invested unit, it shall be necessary to determine provisions and record them to
current investment loss in compliance with obligations expected to be assumed. If the invested unit
realizes any net profits later, the group shall, after the amount of its attributable share of profits offsets its
attributable share of the un-confirmed losses, resume recognizing its attributable share of profits.
12.4 Disposal of long-term equity investments
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
On disposal of a long term equity investment, the difference between the proceeds actually received and
the carrying amount is recognized in profit or loss for the period.
13. Fixed Assets
13.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for
rental to others, or for administrative purposes, and have useful lives of more than one accounting year. A
fixed asset is recognized only when it is probable that economic benefits associated with the asset will
flow to the Group and the cost of the asset can be measured reliably. Fixed assets are initially measured at
cost.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is
probable that economic benefits associated with the asset will flow to the Group and the subsequent
expenditures can be measured reliably. Meanwhile the carrying amount of the replaced part is
derecognized. Other subsequent expenditures are recognized in profit or loss in the period in which they
are incurred.
13.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent
to the one in which it is ready for intended use. The useful life, estimated net residual value rate and
annual depreciation rate of each category of fixed assets are as follows:
Class Depreciation period (years) Residual value rate (%) Annual depreciation rate (%)
Buildings and Constructions 20 years 10 4.5
General-purpose equipment 3-5 years 10 18.0-30.0
Special-purpose equipment 3-5 years 10 18.0-30.0
Transportation vehicles 5 years 10 18.0
Estimated net residual value of a fixed asset is the estimated amount that the Group would currently
obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already
of the age and in the condition expected at the end of its useful life.
13.3 Identification basis and valuation methods for fixed assets acquired under finance leases
On the commencement date of the lease term, record the lower of the fair value of the leasing asset or the
present value of the minimum lease payments on the lease commencement date as the entry book value of
the leased asset, and book the amount of the minimum lease payments as the entry book value of
long-term account payable, and recognize the difference between the entry value of the leased asset and
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
that of the long-term account payables as unrecognized financing expenses. In addition, the initial direct
costs directly attributable to the leased item incurred during the process of negotiating the lease and
signing the leasing agreement shall be included into the value of the leased assets.
The Group adopts a depreciation policy for a fixed asset held under a finance lease which is consistent
with that for its owned fixed asset. If there is reasonable certainty that the Group will obtain ownership of
the leased asset at the end of the lease term, the leased asset is depreciated over its useful life. If there is
no reasonable certainty that the Group will obtain ownership of the leased asset at the end of the lease
term, the leased asset is depreciated over the shorter of the lease term and its useful life.
13.4 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use
or disposal, the fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged,
the amount of any proceeds on disposal of the asset net of the carrying amount and related taxes is
recognized in profit or loss for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation
method applied at least once at each financial year-end, and account for any change as a change in an
accounting estimate.
14. Construction in Process
Construction in progress is measured at its actual costs. The actual costs include various construction
expenditures during the construction period, borrowing costs capitalized before it is ready for intended
use and other relevant costs. Construction in progress is not depreciated. Construction in progress is
transferred to a fixed asset when it is ready for intended use. For those that could reach to the expected
serviceable condition, but haven't gone through final settlement of the accounts for the completed projects,
they will be converted to fixed assets according to the estimated value first, and the provisional estimate
value of the original fixed assets will be adjusted according to the actual costs after final settlement of the
construction accounts.
15. Borrowing Costs
Borrowing costs directly attributable to the acquisition & construction or production of assets eligible for
capitalization shall be capitalized when assets expenditure, borrowing costs and necessary construction or
production for bringing assets to expected conditions for use or marketing have taken place; when
construction or production of assets ready for capitalization reach to expected conditions for use or
marketing, capitalization shall be ceased. Other borrowing expenses are recognized as expenses in the
current period.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is
the actual interest expense incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used on the asset or any investment income on the temporary
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
investment of those funds. Where funds are borrowed under general-purpose borrowings, the Group
determines the amount of interest to be capitalized on such borrowings by applying a capitalization rate
to the weighted average of the excess of cumulative expenditures on the asset over the amounts of
specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates
applicable to the general-purpose borrowings. During the capitalization period, exchange differences
related to a specific-purpose borrowing denominated in foreign currency are all capitalized. Exchange
differences in connection with general-purpose borrowings are recognized in profit or loss in the period
in which they are incurred.
16. Intangible Assets
16.1 Intangible Assets
Intangible assets include land use right, intellectual property (IP) and application software, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is
available for use, its original cost is amortized over its estimated useful life using the straight-line method.
The useful life and predicted net residual value of various intangible assets are shown as follows:
Class Service life (year) Salvage value rate (%)
Land use right 50 years -
IP Right 10 Years -
Application Software 5-10 years -
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method
at the end of the period, and makes adjustments when necessary.
16.2 Internal Research and Development Expenditure
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is
recognized as intangible asset. Expenditure during development phase that does not meet the following
conditions is recognized in profit or loss for the period.
(1) It is technically feasible to complete the intangible asset so that it will be available for use or sale;
(2) The Group has the intention to complete the intangible asset and use or sell it;
(3) The Group can demonstrate the ways in which the intangible asset will generate economic benefits,
including the evidence of the existence of a market for the output of the intangible asset or the intangible
asset itself or, if it is to be used internally, the usefulness of the intangible asset;
Hikvision 2017 Annual Report
Notes to Financial Statements
For the reporting period ended on December 31st 2017
(4) The availability of adequate technical, financial and other resources to complete the development and
the ability to use or sell the intangible asset; and
(5) The expenditure attributable to the intangible asset during its development phase can be reliably
measured.
If the expenditures cannot be distinguished between the research phase and development phase, the
Group recognizes all of them in profit or loss for the period.
17. Long-term Assets Impairment
The Group assesses at each balance sheet date whether there is any indication that the long-term equity
investment, fixed assets, construction in process and intangible assets with a finite useful life may be
impaired. If there is any in
