HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD. 2019 Quarter 1 Report January to March 2019 April 20th 2019 Hikvision 2019 Q1 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. The Company’s chairman Chen Zongnian, and director Gong Hongjia, Qu Liyang, Hu Yangzhong, Wu Weiqi, independent director Lu Jianzhong, Wang Zhidong attended the board meeting to review this report in person. Independent director Cheng Tianzong and Hong Tianfeng were unable to attend the board meeting in person due to personal reasons, and authorized independent director Wang Zhidong and Lu Jianzhong to attend and exercise the voting right on their behalf respectively. Chen Zongnian, the Company's legal representative, Jin Yan, the person in charge of the accounting work, and Zhan Junhua, the person in charge of accounting institution (accounting supervisor) hereby declare and warrant that the financial statements in this report are authentic, accurate and complete. Note: This document is a translated version of the Chinese version 2019 Q1 Financial Report (“2019 年第 一季度报告全文”), and the published Q1 report in the Chinese version shall prevail. The complete published Chinese 2019 Q1 Financial Report may be obtained at http://www.cninfo.com.cn. 2 Hikvision 2019 Q1 Report Section II Corporate Profile I. Key Accounting Data and Financial Indicators Whether the Company performed a retroactive adjustment to or restatement of previous accounting data □Yes √ No Change(%) between December 31st 2018 At March 31st 2019 At December 31st 2018 and March 31st 2019 Total assets (RMB) 60,547,762,104.60 63,484,352,233.42 -4.63% Net assets attributable to shareholders of the Company 39,223,726,364.46 37,590,154,638.46 4.35% (RMB) YoY Change(%) between 2018 Q1 and 2019 Q1 2018 Q1 2019 Q1 Operating income (RMB) 9,942,448,619.42 9,364,828,201.00 6.17% Net profits attributable to shareholders of the Company 1,536,118,222.96 1,815,964,569.77 -15.41% (RMB) Net profits attributable to shareholders of the Company 1,482,828,488.96 1,808,323,790.71 -18.00% excluding non-recurring gains and losses (RMB) Net cash flows from operating activities (RMB) -3,038,198,689.80 -3,856,064,680.53 21.21% Basic earnings per share (RMB/share) 0.168 0.199 -15.58% Diluted earnings per share (RMB/share) 0.167 0.197 -15.23% Weighted average Return on Equity (ROE) 4.00% 5.80% -1.80% 3 Hikvision 2019 Q1 Report Items and Amounts of Non-recurring Gains and Losses √ Applicable □ Inapplicable Unit:RMB Item January 1st –March 31st 2019 Profit or loss from disposal of non-current assets (including the write-off for the 408,476.41 impairment provision of assets) The government subsidies included in the current profits and losses (excluding the government subsidy closely related to regular course of business of the Company 41,713,087.45 and government subsidy based on standard quota or quantification application according to the national industrial policy.) Profits and losses attributed to change in fair value for held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities, and derivative financial liabilities; and investment income in disposal of held-for-trading financial assets, derivative financial assets, held-for-trading 5,255,479.38 financial liabilities, derivative financial liabilities and other debt investments, excluding the effective hedging business related to the regular business operation of the Company. Other non-operating income and expenditures except the items mentioned above 18,830,643.99 Less: Impact of income tax 12,384,274.82 The impact of the minority interests (after tax) 533,678.41 Total 53,289,734.00 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 , or classifies any non-recurring gain/loss item mentioned in the aforementioned note as a recurrent gain/loss item 4 Hikvision 2019 Q1 Report II. Total Number of Shareholders at the end of the reporting period and Information for Top 10 Shareholders 1. Total number of common shareholders and preferred shareholders with resumed voting rights and information about top 10 shareholders Unit: Share Total number of common shareholders at the end of the reporting Total number of preferred shareholders (if any) whose voting rights have been 186,407 0 period recovered at the end of the reporting period Particulars about top 10 shareholders The number of Pledged or frozen Share- Total shares held at common shares held Name of shareholder Nature of shareholder holding percentage (%) the period-end with trading Status Amount restrictions China Electronics Technology HIK Group Co., Ltd. State-owned corporation 39.08% 3,653,674,956 0 Pledged 50,000,000 Gong Hongjia Overseas individual 13.43% 1,255,056,700 941,292,525 Pledged 418,338,300 Hong Kong Securities Clearing Company Ltd.(HKSCC) Overseas corporation 9.41% 879,458,857 0 - Xinjiang Weixun Investment Management Limited Domestic non-state-owned 4.82% 450,795,176 0 Pledged 179,832,999 Partnership corporation Domestic non-state-owned Xinjiang Pukang Investment Limited Partnership 1.95% 182,510,174 0 Pledged 72,570,000 corporation Hu Yangzhong Domestic Individual 1.95% 182,186,477 136,639,858 Pledged 63,690,782 The 52nd Research Institute at China Electronics State-owned corporation 1.93% 180,775,044 0 - - Technology Group Corporation Domestic non-state-owned CITIC Securities Company Limited 0.73% 67,868,267 0 - - corporation UBS AG Overseas corporation 0.72% 66,987,946 0 - - State-owned Central Huijin Investment Ltd. 0.70% 65,818,800 0 - - corporation 5 Hikvision 2019 Q1 Report Particulars about shares held by the Top 10 common shareholders holding shares that are not subject to trading restriction(s) Number of common shares without trading restrictions held at the Type of shares Name of shareholder 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 879,458,857 879,458,857 Ltd.(HKSCC) Xinjiang Weixun Investment Management Limited 450,795,176 450,795,176 Partnership Gong Hongjia 313,764,175 RMB ordinary shares 313,764,175 Xinjiang Pukang Investment Limited Partnership 182,510,174 RMB ordinary shares 182,510,174 The 52nd Research Institute at China Electronics RMB ordinary shares 180,775,044 180,775,044 Technology Group Corporation CITIC Securities Company Limited 67,868,267 RMB ordinary shares 67,868,267 UBS AG 66,987,946 RMB ordinary shares 66,987,946 Central Huijin Investment Ltd. 65,818,800 RMB ordinary shares 65,818,800 Hu Yangzhong 45,546,619 RMB ordinary shares 45,546,619 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 concerted Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong, actions among top ten common shareholders without domestic individual, is holding shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang trading restrictions, and among top ten common Investment Limited Partnership. shareholders and top ten common shareholders Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-concert without trading restrictions parties in accordance with the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the Listed Company. 6 Hikvision 2019 Q1 Report Any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conducts any agreed buy-back in the reporting period? □ Applicable √ Inapplicable No such cases in the reporting period. 2. Total number of preferred shareholders and information about Top 10 preferred shareholders □ Applicable √ Inapplicable 7 Hikvision 2019 Q1 Report Section III Significant Events 1. Information and explanation about variations in key financial statement items and financial indicators during the reporting period. √Applicable □Inapplicable 1.1 Explanation for variations in balance sheet items Balance at March 31st Balance at December 31st Item Change (%) Note of Changes 2019 (RMB) 2018 (RMB) Financial assets at fair value through current According to the new financial instrument standards, the financial assets, 0.00 1,860,050.59 -100.00% profit and loss which are measured at fair value through current profit or loss at the end of the prior year, are adjusted to be presented under held-for-trading financial Held-for-trading financial assets 9,437,149.64 0.00 100.00% assets at the end of the current reporting period. According to the new financial instrument standards, some of the notes Other current assets 2,361,188,959.22 730,682,813.14 223.15% receivable of the Company at the end of the prior year were adjusted to other current assets at the end of the current reporting period. Available for sale financial assets 0.00 290,966,813.00 -100.00% According to the new financial instrument standards, the available-for-sale financial assets of the Company at the end of the prior year were adjusted to other non-current financial assets at the end of the current reporting Other non-current financial assets 290,966,813.00 0.00 100.00% period. Long-term prepaid expenses for 22,996,190.27 0.00 100.00% Newly added house renovation costs for amortization amortization Financial liabilities at fair value through According to the new financial instrument standards, the financial 0.00 290,998.43 -100.00% current profit and loss liabilities, which are measured at fair value through current profit or loss at the end of the prior year, are adjusted to be presented under Held-for-trading financial liabilities 4,641,808.18 0.00 100.00% held-for-trading financial liabilities at the end of the current reporting period. 8 Hikvision 2019 Q1 Report Notes payable and accounts payable 7,128,014,060.23 10,765,145,485.74 -33.79% Increase in procurement payment due Payroll payable 630,067,901.88 1,921,608,104.04 -67.21% The 2018 year-end bonus are distributed during the current quarter Non-current liabilities due within one year 16,071,686.29 3,178,171,147.16 -99.49% Euro bond was due and paid-off during the current quarter Long-term borrowings 4,240,800,000.00 440,000,000.00 863.82% Newly added foreign currency loans for long-term asset investments Long-term payables 36,612,836.89 0.00 100.00% Payables for outstanding financing lease payments Other payables 698,402,283.29 2,953,203,190.99 -76.35% The shares for 2018 Restricted Incentive Stock Scheme were granted, and Capital reserves 4,012,784,365.61 1,956,139,660.52 105.14% the investment funds were converted into share capital and capital reserve, which led to a decrease in other payables and an increase in capital reserve. Other current liabilities 2,422,883,636.78 364,984,759.94 563.83% Other current liabilities and treasury shares increased according to the increase in the number of shares subject to sale restrictions. Treasury stocks 2,422,883,636.78 364,984,759.94 563.83% 1.2 Explanation for variations in income statement items Item 2019 Q1 (RMB) 2018 Q1 (RMB) YoY Change (%) Note of changes Administrative expenses 339,835,080.69 260,406,184.32 30.50% Personnel growth R&D expenses 1,059,175,176.03 734,653,289.03 44.17% Investments in R&D continues to increase Financial expense 140,437,311.57 257,430,070.75 -45.45% Decrease in foreign exchange losses Gains from changes in fair values 3,301,205.32 -42,253,561.30 107.81% Changes in fair value for foreign exchange hedging products 9 Hikvision 2019 Q1 Report 1.3 Explanation for variations in cash flow statement items Item 2019 Q1 (RMB) 2018 Q1 (RMB) YoY Change (%) Note of changes Net cash flow from operating activities -3,038,198,689.80 -3,856,064,680.53 21.21% Increase in sales receipts during the current reporting period Net cash flow from investing activities -447,200,463.78 -1,744,035,918.57 74.36% Reduced investment in principal-guaranteed bank financial products 2. Progress and influence of significant events, analysis and explanation of corresponding solutions. □ Applicable √ Inapplicable 3. Incomplete commitments from the related committed parties such as the Company’s actual controller, shareholders, related parties, acquirer(s), and the Company during the reporting period √Applicable □ Inapplicable 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. Commitments in 2. Commitments in decrease and regulation of transactions with related party: offering documents Zhejiang Haikang Group Co., Ltd (hereinafter referred to as Haikang Group October 29th Strict CETHIK Group Co., Ltd. Long-term or shareholding or actual controller) as the controlling shareholders of Hangzhou Hikvision 2013 performance alterations 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 any fair market transactions in the cooperation with Hikvision. (2) Haikang Group will not make use of the controlling power to obtain the 10 Hikvision 2019 Q1 Report Date of Term of Commitments Giver of commitments Details of commitments Performance commitments commitments prior right to complete the transaction with Hikvision. (3) Haikang Group will not deal with Hikvsion in not fair terms comparing to the market prices to prejudice the Company’s interests. For unavoidable related transactions, the Company will observe the principles of justice and fairness to 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 (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 11 Hikvision 2019 Q1 Report Date of Term of Commitments Giver of commitments Details of commitments Performance commitments commitments 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 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 12 Hikvision 2019 Q1 Report Date of Term of Commitments Giver of commitments Details of commitments Performance commitments commitments existing employee recruitment for the listed Company. 4.6 Currently the Company has no plan to make significant changes for the dividend distribution plan for the listed Company. 4.7 Currently the Company has no plan to make significant changes for business and organizational structure for the listed Company. During Hu Yangzhong, Wu Weiqi, JiangHaiqing, Zhou Zhiping, Xu Lirong, Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan,、Jiang Yufeng, Liu Xiang, Hangzhou Weixun Investment Management Wang Ruihong, Chen Junke’s tenure of the Company’s board of directors, Limited Partnership(later renamed as Xinjiang May 17th Strict supervisors and senior management personnel, the annual transfer of Long term Weixun Investment Management Limited 2010 performance Hikvision’s total shares should not exceed 25% of total number of shares Partnership) 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 senior management personne, the annual Hangzhou Pukang Investment Limited Commitments in transfer of Hikvision’s total shares should not exceed 25% of total number of May 17th Strict Partnership(later renamed as Xinjiang Pukang Long term Initial Public shares held under Pukang; whithin 6 months after abovementioned 2010 performance Offering or Investment Limited Partnership) personnel’s dimission, should not transfer Hikvision’s shares held under re-financing Pukang. The Company's directors, supervisors and executive: HuYangzhong,Wu Weiqi, Jiang During their tenure of the Company’s board of directors, supervisors and Haiqing, Zhou Zhiping,Xu Lirong, Cai senior management personnel, the annual shares transfer should not exceed May 17th Strict Long term Dingguo, He Hongli, Zheng Yibo, Hu Dan, 25% of total number of shares held under Weixun; whthin 6 months after 2010 performance Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen their dimission, they should not transfer their shares held under Weixun. Junke Directors, executive officers of the Company: During their tenure of the Company’s board of directors, supervisors and May 17th Strict Long term Hu Yangzhong, Wu Weiqi senior management personnel, the annual shares transfer should not exceed 2010 performance 13 Hikvision 2019 Q1 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 personnel, Chen’s annual shares transfer The Company’s director Gong Hongjia’s May 17th Strict should not exceed 25% of total number of shares held under Pukang; whthin Long-term spouse, Chen Chunmei 2010 performance 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 Group competing business, China Electronics Technology Group Corporation, the September Strict Corporation(later renamed as China Electronics th Long term actual controller of the Company, issued Letters of non-competition on 18 18 2008 performance Technology Group Co., Ltd.) September, 2008. Gong Hongjia; Hangzhou Weixun Investment Management To avoid any loss of the Company and other shareholders arising from any Limited Partnership(later renamed as Xinjiangcompeting business, Gong Hongjia, Hangzhou WeiXun Investment Weixun Investment Management Limited Management Limited Partnership, ZheJiang Orient Holdings Co., Ltd and Partnership); Hangzhou KangPu Investment Management Limited Partnership, the Strict th Long term Hangzhou Pukang Investment Limited promoters of the Company, issued Commitment Letters of non-competition in July 10 2008 performance Partnership(later renamed as Xinjiang Pukang the same industry on 10 July, 2008. Investment Limited Partnership);ZheJiang Orient Holdings Co., Ltd. CETC Investment Holdin Co.,Ltd (CETCIH).; Other commitments During the effective period of the implementation of CETCIH’s plan to Within 6 The 52nd Research Institute at China rd rd to the company's increase the holding of Hikvision (within 6 months from October 23 2018) October 23 months from Strict Electronics Technology minority and the statutory period, CETCIH will not reduce its shareholdings of 2018 October 23rd performance Group Corporation; China Electronics shareholders Hikvision 2018 Technology Group Co., Ltd. 14 Hikvision 2019 Q1 Report Date of Term of Commitments Giver of commitments Details of commitments Performance commitments commitments Whether the commitments is Yes fulfilled in time 4. Guidance on the Company’s operational result from January 1st 2019 to June 30th 2019 Guidance on the Company’s operational performance from January 1st 2019 to June 30th 2019: Net profits attributable to shareholders of the Company are positive, and situation of turning losses into gains is not applicable. Estimated YoY change (%) of net profits attributable to shareholders of the Company from -10.00% to 10.00% January 1st 2019 to June 30th 2019 Estimated variation interval of net profits attributable to shareholders of the Company from 373,265.60 to 456,213.51 January 1st 2019 to June 30th 2019 (0,000 RMB) Net profits attributable to shareholders of the Company from January 1 st 2018 to June 30th 414,739.55 2018 (0,000 RMB) Note of change in operational results The Company’s operating performance continues to have a solid growth. 5. Financial Assets measured at fair value √ Applicable □ Inapplicable Unit: RMB Profits or losses on Cumulative fair the changes in fair Purchase during the Sales during the Cumulative investment Asset Category Initial investment cost value change Closing balance Source of funds value in current reporting period reporting period income charged to equity period Financial derivative 1,013,306,062.25 3,301,205.32 0.00 239,253,700.00 1,954,274.06 571,588,870.81 Company's own funds instruments Notes receivable 1,793,592,867.04 -16,820,536.48 1,776,772,330.56 Company's own funds 15 Hikvision 2019 Q1 Report Profits or losses on Cumulative fair the changes in fair Purchase during the Sales during the Cumulative investment Asset Category Initial investment cost value change Closing balance Source of funds value in current reporting period reporting period income charged to equity period Equity investments 290,966,813.00 290,966,813.00 Company's own funds Total 3,097,865,742.29 3,301,205.32 -16,820,536.48 239,253,700.00 0.00 1,954,274.06 2,639,328,014.37 -- 6. Illegal provision of guarantees for external parties □ Applicable √ Inapplicable No such case in the reporting period. 7. 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. 8. Schedule for the reception activities including research, communication and interviews during the current reporting period √ Applicable □ Inapplicable 8.1 Reception of research activities during 2019 Q1 Time of reception Method of reception Type of reception object Index of basic situation of the research Site Research and telephone From January 1st 2019 to January 11th 2019 Institutional investors CNINF, Investor Relations Activity Record: From January 1st 2019 to January 11th 2019 communication Site Research and telephone From January 14th 2019 to January 31st 2019 Institutional investors CNINF, Investor Relations Activity Record: From January 14th 2019 to January 31st 2019 communication Site Research and telephone Institutional investors From February 15th 2019 to March 1st 2019 CNINF, Investor Relations Activity Record: From February 15th 2019 to March 1st 2019 communication 16 Hikvision 2019 Q1 Report Time of reception Method of reception Type of reception object Index of basic situation of the research Site Research and telephone Institutional investors From March 4th 2019 to March 19th 2019 CNINF, Investor Relations Activity Record: From March 4th 2019 to March 19th 2019 communication 9.2 Participation of conferences for investor relationship activities during 2019 Q1 Time of conference Location Conference Name Type of reception object Method of reception January 2019 Shanghai UBS 19th Greater China Conference 2019 All kinds of investors One-on-One, One-on-multi, small group Meetings, and etc. January 2019 Beijing Morgan Stanley 2019 China New Economy Summit All kinds of investors One-on-One, One-on-multi, small group Meetings, and etc. January 2019 Shenzhen 17th Annual dbAccess China Conference 2019 All kinds of investors One-on-One, One-on-multi, small group Meetings, and etc. February 2019 Hongkong Macquarie A-Share Technology Stock Conference All kinds of investors One-on-One, One-on-multi, small group Meetings, and etc. March 2019 Taibei Bank of America Merrill Lynch Asia TMT Conference All kinds of investors One-on-One, One-on-multi, small group Meetings, and etc. 9.3 Investor relations activity statistics during 2019 Q1 Number of daily research received (On-site and telephone conference, times) 54 Number of institutional investors received (ppl) 220 Number of individual investors received (ppl) 0 Number of investor relations conference participated 5 17 Hikvision 2019 Q1 Report Section IV Financial Reports 4.1 Financial Reports 1. Consolidated Balance Sheet Prepared by Hangzhou Hikvision Digital Technology Co., Ltd. March 31st 2019 Unit: RMB Item Closing balance Opening balance Current Assets: Cash and bank balances 23,689,219,537.88 26,552,402,711.23 Balances with clearing agencies Lendings with banks and other financial institutions Held-for-trading financial assets 9,437,149.64 1,860,050.59 Financial assets at fair value through current profit and loss Derivative financial assets Notes Receivable and Accounts Receivables 17,011,890,539.07 16,915,040,071.25 Including : Notes receivable 246,914,054.43 295,598,790.07 Accounts receivable 16,764,976,484.64 16,619,441,281.18 Prepayments 594,988,091.64 460,304,219.65 Premiums receivable Amounts receivable under reinsurance contracts Reinsurer's share of insurance contract reserves Other receivables 552,495,647.23 586,748,265.21 Including: Interests receivable Dividends receivable 17,357,220.31 Financial assets purchased under resale agreements Inventories 5,862,542,965.33 5,725,104,153.41 Contract assets Held-for-sale assets Non-current assets due within one year 380,479,565.93 380,795,020.47 18 Hikvision 2019 Q1 Report Item Closing balance Opening balance Other current assets 2,361,188,959.22 2,978,040,396.42 Total Current Assets 50,462,242,455.94 53,600,294,888.23 Non-current Assets: Loans and advances to customers Debt investments Available-for-sale financial assets Other debt investments Held-to-maturity investments Long-term receivables 743,455,496.30 705,512,368.17 Long-term equity investments 159,729,704.73 163,301,844.56 Other equity investments Other non-current financial assets 290,966,813.00 290,966,813.00 Investment properties Fixed assets 5,199,336,097.11 5,082,415,160.10 Construction in progress 486,435,856.27 416,092,413.42 Productive biological assets Oil and gas assets Right-to-use assets Intangible assets 993,696,774.19 869,913,050.09 Development expenditures Goodwill 209,382,366.79 212,269,337.23 Long-term prepaid expenses 22,996,190.27 Deferred tax assets 519,044,957.03 534,346,941.25 Other non-current assets 1,460,475,392.97 1,582,750,600.80 Total Non-current Assets 10,085,519,648.66 9,857,568,528.62 Total Assets 60,547,762,104.60 63,457,863,416.85 Current Liabilities: Short-term borrowings 3,667,674,763.23 3,465,655,688.29 Loans from the central bank Capitals taking from banks and other financial institutions Held-for-trading financial liabilities 4,641,808.18 290,998.43 Financial liabilities at fair value through current profit and loss Derivative financial liabilities 19 Hikvision 2019 Q1 Report Item Closing balance Opening balance Notes payable & Accounts payable 7,128,014,060.23 10,765,145,485.74 Receipts in advance 573,263,127.09 641,430,490.22 Financial assets sold under repurchase agreements Customer deposits and deposits from banks and other financial institutions Funds from securities trading agency Funds from underwriting securities agency Payroll payable 630,067,901.88 1,921,608,104.04 Taxes payable 1,148,883,533.88 1,418,921,664.57 Other payables 698,402,283.29 2,953,203,190.99 Including: Interests payable Dividends payable 73,091,258.74 119,917,640.92 Fees and commissions payable Amounts payable under reinsurance contracts Contract liabilities Held-for-sale liabilities Non-current liabilities due within one year 16,071,686.29 3,178,171,147.16 Other current liabilities 2,422,883,636.78 364,984,759.94 Total Current Liabilities 16,289,902,800.85 24,709,411,529.38 Non-current Liabilities: Insurance contract reserves Long-term borrowings 4,240,800,000.00 440,000,000.00 Bonds payable Including: Preferred share Perpetual bond Leasing liabilities Long-term payables 36,612,836.89 Provisions 76,800,040.78 77,625,238.49 Deferred income 317,864,873.97 293,179,089.13 Deferred tax liabilities Other non-current liabilities Total non-current liabilities 4,672,077,751.64 810,804,327.62 Total liabilities 20,961,980,552.49 25,520,215,857.00 Owners’ Equities 20 Hikvision 2019 Q1 Report Item Closing balance Opening balance Share capital 9,348,465,931.00 9,227,270,473.00 Other equity instruments Including: Preferred share Perpetual debt Capital reserves 4,012,784,365.61 1,956,139,660.52 Less: Treasury stock 2,422,883,636.78 364,984,759.94 Other comprehensive income -72,767,416.81 -76,065,167.67 Surplus reserves 4,460,712,358.45 4,460,712,358.45 General risk reserve Retained earnings 23,897,414,762.99 22,360,593,257.53 Total owners' equity attributable to owner of the 39,223,726,364.46 37,563,665,821.89 Company Minority interests 362,055,187.65 373,981,737.96 Total owners' equity 39,585,781,552.11 37,937,647,559.85 Total liabilities and owners' equity 60,547,762,104.60 63,457,863,416.85 Legal Representative: Chen Zongnian Person in Charge of the Accounting work: Jin Yan Person in Charge of Accounting Institution: Zhan Junhua 2. Balance Sheet of the Parent Company Unit: RMB Item Closing balance Opening balance Current Assets: Cash and bank balances 18,863,944,733.97 19,192,461,228.22 Held-for-trading financial assets Financial assets at fair value through current profit and loss Derivative financial assets Notes receivable & Accounts receivable 22,132,138,034.55 15,325,923,955.48 Including: Notes receivable 72,902,964.58 121,404,793.77 Accounts receivable 22,059,235,069.97 15,204,519,161.71 Prepayments 195,780,892.75 132,344,929.55 Other receivables 831,724,252.68 522,987,955.34 Including: Interests receivable Dividends receivable 19,907,220.31 2,550,000.00 Inventories 66,335,666.02 168,885,723.93 21 Hikvision 2019 Q1 Report Item Closing balance Opening balance Contract assets Held-for-sale assets Non-current assets due within one year Other current assets 179,471,590.77 321,871,615.09 Total Current Assets 42,269,395,170.74 35,664,475,407.61 Non-current Assets: Debt investments Available-for-sale financial assets Other debt investments Held-to-maturity investments Long-term receivables Long-term equity investments 4,382,145,555.87 4,361,147,395.90 Other equity investments Other non-current financial assets 290,956,813.00 290,956,813.00 Investment properties Fixed assets 2,848,146,704.92 2,844,176,300.34 Construction in progress 76,816,992.24 65,156,482.70 Productive biological assets Oil and gas assets Right-to-use assets Intangible assets 205,106,707.93 197,147,608.73 Development expenditure Goodwill Long-term prepaid expenses Deferred tax assets 221,779,547.02 221,779,547.02 Other non-current assets 3,045,101.70 14,601,579.55 Total Non-Current Assets 8,027,997,422.68 7,994,965,727.24 Total Assets 50,297,392,593.42 43,659,441,134.85 Current Liabilities: Short-term borrowings 200,000,000.00 Held-for-trading financial liabilities Financial liabilities at fair value through current profit and loss Derivative financial liabilities 22 Hikvision 2019 Q1 Report Item Closing balance Opening balance Notes payable & Accounts payable 321,500,523.87 356,787,605.91 Receipts in advance 173,076,335.61 204,337,524.21 Contract liabilities Payroll payables 487,392,910.14 1,272,626,004.95 Taxes payables 837,251,221.99 987,057,652.70 Other payables 6,357,906,472.47 2,529,600,057.31 Including: Interests payable Dividends payable 70,641,258.74 117,467,640.92 Held-for-sale liabilities Non-current liabilities due within one year 3,172,727,888.37 Other current liabilities 2,422,883,636.78 364,984,759.94 Total Current Liabilities 10,800,011,100.86 8,888,121,493.39 Non-Current Liabilities: Long-term borrowings 3,016,800,000.00 Bonds payable Including: Preferred share Perpetual bond Leasing liabilities Long-term payables Provisions 52,956,535.09 52,956,535.09 Deferred income 158,337,775.51 186,747,708.01 Deferred tax liabilities Other non-current liabilities Total non-current liabilities 3,228,094,310.60 239,704,243.10 Total liabilities 14,028,105,411.46 9,127,825,736.49 Owners' equity Share capital 9,348,465,931.00 9,227,270,473.00 Other equity instruments Including: Preferred share Perpetual bond Capital reserves 3,945,030,120.97 1,883,262,407.46 Less: Treasury share 2,422,883,636.78 364,984,759.94 Other comprehensive income -2,209,479.93 -2,178,538.52 23 Hikvision 2019 Q1 Report Item Closing balance Opening balance Surplus reserves 4,460,712,358.45 4,460,712,358.45 Retained earnings 20,940,171,888.25 19,327,533,457.91 Total owners' equity 36,269,287,181.96 34,531,615,398.36 Total liabilities and owners' equity 50,297,392,593.42 43,659,441,134.85 Legal Representative: Chen Zongnian Person in Charge of the Accounting work: Jin Yan Person in Charge of Accounting Institution: Zhan Junhua 3. Consolidated Income Statement Unit: RMB Item 2019 Q1 2018 Q1 I. Total operating income 9,942,448,619.42 9,364,828,201.00 Including: Operating income 9,942,448,619.42 9,364,828,201.00 Interest income Premiums earned Fees and commissions income II. Total operating costs 8,459,559,903.73 7,601,579,147.44 Including: Operating costs 5,485,765,941.97 5,144,866,014.52 Interest expenses Fees and commissions expenses Surrender charge fee Claims and policyholder benefits (net of amounts recoverable from reinsurers) Insurance contract reserves (net of reinsurers’ share) Insurance policyholder dividends Expenses for reinsurance accepted Business taxes and levies 77,337,440.61 70,291,380.92 Selling expenses 1,317,557,509.65 1,084,628,143.59 Administrative expenses 339,835,080.69 260,406,184.32 R&D expenses 1,059,175,176.03 734,653,289.03 Financial expenses 140,437,311.57 257,430,070.75 Including: Interest expenses 55,224,699.96 60,245,855.52 Interest income 152,237,461.48 128,780,160.00 Impairment losses of assets 2,541,417.08 49,304,064.31 Credit impairment losses 36,910,026.13 24 Hikvision 2019 Q1 Report Item 2019 Q1 2018 Q1 Add: Other income 339,329,038.35 398,225,011.54 Investment income (Loss is indicated by "-") 15,739,354.54 21,904,699.06 Including: Income from investments in -3,572,139.83 342,772.48 associates and joint ventures Foreign exchange gains (Losses are indicated by “-”) Gains from hedging of net exposure (Losses are indicated by "-") Gains from changes in fair values (Losses are 3,301,205.32 -42,253,561.30 indicated by "-") Gains from disposal of assets (Losses are 408,476.41 3,430,565.03 indicated by “-”) III. Operating profit (Loss is indicated by 1,841,666,790.31 2,144,555,767.89 "-") Add: Non-operating income 20,519,688.26 13,022,792.29 Less: Non-operating expenses 2,085,124.56 1,536,336.10 IV. Total profit (total losses expressed with "-") 1,860,101,354.01 2,156,042,224.08 Less: Income tax expenses 342,176,314.58 373,754,038.72 V. Net profit (net loss expressed with "-") 1,517,925,039.43 1,782,288,185.36 1.Classified by business continuity (1) Net profit on continuous operation (net 1,517,925,039.43 1,782,288,185.36 losses expressed with "-") (2) Net profit on terminated operation (net losses expressed with "-") 2. Classified by ownership (1) Net profit attributable to owners of parent 1,536,118,222.96 1,815,964,569.77 company (2) Profit or loss attributable to minority -18,193,183.53 -33,676,384.41 interests VI. Other comprehensive income, net of income tax 3,421,375.11 15,159,851.45 Other comprehensive income attributable to owners 3,297,750.86 17,152,186.03 of the Company, net of tax (I) Items that are not reclassified to profit or loss 1. Changes in re-measurement of defined benefit obligation 2. Amounts of other comprehensive income that cannot be transferred into profit or loss under equity method 3. Changes in fair value of other equity instruments investment 4. Changes in the fair value of the Company's own credit risk 25 Hikvision 2019 Q1 Report Item 2019 Q1 2018 Q1 5. Others (II) Other comprehensive income to be reclassified to 3,297,750.86 17,152,186.03 profit or loss 1. Amounts of other comprehensive income that are able to be transferred into profit or loss under equity method 2. Changes in fair value of other debt investments 3. Gain or losses attributes to the changes in fair value of available-for-sale financial assets 4. The amount of financial assets reclassified into other comprehensive income 5. Gains or losses through reclassifying held-to-maturity financial assets into available-for-sale financial assets 6. Credit impairment provisions for other debt investments 7. Cash flow hedge reserve 8. Exchange differences arising on conversion of financial statements denominated in foreign -6,370,529.23 17,152,186.03 currencies 9. Gains and losses from changes in fair value of 9,668,280.09 other current assets 10. Others Other comprehensive income attributable to minority 123,624.25 -1,992,334.58 interests, net of tax VII. Total comprehensive income 1,521,346,414.54 1,797,448,036.81 Total comprehensive income attributable to owners 1,539,415,973.82 1,833,116,755.80 of the parent company Total comprehensive income attributable to -18,069,559.28 -35,668,718.99 minority interests VIII. Earnings per share (I) Basic earnings per share 0.168 0.199 (II) Diluted earnings per share 0.167 0.197 Legal Representative: Chen Zongnian Person in Charge of the Accounting work: Jin Yan Person in Charge of Accounting Institution: Zhan Junhua 4. Income Statement of the Parent Company Unit: RMB Item 2019 Q1 2018 Q1 I. Total operating income 4,377,811,528.72 3,928,907,152.63 Less: Operating Costs 1,280,978,910.20 1,169,938,051.45 Business taxes and levies 52,619,746.17 51,940,799.46 26 Hikvision 2019 Q1 Report Item 2019 Q1 2018 Q1 Selling expenses 595,502,558.08 476,356,746.70 Administrative expenses 146,822,872.04 102,594,537.11 R R&D expenses 754,601,871.17 465,592,061.36 Financial expenses -32,942,250.80 146,185,915.34 Including: Interest expenses 31,341,521.92 44,495,750.95 Interest income 139,063,199.07 121,694,763.43 Impairment losses of assets Credit impairment losses 3,691,052.90 Add: Other income 300,013,588.73 365,167,317.80 Investment income (Loss is indicated by "-") 14,758,099.27 -5,689,637.96 Including: Income from investments in -2,599,121.60 342,772.48 associates and joint ventures Gains from hedging of net exposure (Loss is indicated by "-") Gains from changes in fair values (Losses are indicated by "-") Gains from disposal of assets (Loss is indicated 83,734.40 3,494,397.51 by "-") II. Operating profit (loss is indicated by "-") 1,891,392,191.36 1,879,271,118.56 Add: Non-operating income 5,055,004.45 2,193,088.96 Less: Non-operating expenses 941,317.88 346,091.67 III. Total profit (total loss is indicated by "-") 1,895,505,877.93 1,881,118,115.85 Less: Income tax expenses 283,570,730.09 281,964,253.80 IV. Net profit (Net loss is indicated by "-") 1,611,935,147.84 1,599,153,862.05 (1) Net profit on continuous operation (net losses 1,611,935,147.84 1,599,153,862.05 expressed with "-") (2) Net profit on terminated operation (net losses expressed with "-") V. Other comprehensive income, net of income tax -30,941.41 (I) Items that are not reclassified to profit or loss 1. Changes in re-measurement of defined benefit obligation 2. Amounts of other comprehensive income that cannot be transferred into profit or loss under equity method 3. Changes in fair value of other equity instruments investment 4. Changes in the fair value of the Company's own credit risk 27 Hikvision 2019 Q1 Report Item 2019 Q1 2018 Q1 5. Others (II) Other comprehensive income to be reclassified -30,941.41 to profit or loss 1. Amounts of other comprehensive income that are able to be transferred into profit or loss under equity method 2. Changes in fair value of other debt investments 3. Gain or losses attributes to the changes in fair value of available-for-sale financial assets 4. The amount of financial assets reclassified into other comprehensive income 5. Gains or losses through reclassifying held-to-maturity financial assets into available-for-sale financial assets 6. Credit impairment provisions for other debt investments 7. Cash flow hedge reserve 8. Exchange differences arising on conversion of financial statements denominated in foreign currencies 9. Gains and losses from changes in fair value of -30,941.41 other current assets 10. Others VI. Total comprehensive income 1,611,904,206.43 1,599,153,862.05 VII. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share Legal Representative: Chen Zongnian Person in Charge of the Accounting work: Jin Yan Person in Charge of Accounting Institution: Zhan Junhua 5. Consolidated Cash Flow Statement Unit: RMB Item 2019 Q1 2018 Q1 I. Cash flows from operating activities: Cash received from sale of goods 11,410,249,255.26 8,750,853,665.71 or rendering of services Net increase in customer deposits and deposits from banks and other financial institutions Net increase in borrowings from central bank Net increase in placements from other financial institutions 28 Hikvision 2019 Q1 Report Item 2019 Q1 2018 Q1 Cash receipts from premiums under direct insurance contracts Net cash receipts from reinsurance business Net increase in the insurance deposit and investment fund Net cash receipts from disposal of financial assets measured by fair value that changes in fair value would be recognized in the current period gains and losses Cash received from interests, fees and commissions Net increase in capital taking from other banks Net increase in capital from repurchase arrangements Net cash received from trading securities Refund of tax and levies 830,266,831.46 900,802,467.84 Other cash received relating to 209,492,317.37 1,066,892,836.74 operating activities Sub-total of cash inflows from operating activities 12,450,008,404.09 10,718,548,970.29 Cash payments for goods purchased and services 9,892,084,287.80 9,646,942,783.62 received Net increase in loans and advances to customers Net increase in balance with the central bank and due to banks and other financial institutions Cash payments for claims and policyholders' benefits under direct insurance contracts Net increase in financial assets held for trading purposes Net increase in lending to banks and other financial institutions Cash paid for interests, fees and commissions Cash payment for insurance policy dividends Cash paid to and on behalf of employees 2,928,612,571.38 2,157,265,649.41 Payments of various types of taxes 1,659,735,081.63 1,270,538,915.89 Other cash paid relating to operating activities 1,007,775,153.08 1,499,866,301.90 Sub-total of cash outflows from operating activities 15,488,207,093.89 14,574,613,650.82 Net Cash Flow from Operating Activities -3,038,198,689.80 -3,856,064,680.53 II. Cash Flows from Investing Activities: Cash receipts from disposals and recovery of 150,000,000.00 investments 29 Hikvision 2019 Q1 Report Item 2019 Q1 2018 Q1 Cash receipts from investment income 21,561,926.58 Net cash receipts from disposals of fixed assets, 2,029,190.08 8,085,072.84 intangible assets and other long-term assets Net cash receipts from disposals of subsidiaries 6,909,760.56 and other business units Other cash received relating to 1,344,387.34 5,502,905.57 investing activities Sub-total of cash inflows from investing activities 10,283,337.98 185,149,904.99 Cash payments to acquire or construct fixed assets, 382,139,108.19 822,308,036.28 intangible assets and other long-term assets Cash paid to acquire investments 1,100,000,000.00 Net increase in pledged loans receivables Net cash payments for acquisitions of subsidiaries and other business units Other cash paid relating to 75,344,693.57 6,877,787.28 investing activities Sub-total of cash outflows from investing activities 457,483,801.76 1,929,185,823.56 Net Cash Flow from Investing Activities -447,200,463.78 -1,744,035,918.57 III. Cash flows from financing activities: Cash receipts from capital contributions 1,020,000.00 127,400.00 Including: cash received by subsidiaries from capital contributions from minority owners Cash receipts from borrowings 5,211,271,526.27 1,419,781,375.02 Cash receipts from bond issue Other cash receipts relating to financing activities Sub-total of cash inflows from financing activities 5,212,291,526.27 1,419,908,775.02 Cash repayments of amounts borrowed 1,149,914,953.81 304,081,731.11 Cash repayments of bonds 3,079,240,000.00 Cash payments for distribution of dividends or 85,277,545.11 91,048,231.17 profits or settlement of interest expenses Including: payments for distribution of dividends or profits to minority owners of subsidiaries Other cash payments relating to financing 2,095,080.00 6,555,746.33 activities Sub-total of cash outflows from financing activities 4,316,527,578.92 401,685,708.61 Net Cash Flow from Financing Activities 895,763,947.35 1,018,223,066.41 IV. Effect of Foreign Exchange Rate Changes on -322,299,460.18 -332,933,205.11 Cash and Cash Equivalents V. Net Increase in Cash and Cash Equivalents -2,911,934,666.41 -4,914,810,737.80 30 Hikvision 2019 Q1 Report Item 2019 Q1 2018 Q1 Add: Opening balance of Cash and Cash Equivalents 26,023,738,992.19 16,029,010,345.59 VI. Closing Balance of Cash and Cash Equivalents 23,111,804,325.78 11,114,199,607.79 Legal Representative: Chen Zongnian Person in Charge of the Accounting work: Jin Yan Person in Charge of Accounting Institution: Zhan Junhua 6. Cash Flow Statement of the Parent Company Unit: RMB Item 2019 Q1 2018 Q1 I. Cash Flows from Operating Activities:: Cash receipts from the sale of goods and the 1,728,586,413.34 1,502,210,097.61 rendering of services Refund of tax and levies 269,765,182.91 350,404,780.81 Other cash receipts relating to operating activities 167,939,793.53 207,055,033.36 Sub-total of cash inflows from operating activities 2,166,291,389.78 2,059,669,911.78 Cash payments for goods acquired 435,382,368.46 1,659,187,618.03 and services received Cash payments to and on behalf of employees 1,706,007,499.64 1,229,827,502.82 Payments of all types of taxes 1,065,301,762.99 1,016,007,421.93 Other cash payments relating to operating 546,402,252.58 249,104,754.08 activities Sub-total of cash outflows from operating activities 3,753,093,883.67 4,154,127,296.86 Net Cash Flow from Operating Activities -1,586,802,493.89 -2,094,457,385.08 II. Cash Flows from Investing Activities: Cash receipts from disposals and recovery of 150,000,000.00 investments Cash receipts from investment income 3,961,618.03 Net cash receipts from disposals of fixed assets, 1,699,547.18 8,003,034.22 intangible assets and other long-term assets Net cash receipts from disposals of subsidiaries 22,061,775.64 5,971.53 and other business units Other cash receipts relating to investing activities 1,690,715,119.13 4,231,842,800.02 Sub-total of cash inflows from investing activities 1,714,476,441.95 4,393,813,423.80 Cash payments to acquire or construct fixed assets, 84,514,098.16 196,125,986.75 intangible assets and other long-term assets Cash payments to acquire investments 1,100,000,000.00 Net cash payments for acquisitions of subsidiaries 10,000,000.00 33,000,000.00 and other business units Other cash payments relating to investing activities 300,811,908.38 4,761,278,790.32 31 Hikvision 2019 Q1 Report Item 2019 Q1 2018 Q1 Sub-total of cash outflows from investing activities 395,326,006.54 6,090,404,777.07 Net Cash Flow from Investing Activities 1,319,150,435.41 -1,696,591,353.27 III. Cash Flows from Financing Activities Cash receipts from capital contributions Cash receipts from borrowings 3,279,240,000.00 500,000,000.00 Cash receipts from issue of bonds Other cash receipts relating to financing activities Sub-total of cash inflows from financing activities 3,279,240,000.00 500,000,000.00 Cash repayments of amounts 3,079,240,000.00 borrowed Cash payments for distribution of dividends or 64,608,843.51 75,745,723.19 profits or settlement of interest expenses Other cash payments relating to financing 2,095,080.00 6,555,746.33 activities Sub-total of cash outflows from financing activities 3,145,943,923.51 82,301,469.52 Net Cash Flow from Financing Activities 133,296,076.49 417,698,530.48 IV. Effect of foreign exchange rate changes on cash -195,291,375.88 -148,871,705.11 and cash equivalents V. Net increase in cash and cash equivalents -329,647,357.87 -3,522,221,912.98 Add: Beginning balance of cash 18,998,934,287.59 12,304,082,533.11 and cash equivalents VI. Closing Balance of Cash and Cash Equivalents 18,669,286,929.72 8,781,860,620.13 Legal Representative: Chen Zongnian Person in Charge of the Accounting work: Jin Yan Person in Charge of Accounting Institution: Zhan Junhua 32 Hikvision 2019 Q1 Report 4.2 Note on financial statement adjustments 1. The first implementation of the new financial instruments guidelines, new income standards, new lease standards; and the adjustments on the financial statements at the beginning of the year for the first implementation. √ Applicable □Not applicable Consolidated Balance Sheet Unit: RMB Item December 31st 2018 January 1st 2019 Adjusted amount Current Assets: Cash and bank balances 26,552,402,711.23 26,552,402,711.23 0.00 Balances with clearing agencies Lendings with banks and other financial institutions Held-for-trading financial assets Not applicable 1,860,050.59 1,860,050.59 Financial assets at fair value through current profit and loss 1,860,050.59 Not applicable -1,860,050.59 Derivative financial assets Notes Receivable and Accounts Receivables 19,188,886,471.10 16,915,040,071.25 -2,273,846,399.85 Including : Notes receivable 2,569,445,189.92 295,598,790.07 -2,273,846,399.85 Accounts receivable 16,619,441,281.18 16,619,441,281.18 0.00 Prepayments 460,304,219.65 460,304,219.65 0.00 Premiums receivable Amounts receivable under reinsurance contracts Reinsurer's share of insurance contract reserves Other receivables 586,748,265.21 586,748,265.21 0.00 Including: Interests receivable 33 Hikvision 2019 Q1 Report st st Item December 31 2018 January 1 2019 Adjusted amount Dividends receivable Financial assets purchased under resale agreements Inventories 5,725,104,153.41 5,725,104,153.41 0.00 Contract assets Not applicable Held-for-sale assets Non-current assets due within one year 380,795,020.47 380,795,020.47 0.00 Other current assets 730,682,813.14 2,978,040,396.42 2,247,357,583.28 Total Current Assets 53,626,783,704.80 53,600,294,888.23 -26,488,816.57 Non-current Assets: Loans and advances to customers Debt investments Not applicable Available-for-sale financial assets 290,966,813.00 Not applicable -290,966,813.00 Other debt investments Not applicable Held-to-maturity investments Not applicable Long-term receivables 705,512,368.17 705,512,368.17 0.00 Long-term equity investments 163,301,844.56 163,301,844.56 0.00 Other equity investments Not applicable Other non-current financial assets Not applicable 290,966,813.00 290,966,813.00 Investment properties Fixed assets 5,082,415,160.10 5,082,415,160.10 0.00 Construction in progress 416,092,413.42 416,092,413.42 0.00 Productive biological assets 34 Hikvision 2019 Q1 Report st st Item December 31 2018 January 1 2019 Adjusted amount Oil and gas assets Right-to-use assets Not applicable Intangible assets 869,913,050.09 869,913,050.09 0.00 Development expenditures Goodwill 212,269,337.23 212,269,337.23 0.00 Long-term prepaid expenses Deferred tax assets 534,346,941.25 534,346,941.25 0.00 Other non-current assets 1,582,750,600.80 1,582,750,600.8 0.00 Total Non-current Assets 9,857,568,528.62 9,857,568,528.62 0.00 Total Assets 63,484,352,233.42 63,457,863,416.85 -26,488,816.57 Current Liabilities: Short-term borrowings 3,465,655,688.29 3,465,655,688.29 0.00 Loans from the central bank Capitals taking from banks and other financial institutions Held-for-trading financial liabilities Not applicable 290,998.43 290,998.43 Financial liabilities at fair value through current profit and 290,998.43 Not applicable -290,998.43 loss Derivative financial liabilities Notes payable & Accounts payable 10,765,145,485.74 10,765,145,485.74 0.00 Receipts in advance 641,430,490.22 641,430,490.22 0.00 Financial assets sold under repurchase agreements Customer deposits and deposits from banks and other financial institutions 35 Hikvision 2019 Q1 Report st st Item December 31 2018 January 1 2019 Adjusted amount Funds from securities trading agency Funds from underwriting securities agency Payroll payable 1,921,608,104.04 1,921,608,104.04 0.00 Taxes payable 1,418,921,664.57 1,418,921,664.57 0.00 Other payables 2,953,203,190.99 2,953,203,190.99 0.00 Including: Interests payable Dividends payable 119,917,640.92 119,917,640.92 0.00 Fees and commissions payable Amounts payable under reinsurance contracts Contract liabilities Not applicable Held-for-sale liabilities Non-current liabilities due within one year 3,178,171,147.16 3,178,171,147.16 0.00 Other current liabilities 364,984,759.94 364,984,759.94 0.00 Total Current Liabilities 24,709,411,529.38 24,709,411,529.38 0.00 Non-current Liabilities: Insurance contract reserves Long-term borrowings 440,000,000.00 440,000,000.00 0.00 Bonds payable Including: Preferred share Perpetual bond Leasing liabilities Not applicable Long-term payables 36 Hikvision 2019 Q1 Report st st Item December 31 2018 January 1 2019 Adjusted amount Provisions 77,625,238.49 77,625,238.49 0.00 Deferred income 293,179,089.13 293,179,089.13 0.00 Deferred tax liabilities Other non-current liabilities Total non-current liabilities 810,804,327.62 810,804,327.62 0.00 Total liabilities 25,520,215,857.00 25,520,215,857.00 0.00 Owners’ Equities Share capital 9,227,270,473.00 9,227,270,473.00 0.00 Other equity instruments Including: Preferred share Perpetual debt Capital reserves 1,956,139,660.52 1,956,139,660.52 0.00 Less: Treasury stock 364,984,759.94 364,984,759.94 0.00 Other comprehensive income -49,576,351.10 -76,065,167.67 -26,488,816.57 Surplus reserves 4,460,712,358.45 4,460,712,358.45 0.00 General risk reserve Retained earnings 22,360,593,257.53 22,360,593,257.53 0.00 Total owners' equity attributable to owner of the Company 37,590,154,638.46 37,563,665,821.89 -26,488,816.57 Minority interests 373,981,737.96 373,981,737.96 0.00 Total owners' equity 37,964,136,376.42 37,937,647,559.85 -26,488,816.57 Total liabilities and owners' equity 63,484,352,233.42 63,457,863,416.85 -26,488,816.57 37 Hikvision 2019 Q1 Report Balance Sheet of the Parent Company Unit: RMB st st Item December 31 2018 January 1 2019 Adjusted amount Current Assets: Cash and bank balances 19,192,461,228.22 19,192,461,228.22 0.00 Held-for-trading financial assets Not applicable Financial assets at fair value through current profit and loss Not applicable Derivative financial assets Notes receivable & Accounts receivable 15,556,312,793.95 15,325,923,955.48 -230,388,838.47 Including: Notes receivable 351,793,632.24 121,404,793.77 -230,388,838,47 Accounts receivable 15,204,519,161.71 15,204,519,161.71 0.00 Prepayments 132,344,929.55 132,344,929.55 0.00 Other receivables 522,987,955.34 522,987,955.34 0.00 Including: Interests receivable Dividends receivable 2,550,000.00 2,550,000.00 0.00 Inventories 168,885,723.93 168,885,723.93 0.00 Contract assets Not applicable Held-for-sale assets Non-current assets due within one year Other current assets 93,661,315.14 321,871,615.09 228,210,299.95 Total Current Assets 35,666,653,946.13 35,664,475,407.61 -2,178,538.52 Non-current Assets: Debt investments Not applicable 38 Hikvision 2019 Q1 Report st st Item December 31 2018 January 1 2019 Adjusted amount Available-for-sale financial assets 290,956,813.00 Not applicable -290,956,813.00 Other debt investments Not applicable Held-to-maturity investments Not applicable Long-term receivables Long-term equity investments 4,361,147,395.90 4,361,147,395.90 0.00 Other equity investments Not applicable Other non-current financial assets Not applicable 290,956,813.00 290,956,813.00 Investment properties Fixed assets 2,844,176,300.34 2,844,176,300.34 0.00 Construction in progress 65,156,482.70 65,156,482.70 0.00 Productive biological assets Oil and gas assets Right-to-use assets Not applicable Intangible assets 197,147,608.73 197,147,608.73 0.00 Development expenditure Goodwill Long-term prepaid expenses Deferred tax assets 221,779,547.02 221,779,547.02 0.00 Other non-current assets 14,601,579.55 14,601,579.55 0.00 Total Non-Current Assets 7,994,965,727.24 7,994,965,727.24 0.00 Total Assets 43,661,619,673.37 43,659,441,134.85 -2,178,538.52 Current Liabilities: 39 Hikvision 2019 Q1 Report st st Item December 31 2018 January 1 2019 Adjusted amount Short-term borrowings Held-for-trading financial liabilities Not applicable Financial liabilities at fair value through current profit and Not applicable loss Derivative financial liabilities Notes payable & Accounts payable 356,787,605.91 356,787,605.91 0.00 Receipts in advance 204,337,524.21 204,337,524.21 0.00 Contract liabilities Not applicable Payroll payables 1,272,626,004.95 1,272,626,004.95 0.00 Taxes payables 987,057,652.70 987,057,652.70 0.00 Other payables 2,529,600,057.31 2,529,600,057.31 0.00 Including: Interests payable Dividends payable 117,467,640.92 117,467,640.92 0.00 Held-for-sale liabilities Non-current liabilities due within one year 3,172,727,888.37 3,172,727,888.37 0.00 Other current liabilities 364,984,759.94 364,984,759.94 0.00 Total Current Liabilities 8,888,121,493.39 8,888,121,493.39 0.00 Non-Current Liabilities: Long-term borrowings Bonds payable Including: Preferred share Perpetual bond Leasing liabilities Not applicable 40 Hikvision 2019 Q1 Report st st Item December 31 2018 January 1 2019 Adjusted amount Long-term payables Provisions 52,956,535.09 52,956,535.09 0.00 Deferred income 186,747,708.01 186,747,708.01 0.00 Deferred tax liabilities Other non-current liabilities Total non-current liabilities 239,704,243.10 239,704,243.10 0.00 Total liabilities 9,127,825,736.49 9,127,825,736.49 0.00 Owners' equity Share capital 9,227,270,473.00 9,227,270,473.00 0.00 Other equity instruments Including: Preferred share Perpetual bond Capital reserves 1,883,262,407.46 1,883,262,407.46 0.00 Less: Treasury share 364,984,759.94 364,984,759.94 0.00 Other comprehensive income -2,178,538.52 -2,178,538.52 Surplus reserves 4,460,712,358.45 4,460,712,358.45 0.00 Retained earnings 19,327,533,457.91 19,327,533,457.91 0.00 Total owners' equity 34,533,793,936.88 34,531,615,398.36 -2,178,538.52 Total liabilities and owners' equity 43,661,619,673.37 43,659,441,134.85 -2,178,538.52 The adjustments are explained as below: 41 Hikvision 2019 Q1 Report 2. Note on retrospective adjustments of the previous comparison data due to the first implementation of the new financial instrument guidelines, and the new lease criteria. √ Applicable □Not applicable The new financial instrument standard has changed the classification and measurement of financial assets, and has identified three major measurement categories: amortized cost; measured at fair value and its changes are included in other comprehensive income; measured at fair value through current profit and loss. Enterprises need to consider the business model of their own, as well as the contractual cash flow characteristics of financial assets to carry out the above classification. The equity instrument investment is measured at fair value through current profit or loss, but at the time of initial recognition, the non-tradable equity instrument investment can be irrevocably designated as financial asset measured at fair value and whose changes are included in other comprehensive income. According to the requirements of the new financial instrument standard, financial assets impairment measurement is changed from the “loss incurred model” to the “expected credit loss model”, which is applicable to financial assets measured at amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income, as well as loan commitments and financial guarantee contracts. The Company endorses or discounts some bank acceptance bills in daily fund management. The business model for managing the above-mentioned notes receivable is aimed at both collecting contractual cash flow and for sales. Therefore, the notes receivable are reclassified as financial assets measured at fair value and whose changes are included in other comprehensive income by the Group and are presented under other current assets since January 1st 2019. Summary of the impacts of the first implementation of the new financial instruments guidelines on January 1st 2019 Consolidated Balance Sheet Book value according to the Re-classified Re-measured Book value according to the new original financial instrument financial instrument guidelines guidelines January 1st 2019 December 31st 2018 Held-for-trading financial assets 0.00 1,860,050.59 1,860,050.59 42 Hikvision 2019 Q1 Report Book value according to the Re-classified Re-measured Book value according to the new original financial instrument financial instrument guidelines guidelines January 1st 2019 December 31st 2018 Financial assets at fair value through current 1,860,050.59 -1,860,050.59 0.00 profit and loss Notes Receivable and Accounts Receivable 19,188,886,471.10 -2,273,846,399.85 16,915,040,071.25 Other current assets 730,682,813.14 2,273,846,399.85 -26,488,816.57 2,978,040,396.42 Other comprehensive income -49,576,351.10 -26,488,816.57 -76,065,167.67 Available-for-sale financial assets 290,966,813.00 -290,966,813.00 0.00 Other non-current financial assets 0.00 290,966,813.00 290,966,813.00 Held-for-trading financial liabilities 0.00 290,998.43 290,998.43 Financial liabilities at fair value through 290,998.43 -290,998.43 0.00 current profit and loss Balance Sheet of the Parent Company Book value according to the Re-classified Re-measured Book value according to the new original financial instrument financial instrument guidelines guidelines January 1st 2019 December 31st 2018 Notes Receivable and Accounts Receivable 15,556,312,793.95 -230,388,838.47 15,325,923,955.48 Other current assets 93,661,315.14 230,388,838.47 -2,178,538.52 321,871,615.09 Other comprehensive income 0.00 -2,178,538.52 -2,178,538.52 Available-for-sale financial assets 290,956,813.00 -290,956,813.00 0.00 Other non-current financial assets 0.00 290,956,813.00 290,956,813.00 43 Hikvision 2019 Q1 Report 4.3 Audit Report Whether audit has been performed on this 2019 1st Quarter Report □ Yes √ No The Company’s 2019 1st Quarter report has not been audited HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD. Chairman: Chen Zongnian April 20th 2019 Note: This document is a translated version of the Chinese version 2019 Q1 Financial Report (“2019 年第一季度报告全文”), and the published Q1 report in the Chinese version shall prevail. The complete published Chinese 2019 Q1 Financial Report may be obtained at http://www.cninfo.com.cn. 44