Hangzhou Hikvision Digital Technology Co., Ltd.
2020 Interim Report
January to June 2020
July 25th 2020
Hikvision 2020 Half Year 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
accounting work, and Zhan Junhua, the person in charge of accounting department (accounting
supervisor) hereby declare and warrant that the financial statements in this report are authentic,
accurate and complete.
All directors of the Company have attended the board meeting to review this report.
The half year proposal of profit distribution or share distribution from capital reserve passed upon
deliberation at the meeting of the Board of Directors (not applicable): The Company will not
distribute cash dividend, distribute bonus share, or distribute shares from capital reserve during the
current reporting period.
Note:
This document is a translated version of the Chinese version 2020 Half Year Report (“2020 年半年
度报告”), and the published announcements in the Chinese version shall prevail. The complete
published Chinese 2020 Half Year Report may be obtained at www.cninfo.com.cn.
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Hikvision 2020 Half Year Report
Please read the annual report and pay particular attention to the following risk factors:
1) Global COVID-19 epidemic risk: Amidst the sustained transmission of COVID-19 epidemic around the
world, and the heightened uncertainties in economic development, if the epidemic situation in the area
where the Company's business is located intensifies, the Company's business operations may be adversely
affected.
2) Global business risks: The Company operates in more than 150 countries and regions around the world.
As the potential risks of pandemic, debt issues, political conflicts, and exchange rate fluctuations in
various countries around the world are difficult to eliminate, the Company’s overseas business operations
may be adversely affected.
3) Legal and compliance risk: The world's multilateral trading system is facing an impact. The local laws
and regulations that business activities need to comply with are very complicated. The worldwide data
protection regulations are stricter, which require higher compliance requirements. If the Company's
compliance ability cannot keep up with the situation, it will bring risks to the Company's operations.
4) Risk of exchange rate fluctuation: The Company carries out operations in various countries and regions
with different currencies, mainly settled in non-RMB currency (mainly in USD). Exchange rate
fluctuations could have impact on foreign exchange exposures arising out of sales, purchase and financing,
which can likely affect the profitability level of the Company.
5) Supply chain risks: The global supply system is suffering from an array of adverse impacts. The
Company has been making efforts to enhance arrangements for our supply chain and optimize inventory
adjustments and controls. However, if systemic risks arise in the global supply chain, the Company’s
operating capabilities may be affected.
6) Risk of technology upgrade: Technologies such as artificial intelligence (AI), big data, cloud computing,
and edge computing are developing rapidly, facing accelerating technology iterations. If the Company is
unable to adapt to the changes in cutting-edge technologies, or fails to quickly realize business innovation,
the risks of ongoing uncertainties will increase.
7) Risk of internal management: The continual expansion of business scale, the continuous increase of
new products and new businesses, the continuous 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 capability. The Company’s sustainable
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Hikvision 2020 Half Year Report
development will face certain risks if the management level fails to proportionally address the Company’s
business expansion.
8) Capital risk arising from the decline in customers’ ability to pay: The liquidity of different business
links is subject to economic conditions. Despite the cash reserves accumulated from the Company’s
historically healthy operation and low financing costs, accounts receivable of the Company will be
adversely affected once liquidity risks increase.
9) Risk of cybersecurity: The Company has always attached importance and taken active measures to
enhance cybersecurity performance of our products and systems, However, in the context of Internet
applications, there is still a possibility of deliberate attempts，including computer viruses, malicious
software, hacker and others to intentionally attack our systems or products, causing cybersecurity issues.
10) Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale of
R&D investment, and produces considerable technical milestones. At the same time, the Company
implements well-organized intellectual property right (IPR) protection measures. However, the risk of
intellectual property disputes and the risk of intellectual property rights violations still exist.
The above notices might not be all-inclusive of all other potential risks. Please pay attention to potential investment
risks
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Hikvision 2020 Half Year Report
CONTENTS
Section I Important Notes, Contents and Definitions ...................................................................................... 1
Section II Corporate Profile & Key Financial Data......................................................................................... 7
Section III Corporate Business Summary ...................................................................................................... 10
Section IV Discussion and Analysis on Business Operation .......................................................................... 11
Section V Significant Events ............................................................................................................................ 27
Section VI Changes in Shares and Information about Shareholders ........................................................... 42
Section VII Information of Preferred Shares ................................................................................................. 51
Section VIII Information about Convertible Corporate Bonds .................................................................... 52
Section IX Information about Directors, Supervisors, Senior Management ............................................... 53
Section X Corporate Bonds .............................................................................................................................. 55
Section XI Financial Report ............................................................................................................................. 56
Section XII Documents Available for Reference .......................................................................................... 180
Section XIII Other Disclosure Information .................................................................................................. 181
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Hikvision 2020 Half Year Report
Definitions
Term Definition
Reporting Period From January 1st 2020 to December 31th 2020
Articles of Associations Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd
Hikvision, our Company, the Company Hangzhou Hikvision Digital Technology Co., Ltd
CETC China Electronics Technology Group Ltd., the actual controller of the 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 Hangzhou Ezviz Network Co., Ltd.(According to the context, also refers to the
corresponding business)
HikRobot Hangzhou Hikrobot Technology Co., Ltd. (According to the context, also refers to the
corresponding business)
HikAuto Hangzhou HikAuto Technology Co., Ltd. (According to the context, also refers to the
corresponding business)
HikMicro Hangzhou Hikmicro Sensing Technology Co., Ltd. (According to the context, also refers
to the corresponding business)
HikSemi Wuhan Hikstorage Technology Co., Ltd. (According to the context, also refers to the
corresponding business)
HikImaging Hangzhou Hikmed Imaging Technology Co., Ltd. (According to the context, also refers
to the corresponding business)
HikFire, HikSafety Hangzhou Hikfire Technology Co., Ltd. (According to the context, also refers to the
corresponding business)
Hangzhou Rayin Technology Co,. Ltd. (According to the context, also refers to the
HikSecurityCheck, Rayin
corresponding business)
Located in Binjiang District, Hangzhou, Zhejiang Province, the planned use is for R&D,
office space and supporting facilities. It was first disclosed in the Company's
Hangzhou Innovation Industrial Base
Announcement on Investment and Construction of Hangzhou Innovation Industrial Base
Project in Hangzhou (No: 2017-034).
Located in Chengdu, Sichuan Province, the planned use is for R&D, office space and
supporting facilities. It was first disclosed in the Company's Announcement on
Chengdu Science and Technology Park
Investment and Construction of Chengdu Science and Technology Park Project in
Chengdu (No: 2017-033).
Located in Chongqing, the planned use is for production plants, warehouses and
supporting facilities. It was first disclosed in the Company's Announcement on
Chongqing Science and Technology Park
Investment and Construction of Chongqing Science and Technology Park Project in
Chongqing (No. 2017-035).
Located in Chongqing, purposes for manufacturing facility, initially disclosed in
Chongqing Manufacture Base
Announcement about Resolution of the 20th Meeting of the 3rd Session Board（No：
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Hikvision 2020 Half Year Report
Term Definition
2016-068）
Located in Xi'an, Shaanxi Province, the planned use is for R&D, office space and
supporting facilities. It was first disclosed in the Company's Announcement on
Xi’an Science and Technology Park
Investment and Construction of Xi'an Science and Technology Park Project in Xi'an (No:
2017-031).
Located in Wuhan, Hubei Province, the planned use is for R&D, office space and
supporting facilities. It was first disclosed in the Company's Announcement on
Wuhan Science and Technology Park
Investment and Construction of Wuhan Science and Technology Park Project in Wuhan
(No. 2017-032).
Located in Wuhan, Hubei Province, the planned use is for production plants, warehouses
Wuhan Intelligence Industry Park and supporting facilities. First disclosed in the Company's Announcement on Investment
and Construction of Wuhan Intelligence Industry Park Project in Wuhan (No. 2017-036).
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
Innovative Business Management Measures for Core Staff Investment in Innovative Business (《核心员工跟
投创新业务管理办法》) (www.cninfo.com.cn).
In this report, innovative business also refers to EZVIZ, HikvisionRobot, HikAuto,
HikMicro, HikSemi, HikImaging, HikFire, Rayin and their related business or products.
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Hikvision 2020 Half Year Report
Section II Corporate Profile & Key Financial Data
I. Corporate Information
Stock abbreviation HIKVISION Stock code 002415
Stock exchange where the shares of the Company
Shenzhen Stock Exchange
are listed
Name of the Company in Chinese (if any) 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
II. Contacts and contact information
Board Secretary Securities Affairs Representative
Name Huang Fanghong
No. 518 WuLianWang Street, Binjiang
Address
District, Hangzhou
Tel. 0571-88075998; 0571-89710492
Fax 0571-89986895
E-mail hikvision@hikvision.com
III. Other Relevant Information
1. Company’s contact information
Whether there is any change in the Company’s registered address, office address, zip code, company website or
company email address during the reporting period.
□Applicable √Inapplicable
There is no change in the Company’s registered address, office address, zip code, company website or company
email address during the reporting period. Please refer to 2019 Annual Report for details.
2. Information disclosure and place of the report
Whether there is alteration in information disclosure and place of the report during the reporting period.
□ Applicable √ Inapplicable
The newspaper designated by the Company for information disclosure, website specified by CSRC for release of
the half-year report, and the place where the half-year report is available for inspection have not changed during
the reporting period, Please refer to 2019 Annual Report for details.
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Hikvision 2020 Half Year Report
3. Other relevant information
Whether other relevant information has changed during the reporting period
□ Applicable √ Not applicable
IV. Key accounting data and Financial Indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √No
Unit: RMB
The first half of 2020 The first half of 2019 YoY Change (%)
Operating income (RMB) 24,271,159,243.76 23,923,273,424.50 1.45%
Net profits attributable to shareholders of
4,623,972,830.87 4,216,755,210.24 9.66%
the Company (RMB)
Net profits attributable to shareholders of
the Company excluding non-recurring 4,463,498,377.68 4,122,195,529.03 8.28%
gains and losses (RMB)
Net cash flows from operating activities
69,966,340.57 -431,063,793.18 116.23%
(RMB)
Basic earnings per share (RMB/share) 0.493 0.444 11.04%
Diluted earnings per share (RMB/share) 0.493 0.444 11.04%
Weighted average ROE 9.75% 10.86% -1.11%
At June 30th 2020 At December 31st 2019 YoY Change (%)
Total assets (RMB) 71,938,322,381.28 75,358,000,240.29 -4.54%
Net assets attributable to shareholders of
43,512,901,460.11 44,904,033,876.83 -3.10%
the Company (RMB)
The total share capital of the Company as of the previous trading day of the annual report disclosure:
The total share capital of the Company as of the previous trading day of the annual report disclosure (share) 9,345,010,696
Fully diluted earnings per share (RMB/share) calculated with the latest share capital 0.495
V. 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.
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Hikvision 2020 Half Year Report
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.
3. Explanation of the differences in accounting data under domestic and overseas accounting standards
□ Applicable √ Inapplicable
VI. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Inapplicable
Unit：RMB
Item Amount
Profit or loss from disposal of non-current assets (including the write-off for the
21,554.99
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 and
215,000,303.92
government subsidy based on standard quota or quantitative continuous application
according to the state 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 from disposal of held-for-trading financial assets,
-11,274,009.71
derivative financial assets, held-for-trading 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 20,025,782.33
Less: Impact of income tax 51,090,433.75
Impact of the minority interests (after tax) 12,208,744.59
Total 160,474,453.19
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
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Hikvision 2020 Half Year Report
Section III Corporate Business Summary
I. The principal business of the Company during the reporting period
There was no significant change for the principal business of the Company during the reporting period. Please
refer to 2019 Annual Report for details.
II. Significant changes in main assets
1. Major Changes in Main Assets
Major assets Explanation on Major Changes
The increase of 44.7% was mainly due to investments in Hangzhou Haikang Intelligent Industrial
Equity Investment Fund Partnership (Limited Partnership), Zhejiang Haishi Huayue Digital
Equity Assets
Technology Co., Ltd., Xuzhou Kangbo Urban Operation and Management Service, Zhiguang Hailian
Big Data Technology Co., Ltd., and other companies.
Fixed Assets No significant change
Intangible Assets No significant change
Increased by 60.55%, mainly due to increased investment in the construction of Chengdu Science and
Construction in Progress
Technology Park, Hangzhou Innovation Industry Base, and Chongqing Science and Technology Park
2. Major Overseas Assets
□ Applicable √ Inapplicable
III. Analysis of core competitiveness
There was no significant change for the core competitiveness of the Company during the reporting period.
Please refer to 2019 Annual Report for details.
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Hikvision 2020 Half Year Report
Section IV Discussion and Analysis on Business Operation
I. Overview
During the first half of 2020, the unanticipated outbreak of the COVID-19 epidemic caused disruption to the
normal social order and placed significant impact on the real economy; the further escalated trade conflict between
China and the United States exacerbated the international situation, posing unprecedented challenges to global
industrial chain. Amid significant uncertainties in the business environment at home and abroad, the Company has
responded prudently and flexibly, and continued to facilitate its steady and healthy growth by upholding the
customer-demand-oriented guiding principle and insisting on technological innovations as its driving force.
During the reporting period, the Company realized a total operating revenue of RMB 24.27 billion, representing
a year-over-year growth of 1.45%. Net profits attributable to shareholders of the listed company was RMB 4.62
billion, representing a growth of 9.66% as compared to the corresponding period of the previous year. The
Company’s gross profit margin was 49.76% during the first half of 2020, representing an increase of 3.43 percentage
points as compared to the corresponding period of the previous year.
1．Increasing investment in R&D and continuing to take technological innovation as the core driving force
The Company continued to increase investment in R&D by stressing on the accumulation of underlying
fundamental technologies, optimizing capabilities of system design and upgrading products and solutions, with a
view to establishing the comprehensive competitiveness of the Company’s businesses.
2. Big data-AI fusion to promote intelligence upgrade for the industry
In its great efforts to advance the “big data-AI fusion”, the Company further integrated AI with perceptive big
data and multi-dimensional big data to promote the application of intelligent management measures and facilitate
digital transformation for users in various industries.
3. Synergistic development of traditional and innovative businesses to create new opportunities for the
Company
The Company commenced the preparation for the spin-off and listing of the smart home business, while the
other innovative businesses such as HikRobot, HikAuto, HikSemi and HikMicro continued to develop rapidly. In
addition, with the inclusion of the innovative businesses such as HikFire and Rayin into the innovative business
segment, the development echelon of innovative businesses was gradually taking shape. The synergistic
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Hikvision 2020 Half Year Report
development of traditional and innovative businesses will create new opportunities for the Company.
4. Regulating operations to continuously stimulate the establishment of global compliance system
The Company continues to promote the establishment of global compliance system. Particularly, it formulated
compliance-related rules in accordance with the laws, regulations, and business of respective country/region, to
achieve the better alignment of the Company’s governance system and management level with the international
standards.
5. Adjusting strategies to cope with external uncertainties
In response to the significant changes in the macro environment, the Company has stepped up efforts to control
expenses, enhance internal operational efficiency and conduct business prudently and flexibly to maintain smooth
and healthy operations.
II. Core business analysis
Overview
Whether consistent with the overview disclosure under Operation Discussion and Analysis
√ yes □ no
Please refer to details in Section IV Operation Discussion and Analysis-I. Overview
Year-over-Year Changes in Key financial data
Unit: RMB
2020 First Half Year 2019 First Half Year YoY Change (%) Note of Change
Operating Income 24,271,159,243.76 23,923,273,424.50 1.45% No significant change
Operating costs 12,193,719,945.38 12,840,506,333.68 -5.04% No significant change
Selling expenses 3,420,291,518.42 3,213,260,109.16 6.44% No significant change
Administrative expenses 864,959,489.60 731,110,243.76 18.31% No significant change
Affected by fluctuation
in foreign exchange rate,
Financial expenses -227,972,206.73 -129,943,427.26 -75.44%
increase in foreign
currency exchange gains
Income Tax Expenses 952,552,145.97 933,920,656.68 1.99% No significant change
R&D investments 3,063,423,679.69 2,504,800,049.71 22.30% No significant change
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Hikvision 2020 Half Year Report
2020 First Half Year 2019 First Half Year YoY Change (%) Note of Change
Net cash flows from Operating Increase in sales
69,966,340.57 -431,063,793.18 116.23%
Activities collection
Increase in equity
Net cash flows from Investment investment and
-1,494,484,813.41 -684,730,771.16 -118.26%
Activities infrastructure project
expenditures
Net cash flows from Financing -3,478,066,297.20 -3,567,621,483.18 2.51% No significant change
Activities
Net increase in cash and cash -4,892,161,050.91 -4,769,810,219.18 -2.57% No significant change
equivalents
Whether there is significant change in Company’s profit structure or profit source during the reporting period
□ Applicable √ Inapplicable
There is no such case during the reporting period.
Operating income structure
Unit：RMB
2020 First Half Year 2019 First Half Year
YoY Change
Proportion to Proportion to (%)
Amount Amount
operating income operating income
Total operating income 24,271,159,243.76 100% 23,923,273,424.50 100% 1.45%
Classified by industry
Video products and video
24,271,159,243.76 100% 23,923,273,424.50 100% 1.45%
services
Classified by product
Front-end equipment 12,125,236,914.65 49.96% 11,399,609,062.38 47.65% 6.37%
Back-end equipment 2,404,613,230.54 9.91% 3,196,070,064.43 13.36% -24.76%
Central control equipment 3,421,976,609.49 14.10% 3,486,737,083.16 14.57% -1.86%
Construction contracts 300,094,975.52 1.24% 477,564,284.57 2.00% -37.16%
Others 3,508,460,773.13 14.45% 3,575,048,602.41 14.95% -1.86%
Subtotal 21,760,382,503.33 89.66% 22,135,029,096.95 92.53% -1.69%
Smart home business 1,179,170,706.81 4.86% 1,139,058,349.43 4.76% 3.52%
Robotic business 542,724,420.13 2.24% 370,499,077.30 1.55% 46.48%
Other innovative businesses
Note 788,881,613.49 3.24% 278,686,900.82 1.16% 183.07%
Subtotal 2,510,776,740.43 10.34% 1,788,244,327.55 7.47% 40.40%
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Hikvision 2020 Half Year Report
2020 First Half Year 2019 First Half Year
YoY Change
Proportion to Proportion to (%)
Amount Amount
operating income operating income
Classified by region
Domestic 16,728,998,825.16 68.93% 16,980,210,416.78 70.98% -1.48%
Overseas 7,542,160,418.60 31.07% 6,943,063,007.72 29.02% 8.63%
Note: “Other innovative businesses” include products of the corresponding businesses of the innovative business subsidiary HikAuto,
HikMicro, HikSemi, HikMed, HikFire, Rayin and others. Same below.
Composition of operating income of the three major business groups in ChinaNote
Unit: 100mn
2020 First Half Year 2019 First Half Year YoY Change (%)
PBG 59.68 62.93 -5.16%
EBG 59.14 49.22 20.15%
SMBG 30.00 41.04 -26.90%
Total 148.82 153.19 -2.85%
Note: Some innovative business products rely on the sales of the three major business groups. The sales statistics of the business groups
are divided by the sales responsible unit, but the sales statistics of the product / innovation business are divided by product forms.
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
24,271,159,243.76 12,193,719,945.38 49.76% 1.45% -5.04% 3.43%
video services
Classified by product
Front-end equipment 12,125,236,914.65 4,828,656,372.00 60.18% 6.37% -12.43% 8.55%
Back-end equipment 2,404,613,230.54 1,254,053,775.83 47.85% -24.76% -22.70% -1.39%
Central control
3,421,976,609.49 1,827,320,658.46 46.60% -1.86% 17.95% -8.97%
equipment
Construction contracts 300,094,975.52 235,236,267.84 21.61% -37.16% -32.57% -5.34%
Others 3,508,460,773.13 2,506,581,933.99 28.56% -1.86% -7.66% 4.49%
Subtotal 21,760,382,503.33 10,651,849,008.12 51.05% -1.69% -9.34% 4.13%
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Hikvision 2020 Half Year Report
YoY Change (%)
Gross YoY Change (%) YoY Change (%)
Operating income Operating cost of operating
margin of operating cost of gross margin
income
Smart home business 1,179,170,706.81 741,575,630.80 37.11% 3.52% 5.96% -1.45%
Robotic business 542,724,420.13 271,967,778.00 49.89% 46.48% 51.74% -1.74%
Other innovative
788,881,613.49 528,327,528.46 33.03% 183.07% 149.04% 9.15%
businesses
Subtotal 2,510,776,740.43 1,541,870,937.26 38.59% 40.40% 41.29% -0.39%
Classified by region
Domestic 16,728,998,825.16 8,857,173,150.49 47.05% -1.48% -1.98% 0.27%
Overseas 7,542,160,418.60 3,336,546,794.89 55.76% 8.63% -12.30% 10.55%
When the statistical caliber of the Company's main business data is adjusted during the reporting period, the Company's
main business data would be adjusted according to the end of the reporting period in the most recent period.
□ Applicable √ Inapplicable
Operating cost structure
Classified by industry
Unit: RMB
2020 First Half Year 2019 First Half Year Increase/
Industry Item Proportion to Proportion to decrease over
Amount Amount
operating cost operating cost previous year
Video products
and video Operating cost 12,193,719,945.38 100.00% 12,840,506,333.68 100.00% -5.04%
services
Classified by products
Unit: RMB
2020 First Half Year 2019 First Half Year Increase/
Product Item Proportion to Proportion to decrease over
Amount Amount
operating cost operating cost previous year
Front-end
Operating cost 4,828,656,372.00 39.60% 5,514,282,317.87 42.94% -12.43%
equipment
Back-end
Operating cost 1,254,053,775.83 10.28% 1,622,327,866.91 12.63% -22.70%
equipment
Central control
Operating cost 1,827,320,658.46 14.99% 1,549,258,451.92 12.07% 17.95%
equipment
Construction
Operating cost 235,236,267.84 1.93% 348,868,121.15 2.72% -32.57%
contracts
Others Operating cost 2,506,581,933.99 20.56% 2,714,505,626.31 21.14% -7.66%
Subtotal Operating cost 10,651,849,008.12 87.36% 11,749,242,384.16 91.50% -9.34%
Smart home
Operating cost 741,575,630.80 6.08% 699,890,662.72 5.45% 5.96%
business
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Hikvision 2020 Half Year Report
2020 First Half Year 2019 First Half Year Increase/
Product Item Proportion to Proportion to decrease over
Amount Amount
operating cost operating cost previous year
Robotic business Operating cost 271,967,778.00 2.23% 179,227,186.56 1.40% 51.74%
Other innovative
Operating cost 528,327,528.46 4.33% 212,146,100.24 1.65% 149.04%
businesses
Subtotal Operating cost 1,541,870,937.26 12.64% 1,091,263,949.52 8.50% 41.29%
Explanations on relevant data changed for more than 30% on a year-over-year base
√Applicable □Inapplicable
YoY Change (%) YoY Change
of operating (%) of operating Note on YoY change (%) above 30%
income cost
Robotic business 46.48% 51.74% The robotic business is developing rapidly.
Other innovative
183.07% 149.04% Rayin and HikSemi are growing rapidly
businesses
III. Non-Core Business Analysis
□Applicable √Inapplicable
IV. Analysis of assets and liabilities
1. Material changes of asset items
Unit：RMB
June 30th 2020 January 1st 2020
YoY
Percentage Percentage Change Note of significant change
Amount of total Amount of total (%)
assets assets
Dividends reduce monetary
Cash and bank balances 22,090,506,085.61 30.71% 27,071,948,919.78 35.92% -5.21%
funds
Accounts receivable 21,449,479,247.87 29.82% 21,272,964,582.56 28.23% 1.59% No significant change
Inventory 11,212,408,913.89 15.59% 10,756,027,592.41 14.27% 1.32% No significant change
Mainly to increase investment
in Hangzhou Haikang
Long-term equity
520,322,603.80 0.72% 252,165,321.49 0.33% 0.39% Intelligent Industrial Equity
investment
Investment Fund Partnership
(Limited Partnership).
Fixed assets 6,005,536,637.71 8.35% 5,791,218,720.87 7.68% 0.67% No significant change
Increase in construction
Construction in process 1,013,956,457.06 1.41% 631,555,479.06 0.84% 0.57%
investment on Chengdu
16
Hikvision 2020 Half Year Report
June 30th 2020 January 1st 2020
YoY
Percentage Percentage Change Note of significant change
Amount of total Amount of total (%)
assets assets
Science and Technology Base,
Hangzhou Innovation
Industry Base and Chongqing
Science and Technology Base
Phase 2
Increase in demands for
Short-term loans 4,447,276,972.89 6.18% 2,640,082,485.15 3.50% 2.68%
temporary capital turnover
Long-term loans 4,771,375,714.28 6.63% 4,604,168,571.43 6.11% 0.52% No significant change
The Company issued 1 billion
RMB of short-term
Other current liabilities 1,813,013,618.43 2.52% 913,534,538.26 1.21% 1.31%
commercial paper (SCP) in
the current reporting period.
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB
Difference
Provision
on Cumulative for
Profit or loss translation changes in decline Purchased Amount
from change of fair value in value amount sold
Opening Other Closing
Item in fair value financial included in during during the during
balance changes balance
during the statements equity the
the period
period dominated period
current
in foreign
period
currency
Financial assets
1. Derivative
financial 181.76 849,343.33 3,600.37 853,125.46
assets
2. Other non-
current
312,398,267.44 -13,017,332.26 -2,800,000.00 296,580,935.18
financial
assets
3. Receivables
for 1,257,385,053.02 -73,811,242.43 1,183,573,810.59
financing
Subtotal of
1,569,783,502.22 -12,167,988.93 3,600.37 -76,611,242.43 1,481,007,871.23
financial assets
Financial
652,428.18 -8,268,448.03 30,238.56 8,951,114.77
Liabilities
17
Hikvision 2020 Half Year Report
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 (RMB) Reasons for being restricted
Monetary fund 466,999,128.12 Various cash deposits and other restricted funds
Notes receivable 326,970,323.42 Endorsed to suppliers
Notes receivable 2,606,950.00 Pledge for issuance of bank acceptance
Receivables for financing 90,566,739.34 Pledge for issuance of bank acceptance
Accounts receivable 4,749,676.59 Pledge for short-term borrowings
Fixed assets 53,502,842.70 Sale and leaseback of fixed assets
Long-term receivables 1,158,287,191.19 Pledge for long-term debts
Total 2,103,682,851.36
V. Analysis of Investments
1. Overview
√Applicable □ Inapplicable
Investment during the first half of 2020 Investment during the first half of 2019
Fluctuation (%)
(RMB) (RMB)
1,309,423,538.62 794,447,793.06 64.82%
2. Significant equity investment during the reporting period
□Applicable √Inapplicable
18
Hikvision 2020 Half Year Report
3. Significant non-equity investment during the reporting period
√ Applicable □ Inapplicable
Unit: RMB
Reasons
for not
Cumulative amount reaching
Fixed assets Investment Disclosure
Invest Project of investment by the Source of Project planned
Project name investment or during the current Date (if Disclosure Index (if applicable)
method industry end of reporting funds schedule progress
not reporting period applicable)
period and
expected
benefits
Video Announcement on Investment and
Hangzhou Innovation Self- product and Specific September Construction of Hangzhou
YES 123,512,394.15 237,051,028.73 23.10% 无
Industry Base built video Loan 23rd 2017 Innovation Industry Base Project in
service Hangzhou (No. 2017-034)
Video Announcement on Investment and
Chengdu Science and
Self- product and September 23 Construction of Chengdu Science
Technology Park YES 126,466,478.57 369,398,026.23 Self-fund 20.30% None
built video rd 2017 and Technology Base Project in
Project
service Chengdu (No. 2017-033)
Video Announcement on Investment and
Chongqing Science
Self- product and September 23 Construction of Chongqing Science
and Technology Park YES 74,800,198.49 185,866,637.47 Self-fund 24.39% None
built video rd 2017 and Technology Base in Chongqing
Project-phase 2
service (No. 2017-035)
Video Announcement on Investment and
Xi’an Science and
Self- product and September 23 Construction of Xi’an Science and
Technology Park YES 1,032,758.02 7,204,329.92 Self-fund 0.32% None
built video rd 2017 Technology Base in Xi’an（2017-
Project
service 031）
19
Hikvision 2020 Half Year Report
Reasons
for not
Cumulative amount reaching
Fixed assets Investment Disclosure
Invest Project of investment by the Source of Project planned
Project name investment or during the current Date (if Disclosure Index (if applicable)
method industry end of reporting funds schedule progress
not reporting period applicable)
period and
expected
benefits
Video Announcement on Investment and
Wuhan Science and
Self- product and September 23 Construction of Wuhan Science and
Technology Park YES - 4,339,622.64 Self-fund 0.15% None
built video rd 2017 Technology Base in Wuhan (2017-
Project
service 032)
Video
Announcement on Investment and
Wuhan Intelligence Self- product and September 23
YES - 2,370,546.89 Self-fund 0.10% None Construction of Wuhan Intelligence
Industry Park Project built video rd 2017
Industry Base in Wuhan (2017-036)
service
Total -- -- -- 325,811,829.23 806,230,191.88 -- --
20
Hikvision 2020 Half Year Report
4. Financial assets measured at fair values
√ Applicable □ Inapplicable
Unit: RMB
Amount
Accumulated
sold
Current profits or fair value
Purchase during the reporting during Cumulative investment Source of
Category Initial investment cost losses on the changes Closing balance
period the income funds
changes in fair value included in
reporting
equity
period
Derivative Company's
984,893,221.62 -7,419,104.70 1,322,723,876.30 9,162,427.25 1,322,979,201.41
instruments own funds
Other non-
current Company's
312,398,267.44 -13,017,332.26 - - 296,580,935.18
financial own funds
assets
Receivables Company's
for 1,257,385,053.02 - - - 1,183,573,810.59
own funds
financing
Total 2,554,676,542.08 -20,436,436.96 1,322,723,876.30 9,162,427.25 2,803,133,947.18 --
5. Financial asset investment
(1) Securities Investments
□ Applicable √ Inapplicable
There no such case in the reporting period.
(2) Derivatives Investments
21
Hikvision 2020 Half Year Report
√ Applicable □ Inapplicable
Unit: 0,000 RMB
Proportion
of closing
investment
Sold
Initial amount to Actual gain
Operation Purchased amount
Whether Whether Type of investment Opening Impairment Closing the or loss
party of Termination amount during during
Related related derivatives amount of Initial date investment provisions investment Company’s during the
derivatives date the reporting the
party transaction investment derivatives amount (if any) amount net assets at reporting
investment period reporting
investment the end of period
period
the
reporting
period
foreign
Commercial December September
No No exchange 98,489.32 98,489.32 132,272.39 132,297.92 2.99% 916.24
bank 5th 2019 1st 2020
contract
Total 98,489.32 -- -- 98,489.32 132,272.39 132,297.92 2.99% 916.24
Capital source of derivatives investment Company’s own fund
Prosecution (if applicable) Nil
Announcement date for approvals of derivatives
April 20th 2019/December 25th 2019
investment from the board of directors (if any)
Announcement date for approvals of derivatives
May 16th 2020
investment from the general meeting (if any)
Risk analysis and control measures (including but
For details of the risk analysis and control measures, please refer to the Announcement on Conducting Foreign Exchange Hedging
not limited to, market risk, liquidity risk, credit
Transactions in 2019 (NO. 2019-021) dated April 20th 2019 and the Announcement on Conducting Foreign Exchange Hedging Transactions
risk, operational risk, legal risk, etc.) of holding
in 2020 (NO. 2019-065) dated December 25th 2019 of the Company
derivatives during the reporting period
22
Hikvision 2020 Half Year Report
Change of market price or fair value of invested
derivatives during the reporting period; specific The Company’s accounting of derivatives’ fair value was mainly about the outstanding contracts signed with banks for forward exchange
methods, related assumptions and parameter settlement during the reporting period. Held-for-trading financial assets/liabilities were determined with difference between the quoted price
setting of the derivatives’ fair value analysis and forward exchange price in outstanding forward exchange contracts at the end of the period.
should be disclosed
During the current reporting period, whether there
was significant changes of accounting policies and
Nil
accounting principles of the Company’s
derivatives comparing to the prior reporting period
Specific opinions on the Company’s derivatives
investments and risk control from independent Nil
directors
6. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund
7．Major projects invested by non-raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no major projects invested by non-raised funds
VI. Disposal of significant assets and equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable
23
Hikvision 2020 Half Year Report
During the reporting period, there was no disposal of significant assets
2. Sale of significant equity:
□ Applicable √ Inapplicable
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 Company Registered
Principal business Total assets Net assets Operating revenue Operating profit Net profit
name type capital
Technology development, technology consulting,
results transferring; computer software, electronic
product, communication product, digital security
product, fire-control products; production and sales:
security electronic product and its auxiliary equipment,
Hangzhou intelligent hardware electronic product, explosion-proof
Hikvision electrics, security electronic product and its auxiliary
Subsidiary 1000 million 37,493,807,565.10 4,339,394,001.81 22,942,782,260.98 741,113,184.73 603,963,564.51
Technology equipment, intelligent hardware electronic product,
Co., Ltd. explosion-proof electrics, fire-control products, IC card
and IC card RW device, mobile phone, cordless phone,
handheld wireless police terminal, hand held mobile
police terminal; labor protection articles (including
special labor protection articles); import or export of
goods or technology
24
Hikvision 2020 Half Year Report
Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable
Equity acquisition and disposal method Impact on overall
Company name
during the reporting period production results
Hangzhou Rayin Technology Co., Ltd. Cash contribution Business development
Expand overseas sales
Hikvision Morocco LLC Cash contribution
channels
VIII. Structural entities controlled by the Company
□ Applicable √ Inapplicable
IX. Guidance on the Company’s operational result from January 1st 2020 to September 30th 2020
□ Applicable √ Inapplicable
X. Risks of the Company and risk response solutions
During the reporting period, there was no material change in the risk exposure of the Company. For details,
please refer to Section I - Important Notes. The Company has been striving to identify various risk exposures, and
actively adopting countermeasures to avoid and reduce risks:
(1) Risk of COVID-19 epidemic: The Company strengthened the prevention and control of the epidemic and
endeavored to secure the health of its employees. Meanwhile, relying on its own accumulated advantage in
technologies and product development capabilities, the Company made contribution to prevent and control the
epidemic. The Company will continue to pay close attention to the impact of the epidemic, and actively adjust the
countermeasures.
(2) Risk of global operations: The Company actively carried out studies and researches on global policies and
trade laws and regulations and related significant changes, and formulated countermeasures to reduce various trade
compliance risks that may arise.
(3) Legal compliance risk: The Company continued to strengthen the establishment of the compliance risk
control system to carry out instant and full-cycle risk supervision and control on businesses, in order to enhance the
legal compliance capability of the Company.
(4) Risk of foreign exchange fluctuation: The Company cared a lot about the management of foreign exchange
risk, making best efforts to hedge and avoid exchange rate risk through various means under the premise of ensuring
25
Hikvision 2020 Half Year Report
safety and liquidity. For foreign exchange risk exposure, the Company actively applied non-speculative financial
hedging tools such as hedging, to realize reasonable risk management.
(5) Supply chain risk: The Company endeavored to properly manage the supply chain arrangements,
reasonably regulate inventory, and develop effective alternative solutions in a timely manner. Meanwhile, it
stimulated research and development in basic and fundamental areas to enhance the accumulation of underlying
technologies.
(6) Risk of technology upgrading: The Company continued to maintain R&D investments, conduct in-dept
exploration of frontier technologies and maintain its leadership in core technologies. Through steady and reliable
R&D management, the Company has developed an efficient R&D system that addresses market needs, with
perseverant response to the market demands for products and technologies, thus achieving sustainable development.
(7) Risk of internal management: The Company continued to implement management reforms, learn from top
enterprises by referring to their successful management practices and experience to optimize its organizing
capabilities.
(8) Financial risk due to the customers’ deteriorating solvency: the Company continued to increase its focus
on the security of its funds, stress on the quality of its businesses and ensure the effectiveness of its business activities.
(9) Risk of cybersecurity: The Company has always attached importance to enhancing the security of its
products and systems. The Company built a professional cybersecurity team, and instituted a complete product
security assurance system. To ensure continuous improvements on product and system security, and provide more
secured products and solutions for customers using the Internet/IoT applications, the Company integrated product
security requirements, cybersecurity design, cybersecurity development, cybersecurity testing and other links into
its product development procedure.
(10) Risk of intellectual property (IP) rights: The Company has built a professional IP rights team to carry out
routine management and IP rights protection work for trademarks, patents, and etc. Leveraging on various legal
means, such as administrative investigation, court proceedings and so on, the Company would combat violations of
its IP rights.
26
Hikvision 2020 Half Year Report
Section V Significant Events
I. Annual General Meeting and Extraordinary General Meetings convened during the reporting period
1. Annual General Meeting convened during the current reporting period
Proportion
of
Meeting Nature Convened Date Disclosure Date Disclosure Index
participating
investors
Annual General
2019 Annual General Meeting No. 2020-032；
Meeting of 71.59% May 15th 2020 May 16th 2020
of Shareholders www.cninfo.com.cn
Shareholders
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ Inapplicable
II. Profit distribution and capitalization of capital reserves plan or proposal for the current reporting
period
□ Applicable √ Inapplicable
The Company did not plan to distribute cash dividends, send bonus shares, or convert capital reserve into share
capital during the first half of 2019.
III. Unfulfilled and overdue commitments from the related committed parties such as the Company’s actual
controller, shareholders, related parties, acquirer(s), and the Company during the current reporting period.
□ Applicable √ Inapplicable
No such case during the reporting period.
IV. Engagement and disengagement of the CPA firm
Whether the half year report was audited
□Yes √No
The Company’s half year report was not audited.
27
Hikvision 2020 Half Year Report
V. Explanation given by the board of directors and supervisory committee regarding the “non-standard
auditor’s report” issued by the CPA firm for the current reporting period
□ Applicable √ Inapplicable
VI. Explanation given by the board of directors regarding the “non-standard auditor’s report” issued by the
CPA firm for the prior year.
□ Applicable √ Inapplicable
VII. Bankruptcy and restructuring
□ Applicable √ Inapplicable
No such case during the reporting period.
VIII. Litigations
Material litigation and arbitration
□ Applicable √ Inapplicable
No such case during the reporting period.
Other litigations
□ Applicable √ Inapplicable
IX. Media queries
□ Applicable √ Inapplicable
There was no prevalent media query during the reporting period.
X. Punishments and rectifications
□ Applicable √ Inapplicable
No such case during the reporting period.
XI. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Inapplicable
XII. The implementation of Equity Incentive Plan, Employee Stock Incentive Plan, or other incentive plans
√Applicable □Inapplicable
28
Hikvision 2020 Half Year Report
During the reporting period, the Company completed the second time unlocking shares for 2016 Restricted
Share Incentive Scheme.
On December 26th 2019, Resolution for the Fulfillment of the Unlocking Conditions of the Second Unlock Period
for the 2016 Restricted Share Incentive Schemes was approved by the 14th meeting of the fourth Board. Authorized
by the second extraordinary general meeting for 2016, a total of 21,836,266 restricted shares of 2,726 grantees were
vested, the vested shares were circulated on January 20th 2020.
For details, please refer to the Indicative Notice of Listing the Unlocked Shares for the Second Unlocking Period
of 2016 Restricted Share Incentive Schemes (No. 2020-002) issued on January 17th 2020.
By the end of the current reporting period, the Company has a total of 144,763,704 granted and restricted shares,
accounts for 1.55% of the Company’s total share capital.
29
Hikvision 2020 Half Year Report
XIII. Significant related-party transaction
1. Related-party transactions arising from routine operation
√Applicable □Inapplicable
Proportion Whether
Pricing Trading Approved
Type of Content of to the exceed
principles for Amount trading quota Settlemen Disclosure
Related party Relationship related related amount of the Disclosure reference
related party （0’000 (0’000 t method date
transaction transaction similar approved
transactions RMB） RMB）
transactions. quota
Under the common
Payment
Subsidiaries or research control of the
Procurement 32,374.65 2.38% 60,000 No on
institutes of CETC Company’s actual
delivery
controller.
The Company’s
director, Gong Payment
Shanghai Fullhan Micro Co.,
Hongjia is the Procurement 11,862.88 0.87% 50,000 No on Announcement on
Ltd.
director of the related delivery projections on 2020
Reference
Procurement, April 25th
party market price; related-party
receiving 2020
Wu Weiqi, director of Agreed on transactions (No：
services Payment
Maxio Technology (Hangzhou) the Company, served price 2020-017）
Procurement 1,981.06 0.15% 13,000 No on
Co., Ltd. and its subsidiaries as director of this
delivery
company
Wu Weiqi, director of
Payment
Wuhu Sensor Technology Co., the Company, served
Procurement 1,475.60 0.11% 14,000 No on
Ltd. as director of this
delivery
company
Zhiguang Hailian Big Data An associated Procurement 13.58 0.00% 1,000 No Payment - -
30
Hikvision 2020 Half Year Report
Technology Co., Ltd. and its companies held by on
subsidiaries the company delivery
Under the common Payment
Subsidiaries or research control of the on
Sales 10,151.61 0.42% 75,000 No
institutes of CETC Company’s actual delivery
controller.
The Company’s Payment
Daishan Hailai Yunzhi senior management on
Sales 1,041.60 0.04% 4,000 No
Technology Co., Ltd. is appointed as this delivery
company’s chairman
Zhiguang Hailian Big Data An associated Payment
Technology Co., Ltd. and its companies held by Sales 716.25 0.03% 1,500 No on
subsidiaries the company delivery
Providing Announcement on
Wu Weiqi, director of Reference Payment
services, selling projections on 2020
Wuhu Sensor Technology Co., the Company, served market price; on April 25th
Sales products, 78.88 0.00% 2,000 No related-party
Ltd. as director of this Agreed on delivery 2020
commercial transactions (No：
company price
goods 2020-017）
The Company’s Payment
Zhejiang Haishi Huayue Digital senior management on
Sales 65.44 0.00% 1,000 No
Technology Co., Ltd. is appointed as this delivery
company’s chairman
An associated Payment
Sanmenxia Xiaoyun Vision
companies held by Sales 51.85 0.00% 1,500 No on
Technology Co., Ltd.
the company delivery
The former executive Payment
Hangzhou Comfirmware of the Company, Jia on
Sales 29.79 0.00% 500 No
Technology Co., Ltd. Yonghua, served as delivery
the director of this
31
Hikvision 2020 Half Year Report
company. Jia
Yonghua resigned in
October 2019. Within
12 months after his
departure, Hangzhou
Comfirmware was
still recognized as the
Company's related
legal person.
Senior executives of Payment
Shenzhen Wanyu Security the Company serve on
Sales 19.82 0.00% 500 No
Service Technology Co., Ltd. as directors of this delivery
company
Maxio Technology (Hangzhou) Wu Weiqi, director of Payment
Co., Ltd. and its subsidiaries the Company, served on
Sales 10.65 0.00% 500 No
as director of this delivery
company
An associated Payment
Qinghai Qingtang Big Data Co.,
companies held by Sales 0.30 0.00% 1,000 No on
Ltd.
the company delivery
An associated Payment
Jiaxin Haishi JiaAn Zhicheng
companies held by Sales 721.01 0.03% 500 Yes on
Technology Co., Ltd.
the company delivery
Xuzhou Kangbo Urban Payment
A joint ventures held
Operation Management Service Sales 68.40 0.00% 1,000 No on - -
by the company
Co., Ltd. delivery
Total 60,663.37 - 227,000
Details on significant sales return None
32
Hikvision 2020 Half Year Report
1) The amount of related purchases with Zhiguang Hailian Big Data Technology Co., Ltd. and its
subsidiaries, and the amount of related sales with Xuzhou Kongbo Urban Operation Management
Service Co., Ltd., are subject to approval by the chairman of the board in accordance with the
Total amount of related transactions projected based on different categories, actual Company's Related-Party Transaction Management System.
performance during the current reporting period (if any) 2) The part of the related-party transactions with Jiaxing Haishi Jiaan Zhicheng Technology Co.,
Ltd. that exceeds the approved quota has been submitted to the 18th meeting of the fourth board
of directors for confirmation. For details, please refer to the Announcement on increasing the
projections on daily related-party transactions in 2020 (No. 2020-045).
Reasons on significant difference between trading price and market referencing price
Not applicable
(if applicable)
33
Hikvision 2020 Half Year 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 credit and debt transactions
□ Applicable √Inapplicable
No related-parties’ creditor’s rights or debts during the reporting period.
5. Other significant related party transactions
√Applicable □Inapplicable
On April 23rd 2020, the Resolution on the Commencement of Financial Leasing Business and Related-Party
Transactions with China Electronics Technology Leasing Co. Ltd. was considered and approved by the Company at
the seventeenth meeting of the fourth session of the Board, agreeing that the Company enters into a financial leasing
contract with China Electronics Technology Leasing Co. Ltd. to commence financial leasing related-party
transactions. The aforesaid related-party transactions mainly included the design of financing solutions, financial
leasing and other consulting services relating to procurement, taxation, finance and asset management in connection
with financial leasing, with the total amount of financing not exceeding RMB 500 million (excluding tax). On May
15th 2020, the Company entered into a financial leasing contract with China Electronics Technology Leasing Co.
Ltd., effective for 1 year from the effective date.
On April 23rd 2020, the Resolution on Increasing the Capital of China Electronic Technology Finance Co., Ltd.
and Related-Party Transactions was considered and approved by the Company at the seventeenth meeting of the
fourth session of the Board, agreeing that the Company increases the capital of China Electronic Technology Finance
Co., Ltd. with RMB 112.87 million in cash, including RMB 68.94 million as registered capital and RMB 43.93
million as capital reserve. After the capital increase, Hikvision still holds 3.83% equity interest in China Electronic
Technology Finance Co., Ltd. Meanwhile, the Company's management is authorized to deal with matters related to
this capital increase.
34
Hikvision 2020 Half Year Report
Disclosure website for provisional reports on significant related-party transactions:
Title of provisional repo/rts Disclosure date Disclosure website
Announcement on Carrying out Financial Leasing Business and Related-
April 25th 2020 www.cninfo.com.cn
party Transactions with CLP Leasing Co., Ltd. (No. 2020-022)
Announcement on Capital Increase of China Electronic Technology
April 25th 2020 www.cninfo.com.cn
Finance Co., Ltd. and Related Party Transactions (No. 2020-023)
XIV. The Company’s funds used by the controlling shareholder or its related parties for non-
operating purposes.
□ Applicable √ Inapplicable
No such case duiring the reporting period.
XV. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such case in the reporting period.
(2) Contracting
□ Applicable √ Inapplicable
No such case in the reporting period.
(3) Leasing
□Applicable √ Inapplicable
No such case during the reporting period.
35
Hikvision 2020 Half Year Report
2. Significant guarantees
√Applicable □ Inapplicable
(1) Details of guarantees
Unit: RMB’0000
Guarantees provided by the Company for subsidiaries
Disclosure date of Guarantee for
Guarantee Actual occurrence Actual guaranteed Type of
Guaranteed party announcement of the Term of guarantee Due or not a related party
Cap date amount guarantee
guarantee cap or not
Hangzhou Hikvision Technology 2019.01.18-
April 25th 2020 1,437,500 January 18th 2019 189,711.92 Joint guarantee No Yes
Co., Ltd. 2021.01.18
Hangzhou Hikvision Electronics 2020.05.01-
April 25th 2020 287,500 May 1st 2020 146.65 Joint guarantee No Yes
Co., Ltd. 2021.04.30
2017.12.20-
Hikvision International Co., Ltd. April 25th 2020 462,500 December 20th 2017 8,665.95 Joint guarantee No Yes
2020.12.20
Chongqing Hikvision Technology 2019.07.05-
April 25th 2020 155,000 July 5th 2019 51,340.26 Joint guarantee No Yes
Co., Ltd. 2020.08.08
Hangzhou Hikvision System 2020.05.01-
April 25th 2020 190,000 May 1st 2020 1,007.60 Joint guarantee No Yes
Technology Co., Ltd. 2021.04.30
Urumqi HaiShi Xin’An Electronic 2019.03.29-
April 25th 2020 40,000 March 29th 2019 15,844.57 Joint guarantee No Yes
Technology Co., Ltd. 2028.06.20
Mo Yu HaiShi Electronic 2019.03.26-
April 25th 2020 25,000 March 26th 2019 18,560.00 Joint guarantee No Yes
Technology Co., Ltd. 2035.03.26
Pi Shan HaiShi Yong An Electronic 2019.03.26-
April 25th 2020 30,000 March 26th 2019 22,778.00 Joint guarantee No Yes
Technology Co., Ltd. 2040.06.26
36
Hikvision 2020 Half Year Report
Guarantees provided by the Company for subsidiaries
Disclosure date of Guarantee for
Guarantee Actual occurrence Actual guaranteed Type of
Guaranteed party announcement of the Term of guarantee Due or not a related party
Cap date amount guarantee
guarantee cap or not
Luo Pu HaiShi Ding Xin Electronic 2019.03.26-
April 25th 2020 30,000 March 26th 2019 14,400.00 Joint guarantee No Yes
Technology Co., Ltd. 2035.06.26
Yu Tian HaiShi Mei Tian 2019.03.26-
April 25th 2020 30,000 March 26th 2019 23,840.00 Joint guarantee No Yes
Electronic Technology Co., Ltd. 2034.03.26
Chongqing Hikvision System
April 25th 2020 60,000 Not happened during the reporting period
Technology Co., Ltd.
Chengdu Hikvision Digital
April 25th 2020 50,000 Not happened during the reporting period
Technology Co., Ltd.
Hangzhou Haikang Zhicheng
Investment and Development Co., April 25th 2020 20,000 Not happened during the reporting period
Ltd.
Wuhan Hikvision Technology Co.,
April 25th 2020 50,000 Not happened during the reporting period
Ltd.
Wuhan Hikvision Science and
April 25th 2020 50,000 Not happened during the reporting period
Technology Co., Ltd.
Xi’an Hikvision Digital
April 25th 2020 30,000 Not happened during the reporting period
Technology Co., Ltd.
Pyronix Limited April 25th 2020 11,000 Not happened during the reporting period
Zhenping Haikang Juxin Digital
April 25th 2020 23,000 Not happened during the reporting period
Technology Co., Ltd.
Hikvision Singapore Pte. Ltd April 25th 2020 100,000 Not happened during the reporting period
37
Hikvision 2020 Half Year Report
Guarantees provided by the Company for subsidiaries
Disclosure date of Guarantee for
Guarantee Actual occurrence Actual guaranteed Type of
Guaranteed party announcement of the Term of guarantee Due or not a related party
Cap date amount guarantee
guarantee cap or not
Hikvision Limited Liability
April 25th 2020 50,000 Not happened during the reporting period
Company
Hikvision USA Inc. April 25th 2020 2,000 Not happened during the reporting period
Prama Hikvision India Private
April 25th 2020 50,000 Not happened during the reporting period
Limited
Hikvision South Africa (Pty) Ltd April 25th 2020 20,000 Not happened during the reporting period
HIKVISION DO BRASIL
COMRCIO DE
April 25th 2020 20,000 Not happened during the reporting period
EQUIPAMENTOS DE
SEGURANA LTDA
Hikvision (Malaysia) SDN BHD. April 25th 2020 2,000 Not happened during the reporting period
Hikvision Australia Pty Ltd. April 25th 2020 2,000 Not happened during the reporting period
Hikvision FZE April 25th 2020 2,000 Not happened during the reporting period
Hikvision Europe B.V. April 25th 2020 50,000 Not happened during the reporting period
Total guarantee cap for subsidiaries approved during the Total actual guarantee amount for
3,279,500 425,195.95
reporting period(B1) subsidiaries during the reporting period(B2)
Total actual guarantee balance for
Total approved guarantee cap for subsidiaries at the end of
3,279,500 subsidiaries at the end of the reporting 346,294.94
the reporting period(B3)
period(B4)
Total guarantee amount provided by the Company (total of the above-mentioned 3 kinds of guarantees)
38
Hikvision 2020 Half Year Report
Guarantees provided by the Company for subsidiaries
Disclosure date of Guarantee for
Guarantee Actual occurrence Actual guaranteed Type of
Guaranteed party announcement of the Term of guarantee Due or not a related party
Cap date amount guarantee
guarantee cap or not
Total guarantee cap approved during the reporting period Total actual guarantee amount during the
3,279,500 425,195.95
（A1+B1+C1） reporting period（A2+B2+C2）
Total approved guarantee cap at the end of reporting Total actual guarantee balance at the end of
3,279,500 346,294.94
period（A3+B3+C3） the reporting period（A4+B4+C4）
Portion of the total actual guarantee (A4+B4+C4) amount in net assets of the Company 7.83%
Of which:
The balance of guarantee for shareholders, actual controllers and their affiliates. (D) 0
Amount of debt guarantees provided directly or indirectly for entities with a liability-to-
329,296.13
asset ratio over 70% (E)
Total amount of guarantee exceeding 50% of net assets (F) 0
Total guarantee amount of the above-mentioned 3 kinds of guarantees (D+E+F) 329,296.13
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.
39
Hikvision 2020 Half Year Report
(2) Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
No such case in the reporting period.
3. Entrusted financial management
□ Applicable √ Inapplicable
No entrusted finance during the reporting period
4. Other significant contracts
□ Applicable √ Inapplicable
No such case in the reporting period.
XVI. Social responsibility
1. Significant environmental problems
Whether the Company or the Company’s subsidiaries are critical pollutant enterprises disclosed by national
environmental protection department
No
2. Fulfillment of the social responsibility of targeted poverty alleviation
□ Applicable √ Inapplicable
The Company did not conduct any targeted poverty alleviation during the current reporting period and had no
future arrangement for targeted poverty alleviation.
XVII. Other significant events
√ Applicable □ Inapplicable
On March 13th 2020, Mr. Gong Hongjia and Mr. Hu Yangzhong, Directors of the Company, received the Case
Closure Notice from the China Securities Regulatory Commission and the Decision Letter regarding Administrative
Regulatory Measures from the Zhejiang Securities Regulatory Bureau of the China Securities Regulatory
Commission ([2020] No. 16). The Zhejiang Securities Regulatory Bureau took the supervisory and administrative
40
Hikvision 2020 Half Year Report
measures against the above two Directors by issuing warning letters, and recorded them in the integrity files of
securities and futures markets. For details, please refer to the Announcement on the Directors' Receipt of the "Case
Closure Notice from the China Securities Regulatory Commission and Decision Letter regarding Administrative
Regulatory Measures from the Zhejiang Securities Regulatory Bureau of the China Securities Regulatory
Commission (Announcement No.: 2020-009) published by the Company on March 14th 2020. The above two
Directors have submitted written rectification reports to the Zhejiang Securities Regulatory Bureau on March 19th
2020.
On April 23rd 2020, the 17th meeting of the 4th session of the Board of the Company considered and approved
the Proposal on Authorizing the Company’s Management to Initiate the Preliminary Preparatory Work for the
Domestic Listing of Spin-off Subsidiaries, and agreed to authorize the Company’s management to initiate the
preliminary preparatory work for the spin-off of Hangzhou EZVIZ Network Co., Ltd. to the Shenzhen Stock
Exchange for listing, including but not limited to the demonstration of feasibility plan, the preparation of the listing
plan, the signing of relevant agreements involved in the planning process and other listing-related matters, and upon
the formulation of the spin-off plan, the submission of relevant listing plan and other listing-related matters to the
Board and the general meeting of shareholders of the Company respectively for consideration and approval. For
details, please refer to the Prompt Announcement on the Authorization of the Management of the Company to Initiate
the Preliminary Preparatory Work for the Domestic Listing of Spin-off Subsidiaries (Announcement No.: 2020-028)
published by the Company on April 25th 2020.
On December 22nd 2016, the 2016 Second Extraordinary General Meeting of the Company approved the
Proposal on the Issuance of Short-Term Commercial Paper (SCP) and approved the Company's application to the
China Association of Interbank Market Dealers for the registration and issuance of SCP of no more than RMB 7
billion. During the Reporting Period, the Company issued the 2020 First Tranche of Short-term Commercial Paper
(SCP) of Hangzhou Hikvision Digital Technology Co., Ltd. with a total amount of RMB 1 billion and an interest
rate of 1.75%. For details, please refer to the Announcement on the Issuance Results of the 2020 First Tranche of
Short-term Commercial Paper (SCP) (Announcement No.: 2020-037) issued by the Company on June 6th 2020 and
Footnote 31- Other Current Liabilities in Item (V) to the consolidated financial statements herein.
XVIII. Significant events of the Company’s subsidiaries
□ Applicable √ Inapplicable
41
Hikvision 2020 Half Year 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
Bonus
Shares Ratio transferred Others Sub-total Shares Ratio
New Shares Issued share
from capital reserve
1. Shares subject to conditional restriction(s) 1,276,701,961 13.66% -27,083,195 -27,083,195 1,249,618,766 13.37%
1)State holdings
2)Shares held by State-owned corporate
3) Other domestic shares 335,144,656 3.59% -27,062,855 -27,062,855 308,081,801 3.30%
Including: held by domestic corporates
held by domestic natural person 335,144,656 3.59% -335,144,656 -335,144,656 308,081,801 3.30%
4) Foreign shares 941,557,305 10.07% -20,340 -20,340 941,536,965 10.07%
42
Hikvision 2020 Half Year Report
Including:held by overseas corporates
held by overseas natural person 941,557,305 10.07% -20,340 -20,340 941,536,965 10.07%
2. Shares without restriction 8,068,308,735 86.34% 27,083,195 27,083,195 8,095,391,930 86.63%
1) RMB ordinary shares 8,068,308,735 86.34% 27,083,195 27,083,195 8,095,391,930 86.63%
2) Domestically listed foreign shares
3) Foreign shares listed overseas
4) Others
3. Total 9,345,010,696 100.00% 0 0 9,345,010,696 100.00%
Reason for the changes in share capital
□ Applicable √Inapplicable
Approval for changes in share capital
□ Applicable √Inapplicable
Transfer for changes in share capital
□ Applicable √Inapplicable
Information about the implementation of share repurchase
□Applicable √Inapplicable
43
Hikvision 2020 Half Year Report
The implementation progress of reducing and repurchasing shares by centralized bidding
□Applicable √Inapplicable
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
Other contents that the Company considers necessary or required by the securities regulatory authorities to disclose
□ Applicable √ Inapplicable
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: Share
Opening restricted Increased in Vested in current Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares current period period shares
According to the relevant
provisions of shares
Gong Hongjia 941,292,525 0 0 941,292,525 Restricted shares for senior executives
management for senior
executives
Grantees of restricted share
166,599,970 0 21,836,266 144,763,704 Equity Incentive Restricted Shares January 20th 2020
incentive plan (consolidated)
Restricted shares for senior executives + According to the relevant
partial of the unlocked restricted shares provisions of shares
Hu Yangzhong 136,543,558 48,150 0 136,591,708
turning into restricted shares for senior management for senior
executives executives
Jiang Haiqing 11,317,082 0 2,810,821 8,506,261 Restricted shares for senior executives +
44
Hikvision 2020 Half Year Report
Opening restricted Increased in Vested in current Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares current period period shares
partial of the unlocked restricted shares
turning into restricted shares for senior
executives
Restricted shares for senior executives +
partial of the unlocked restricted shares
Wu Weiqi 8,439,442 44,550 0 8,483,992
turning into restricted shares for senior
executives
Restricted shares for senior executives +
partial of the unlocked restricted shares
Jia Yonghua 5,635,544 0 1,392,461 4,243,083
turning into restricted shares for senior
executives
Restricted shares for senior executives +
partial of the unlocked restricted shares
Li Pan 5,634,368 0 1,377,167 4,257,201
turning into restricted shares for senior
executives
Restricted shares for senior executives +
partial of the unlocked restricted shares
Fu Baijun 272,100 32,700 0 304,800
turning into restricted shares for senior
executives
Restricted shares for senior executives +
partial of the unlocked restricted shares
Huang Fanghong 219,375 0 27,500 191,875
turning into restricted shares for senior
executives
Restricted shares for senior executives +
Jiang Yufeng 170,325 36,900 0 207,225 partial of the unlocked restricted shares
turning into restricted shares for senior
45
Hikvision 2020 Half Year Report
Opening restricted Increased in Vested in current Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares current period period shares
executives
Restricted shares for senior executives +
partial of the unlocked restricted shares
He Hongli 165,825 41,400 0 207,225
turning into restricted shares for senior
executives
Restricted shares for senior executives +
partial of the unlocked restricted shares
Xu Lirong 161,550 32,850 0 194,400
turning into restricted shares for senior
executives
Partial of the unlocked restricted shares
Pu Shiliang 130,785 19,820 0 150,605 turning into restricted shares for senior
executives
Wang Qiuchao 26,250 0 0 26,250 Restricted shares for senior executives
Partial of the unlocked restricted shares
Jin Yan 26,100 24,700 0 50,800 turning into restricted shares for senior
executives
Partial of the unlocked restricted shares
Bi Huijuan 22,500 14,250 0 36,750 turning into restricted shares for senior
executives
Partial of the unlocked restricted shares
Jin Duo 16,425 32,850 0 49,275 turning into restricted shares for senior
executives
Partial of the unlocked restricted shares
Cai Changyang 16,425 32,850 0 49,275
turning into restricted shares for senior
46
Hikvision 2020 Half Year Report
Opening restricted Increased in Vested in current Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares current period period shares
executives
Qu Liyang 11,812 0 0 11,812 Restricted shares for senior executives
Total 1,276,701,961 361,020 27,444,215 1,249,618,766 -- --
Note:
1. 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 second row.
2. The three executives Jiang Haiqing, Jia Yonghua and Li Pan have left office on October 25th 2019. According to relevant regulations, the shares held by them still
need to be kept restricted.
II. Issuance and listing of securities
1. Securities (exclude preferred share) issued during the reporting period
□Applicable √Inapplicable
47
Hikvision 2020 Half Year Report
III. Total number of shareholders and their shareholdings
Unit: Share
Total number of common shareholders at the end of the reporting Total number of preferred shareholders (if any) whose voting rights have
317,713 0
period been recovered at the end of the reporting period
Particulars about shares held by common shareholders with a shareholding percentage over 5% or the Top 10 of them
The number Pledged or frozen
Share- Total common shares Increase/ of common The number of shares
Nature of
Name of shareholder holding held at the end of the decrease during the shares held held without trading
shareholder Status Amount
percentage (%) reporting period reporting period with trading restrictions
restrictions
China Electronics Technology State-owned
38.88% 3,632,897,256 - - 3,632,897,256 Pledged 50,000,000
HIK Group Co., Ltd. corporation
Overseas
Gong Hongjia 13.43% 1,255,056,700 - 941,292,525 313,764,175 Pledged 490,240,000
individual
Hong Kong Securities Clearing Overseas
5.95% 556,442,594 -32,151,596 - 556,442,594 - -
Company Ltd.(HKSCC) corporation
Domestic
Xinjiang Weixun Investment
non-state-
Management Limited 4.82% 450,795,176 - - 450,795,176 Pledged 114,758,998
owned
Partnership
corporation
Domestic
Xinjiang Pukang Investment non-state-
1.95% 182,510,174 - - 182,510,174 Pledged 127,700,000
Limited Partnership owned
corporation
Domestic
Hu Yangzhong 1.95% 182,186,477 - 136,639,858 45,546,619 Pledged 54,550,000
Individual
The 52nd Research Institute at
State-owned
China Electronics Technology 1.93% 180,775,044 - - 180,775,044 - -
corporation
Group Corporation
48
Hikvision 2020 Half Year Report
Domestic
CITIC Securities Company non-state-
1.10% 103,176,837 6,578,774 - 103,176,837 - -
Limited owned
corporation
Central Huijin Investment Co., State-owned
0.70% 65,818,800 - - 65,818,800 - -
Ltd. corporation
GOLDMAN, SACHS & Overseas
0.49% 46,227,207 46,227,207 - 46,227,207 - -
CO.LLC 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 Co. Ltd.. Ms. Chen Chunmei, limited partner of Xinjiang Pukang Investment
Explanation on associated relationship or
Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong, domestic individual,
concerted actions among the above-mentioned
is holding shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership.
shareholders:
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 common shareholders holding shares that are not subject to trading restriction(s)
Type of shares
Number of common shares without trading restrictions held at the period-
Name of shareholder
end Type Number
China Electronics Technology HIK Group Co.,
3,632,897,256 RMB ordinary shares 3,632,897,256
Ltd.
Hong Kong Securities Clearing Company
556,442,594 RMB ordinary shares 556,442,594
Ltd.(HKSCC)
Xinjiang Weixun Investment Management Limited
450,795,176 RMB ordinary shares 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
180,775,044 RMB ordinary shares 180,775,044
Technology Group Co. Ltd.
49
Hikvision 2020 Half Year Report
CITIC Securities Company Limited 103,176,837 RMB ordinary shares 103,176,837
Central Huijin Investment Co., Ltd. 65,818,800 RMB ordinary shares 65,818,800
GOLDMAN, SACHS & CO.LLC 46,227,207 RMB ordinary shares 46,227,207
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
Explanation on associated relationship and all subject to control of China Electronics Technology Group Co. Ltd. Ms. Chen Chunmei, limited partner of Xinjiang Pukang Investment
concerted actions among top ten common Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong, domestic
shareholders without trading restrictions, and individual, is holding shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang Investment
among top ten common shareholders and top ten Limited Partnership.
common 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
No such case during the current reporting period.
IV.Particulars about change in controlling shareholder or actual controller
Change of the controlling shareholder during the current reporting period
□ Applicable √ Inapplicable
No such cases in the reporting period.
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
No such cases in the current reporting period
50
Hikvision 2020 Half Year Report
Section VII Information of Preferred Shares
□ Applicable √ Inapplicable
There is no preferred share existed for the Company during the current reporting period.
51
Hikvision 2020 Half Year Report
Section VIII Information about Convertible Corporate Bonds
□ Applicable √ Inapplicable
There is no convertible corporate bond existed for the Company during the current reporting period.
52
Hikvision 2020 Half Year Report
Section IX Information about Directors, Supervisors, Senior
Management
I. Shareholding changes of directors, supervisors, senior management personnel
√Applicable □ Inapplicable
Number of Number
Number of
Shares restricted of
Shares restricted
increased shares held restricted
Shares held at decreased Shares held at shares held
Tenure the beginning during at the shares
Name Title during the the end of the at the end
status of the Period the beginning granted
(Shares) Period Period (Shares) of the
Period of the during the
(Shares) period
(shares) period period
(shares)
(shares) (shares)
Chen
Chairman Incumbent 0 0 0 0
Zongnian
Gong
Vice Chairman Incumbent 1,255,056,700 1,255,056,700 0 0
Hongjia
Qu Liyang Director Incumbent 15,750 15,750 0 0
Director,
Hu
General Incumbent 182,186,477 182,186,477 96,300 48,150
Yangzhong
Manager (CEO)
Director,
Wu Weiqi Standing Incumbent 11,371,389 11,371,389 89,100 44,550
Deputy
General
Cheng Independent
Manager Incumbent 0 0 0 0
Tianzong Director
Lu Independent
Incumbent 0 0 0 0
Jianzhong Director
Wang Independent
Incumbent 0 0 0 0
Zhidong Director
Hong Independent
Incumbent 0 0 0 0
Tianfeng Director
Cheng Supervisor
Incumbent 0 0 0 0
Huifang Chairman
Wang
Supervisor Incumbent 35,000 35,000 0 0
Qiuchao
Supervisor;
Xu Lirong person in Incumbent 303,000 303,000 65,700 32,850
charge of
internal audit
Senior Deputy
He Hongli Incumbent 331,500 331,500 82,800 41,400
General
Manager
53
Hikvision 2020 Half Year Report
Number of Number
Number of
Shares restricted of
Shares restricted
increased shares held restricted
Shares held at decreased Shares held at shares held
Tenure the beginning during at the shares
Name Title during the the end of the at the end
status of the Period the beginning granted
(Shares) Period Period (Shares) of the
Period of the during the
(Shares) period
(shares) period period
(shares)
(shares) (shares)
Senior Deputy
Fu Baijun Incumbent 495,000 495,000 222,900 163,950
General
Cai Manager
Senior Deputy
Incumbent 109,500 109,500 65,700 32,850
Changyang General
Manager
Senior Deputy
Xu Ximing Incumbent 197,000 197,000 197,000 197,000
General
Manager
Senior Deputy
Bi Huijuan Incumbent 273,000 273,000 213,000 168,000
General
Jiang Manager
Senior Deputy
Incumbent 325,500 325,500 73,800 36,900
Yufeng General
Pu Manager
Senior Deputy
Incumbent 393,900 393,900 189,640 144,820
Shiliang General
Manager
Senior Deputy
Jin Duo Incumbent 109,500 109,500 65,700 32,850
General
Manager
Senior Deputy
Jin Yan General Incumbent 284,000 284,000 214,400 162,200
Manager,
Huang Senior Deputy
Incumbent 402,500 402,500 110,000 110,000
Fanghong charge of
General
finance
Chen Manager,
Senior Deputy
Incumbent 0 0
Junke BoardGeneral
Secretary
Manager
Total -- -- 1,451,889,716 1,451,889,716 1,686,040 1,215,520
Note: 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.
II. Changes of directors, supervisors and senior management personnel
□Applicable √Inapplicable
The Company's directors, supervisors and senior management personnel did not change during the current
reporting period. For details, please refer to the 2019 annual report.
54
Hikvision 2020 Half Year 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 half year report authorized disclosure date.
□Yes √No
55
Hikvision 2020 Half Year Report
Section XI Financial Report
I. Audit report
Whether audit has been performed on this interim financial report
□ Yes √ No
The Company’s 2020 Half Year Report has not been audited
56
Hikvision 2020 Half Year Report
Half year ended on June 30th 2020
Consolidated Balance Sheet
Unit: RMB
Item Notes On June 30th 2020 On December 31st 2019
Current Assets:
Cash and bank balances (V)1 22,090,506,085.61 27,071,948,919.78
Held-for-trading financial
(V)2 853,125.46 181.76
assets
Notes receivable (V)3 810,252,938.16 973,236,789.02
Accounts receivable (V)4 21,449,479,247.87 21,307,927,200.28
Receivables for financing (V)5 1,183,573,810.59 1,257,385,053.02
Prepayments (V)6 405,067,235.70 309,685,733.32
Other receivables (V)7 474,236,839.64 555,246,545.48
Inventories (V)8 11,212,408,913.89 11,267,986,843.11
Contract assets (V)9 111,392,631.57 -
Non-current assets due within
(V)10 781,587,087.34 528,469,701.75
one year
Other current assets (V)11 673,906,905.00 754,456,821.72
Total Current Assets 59,193,264,820.83 64,026,343,789.24
Non-current Assets:
Long-term receivables (V)12 1,576,950,814.85 1,382,536,761.22
Long-term equity investment (V)13 520,322,603.80 252,165,321.49
Other non-current financial
(V)14 296,580,935.18 312,398,267.44
assets
Fixed assets (V)15 6,005,536,637.71 5,791,218,720.87
Construction in progress (V)16 1,013,956,457.06 631,555,479.06
Intangible assets (V)17 1,027,651,035.49 1,046,122,507.64
Goodwill (V)18 275,619,227.98 273,611,961.96
Long-term deferred expenses (V)19 95,391,183.98 87,611,490.75
Deferred tax assets (V)20 861,572,540.35 688,849,263.70
Other non-current assets (V)21 1,071,476,124.05 865,586,676.92
Total Non-current Assets 12,745,057,560.45 11,331,656,451.05
Total Assets 71,938,322,381.28 75,358,000,240.29
57
Hikvision 2020 Half Year Report
Half year ended on June 30th 2020
Consolidated Balance Sheet-continued
Unit: RMB
Item Notes On June 30th 2020 On December 31st 2019
Current Liabilities:
Short-term borrowings (V)22 4,447,276,972.89 2,640,082,485.15
Held-for-trading financial
(V)23 8,951,114.77 652,428.18
liabilities
Notes payable (V)24 1,222,676,114.77 1,239,584,016.70
Accounts payable (V)25 7,297,949,959.60 12,700,075,307.70
Contract liabilities (V)26 1,172,844,148.91 -
Receipts in advance - 1,020,989,460.61
Payroll payable (V)27 1,806,262,267.93 2,359,674,640.12
Taxes payable (V)28 1,376,692,090.42 991,342,805.91
Other payables (V)29 1,912,704,151.68 1,568,744,599.94
Non-current liabilities due
(V)30 155,035,558.24 86,123,154.06
within one year
Other current liabilities (V)31 1,813,013,618.43 913,534,538.26
Total Current Liabilities 21,213,405,997.64 23,520,803,436.63
Non-current Liabilities:
Long-term borrowings (V)32 4,771,375,714.28 4,604,168,571.43
Long-term payables (V)33 40,625,618.86 50,181,416.72
Provisions (V)34 84,693,948.33 90,570,669.01
Deferred income (V)35 252,658,264.22 333,589,831.30
Deferred tax liabilities (V)20 94,468,255.70 51,088,103.96
Other non-current liabilitie (V)36 1,234,739,326.10 1,234,739,326.10
Total non-current liabilities 6,478,561,127.49 6,364,337,918.52
Total liabilities 27,691,967,125.13 29,885,141,355.15
Owners’ Equity
Share capital (V)37 9,345,010,696.00 9,345,010,696.00
Capital reserves (V)38 4,576,494,261.24 4,126,943,698.96
Less: Treasury shares (V)39 2,046,939,271.56 2,148,273,864.36
Other comprehensive income (V)40 (78,024,062.46) (53,541,146.99)
Surplus reserves (V)41 4,672,505,348.00 4,672,505,348.00
Retained earnings (V)42 27,043,854,488.89 28,961,389,145.22
Total owners' equity attributable 43,512,901,460.11 44,904,033,876.83
to owner of the Company
Minority equity 733,453,796.04 568,825,008.31
Total owners' equity 44,246,355,256.15 45,472,858,885.14
Total liabilities and owners' 75,358,000,240.29
71,938,322,381.28
equity
The accompanying notes form part of the financial statements.
The financial statements were signed by the following:
Legal Representative: Chen Zongnian；Person in charge of the accounting work: Jin Yan;
Person in Charge of the Accounting Department: Zhan Junhua
58
Hikvision 2020 Half Year Report
Half year ended on June 30th 2020
Balance sheet of the parent company
Unit: RMB
th st
Item Notes On June 30 2020 On December 31 2019
Current Assets:
Cash and bank balances 15,366,157,034.76 16,851,590,525.05
Notes receivable 99,447,853.10 149,703,073.98
Accounts receivable (XV)1 27,882,589,962.64 25,107,965,925.08
Receivables for financing 83,893,478.71 84,839,695.67
Prepayments 121,487,841.52 160,688,588.99
Other receivables (XV)2 1,488,158,636.58 921,275,388.15
Inventories 211,790,683.91 171,243,815.97
Contract assets 4,880,231.89 -
Non-current assets due within
55,861,259.90 4,513,795.81
one year
Other current assets 33,810,615.59 23,117,398.50
Total Current Assets 45,348,077,598.60 43,474,938,207.20
Non-current Assets:
Other non-current financial
293,686,715.18 309,504,047.44
assets
Long-term accounts receivable 81,505,791.91 681,568.43
Long-term equity investment (XV)3 5,934,231,347.64 5,074,018,030.44
Fixed assets 2,853,968,748.87 2,831,295,145.61
Construction in progress 285,297,616.77 153,416,054.28
Intangible assets 173,696,502.86 188,362,883.75
Long-term prepaid expenses for
39,503,103.61 34,199,446.06
amortization
Deferred tax assets 176,930,540.34 126,357,792.34
Other non-current assets 18,388,245.60 21,619,464.07
Total Non-current Assets 9,857,208,612.78 8,739,454,432.42
Total Assets 55,205,286,211.38 52,214,392,639.62
59
Hikvision 2020 Half Year Report
Half year ended on June 30th 2020
Balance sheet of the parent company - continued
Unit: RMB
th st
Item Notes On June 30 2020 On December 31 2019
Current Liabilities:
Short-term borrowings 3,482,751,236.09 2,001,781,388.89
Accounts payable 388,484,821.08 450,983,270.08
Contract liabilities 236,895,197.55 -
Receipts in advance - 227,242,328.23
Payroll payable 1,220,893,104.84 1,564,304,003.49
Taxes payable 967,834,022.75 796,890,945.83
Other payables 2,314,123,394.86 533,325,191.05
Non-current liabilities due
9,601,850.55 9,539,251.98
within one year
Other current liabilities 1,813,013,618.53 913,534,538.26
Total Current Liabilities 10,433,597,246.25 6,497,600,917.81
Non-current Liabilities:
Long-term borrowings 3,184,400,000.00 3,126,200,000.00
Provisions 51,992,619.17 62,863,096.83
Deferred Income 186,493,263.45 162,018,728.45
Other non-current liabilities 1,234,739,326.00 1,234,739,326.10
Total non-current liabilities 4,657,625,208.62 4,585,821,151.38
Total liabilities 15,091,222,454.87 11,083,422,069.19
Owners’ Equity
Share capital 9,345,010,696.00 9,345,010,696.00
Capital reserves 4,546,002,655.27 4,064,833,739.52
Less: Treasury shares 2,046,939,271.56 2,148,273,864.36
Surplus reserves 4,672,505,348.00 4,672,505,348.00
Retained earnings 23,597,484,328.80 25,196,894,651.27
Total owners' equity 40,114,063,756.51 41,130,970,570.43
Total liabilities and owners'
55,205,286,211.38 52,214,392,639.62
equity
60
Hikvision 2020 Half Year Report
Half year ended on June 30th 2020
Consolidated Income Statement
Unit: RMB
Amount for the Amount for the prior
Item Notes
current period period
I. Total operating income (V)43 24,271,159,243.76 23,923,273,424.50
Less：Total operating costs (V)43 12,193,719,945.38 12,840,506,333.68
Business taxes and surcharges (V)44 168,072,165.25 167,547,905.92
Selling expenses 3,420,291,518.42 3,213,260,109.16
Administrative expenses 864,959,489.94 731,110,243.76
Research and Development (R&D)
3,063,423,679.69 2,504,800,049.71
expenses
Financial expenses (V)45 (227,972,206.73) (129,943,427.26)
Including：Interest expenses 94,137,084.05 93,002,377.62
Interest income 306,973,066.18 293,012,529.35
Add: Other Income (V)46 994,778,394.15 722,566,221.54
Investment income (V)47 150,219,709.56 21,224,355.97
Including: Investment losses in
associated enterprise and joint-venture (8,942,717.69) (4,215,155.62)
enterprise
Gains (losses) from changes in fair values (V)48 (20,436,436.96) 1,866,394.46
Credit impairment losses (V)49 (152,772,469.77) (134,526,432.57)
Impairment losses of assets (V)50 (165,394,158.33) (80,143,742.65)
Asset disposal income 21,554.99 810,043.90
II. Operating profit 5,595,081,245.45 5,127,789,050.18
Add: Non-operating income (V)51 31,721,207.08 38,307,078.60
Less: Non-operating expenses (V)52 7,378,765.56 8,414,181.91
III. Total profit 5,619,423,686.97 5,157,681,946.87
Less: Income tax expenses (V)53 952,552,145.97 933,920,656.68
IV. Net profit 4,666,871,541.00 4,223,761,290.19
4.1 Classification by continuous operation
(a) Net profit on continuous operation 4,666,871,541.00 4,223,761,290.19
4.2 Classification by attribution of
ownership
(a) Profit or loss attributable to minority
42,898,710.13 7,006,079.95
shareholders
(b) Net profit attributable to owners of
4,623,972,830.87 4,216,755,210.24
parent company
V. Other comprehensive income, net of income (26,796,178.37) 5,491,667.93
(V)40
tax
Other comprehensive income attributable to owners
(24,482,915.47) 4,922,806.84
of the Company, net of tax
(I) Items that will not be reclassified subsequently
- -
to profit or loss
(II) Other comprehensive income to be
(24,482,915.47) 4,922,806.84
reclassified to profit or loss in subsequent periods
1. Gains and losses from changes in fair value of
- 14,124,975.09
other current assets
61
Hikvision 2020 Half Year Report
Amount for the Amount for the prior
Item Notes
current period period
2. Exchange differences arising on conversion of
financial statements denominated in foreign (24,482,915.47) (9,202,168.25)
currencies
Other comprehensive income attributable to
(2,313,262.90) 568,861.09
minority interests, net of tax
VI. Total comprehensive income 4,640,075,362.63 4,229,252,958.12
Total comprehensive income attributable to owners
4,599,489,915.40 4,221,678,017.08
of the parent company
Total comprehensive income attributable to
40,585,447.23 7,574,941.04
minority shareholders
VII. Earnings per share
(I) Basic earnings per share (XVI)2 0.493 0.444
(II) Diluted earnings per share (XVI)2 0.493 0.444
62
Hikvision 2020 Half Year Report
Half year ended on June 30th 2020
Income statement of the parent company
Unit: RMB
Amount for the Amount for the
Item Notes
current period prior period
I. Total operating income (XV)4 11,584,268,085.23 10,434,243,978.59
Less: Total operating Cost (XV)4 2,922,006,997.48 3,079,780,648.92
Business taxes and surcharges 127,523,350.50 111,602,431.74
Selling expenses 1,378,570,165.20 1,500,387,153.95
Administrative expenses 382,045,872.60 346,843,922.68
Research and Development (R&D) expenses 2,190,386,100.23 1,779,985,365.59
Financial expenses (200,603,140.91) (74,584,512.33)
Including : Interest expenses 13,789,744.18 61,705,246.69
Interest income 215,501,593.83 268,165,821.94
Add: Other income 797,244,362.60 635,767,724.45
Investment income (XV)5 192,706,003.20 17,050,928.15
Including: Investment losses in
associated enterprise and joint-venture (3,628,950.89) (2,874,991.72)
enterprise
Gains (losses) from changes in fair values (13,017,332.26) 2,153,238.50
Credit impairment gains (losses) (15,105,661.89) 653,420,471.92
Gains on asset impairment 1,095,084.66 49,569,282.84
Asset disposal income 2,863.84 181,748.65
II. Operating profit 5,747,264,060.28 5,048,372,362.55
Add: Non-operating income 8,749,908.65 8,215,858.64
Less: Non-operating expenses 1,267,522.90 5,237,082.32
III. Total profit 5,754,746,446.03 5,051,351,138.87
Less: Income tax expenses 812,649,281.30 845,566,584.68
IV. Net profit 4,942,097,164.73 4,205,784,554.19
V. Other comprehensive income, net of income tax - 1,163,229.41
VI. Total comprehensive income 4,942,097,164.73 4,206,947,783.60
63
Hikvision 2020 Half Year Report
Half year ended on June 30th 2020
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 27,244,048,844.95 25,100,138,387.74
Receipts of tax refunds 1,718,589,299.56 1,342,631,486.14
Other cash receipts relating to operating activities (V)54(1) 707,923,092.38 584,492,082.01
Sub-total of cash inflows from operating activities 29,670,561,236.89 27,027,261,955.89
Cash payments for goods purchased and services received 19,503,212,062.93 18,092,259,319.13
Cash paid to and on behalf of employees 5,587,456,744.73 4,629,022,309.36
Payments of various types of taxes 2,463,618,915.37 2,602,541,375.69
Other cash payments relating to operating activities (V)54(2) 2,046,307,173.29 2,134,502,744.89
Sub-total of cash outflows from operating activities 29,600,594,896.32 27,458,325,749.07
Net Cash flows from Operating Activities (V)55(1) 69,966,340.57 (431,063,793.18)
II. Cash flows from Investing Activities:
Cash receipts from recovery of investments 967,045,868.90 -
Cash receipts from investment income 150,000,000.00 8,076,808.70
Net cash receipts from disposals of fixed assets, intangible assets and
2,855,619.32 84,652,360.44
other long-term assets
Other cash receipts relating to investing activities (V)54(3) 14,990,732.87 -
Sub-total of cash inflows from investing activities 1,134,892,221.09 92,729,169.14
Net cash paid to aquire subsidiaries and other business units - 44,095,782.07
Cash payments to acquire or construct fixed assets, intangible assets
1,397,220,231.04 730,479,938.23
and other long-term assets
Cash paid to acquire investments 1,232,156,803.46 2,884,220.00
Sub-total of cash outflows from investing activities 2,629,377,034.50 777,459,940.30
Net cash flows from Investing Activities (1,494,484,813.41) (684,730,771.16)
III. Cash flows from financing activities:
Cash receipts from capital contributions 154,264,987.03 18,220,262.17
Including: cash receipts from capital contributions from minority
154,264,987.03 18,220,262.17
owners of subsidiaries
Cash receipts from issuance of bonds 999,500,000.00 -
Cash receipts from borrowings 3,445,980,000.00 6,827,958,906.73
Sub-total of cash inflows from financing activities 4,599,744,987.03 6,846,179,168.90
Cash repayments of borrowings 1,459,216,468.29 1,598,774,442.94
Cash payments for bond repayment - 3,079,240,000.00
Cash payments for distribution of dividends or profits or settlement of
6,554,304,815.58 5,704,495,352.39
interest expenses
Including : Dividends and profits paid by subsidiaries to minority
- 600,000.00
shareholders
Other cash payments relating to financing activities (V)54(4) 64,290,000.00 31,290,856.75
Sub-total of cash outflows from financing activities 8,077,811,283.87 10,413,800,652.08
Net cash flows from Financing Activities (3,478,066,296.84) (3,567,621,483.18)
IV. Effect of foreign exchange rate changes on Cash and Cash
10,423,718.77 (86,394,171.66)
Equivalents
V. Net Increase in Cash and Cash Equivalents (V)55(1) (4,892,161,050.91) (4,769,810,219.18)
Add: Opening balance of Cash and Cash Equivalents (V)55(1) 26,515,668,008.40 26,031,011,733.89
VI. Closing Balance of Cash and Cash Equivalents (V)55(3) 21,623,506,957.49 21,261,201,514.71
64
Hikvision 2020 Half Year Report
Half year ended on June 30th 2020
Cash Flow Statements of the parent 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 10,102,563,972.01 8,172,744,128.12
Receipts of tax refunds 751,843,296.77 587,302,186.13
Other cash receipts relating to operating activities 375,348,009.24 363,699,162.54
Sub-total of cash inflows from operating activities 11,229,755,278.02 9,123,745,476.79
Cash payments for goods acquired and services received 3,428,323,188.51 3,620,127,267.15
Cash payments to and on behalf of employees 3,021,694,357.17 2,711,649,012.33
Payments of various types of taxes 1,820,418,512.27 1,427,332,880.19
Other cash payments relating to operating activities 1,332,281,567.50 849,540,447.05
Sub-total of cash outflows from operating activities 9,602,717,625.45 8,608,649,606.72
Net Cash flows from Operating Activities 1,627,037,652.57 515,095,870.07
II. Cash flows from Investing Activities:
Cash receipts from recovery of investments 2,800,000.00 -
Cash receipts from investment income 150,000,000.00 2,568,699.00
Net cash receipts from disposals of fixed assets, intangible assets and
1,142,724.61 3,679,476.09
other long-term assets
Other cash receipts relating to investing activities 1,698,134,887.49 2,561,153,903.93
Sub-total of cash inflows from investing activities 1,852,077,612.10 2,567,402,079.02
Cash payments to acquire or construct fixed assets, intangible assets and
294,745,004.28 148,098,627.08
other long-term assets
Cash payments to acquire investments 725,748,730.00 -
Net cash paid to aquire subsidiaries and other business units - 171,600,000.00
Other cash payments relating to investing activities - 45,079,102.37
Sub-total of cash outflows from investing activities 1,020,493,734.28 364,777,729.45
Net Cash flows from Investing Activities 831,583,877.82 2,202,624,349.57
III. Cash flows from Financing Activities
Cash receipts from capital contributions - -
Cash receipts from issuance of bonds 999,500,000.00 -
Cash receipts from borrowings 2,480,000,000.00 3,679,240,000.00
Sub-total of cash inflows from financing activities 3,479,500,000.00 3,679,240,000.00
Cash repayments of borrowings 1,000,000,000.00 -
Cash payments for bond repayment - 3,079,240,000.00
Cash payments for distribution of dividends or profits or settlement of
6,455,560,277.48 5,643,872,935.64
interest expenses
Other cash payments relating to financing activities - 2,095,080.00
Sub-total of cash outflows from financing activities 7,455,560,277.48 8,725,208,015.64
Net Cash flows from Financing Activities (3,976,060,277.48) (5,045,968,015.64)
IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents 32,767,298.25 (34,135,897.31)
V. Net increase in cash and cash equivalents (1,484,671,448.84) (2,362,383,693.31)
Add: Opening balance of cash and cash equivalents 16,656,028,410.72 18,998,934,287.59
VI. Closing Balance of Cash and Cash Equivalents 15,171,356,961.88 16,636,550,594.28
65
Hikvision 2020 Half Year Report
th
Half year ended on June 30 2020
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
Amount for the first half of 2020
Owner’s equity attributable to owners of the Company
Item Less: Other Minority Total owners'
Capital Surplus Retained interests equity
Share capital Treasury comprehensive
reserves reserve profits
share income
I. Closing balance of the prior year 9,345,010,696.00 4,126,943,698.96 2,148,273,864.36 (53,541,146.99) 4,672,505,348.00 28,961,389,145.22 568,825,008.31 45,472,858,885.14
Add: Business merger under common
- - - - - - - -
control
II. Opening balance of the current
9,345,010,696.00 4,126,943,698.96 2,148,273,864.36 (53,541,146.99) 4,672,505,348.00 28,961,389,145.22 568,825,008.31 45,472,858,885.14
period
III. Increase or decrease in the
- 449,550,562.28 (101,334,592.80) (24,482,915.47) - (1,917,534,656.33) 164,628,787.73 (1,226,503,628.99)
current period
(I) Total comprehensive income - - - (24,482,915.47) - 4,623,972,830.87 40,585,447.23 4,640,075,362.63
(II) Owners’ contributions and
- 449,550,562.28 - - - - 121,593,340.50 571,143,902.78
reduction in capital
1. Capital contribution from
- - - - - - 154,264,987.03 154,264,987.03
shareholders
2. Share-based payment recognized
- 460,632,426.68 - - - - 20,536,489.07 481,168,915.75
in owners’ equity
3. The amount formed by the
acquisition of minority shareholders' - (33,016,354.85) - - - - (31,273,645.15) (64,290,000.00)
equity
4. The amount formed by the transfer of
- 2,380,508.81 - - - - (2,380,508.81) -
the equity of the subsidiary
5. Amount formed by disposal of asset
- 19,553,981.64 - - - - (19,553,981.64) -
group
(III) Profit distribution - - (101,334,592.80) - - (6,541,507,487.20) 2,450,000.00 (6,437,722,894.40)
1. Transfer to surplus reserves - - - - - - -
2. Distributions to shareholders - - (101,334,592.80) - - (6,541,507,487.20) 2,450,000.00 (6,437,722,894.40)
3. Others - - - - - - - -
III. Closing balance of the current
9,345,010,696.00 4,576,494,261.24 2,046,939,271.56 (78,024,062.46) 4,672,505,348.00 27,043,854,488.89 733,453,796.04 44,246,355,256.15
period
66
Hikvision 2020 Half Year Report
th
Half year ended on June 30 2020
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
Amount for the first half of 2019
Owner’s equity attributable to owners of the Company
Item Less: Other Minority Total owners'
Capital Surplus Retained interests equity
Share capital Treasury comprehensive
reserves reserve profits
share income
I. Closing balance of the prior year 9,227,270,473.00 1,956,139,660.52 364,984,759.94 (49,576,351.10) 4,460,712,358.45 22,360,593,257.53 373,981,737.96 37,964,136,376.42
Add: Changes in accounting policies - - - (26,488,816.57) - - - (26,488,816.57)
Business merger under 6,771,689.82
- 4,800,000.00 - - - (736,986.11) 2,708,675.93
common control
II. Opening balance of the current 37,944,419,249.67
9,227,270,473.00 1,960,939,660.52 364,984,759.94 (76,065,167.67) 4,460,712,358.45 22,359,856,271.42 376,690,413.89
period
III. Increase or decrease in the (1,012,052,401.13)
120,685,833.00 2,166,797,515.76 1,955,865,753.84 4,922,806.84 - (1,389,068,647.86) 40,475,844.97
current period
(I) Total comprehensive income - - - 4,922,806.84 - 4,216,755,210.24 7,574,941.04 4,229,252,958.12
(II) Owners’ contributions and 365,118,498.85
120,685,833.00 2,166,797,515.76 1,955,865,753.84 - - - 33,500,903.93
reduction in capital
1. Capital contribution from 23,254,887.07
121,195,458.00 1,936,703,418.84 2,057,898,876.84 - - - 23,254,887.07
shareholders
2. Share-based payment recognized 241,925,568.78
- 231,679,551.92 - - - - 10,246,016.86
in owners’ equity
3. others (509,625.00) (1,585,455.00) (102,033,123.00) - - - - 99,938,043.00
(III) Profit distribution - - - - - (5,605,823,858.10) (600,000.00) (5,606,423,858.10)
1. Transfer to surplus reserves - - - - - - - -
2. Distributions to shareholders - - - - - (5,605,823,858.10) (600,000.00) (5,606,423,858.10)
3. Others - - - - - - - -
III. Closing balance of the current
9,347,956,306.00 4,127,737,176.28 2,320,850,513.78 (71,142,360.83) 4,460,712,358.45 20,970,787,623.56 417,166,258.86 36,932,366,848.54
period
67
Hikvision 2020 Half Year Report
th
Half year ended on June 30 2020
Statement of Changes in Owners' Equity of the parent company
Unit: RMB
Amount for the first half of 2020
Other
Item Less: Treasury Total owners'
Share capital Capital reserves comprehensive Surplus reserve Retained profits
share equity
income
I. Closing balance of the prior year 9,345,010,696.00 4,064,833,739.52 2,148,273,864.36 - 4,672,505,348.00 25,196,894,651.27 41,130,970,570.43
Add: changes in accounting policies - - - - - - -
II. Opening balance of the current
9,345,010,696.00 4,064,833,739.52 2,148,273,864.36 - 4,672,505,348.00 25,196,894,651.27 41,130,970,570.43
period
III. Increase or decrease in the current
- 481,168,915.75 (101,334,592.80) - - (1,599,410,322.47) (1,016,906,813.92)
period
(I) Total comprehensive income - - - - 4,942,097,164.73 4,942,097,164.73
(II) Owners’ contributions and reduction in
- 481,168,915.75 - - - - 481,168,915.75
capital
1. Capital contribution from shareholders - - - - - - -
2. Share-based payment
- 481,168,915.75 - - - - 481,168,915.75
recognized in owners’ equity
3. Others - - - - - - -
(III) Profit distribution - - (101,334,592.80) - - (6,541,507,487.20) (6,440,172,894.40)
1.Transfer to surplus reserve - - - - - - -
2.Distributions to shareholders - - (101,334,592.80) - - (6,541,507,487.20) (6,440,172,894.40)
3. Others - - - - - - -
III. Closing balance of the current period 9,345,010,696.00 4,546,002,655.27 2,046,939,271.56 - 4,672,505,348.00 23,597,484,328.80 40,114,063,756.51
68
Hikvision 2020 Half Year Report
th
Half year ended on June 30 2020
Statement of Changes in Owners' Equity of the parent company-continued
Unit: RMB
Amount for the first half of 2019
Less: Other
Item Surplus Total owners'
Share capital Capital reserves Treasury comprehensi Retained profits
reserve equity
share ve income
I. Closing balance of the prior year 9,227,270,473.00 1,883,262,407.46 364,984,759.94 - 4,460,712,358.45 19,327,533,457.91 34,533,793,936.88
Add: changes in accounting policies - - - (2,178,538.52) - - (2,178,538.52)
II. Opening balance of the current period 9,227,270,473.00 1,883,262,407.46 364,984,759.94 (2,178,538.52) 4,460,712,358.45 19,327,533,457.91 34,531,615,398.36
III. Increase or decrease in the current
120,685,833.00 2,185,246,553.18 1,955,865,753.84 1,163,229.41 - (1,400,039,303.91) (1,048,809,442.16)
period
(I) Total comprehensive income - - - 1,163,229.41 - 4,205,784,554.19 4,206,947,783.60
(II) Owners’ contributions and reduction in
120,685,833.00 2,185,246,553.18 1,955,865,753.84 - - - 350,066,632.34
capital
1. Capital contribution from shareholders 121,195,458.00 1,936,703,418.84 2,057,898,876.84 - - - -
2. Share-based payment recognized in
- 250,128,589.34 - - - - 250,128,589.34
owners’ equity
3. Others (509,625.00) (1,585,455.00) (102,033,123.00) - - - 99,938,043.00
(III) Profit distribution - - - - - (5,605,823,858.10) (5,605,823,858.10)
1.Transfer to surplus reserve - - - - - - -
2.Distributions to shareholders - - - - - (5,605,823,858.10) (5,605,823,858.10)
3. Others - - - - - - -
III. Closing balance of the current period 9,347,956,306.00 4,068,508,960.64 2,320,850,513.78 (1,015,309.11) 4,460,712,358.45 17,927,494,154.00 33,482,805,956.20
69
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
I. Basic Information about the Company
Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company" or
“Hikvision”), is a Sino-foreign equity joint venture company, formerly known as "Hangzhou Hikvision Digital
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 March 27th 2018, according to the authorization of the Company's first extraordinary shareholders meeting in
2014, the Company completed the procedures of repurchase and cancellation of some of the 1,594,641 restricted stocks
that did not meet the incentive conditions, and the share capital of the Company was changed to 9,227,270,473 shares.
On December 20th 2018, pursuant to the Articles of Association of the Company revised by the resolution of 8th
Meeting of the fourth session Board of Directors authorized by the 2nd extraordinary general meeting in 2018, the company
was approved to issue additional 126,518,281 shares of RMB common stock (adjusted to 121,195,458 shares) to 6,341
(adjusted to 6,095) incentive personnels. The Company completed the registration of shares on January 17th 2019, adjusted
the Company’s total capital share to 9,348,465,931 shares.
On June 26th 2019, authorized by the Company’s first Extraordinary General Meeting in 2014, the Company
completed procedures of repurchase and cancellation of some of the 509,625 restricted stocks that did not meet the
incentive conditions, and the total share capital of the Company was adjusted to 9,347,956,306 shares.
On September 3rd 2019, authorized by the Company’s second Extraordinary General Meeting in 2016, the Company
completed procedures of repurchase and cancellation of some of the 2,945,610 restricted stocks that did not meet the
incentive conditions, and the total share capital of the Company was adjusted to 9,345,010,696 shares. Please refer to Note
(V)-37 for share capital details.
As of June 30th 2020, the Company’s total registered capital is RMB 9,345,010,696, with total capital shares of
9,345,010,696 shares (face value RMB 1 per share), of which restricted A-shares were 1,249,618,766.00 shares, A-shares
without restriction are 8,095,391,930.00 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), transmission and display
equipment, fire protection products, big data and IoT software and hardware products, aircraft, robot, intelligent equipment
and intelligent system, real-time communication system, auto parts and accessories, and electrical signal equipment for
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
vehicle, and servers and supporting hardware and software products ; sales of self-manufactured products; technical
service, electronic technology consulting service, training service (excluding class training), electronic equipment
installation, electronic engineering, and design, construction and maintenance of intelligent systems. 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 18th meeting of the fourth
session Board of Directors of the Company on July 24th 2020.
For consolidation scope of the financial statements of the current reporting period, please refer to Note (VII) “Interest
in other entities”. For changes in consolidation scope of the financial statements during the current reporting period, please
refer to “changes in the consolidation scope” in Note (VI).
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).
Going concern
The Group has evaluated its going concern for 12 months going forward starting from June 30th 2020, 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.
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.
71
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
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.
When measuring non-financial assets at fair value, the assets shall be measured considering the ability of market
participants to use the assets for optimal use to generate economic benefits, or to sell the assets to other market participants
to use the assets for optimal use to generate economic benefits.
For the financial assets measured with transaction price at the initial recognition, and the use of valuation techniques
involving unobservable inputs in the subsequent fair value measurement, the valuation technique is corrected in the
valuation process in order to make the initial recognition results confirmed by valuation techniques equal to the transaction
price.
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.
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 June 30th 2020; and the Company's and consolidated results of
operations, the Company’s and consolidated changes in shareholders' equity, and the Company’s and consolidated cash
flows for the first half year of 2020.
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
72
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
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) 57. 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 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.
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. If a business combination
not under the common control is realized step by step through multiple transactions, the cost of the combination is the sum
of the consideration paid on the purchase date and the fair value of the equity of the purchasee already held before the
purchase date on the purchase date. 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.
73
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
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.
As for subsidiaries disposed by the Group, operating results and cash flows 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 is adjusted against retained earnings.
74
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
In the case that the equity of the acquiree is obtained through multiple deals step by step to finally form the business
combination not under the common control, the business combination shall be handled differently based on whether it is
"package deal": where it is package deal, the Company accounts each deal as a deal to obtain the control. If the deal is not
a "package deal", a deal where the control is obtained on the acquisition date will be subject to accounting. The acquiree's
equity held before the acquisition date will be remeasured based on the fair value of the equity on the acquisition date and
the difference between the fair value and book value will be included in the profit or loss in the current period. If the
acquiree's equity held before the acquisition date involves any changes in the other comprehensive income or in any other
owner's equity accounted by the equity method, such equity changes will be converted into the profit or loss in the current
period on the acquisition date.
7. Joint arrangement classification and joint operation accounting
Joint arrangements include joint operation and joint ventures. Such classification is defined based on the rights and
obligations of the joint parties in the joint arrangement, taking into account the structure and legal form of such
arrangement and also the contractual provisions. Joint operation refers to a joint arrangement where the joint venture is
entitled to assets related to this arrangement and bear liabilities related to this arrangement. Joint ventures mean that joint
venture parties are merely entitled to joint venture arrangements of net assets of such arrangements.
The Groups investment in any joint venture is accounted by the equity method. See the details in Note (III) "14.3.2 Long-
term equity investment accounted under the equity method".
The Group confirms its assets held separately according to the arrangement of joint operation and those held jointly in
proportion to the Group's share; confirms its liabilities held separately and those held jointly in proportion to the Group's
share ; confirms its revenue from the sale of its share of the output arising from the joint operation; confirms its share of
the revenue from the sale of the output by the joint operation; confirms the expenses incurred by the Group alone and the
expenses incurred by the joint operation corresponding to the share of the Group therein. The assets, liabilities, revenues
and expenses related to the joint operation are accounted and confirmed by the Group in accordance with the regulations
applicable to specific assets, liabilities, revenues, and expenses.
8. 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 (Generally refers to due within three months from the purchase date), highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
9. Conversion of transactions and financial statements denominated in foreign currencies.
9.1 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.
75
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
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.
9.2 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.
The foreign currency cash flows and cash flows of overseas subsidiaries adopt the exchange rate similar to the spot rate at
the date of cash flows 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 of 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.
10. Financial Instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to a contract of financial instrument.
For the purchase or sale of a financial asset in conventional manner, the asset to be received and the liability to be assumed
will be recognized on the trading day, or the asset sold will be derecognized on the trading day.
76
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Financial assets and financial liabilities are measured by fair value upon initial recognition. For financial assets and
financial liabilities at fair value through profit and loss, the relevant trading costs will be directly charged to profit and loss
of the current period. For other types of financial assets and financial liabilities, the relevant trading costs will be booked
into the initial recognition amount. Upon initial recognition of accounts receivable which have no material financing
components or have not taken into consideration the financing components in contracts with a term not exceeding one
year according to Accounting Standards for Business Enterprise No. 14 – Revenue (“Revenue Standard”), such initial
amount is measured by the transaction price as defined under the Revenue Standard.
Effective interest rate method refers to the method of calculating the amortized cost of financial asset or financial liability
and apportioning interest income or interest expenses to each accounting period.
Effective interest rate refers to the interest rate used for discounting the estimated future cash flows of a financial asset or
a financial liability for an expected subsisting period into the balance of book value of the financial asset or the amortized
cost of the financial liability. When determining the effective interest rate, the expected cash flows are estimated on the
basis of considering all contractual terms of the financial asset or financial liability (such as early repayment, extended
term, call option or other similar option) but without considering the expected credit loss.
The amortized cost of a financial asset or a financial liability refers to the initial recognition amount of such financial asset
or financial liability, less the repaid amount of principal, plus or minus the accrued amortized amount calculated by
amortization of the difference between the initial recognition amount and the amount on maturity by using the effective
interest rate method, and then deducts the accrued provision for losses (only applicable to financial assets).
10.1 Classification and Measurement of Financial Assets
After initial recognition, the Group will adopt amortized cost, fair value through other comprehensive income, or fair value
through profit and loss for subsequent measurement depending on different categories of financial assets.
The Group will classify a financial asset into a financial asset measured at amortized cost if the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding and the financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows. Financial assets classified by the Group as financial asset measured by amortized
cost include cash and cash equivalents, notes receivables and accounts receivable, some of the other receivables and long-
term receivables.
The Group will classify a financial asset into a financial asset measured by fair value through other comprehensive income
if the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding, and the financial asset is held within a business model whose objective
is achieved by both collecting contractual cash flows and selling the financial assets. This category of financial assets
mainly includes financial assets with a maturity of more than one year from the date of acquisition and which are presented
under other debt investments, financial assets maturing within one year (inclusive) from the balance sheet date and which
are presented under non-current assets maturing within one year, as well as the accounts receivable and notes receivable
classified as fair value at the time of acquisition and their changes are included in other comprehensive income are listed
in the receivables for financing, and for those have acquisition period within one year (including one year) are listed in
other current assets.
At the time of initial recognition, the Group may, on the basis of a single financial asset, irrevocably designate an
investment in an equity instrument held for non-trading purpose recognized or without consideration in a business merger
not under common control as a financial asset at fair value through other comprehensive income. This type of financial
assets is presented as investment in other equity instruments.
Financial assets which have satisfied one of the following conditions indicate that such financial assets are held for trading
purpose by the Group:
77
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
The purpose of acquiring the relevant financial asset is mainly for sale in recent period.
At the time of initial recognition, the relevant financial asset is a part of an identifiable portfolio of financial
instruments under collective management, and there is objective evidence showing a recent and actual existence of short-
term profitable mode.
The relevant financial assets are derivatives, excluding derivatives which satisfy the definition under financial
guarantee contracts and derivatives which are designated as effective hedging instruments.
Financial assets at fair value through profit and loss include financial assets which are classified as financial assets at fair
value through profit and loss and financial assets designated at fair value through profit and loss:
Financial assets which do not satisfy the conditions of being classified as financial assets measured at amortized cost
or as financial assets at fair value through other comprehensive income, they will be classified as financial assets at fair
value through profit and loss.
At the time of initial recognition, in order to eliminate or substantially reduce mismatch in accounting, the Group
may irrevocably designate a financial asset as a financial asset measured at fair value with changes through profit and loss.
Financial assets at fair value through profit and loss will be presented as held-for-trading financial assets. If such financial
assets have a maturity of more than one year from the balance sheet date (or without a fixed maturity) and which are
expected to be held for more than one year, they will be presented under other non-current financial assets.
10.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost adopt the effective interest rate method for subsequent measurement according
to amortized cost, the profit or loss when impairment occurs or upon derecognition will be accounted in profit and loss of
the current period.
The Group recognizes interest income by using effective interest rate method for financial assets measured at amortized
cost. The Group determines interest income by multiplying the balance of book value of financial assets with the effective
interest rate except under the following circumstances:
For acquired or generated financial assets which incurred credit impairment already, their interest income will be
determined by using the amortized cost of such financial asset calculated with the credit adjusted effective interest rate.
For acquired or generated financial assets which have not incurred credit impairment but incur credit impairment in
the subsequent period, the Group will determine their interest income by using the amortized cost of such financial assets
multiplied with the effective interest rate in the subsequent period. If such financial asset ceases to have credit impairment
due to improvement in credit risk in the subsequent period, then the Group should change to multiply the effective interest
rate with the balance of book value of such financial asset instead to determine the interest income.
10.1.2 Financial asset at fair value through other comprehensive income
The impairment loss or profit, or interest income calculated by using the effective interest rate method, relating to financial
asset at fair value through other comprehensive income should be accounted in the profit and loss of the current period,
and other changes in fair value of such financial assets will be accounted in other comprehensive income. The amount
charged by such financial asset to the profit and loss of each period is deemed to be equal to the amount which has been
measured by amortized cost and charged to the profit and loss of each period. Upon derecognition of such financial asset,
the accumulated profit or loss previously charged to other comprehensive income will be reversed from other
comprehensive income and charged to profit and loss of the current period.
For non-trading equity instrument investment designated at fair value through other comprehensive income, its changes
in fair value will be recognized in other comprehensive income. Upon derecognition of such financial asset, the
accumulated profit or loss charged to other comprehensive income will be reversed from other comprehensive income and
charged to retained earnings. During the period when such investment in equity instruments for non-trading purpose are
held by the Group, the right to receive dividends by the Group has been established, and economic benefits related to
dividends are likely to flow into the Group, and if the amount of dividends may be measured reliably, the dividend income
78
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
is recognized and accounted in the profit and loss of the current period.
10.1.3 Financial asset at fair value through profit and loss
For financial asset at fair value through profit and loss, subsequent measurement will be calculated at fair value, the profit
or loss arising from changes in fair value and the dividend and interest income relating to such financial asset will be
accounted in the profit and loss of the current period.
10.2 Impairment of Financial Assets
For financial assets measured at amortized cost, financial assets that are classified as financial asset at fair value through
other comprehensive income, and contract assets, the Group will handle impairment on the basis of expected credit loss
and recognize loss provision.
For the receivables in the contracts that are generated by the transactions governed by revenue standards and that do not
contain any major financial components or the financial components in the contracts that are valid for more than one year,
and as well as contract assets, the loss reserve will be measured based on the amount of the expected credit loss in the
entire life.
For other financial instruments, other than acquired or generated financial assets which have incurred credit impairment
already, the Group will assess on each balance sheet date the changes in credit risk of the relevant financial instruments
since initial recognition. If the credit risk of such financial asset has significantly increased after initial recognition, the
Group will calculate its loss provision based on the amount equivalent to the expected credit loss for the entire subsisting
period. If the credit risk of such financial asset since initial recognition has not increased significantly, the Group will
calculate its loss provision according to the expected credit loss amount of such financial asset for the next 12 months.
The amount of increase or reversal in the provision for credit loss, apart from financial assets classified as financial asset
at fair value through other comprehensive income, is accounted in the profit and loss of the current period. For financial
asset classified as measured at fair value through other comprehensive income, the Group will recognize its credit loss
provision in other comprehensive income and charged the impairment loss or gain to the profit and loss of the current
period, and will not decrease the book value of such financial asset presented in the balance sheet.
The Group has calculated the loss provision equivalent to the expected credit loss amount for the entire subsisting period
of the financial instrument in the preceding accounting period, but at the balance sheet date of the current period, such
financial instrument is no longer under the condition of significant increase in credit risk since initial recognition, the
Group calculates the loss provision for such financial instrument on the balance sheet date of the current period according
to an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provision reversal amount
will be counted as impairment gain and booked into the profit and loss of the current period.
10.2.1 Significant increase in credit risk
The Group uses available and reasonable forward-looking information with justification, by comparing the default risk of
the financial instrument at the balance sheet date with the default risk on the initial recognition date, to confirm whether
the credit risk of the financial instrument has significantly increased after initial recognition. When using the financial
instrument impairment rules for loan commitment and financial guarantee contracts, the date when the Group becomes a
party of an irrevocable commitment is deemed as the initial recognition date.
The Group considers the following factors when assessing whether the credit risk has significantly increased:
(1) Whether a significant change has been caused to the internal price indicator due to changes in credit risk.
(2) Whether the external credit rating of financial instrument has actual or expected significant changes.
(3) Whether the actual or expected internal credit rating of the debtor has been downgraded.
(4) Whether adverse changes have occurred in the business, finance or economic conditions which are expected to cause
significant changes in the capability of the debtor to perform debt repayment obligations.
(5) Whether actual or expected significant changes have occurred in the operating results of the debtor.
(6) Whether significant adverse changes have occurred in the supervision, economic or technical environment in which
the debtor operates.
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(7) Whether significant changes have occurred in the value of security pledged for the debt or the quality of guarantee
or credit enhancement provided by third parties. Such changes are expected to reduce the debtor’s economic
motivation of repayment according to contractual term or influence the probability of default.
(8) Whether significant changes have occurred in the economic motivation which will lower the expectation of
repayment by the borrower according to the contractual term.
(9) Whether significant changes have occurred in the expected performance and repayment behavior of the debtor.
Whether or not the credit risks increase significantly after the foregoing assessments, the Group Management
comprehensively assesses the payment cycles of the customer base and the transaction practices traditionally formed. If
any contractual payment for any financial instrument that exceeds the credit period for over (including) 30 days, it indicates
the credit risks of that financial instrument have increased significantly.
On the balance sheet date, if the Group determines that the financial instrument only carries low credit risks, then it assumes
that the credit risks of the financial instrument have not increased significantly since the initial recognition. If the risk of
default on financial instruments is low, the borrower is highly able to perform its contractual cash flow obligations in the
short term, and even if the economic situation and operating environment are adversely changed over a long period of time
but not necessarily reducing the borrower’s performance of its contractual cash obligations, the financial instrument is
considered as having a lower credit risk.
10.2.2 Financial assets which have incurred credit impairment already
When one or more events which will have adverse effect on the expected future cash flows from the financial asset of the
Group have occurred, such financial asset will become a financial asset which have incurred credit impairment already.
The evidence of credit impairment occurred in a financial asset includes the following observable information:
(1) Material financial difficulties have occurred in the issuer or debtor;
(2) Breach of contract by the debtor, such as default or exceeding the credit period for the payment of interest or repayment
of principal;
(3) Due to economic or contractual considerations relating to financial difficulties of the debtor, the creditor has granted
concession to the debtor under no other circumstances;
(4) The debtor is likely to go bankrupt or carry out other financial restructuring;
(5) The financial difficulties of the issuer or debtor have caused the disappearance of the active market for the financial
asset;
(6) The purchase or generation of a financial asset at a large discount, such discount reflects the fact of occurrence of credit
loss.
10.2.3 Confirmation of expected credit loss
The Group uses the impairment matrix to identify the credit losses of the financial instruments on a portfolio basis of
accounts receivable, contract assets, other receivables and long-term receivables; and the Group determines credit losses
by assessing their probability of breach and loss given default based on their credit rating on a portfolio basis of notes
receivable and receivables. On the basis of common risk characteristics, the Group places financial instruments in different
groups. The common credit risk characteristics adopted by the Group include: financial instrument type, credit risk rating,
initial recognition date, remaining contract period, industry of debtor, geographic location of debtor, and etc.
The Group confirms the expected credit loss of the relevant financial instrument according to the following method:
In respect of a financial asset, the credit loss is the present value of the difference between the contractual cash
flows receivable and the cash flows expected to receive by the Group.
In respect of a financial guarantee contrac (for specific accounting policies, please refer to Note (III ), 10.4.1.2.1),
the credit loss is the present value of the difference between Group’s expected payment amount for the
compensation made to the contract holder due to the occurrence of credit loss and the amount expected to be
received by the Group from such contract holder, debtor or any other parties.
In respect of financial assets with credit impairment on the balance sheet date but they are not acquired or
generated financial assets with credit impairment, the credit loss represents the difference between the balance
of the book value of such financial asset and the present value of the estimated future cash flows discounted by
the original effective interest rate.
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The factors reflected by the method used for calculating expected credit loss of financial instruments by the Group include:
an unbiased weighted average amount determined by assessing a series of probable outcomes; time value of currency;
reasonable and justifiable information relating to past events, prevailing conditions and forecast of future economic
conditions obtained on the balance sheet date without incurring unnecessary additional cost or effort.
10.2.4 Write-off on financial asset
When the Group ceases to have reasonable expectation on the possible collection of all or part of the contractual cash
flows from the financial asset, the balance of book value of such financial asset will be written off directly. Such a write-
off constitutes a de-recognition of the relevant financial asset.
10.3 Transfer of financial asset
A financial asset that fulfills one of the following conditions will be de-recognized: (1) termination of contractual rights
to receive cash flows from the financial asset; (2) upon transfer of such financial asset and transfer of substantially all the
risks and rewards in respect of the ownership of such financial asset to the transferee; (3) upon transfer of such financial
asset, though the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownership
of such financial asset, yet it has not retained the control over such financial asset.
If the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownership of such
financial asset, and has retained the control over such financial asset, then such transferred financial asset will continue to
be recognized, and the relevant liabilities will continue to be recognized, according to the level of the Group’s continuous
involvement in such transferred financial asset. The relevant liabilities will be measured by the Group according to the
following method:
If the transferred financial asset is measured by amortized cost, the book value of the relevant liabilities is equivalent
to the book value of the transferred asset of continuous involvement less the amortized cost of the rights retained by the
Group (if the Group has retained the relevant rights due to transfer of the financial asset) and plus the amortized cost of
the obligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of the
financial asset), and the relevant liabilities are not designated as financial liabilities at fair value through profit and loss of
the current period.
If the transferred financial asset is measured by fair value, the book value of the relevant liabilities is equivalent to
the book value of the transferred asset of continuous involvement less the fair value of the rights retained by the Group (if
the Group has retained the relevant rights due to transfer of the financial asset) and plus the fair value of the obligations
undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of the financial asset), and
the fair value of the rights and obligations shall be measured at the fair value on a separate basis.
For full transfer, which satisfies the conditions of derecognition, of the financial assets, the difference between the sum of
the book value of the transferred financial assets as at the date of derecognition and the consideration received from such
transfer and the accumulated amount of change in fair value originally included in other comprehensive income, which
corresponds to the amount in respect of derecognition, shall be recognized in the profit and loss for the current period. If
the transfer of the financial assets by the Group is designated as investment in equity instrument held for non-trading
purpose measured at fair value through other comprehensive income, the accumulated gains or losses previously included
in other comprehensive income shall be transferred out from other comprehensive income and be included in retained
earnings.
For transfer in part, which satisfies the conditions of derecognition, of the financial assets, the book value of the entire
financial assets before the transfer shall be shared between the derecognized portion and the continuous recognition portion
at their respective relative fair value on the date of transfer, and the difference between the sum of the consideration
received from derecognition and the accumulated amount of change in fair value originally included in other
comprehensive income, which corresponds to the amount in respect of derecognition, and the book value of the
derecognized portion as at the date of derecognition shall be included in the profit and loss of the current period. If the
transfer of the financial assets by the Group is designated as investment in equity instrument for non-trading purpose
measured at fair value through other comprehensive income, the accumulated gains or losses previously included in other
comprehensive income shall be transferred out from other comprehensive income and be included in retained earnings.
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For full transfer, which does not satisfy the conditions of derecognition, of the financial assets, the Group will continue to
recognize the entire financial assets transferred and the consideration received as a result of the asset transfer is recognized
as a liability when received.
10.4 Classification and measurement of financial liabilities and equity instruments
Pursuant to the contractual terms of the issued financial instruments and the substantive economic condition as reflected,
but not in legal terms only, combined with the definitions of financial liabilities and equity instruments, the Group has
classified such financial instruments or the components thereof as financial liabilities or equity instruments upon initial
recognition.
10.4.1 Classification and measurement of financial liabilities
Financial liabilities are classified into financial liabilities at fair value through profit and loss of the current period and
other financial liabilities upon initial recognition.
10.4.1.1 Financial liabilities at fair value through profit and loss of the current period
Financial liabilities at fair value through profit and loss of the current period comprise of financial liabilities held for
trading purpose (including derivatives of financial liabilities) and financial liabilities designated as measured at fair value
through profit and loss of the current period. Except for derivatives of financial liabilities, which are presented separately,
financial liabilities at fair value through profit and loss of the current period are presented as financial liabilities held for
trading.
Financial liabilities that fulfill one of the following conditions suggest that the Group assumes such financial liabilities for
trading purpose:
Assumption of the relevant financial liabilities is mainly for the purpose of the recent repurchases.
The relevant financial liabilities, upon initial recognition, are part of a portfolio of identifiable financial instruments
under centralized management, and available objective evidence shows the recent and actual existence of a short-
term profit-making model.
The relevant financial liabilities are derivatives, except derivatives which satisfy the definition of financial guarantee
contract and derivatives designated as effective hedging instruments.
Financial liabilities can be designated, upon initial recognition, by the Group as financial liabilities at fair value through
profit and loss of the current period, provided that they have satisfied one of the following conditions: (1) such designation
can eliminate or substantially reduce accounting mismatches; (2) managing and evaluating the performance of portfolios
of financial liabilities, or portfolios of financial assets and financial liabilities, on fair value basis and reporting internally
to key personnel of the Group on this basis in accordance with the risk management or investment strategies specified in
formal written documents of the Group; (3) hybrid contracts, with embedded derivatives, have satisfied the conditions.
Financial liabilities held for trading purpose use fair value for subsequent measurement, gains or losses arise from changes
in fair value and the dividends or interest expenses relating to such financial liabilities are accounted in the profit and loss
of the current period.
For financial liabilities designated at fair value through profit and loss of the current period, changes in fair value of such
financial liabilities caused by changes in the Group’s own credit risks shall be included in other comprehensive income,
and other changes in fair value shall be included in the profit and loss of the current period. On derecognition of such
financial liabilities, the accumulated amount of changes in fair value as a result of changes in our own credit risk included
previously in other comprehensive income shall be transferred to retained earnings. Dividends or interest expenses relating
to such financial liabilities shall be included in the profit and loss of the current period. If handling the effect of changes
in credit risk of such financial liabilities according to the aforesaid method would cause or magnify the accounting
mismatches in profit and loss, the Group will include all gains or losses of those financial liabilities (including the amount
affected by changes in their own credit risk) in the profit and losses of the current period.
10.4.1.2 Other financial liabilities
Excluding transfer of financial assets not complying with derecognition conditions, or financial liabilities as a result of
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continuous involvement in transferred financial assets, the other financial liabilities will be classified as financial liabilities
measured at amortized cost, subsequent measurement will be based on amortized cost, gains or losses on derecognition or
amortization will be accounted in the profit and loss of the current period.
If the Group and the counterparty have revised or renegotiated the contract, this has not resulted in the derecognition of
financial liabilities measured at amortized cost for subsequent measurement, but has caused changes in the contractual
cash flows, then the Group should recalculate the book value of such financial liabilities, and the relevant gains or losses
shall be accounted in the profit and loss of the current period. The recalculated book value of such financial liabilities will
be determined by the Group by discounting the cash flows from the renegotiated or revised contract with the original effect
interest rate of the financial liabilities. All costs or expenses incurred in the revision or renegotiation of the contract will
be reflected in the adjusted book value of financial liabilities after such revision, and will be amortized during the
remaining period of the revised financial liabilities.
10.4.1.2.1 Financial guarantee contract
Financial guarantee contract refers to a contract that requests the issuer to provide a specific amount of compensation to
the contract holder who suffers losses when a specific debtor fails to repay the debt on due date according to the initial or
revised terms of the debt instrument. In respect of financial liabilities which are not designated at fair value through profit
and loss of the current period, or in respect of financial guarantee contract for financial liabilities arising from transfer of
financial assets not complying with derecognition conditions or continuous involvement in the transferred financial assets,
the measurement after initial recognition will be based on the amount of provision for losses, or the balance of initial
recognized amount after deducting the accumulated amortized amount confirmed in accordance with the relevant
provisions of the Revenue Standard, whichever the higher.
10.4.2 Derecognition of financial liabilities
When the existing obligations of a financial liability have been wholly or partially discharged, such financial liability or
such part of it will be derecognized. When the Group (as borrower) and the lender enter into an agreement to undertake
new financial liabilities for replacing the original financial liabilities, if substantive difference exists in the contractual
terms between the new financial liabilities and the original financial liabilities, the Group should derecognize the original
financial liabilities while at the same time recognizes the new financial liabilities.
When a financial liability is wholly or partially derecognized, the difference between the book value of the derecognized
portion and the consideration paid (including non-cash asset transferred out or new financial liabilities undertaken) will
be accounted in the profit and loss of the current period.
10.4.3 Equity instrument
Equity instrument refers to a contract which can prove the ownership of remainder interest in assets after deducting all
liabilities of the Group. The Group issues (including refinances), repurchases, sells or cancels equity instruments for
treatment of changes in equity. The Group will not recognize changes in the fair value of equity instruments. Trading
expenses relating to equity transactions will be deducted from equity.
The Group’s distribution to holder of equity instrument is treated as profit distribution, the share dividends paid out will
not affect the total equity of shareholders.
10.5 Derivatives and embedded derivatives
Derivatives include foreign exchange forward contract, currency exchange rate swap contract, and foreign exchange option
contract, etc. Derivatives are measured at fair value initially on the date of signing the relevant contract and will be
measured at fair value for subsequent measurement.
For a hybrid contract constituted by an embedded derivative and a master contract, if the master contract is in respect of a
financial asset, the Group will not split the embedded derivative from the hybrid contract, but will consider such hybrid
contract as a whole unit to which the accounting standards and rules for classification of financial assets are applicable.
If the master contract included in the hybrid contract is not in respect of a financial asset, and fulfills the following
conditions at the same time, the Group will split the embedded derivative from the hybrid contract to be treated as a
separate subsisting derivative.
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(1) The economic characteristics and risks of the embedded derivative are not closely connected to the economic
characteristics and risks of the master contract.
(2) A separate instrument containing the same terms as the embedded derivative fits the definition of a derivative.
(3) The hybrid contract is not measured at fair value and changes in fair value are accounted through profit and loss of
the current period.
If an embedded derivative is split from the hybrid contract, the accounting treatment adopted by the Group for the master
contract within the hybrid contract will be in accordance with the applicable accounting standards and rules. If the Group
is unable to measure the fair value of the embedded derivative reliably according to the terms and conditions of the
embedded derivative, the fair value of such embedded derivative will be determined by the difference between the fair
value of the hybrid contract and the fair value of the master contract. After adoption of the above method, if the fair value
of such embedded derivative is still unable to be measured separately on the acquisition date or subsequent balance sheet
date, the Group will designate the entire hybrid contract as a financial instrument measured at fair value through profit and
loss of the current period.
10.6 Offsetting between financial assets and financial liabilities
When the Group has legal right to offset the recognized financial assets and financial liabilities, and such legal right is
enforceable currently, while at the same time the Group plans to perform netting settlement, or to liquidate the financial
asset and repay the financial liability at the same time, the amount after offsetting between the financial asset and financial
liability will be presented in the balance sheet. Save as said above, the financial asset and financial liability are presented
separately in the balance sheet without offsetting each other.
11. Receivables for financing
Among the notes receivable measured at fair value through other comprehensive income, the ones with a term of less than
(including) one year since they are acquired will be listed as receivables for financing; the ones with a term of more than
(including) one year since they are acquired will be listed as other debt investment. The relevant accounting policy is
explained in Note (III), 10.1, 10.2 and 10.3.
12. Inventories
12.1 Categories of inventories
The Group's inventories mainly include finished goods or commodities held for sale in the daily activities, 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.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the moving weighted average method.
12.3 Basis for determining net realizable value of inventories
The inventory is measured according to cost and net realizable value, whichever is lower, on the date of balance sheet.
When the net realizable value is lower than cost, withdraw inventory impairment 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
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For the reporting period from January 1st 2020 to June 30th 2020
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.
For the low-price stocks in large quantity, provision for the inventory price drops will be made based on the categories of
stocks; for the stocks that are related to the products manufactured and sold in the same region, that have identical or
similar ultimate use or purpose and that are hard to separate from other items when being measured, they are consolidated
for provision for the inventory price drops; for other stocks, the provision for the inventory price drops will be made based
on the cost of a single stock item in excess of the net realizable value.
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.
12.4 Inventory count system
The perpetual inventory system is maintained for stock system.
12.5 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.
13. Contract Assets
13.1 Method and standard for determination of contract assets
Contract assets refer to the Group’s right to consideration in exchange for goods or services that the Group has transferred
to a customer when that right is conditioned on something other than the passage of time. The Group’s unconditional (i.e.,
depending on the passage of time only) right to receive consideration from the customer is separately presented as
receivables.
13.2 Methods for determining and accounting of expected credit loss of contract assets
For details of methods for determining and accounting of expected credit loss of contract assets, please refer to Note (III)-
10.2 Impairment of financial instruments.
14. Long-term Equity Investment
14.1 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 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.
14.2 Determination of initial investment cost
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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. In the case that the equity
of the acquiree is obtained through multiple deals step by step to finally form the business combination not under the
common control, the business combination shall be handled differently based on whether it is a "package deal": where it
is a package deal, the Company accounts each deal as a deal to obtain the control. Otherwise, the Group shall measure the
initial investment cost of long-term equity investment accounted using cost method at the sum of book value of equity
investment of the combined part originally held and investment cost additionally paid.
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.
14.3 Subsequent measurement and recognition of profit or loss
14.3.1 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.
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.
14.3.2 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
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For the reporting period from January 1st 2020 to June 30th 2020
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 Group 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 Group 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 Group, the adjustment shall be made for the financial statements of
the invested unit in accordance with the accounting policies and accounting periods of the Group 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 Group determines the net loss of the invested unit that 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.
14.4 Disposal of long-term equity investments
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.
15. Fixed Assets
15.1 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.
15.2 Depreciation of each category of fixed assets
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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
Means of transportation 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.
15.3 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 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.
15.4 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.
16. 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.
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Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
17. 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 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.
18. Intangible Assets
18.1 Intangible Assets Valuation Method and Service Life
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 40 or 50 years -
IP Right 10 Years -
Application Software 5-10 years -
Franchise 8 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.
For the impairment test of intangible assets, please refer to Note (III ), 19. Long-term asset impairment.
18.2 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.
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(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;
(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. The costs of the intangible assets generated by internal development activities only
include the total expenditure incurred from the time point when the capitalization conditions are available to the point
when the intangible assets are used for their intended purposes; for the expenditure that already becomes an expenditure
in the profit and loss statement before the capitalization conditions are available during development of the same intangible
asset, no adjustment will be made.
19. 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 indication that
such assets may be impaired, recoverable amounts are estimated for such assets. Intangible assets with indefinite useful
life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether there is any
indication that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an
individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverable
amount is determined by the higher of 1) net amount of fair value of the asset or asset group deducted by the disposal
expenses; or 2) the present value of the expected future cash flows of the asset or asset group.
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted as an
impairment provision and is recognized in profit or loss for the period.
Goodwill impairment test shall be conducted at the end of each year at least. Goodwill impairment test shall be conducted
in accordance with the concerned asset group or asset portfolio. That is to allocate the book value of goodwill to the asset
group or asset portfolio that is expected to benefit from the synergies of the combination in a reasonable way from the date
of purchasing. When recoverable amount of apportion-included asset group or asset portfolio of goodwill is less than book
value of goodwill, impairment loss shall be recognized. Firstly, amount of impairment loss shall be apportioned to the
book value of goodwill of the said asset group or asset portfolio, and then book value of other assets, except for goodwill,
in asset group or asset portfolio shall be abated in proportion.
Once the impairment loss of such assets is recognized, it can not be reversed in any subsequent period.
20. Long-term unamortized expenses
Long-term unamortized expenses are the expenses that are already incurred but will be shared in the current reporting
period and later periods with amortization term of more than one year, including the expenses on betterment of leased
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For the reporting period from January 1st 2020 to June 30th 2020
fixed assets. Long-term unamortized expenses are evenly amortized in installments in three years during the expected
benefit period.
21. Employee compensation
21.1 Accountant Arrangement Method of Short-term Remuneration
During accounting period when the Group's employees provide services, actual short-term remuneration shall be
recognized as the liabilities and current profit and loss or relevant asset cost. The Group’s employee benefits and welfare
are included into current profit and loss or relevant asset cost according to actual amount occurred during the period. If
the employee benefits and welfare is non-monetary, it shall be measured according to its fair value.
During the accounting period that the employees service the Group, the Group pays social insurance premiums such as
medical insurance premium, industrial injury insurance premium, maternity insurance premium and housing accumulation
fund for its employees, as well as labor union expenditure and employee education expenses calculated and withdrawn
according to the regulations, corresponding employee remuneration amount shall be calculated and determined in
accordance with specified calculation and withdrawal basis and proportion to recognize corresponding liabilities and
included into the current profit and loss or relevant asset cost.
21.2 Accountant Arrangement Method of Post-employment Benefits
All post-employment benefits shall be considered as the defined contribution plan.
In the accounting period when the employee serves for the Group, the deposited amount calculated based on defined
contribution plan shall be recognized as liabilities and included in the current profit and loss or relevant asset cost.
21.3 Accountant Arrangement Method of the Termination Benefits
Where the Group provides termination benefits, the employee remuneration liabilities caused by such termination benefits
will be determined as the following date, whichever is earlier, and will be included in the current profit and loss: 1) When
the Group cannot unilaterally withdraw the termination benefits provided due to labor relation cancellation plan or
employee lay-off suggestion; or 2）when the Group determines costs or expenses in relation with the restructuring of the
paid termination benefits.
22. Contract liabilities
Contract liabilities refer to the Group’s obligation to transfer goods or services to a customer for which the Group has
received consideration or the amount is due from the customer. The Group will present the net amount of contract assets
and contract liabilities under the same contract.
23. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency such as products quality
assurance, etc. And it is probable that an outflow of economic benefits will be required to settle the obligation, and the
amount of the obligation can be measured reliably.
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The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at
the balance sheet date, taking into account factors pertaining to a contingency such as the risks, uncertainties and time
value of money. Where the effect of the time value of money is material, the amount of the provision is determined by
discounting the related future cash outflows.
24. Share-based Payment
Share-based payment refers to a transaction in which the Group grants the equity instruments or undertakes the equity-
instrument-based liabilities in return for services from employees. The Group's share-based payment is an equity-settled
share-based payment.
A share-based payment is a transaction which the Group grants equity instruments, or incurs liabilities for amounts that
are determined based on the price of equity instruments, in return for services rendered by employees. The Group's share-
based payments are equity-settled share-based payments.
24.1 Equity-settled share-based payments
Grants to employees are equity-settled share-based payments.
Equity-settled share-based payments in exchange for services rendered by employees are measured at the fair value of the
equity instruments granted to employees at the grant date. Such amount is recognized as related costs or expenses on a
straight-line basis over the vesting period, with a corresponding increase in capital reserve.
At each balance sheet date during the vesting period, the Group makes the best estimate according to the subsequent latest
information of change in the number of employees who are granted with options that may vest, etc. and revises the number
of equity instruments expected to vest. The effect of the above estimate is recognized as related costs or expenses, with a
corresponding adjustment to capital reserve.
24.2. Accounting treatment related to implementation, modification and termination of share-based payment arrangement
In case the Group modifies a share-based payment arrangement, if the modification increases the fair value of the equity
instruments granted, the Group will include the incremental fair value of the equity instruments granted in the measurement
of the amount recognized for services received. If the modification increases the number of the equity instruments granted,
the Group will include the fair value of additional equity instruments granted in the measurement of the amount recognized
for services received. The increase in the fair value of the equity instruments granted is the difference between fair value
of the equity instruments before and after the modification on the date of the modification. If the Group modifies the terms
or conditions of the share-based payment arrangement in a manner that reduces the total fair value of the share-based
payment arrangement, or is not otherwise beneficial to the employee, the Group will continue to account for the services
received as if that modification had not occurred, other than a cancellation of some or all the equity instruments granted.
If cancellation of the equity instruments granted occurs during the vesting period, the Group will account for the
cancellation of the equity instruments granted as an acceleration of vesting, and recognize immediately the amount that
otherwise would have been recognized over the remainder of the vesting period in profit or loss for the period, with a
corresponding recognition in capital reserve. When the employee or counterparty can choose whether to meet the non-
vesting condition but the condition is not met during the vesting period, the Group treats it as a cancellation of the equity
instruments granted.
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Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
25. Revenue
25.1 Accounting policies applied in revenue recognition and measurement
The revenue of the Group is mainly generated from business types as follows:
（1） revenue from sale of goods
（2） revenue from rendering of services
（3） construction contract
When (or as) a performance obligation in a contract was satisfied, i.e., when (or as) the customer obtains control of relevant
goods or services, the Group recognizes as revenue the amount of the transaction price that is allocated to that performance
obligation. A performance obligation is the Group’s commitment to transfer to a customer a good or service (or a bundle
of goods or services) that is distinct, in a contract with the customer. The transaction price is the amount of consideration
to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding
amounts collected on behalf of third parties and amounts that the Group expects to refund to the customer.
Revenue is recognized over time by reference to the progress towards complete satisfaction of the relevant performance
obligation if one of the following criteria is met: (1) the customer simultaneously receives and consumes the benefits
provided by the Group’s performance as the Group performs; (2) the Group’s performance creates or enhances an asset
that the customer controls as the Group performs; or (3) the Group’s performance does not create an asset with an
alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.
Otherwise, revenue is recognized at a point in time when the customer obtains control of the distinct good or service.
The Group adopts the input method to determine the progress of performance, that is, to determine the progress of
performance based on the Group’s investment in fulfilling its performance obligations. When the performance progress
cannot be reasonably determined, and the costs incurred can be expected to be compensated, the Group recognizes revenue
based on the amount of costs incurred until the performance progress can be reasonably determined.
If the contract contains two or more performance obligations, the Group allocates the transaction price to each single
performance obligation on the contract start date in accordance with the relative proportion of the individual selling price
of the goods or services promised by each single performance obligation. However, if there is strong evidence that the
contract discount or variable consideration is only related to one or more (but not all) performance obligations in the
contract, the Group allocates the contract discount or variable consideration to the relevant one or more performances
obligation. Individual selling price refers to the price at which the Group sells goods or services to customers separately.
Where the individual selling price cannot be directly observed, the Group comprehensively considers all relevant
information that can be reasonably obtained, and uses the observable input value to the maximum to estimate the individual
selling price.
If there is variable consideration in the contract, the Group determines the best estimate of variable consideration based
on the expected value or the most likely amount. The transaction price including variable consideration shall not exceed
the amount that is likely to cause no significant reversal of accumulated recognized revenue when the relevant uncertainty
is eliminated. At each balance sheet date, the Group re-estimates the amount of variable consideration that should be
included in the transaction price.
Where a customer pays non-cash consideration, the Group determines the transaction price based on the fair value of the
non-cash consideration. If the fair value of the non-cash consideration cannot be reasonably estimated, the Group indirectly
determines the transaction price by referring to the individual selling price of the goods or services promised to transfer to
the customer.
There is a consideration payable to the customer in the contract, unless the consideration is to obtain other clearly
distinguishable goods or services from the customer. The Group offsets the payable consideration by the transaction price,
and offsets the current income at the later point of time of recognizing relevant revenue or paying (or promising to pay)
the customer’s consideration.
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If there is a significant financing component in the contract, the Group determines the transaction price based on the
amount payable in cash when the customer assumes control of the goods or services. The difference between the
transaction price and the contract consideration is amortized using the effective interest rate method during the contract
period. On the contract commencement date, the Group does not consider the significant financing components in the
contract if the interval between the customer obtaining control of the goods or services and the price being paid by the
customer is not more than one year.
For sales with sales return terms attached, as the customer obtains ownership of related goods, the Group recognizes
revenue in accordance with the consideration (excluding expected refund amounts due to sales returns) that the Group is
expected to receive due to the transfer of goods or services to the customer, and recognizes expected liabilities in
accordance with expected refund amounts due to sales returns. The remaining amount, subsequent to deduction of expected
costs from collecting the goods (including the decrease in value of the returned goods), is recognized as an asset in
accordance with the carrying amount during the expected transfer of returned goods after deducting the costs of the above
net assets carried forward.
For sales with quality assurance clauses, if the quality assurance provides a separate service beyond the assurance to the
customer that the goods or services sold meet established standards, the quality assurance constitutes a single performance
obligation. Otherwise, the Group conducts accounting for quality assurance responsibilities in accordance with the
Accounting Standards for Business Enterprises No. 13-Contingencies.
The Group judges whether the Group’s identity is the principal or agent when engaging in transactions based on whether
it has control over the goods or services before transferring the goods or services to customers. If the Group is able to
control the goods or services before transferring them to customers, the Group is the principal responsible person, and
revenue is recognized based on the total amount of consideration received or receivable; otherwise, the Group is an agent
and recognizes revenue based on the amount of commissions or fees which the Group is expected to be entitled to charge.
The amount of commissions or fees is determined based on the total amount of consideration received or receivable net of
the amount payable to other parties, or determined based on the amount or proportion of the commission.
26. Cost of contract
26.1 Cost of obtaining a contract
Incremental costs incurred by the Group to obtain a contract (that is, costs that would not have occurred without a contract)
and expected to be recovered are recognized as an asset, and amortized using the same basis as revenue recognition for
the goods or services to which the asset relates, and included in current profit or loss. If the amortization period of the
asset does not exceed one year, it is included in current profit or loss when it occurs. Other expenses incurred by the Group
in order to obtain the contract shall be included in current profit or loss when incurred, unless it is clearly borne by the
customer.
26.2 Cost of contract fulfillment
The cost of the Group’s performance of a contract that does not fall within the scope of accounting standards other than
the revenue standard and meets the following conditions is recognized as an asset: (1) The cost is directly related to a
current or anticipated contract; (2) The cost increases the Group’s resources for fulfilling performance obligations in the
future; (3) The cost is expected to be recovered. The aforesaid assets are amortized on the same basis as the recognition
of income from goods or services related to the assets, and are included in the current profit or loss.
27. Governmental Subsidy
Government subsidies refer to the monetary and non-monetary assets obtained by the Group from the government for free.
Government subsidies are recognized when they can meet the conditions attached to the government subsidies and can be
received.
If a government subsidy is a monetary asset, it shall be measured at the amount received or receivable.
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Hikvision 2020 Half Year Report
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For the reporting period from January 1st 2020 to June 30th 2020
27.1 Judgment basis and Accountant treatment of government subsidy related to assets
The government subsidies for Chongqing Manufacture Base construction and etc. are used for constructions and forms
long-term assets, and therefore are categorized as government subsidy related to assets.
A government grant related to an asset is recognized as deferred income, and it should be evenly amortized to profit or
loss over the useful life of the related asset.
27.2 Judgment basis and accountant treatment of government subsidy related to income
The Group receives government subsidies including subsidies for Core Electronic Devices, High-end Universal Chip and
Basic Software Product Projects, Value-Added-Tax rebate (VAT rebate), subsidies for special projects, and tax refunds,
etc., which are not used for constructions and forms long-term assets in other ways, and therefore are categorized as
government subsidy related to income.
For a government grant related to income, for example subsidy for Core Electronic Devices, High-end Universal Chip and
Basic Software Product Projects, since the subsidy is a compensation for related expenses or losses to be incurred in
subsequent periods, it is recognized as deferred income, and recognized in profit or loss over the periods in which the
related costs or losses are recognized; If the subsidy, such as VAT Rebate, is a compensation for related expenses or losses
already incurred, it is recognized immediately in profit or loss for the period.
For government subsidies related to the Group’s daily operations shall be booked into other income; for those not related
to the Group’s daily operations, shall be booked into non-operating income/expense.
For the policy-backed preferential subsidized loan, if the Ministry of Finance will appropriate the subsidy amount to the
lending bank, who will grant the loan to the Group at the policy-backed preferential interest rate, the actually received
loan amount will be the entry value of the loan and the loan-related expenses will be calculated based on the loan principal
and policy-backed preferential interest rate.
28. Deferred Income Tax Assets / Deferred Income Tax Liabilities
The income tax expenses include current income tax and deferred income tax.
28.1. Current Income Tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at the
amount expected to be paid (or recovered) according to the requirements of tax laws.
28.2 Deferred Income Tax Assets and Deferred Income Tax Liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between the
nil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be determined
according to tax laws, deferred tax assets and liabilities are recognized through the balance sheet liability method.
Deferred tax is generally recognized for all temporary differences. Deferred tax assets for deductible temporary differences
are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary
differences can be utilized. However, for temporary differences associated with the initial recognition of goodwill and the
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Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the
accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is
recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it is
probable that future taxable profits will be available against which the deductible losses and tax credits can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except
where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments are only recognized to the extent that it is probable that there will be taxable
profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured at the applicable
tax rates in the period in which the related assets are recovered or the related liabilities are recovered in accordance with
the tax laws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise from
transactions or events that are directly recognized in other comprehensive income or in shareholders' equity, in which case
they are recognized in other comprehensive income or in shareholders' equity; and when they arise from business
combinations, in which case they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable
that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Such
reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.
28.3 Offset of Income Tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assets
and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and
deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets
and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are
expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
29. Lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
29.1 Accounting treatment of operating Lease
29.1.1 The Group as lessee under operating leases
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Operating lease payments are recognized on a straight-line basis over the term of the relevant lease, and are either included
in the cost of related asset or charged to profit or loss for the period. Initial direct costs incurred are charged to profit or
loss for the period. Contingent rents are charged to profit or loss in the period in which they are actually incurred.
29.1.2 The Group as lessor under operating leases
Rental income from operating leases is recognized in profit or loss on a straight-line basis over the term of the relevant
lease. Initial direct costs with more than an insignificant amount are capitalized when incurred, and are recognized in profit
or loss on the same basis as rental income over the lease term. Other initial direct costs with an insignificant amount are
charged to profit or loss in the period in which they are incurred. Contingent rents are charged to profit or loss in the period
in which they actually arise.
29.2. Accounting treatment of the finance lease
29.2.1 The Group as lessee under finance leases
For relevant accounting treatment, refer to Note (III) 15.3 Identification basis, valuation and depreciation method of
finance lease of fixed assets.
Unrecognized finance charges are recognized as finance charge for the period using the effective interest method over the
lease term. Contingent rents are credited to profit or loss in the period in which they are actually incurred. The net amount
of minimum lease payments less unrecognized finance charges is separated into long-term liabilities and the portion of
long-term liabilities due within one year for presentation.
29.2.2 The Group as lessor under finance leases
At the commencement of the lease term, the aggregate of the minimum lease receivable at the inception of the lease and
the initial direct costs is recognized as a finance lease receivable, and the unguaranteed residual value is recorded at the
same time. The difference between the aggregate of the minimum lease receivable, the initial direct costs and the
unguaranteed residual value, and the aggregate of their present values is recognized as unearned finance income.
Unearned finance income is recognized as finance income for the period using the effective interest method over the lease
term. Contingent rents are credited to profit or loss in the period in which they are actually incurred.
The net amount of financial lease receivables less unearned finance income is separated into long-term debts receivable
and the portion of long-term debts receivable due within one year for presentation.
30. Important judgments while applying accounting policy, and key assumptions and uncertainty factors applied
for accounting estimate
During the process of using accounting policy described in note (III), due to the uncertainty in operation activities, the
group should judge, estimate and assume the book value of the report items which may not be metered reliably. These
judgments, estimates and assumptions are based on the historical experience of the Group's management and other related
factors. Differences may exist between the actual results and the Group’s estimate.
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Notes to Financial Statements
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The Group regularly reviews the above judgments, assumptions and estimations on the basis of continuous operation. If
the changes of accounting estimate only influence current period, the influence amount will be affirmed during the
changing period; if it influences the current period and subsequent periods, the influence amount will be recognized in the
current period and future period.
- Key assumptions and uncertainties used in accounting estimate
On balance sheet date, key assumptions and uncertainties for performing accounting estimates on book value of assets and
liabilities in subsequent future periods are:
Impairment provision for inventories
Inventories are measured at the lower of cost and net realizable value. For raw materials, the latest actual purchase price
is used as the basis for determining the net realizable value; for in-process products, the estimated selling price of the
finished product minus the estimated cost to be incurred to completion, estimated sales expenses and related taxes is used
as the basis for determining the net realizable value; for the finished product, the estimated selling price minus the
estimated sales expenses and related taxes is used as the basis for determining the net realizable value. The Group will
regularly conduct a comprehensive stocktaking to review the impairment circumstances on defective, obsoleted or slow-
moving inventory if any; in addition, the Group's management will regularly review the impairment circumstance of
inventory with long storage time according to the inventory aging list. The review procedure includes the comparison
between book value of defective, obsoleted or slow-moving inventories and inventory with long storage time and its
corresponding net realizable value in order to determine whether to withdraw provisions on the defective, obsoleted or
slow-moving inventory and inventory with long storage time. Based on the above procedure, the Group's management
deems that the full provision amounts have been withdrawn for inventory.
Impairment of accounts receivables
The Group uses the impairment matrix to determine the provision for expected credit loss of accounts receivable. By
considering the historical loss rates, the Group will determine the proportions in the provision for loss for the accounts
receivable with similar risk characteristics. The impairment matrix is determined based on the Group's historical ratio of
which exceeding the credit period and in the default situation, and considers reasonable and forward-looking industry
information. As of June 30th 2020, the Group has reassessed the historically observable percentage of excess credit periods,
while taking into account the changes of prospective information. The amount of the provision for expected credit losses
will change as the estimation of the Group. The details on the provision for expected credit losses of the accounts receivable
of the Group are given in Note (V). 4.
Useful life and predicted net residual value of fixed asset
The Group's estimation of fixed assets useful life is based on the historical experience of actual usable term of fixed assets
with similar properties and functions, the estimation of predicted net residual value is the amount obtained currently by
the Group from the assets after deducting the anticipated disposal expense based on the anticipated status assuming the
conditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. The Group shall
conduct the review on the predicted service life and predicted net residual value of fixed assets at least annually. For the
current reporting period, the Group's management did not see signs either indicating a shortened or extended useful life of
the Group’s fixed asset or indicating a change in predicted net residual value.
Accrued liabilities of product quality warranty
Accrued liabilities of product quality assurance are an estimation made by the Group according to the predicted repair and
replacement cost of relevant products. The estimation considers the product claim rate trend, historic defect rate, industry
practice and other major estimations. The management deems that the current estimation on accrued liabilities of product
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For the reporting period from January 1st 2020 to June 30th 2020
quality warranty is reasonable, however, the Group will continue to review the conditions of product repairs, and will
conduct adjustment if any sign indicating the need to make adjustments on accounting estimates.
Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets and deferred income tax liabilities are measured at the applicable income tax rate during the
period when the asset is expected to be recovered or the debt is paid off. The expected applicable income tax rate is
determined according to the relevant current tax regulations and the actual situation of the Group. If the estimated income
tax rate is different from the original estimate, the management of the Group will adjust it.
The realization of deferred income tax assets mainly depends on the actual future profits and the effective tax rate of
temporary difference in the future applicable years. If the actual profit in the future is less than the estimation, or actual
tax rate is lower than the estimation, then the confirmed deferred income tax assets will be reversed and confirmed in the
income statement during the corresponding period. If the actual profit in the future is more than the estimation, or actual
tax rate is higher than the estimation, then the corresponding deferred income tax assets will be adjusted and confirmed in
the income statement during the corresponding period.
Goodwill impairment
When performing impairment test on goodwill, the predicted present value of future cash flows of relevant asset group or
asset group portfolio included the goodwill need to be calculated, the future cash flows of relevant asset group or asset
group portfolio need to be estimated, and the proper pretax rate that fairly reflects the current market time value of money
and specific asset risk need to be determined. When the future actual result is different from the original estimation, the
goodwill impairment loss will alter.
Fair value measurement and valuation process
Held-for-trading financial assets, receivables for financing, and other non-current financial assets of the Group are
measured at fair value in the financial statement. When valuating the fair value of these assets, the Group preferably uses
obtainable and observable market data. If no observable data is available, the Group will organize an internal evaluation
panel or hire qualified third-party valuers to conduct valuation. The Finance Department and evaluation panel of the Group
will work closely with the hired valuers to determine appropriate valuation techniques and the input values of the valuation
model. The valuation techniques and input values used for valuating the fair value of various assets are disclosed in Note
(IX).
99
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
31. Significant alternation in accounting policy and accounting estimations
31.1 Significant changes in accounting policies
Approval
Changes in accounting policies and reasons Notes
Procedures
New revenue standard
Starting from January 1st 2020, the Group has adopted the Accounting Standards for Business
Enterprises No. 14 – Revenue (hereinafter referred to as the “New Revenue Standard”) modified
by the Ministry of Finance in 2017. Such
alternations
The New Revenue Standard has introduced the 5-step method for recognition and measurement in
of revenue and added more instructions on specific transactions (or events). For details of the accounting
accounting policies for recognition and measurement of revenue of the Group, please refer to policy were
Note (III). 25. The New Revenue Standard requires the entity to adjust the retained earnings and approved
None
the amounts of other relative items in the financial statements at the beginning of initial adoption by the
(i.e. January 1st 2020) of the new standards for the cumulative amount of impact, and not to Group at
adjust information in comparable period. In adopting the New Revenue Standard, the Group board of
adjusts only the cumulative impact of contracts that have not been completed as at January 1st director
2020. For changes in contract incurred before the beginning of adoption of New Revenue general
Standard, the Group will make simplified treatment, namely, the Group will identify the fulfilled meeting.
and unfulfilled performance obligations, determine transaction price and allocate the transaction
price between the fulfilled and unfulfilled performance obligations according to the final
arrangement of contract changes. For details of the impact of the Group’s adoption of the New
Revenue Standard on January 1st 2020, please refer to Note (III). 31.2.
31.2 Adjustment to relevant items in financial statement at the beginning of the year of first implementation upon
first implementation of the New Revenue Standards.
Consolidated Balance Sheet
Unit: RMB
Consolidated Report Items December 31st 2019 January 1st 2020 Adjusted amounts
Assets:
Accounts receivable 21,307,927,200.28 21,272,964,582.56 (34,962,617.72)
Inventories 11,267,986,843.11 10,756,027,592.41 (511,959,250.70)
Contract assets - 546,921,868.42 546,921,868.42
Other non-current assets-
Completed but unsettled assets 751,457,739.44 - (751,457,739.44)
formed by construction contracts
Other non-current assets-
- 751,457,739.44 751,457,739.44
Contract assets
Liabilities:
Receipts in advance 1,020,989,460.61 - (1,020,989,460.61)
Contract liabilities - 1,128,239,007.61 1,128,239,007.61
Defeerred income 333,589,831.30 226,340,284.30 (107,249,547.00)
100
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Explanation of the adjustment of each item:
A summary of the impact of the first implementation of the new revenue standards on January 1th 2020:
Unit: RMB
Impact of the implementation of the new revenue standards
Reclassified
Book value as stated under the Transfer from items that Book value as stated under the
Itmes original standard originally classified as Transfer from items that new standard
December 31st 2019 completed but unsettled originally classified as January 1st 2020
assets formed by receipts in advance/deferred
construction contracts and income (Note 2)
accouts receivable (Note 1)
Assets:
Accounts receivable 21,307,927,200.28 (34,962,617.72) - 21,272,964,582.56
Inventories 11,267,986,843.11 (511,959,250.70) - 10,756,027,592.41
Contract assets - 546,921,868.42 - 546,921,868.42
Other non-current assets- Completed
but unsettled assets formed by 751,457,739.44 (751,457,739.44) - -
construction contracts
Other non-current assets-Contract
- 751,457,739.44 - 751,457,739.44
assets
Liabilities:
Receipts in advance 1,020,989,460.61 - (1,020,989,460.61) -
Contract liabilities - - 1,128,239,007.61 1,128,239,007.61
Defeerred income 333,589,831.30 - (107,249,547.00) 226,340,284.30
101
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Note 1: Transferred from items originally classified as completed but unsettled assets and accounts receivable:
The construction contracts undertaken by the Group were performance obligations to be fulfilled over a period of time,
and the Group recognized revenue based on the progress of fulfillment of the contract. The amount of revenue recognized
by the Group based on the progress of fulfillment of the project in excess of the progress billings for contracts in progress
is reclassified as contract assets. Accordingly, as at January 1st 2020, the Group’s completed but unsettled assets of RMB
1,263,416,990.14 and accounts receivable of RMB 34,962,617.72 formed by construction contracts previously presented
under inventory and other non-current asset were reclassified as contract assets, of which amounts expected to be recovered
over 1 year were presented under other non-current assets.
Note 2: Transferred from item originally classified as receipts in advance / deferred income:
Receipts in advance received by the Group for sales of goods and services rendered were reclassified as contract liabilities
as at January 1st 2020. The Group's obligations to provide services to customers in consideration for the provision of cloud
storage and other services were reclassified to contract liabilities as at January 1st 2020.
Balance Sheet of Parent Company
Unit: RMB
Items on the Parent
December 31st 2019 January 1st 2020 Adjusted amounts
Company’s report
Assets:
Inventories 171,243,815.97 160,419,083.27 (10,824,732.70)
Contract assets - 10,824,732.70 10,824,732.70
Liabilities:
Receipts in advance 227,242,328.23 - (227,242,328.23)
Contract liabilities - 227,242,328.23 227,242,328.23
Explanation of the adjustment of each item:
Unit: RMB
Impact of the implementation of the new
revenue standards
Reclassified
Transfer from
Book value as items that Book value as stated
stated under the originally under the new
Itmes Transfer from items
original standard classified as standard
that originally
December 31st completed but January 1st 2020
classified as receipts
2019 unsettled assets
in advance (Note 2)
formed by
construction
contracts (Note1)
Assets:
Inventories- completed
but unsettled assets
171,243,815.97 (10,824,732.70) - 160,419,083.27
formed by construction
contracts
Contract assets - 10,824,732.70 - 10,824,732.70
Liabilities:
Receipts in advance 227,242,328.23 - (227,242,328.23) -
Contract liabilities - - 227,242,328.23 227,242,328.23
102
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Note 1: Transferred from items originally classified as completed but unsettled assets:
The construction contracts undertaken by the Company were performance obligations to be fulfilled over a period of time,
and the Company recognized revenue based on the progress of fulfillment of the contract. The amount of revenue
recognized by the Company based on the progress of fulfillment of the project in excess of the progress billings for
contracts in progress is reclassified as contract assets. Accordingly, as at January 1st 2020, the Company’s completed but
unsettled assets of RMB 10,824,732.70 from construction contracts previously presented under inventory were reclassified
as contract assets.
Note 2: Transferred from items originally classified as receipts in advance:
Receipts in advance received by the Company for the sales of goods and services rendered were reclassified to contract
liabilities as at January 1st 2020.
103
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
IV. Taxes
1. Major categories of taxes and tax rates
Category of tax Basis of tax computation Tax rate
Enterprise income tax Taxable income 25% (Note 1)
6%, 9%, 10%, 11%, 13%,
For the taxable product sales revenue or taxable labor revenue, the Company
16%, 17% and simple
VAT and its domestic subsidiaries are ordinary Value-added Tax payers; the VAT
collection rate of 5%, 3%
payable is the balance of input tax after deducting the deductible output tax.
(Note 2)
City maintenance and
Actual payable turnover tax 7%
construction tax
Education surcharges Actual payable turnover tax 3%
Local education
Actual payable turnover tax 2%
surcharges
Note 1: Except that this Company and subsidiaries in China are applicable to the following tax preference, this Company's
other subsidiaries in China are applicable to 25% of enterprise income tax rate, the overseas subsidiaries are applicable
to corresponding local tax rate.
(1) In accordance with the Letter of Reply on Publishing the List of First Batch of identified High-tech Enterprises of
Zhejiang Province in 2017 (GuoKeHuoZi [2017] No. 201) issued by the leading group office of Zhejiang high-tech
enterprise identification management work on December 15th 2017, the Company was identified as the high-tech
enterprise with a valid term of 3 years, from 2017 to 2019. The current reporting period is still in the stage of
application for re-examination of high-tech enterprise qualifications. According to the Announcement of the State
Administration of Taxation on the Implementation of the High-Tech Enterprise Income Tax Preferential Policies,
during the period of expiration of the high-tech enterprise qualification, before the re-certification was obtained, the
enterprise income tax could be temporarily paid at the rate of 15%, so the Company’s current corporate income tax
shall be calculated and paid according to a reduced tax rate of 15%. (2019:15%)
(2) According to the Notice on Publishing the List of Second Batch of Proposed Identified High-tech Enterprises of
Shanghai in 2017 issued by Shanghai High-tech Enterprise Identification Office, the Company’s wholly-owned
subsidiary, Shanghai Goldway Intelligent Traffic System Co., Ltd. (Shanghai Goldway) was identified as the high-
tech enterprise with a valid term of 3 years, from 2017 to 2019. The current reporting period is still in the stage of
application for re-examination of high-tech enterprise qualifications. According to the Announcement of the State
Administration of Taxation on the Implementation of the High-Tech Enterprise Income Tax Preferential Policies,
during the period of expiration of the high-tech enterprise qualification, before the re-certification was obtained, the
enterprise income tax could be temporarily paid at the rate of 15%, so the Company’s current corporate income tax
shall be calculated and paid according to a reduced tax rate of 15%. (2019:15%)
(3) In accordance with the Replies on Publishing the List of First Batch of identified High-tech Enterprises of Zhejiang
Province in 2017 (GuoKeHuoZi [2017] No. 201) issued by the leading group office of Zhejiang high-tech enterprise
identification management work on December 15th 2017, the Company’s joint-venture subsidiary, Hangzhou Hikrobot
Technology Co., Ltd. (Hangzhou Robotic Technology) were identified as the high-tech enterprises with a valid term
of 3 years, from 2017 to 2019. The current reporting period is still in the stage of application for re-examination of
high-tech enterprise qualifications. According to the Announcement of the State Administration of Taxation on the
Implementation of the High-Tech Enterprise Income Tax Preferential Policies, during the period of expiration of the
high-tech enterprise qualification, before the re-certification was obtained, the enterprise income tax could be
temporarily paid at the rate of 15%, so the Company’s current corporate income tax shall be calculated and paid
according to a reduced tax rate of 15%. (2019:15%)
(4) In accordance with Finance and Taxation [2011] No. 58 Document of Ministry of Finance, State Administration of
Taxation (SAT) and General Administration of Customs, the wholly-owned subsidiaries, Chongqing Hikvision
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Technology Co., Ltd. and Chongqing Hikvision System Technology Co., Ltd., are qualified to enjoy the west
development preferential tax policy from 2011 to 2020, therefore, the enterprise income rate shall be calculated and
paid on the basis of a reduced tax rate of 15% in the current reporting period. (2019:15%)
(5) In accordance with the Replies on Publishing the List of First Batch of identified High-tech Enterprises of Zhejiang
Province in 2018 (GuoKeHuoZi [2019] No. 70) issued by the leading group office of Zhejiang high-tech enterprise
identification management work on February 20th 2019, the Company’s joint venture subsidiary, Hangzhou Fuyang
Baotai Security Technology Service Co., Ltd. (Fuyang Baotai), was recognized as a high-tech enterprise and was valid
for 3 years from 2018 to 2020. Therefore, the enterprise income rate shall be calculated and paid on the basis of a
reduced tax rate of 15% in the current reporting period. (2019:15%)
(6) In accordance with the Replies on Publishing identified High-tech Enterprises of Zhejiang Province in 2019
(GuoKeHuoZi [2020] No. 32) issued by the leading group office of Zhejiang high-tech enterprise identification
management work on January 20th 2020, the Company’s wholly-owned subsidiary, Hangzhou Hikvision System
Technology Co., Ltd. (Hangzhou System), was recognized as a high-tech enterprise and was valid for 3 years from
2019 to 2021. Therefore, the enterprise income rate shall be calculated and paid on the basis of a reduced tax rate of
15% in the current reporting period. (2019:15%)
(7) According to the Notice of State Administration of Taxation and Ministry of Finance on the Corporate Income Policy
for Further Incentivizing Software Industry and Integrated Circuit Industry (Finance and Taxation [2012] No. 27) and
Notice on Issues Related to Enterprise Income Tax Preferential Policies for Software and Integrated Circuit Industry
(Finance and Taxation [2016] No. 49), HikMicro is an integrated circuit manufacturer that was founded before
December 31st 2017 and has not made profit and that produces the integrated circuit with line width <0.8 micrometers
(incl.), so it is exempted from corporate income tax in the first and second years after start of profiting and pays
corporate income tax at half of the 25% statutory tax rate in the third to fifth years until the preferential treatment
expires. HikMicro enjoyed the preferential corporate income tax exemption in the current reporting period (2019:
15%).
(8) In accordance with the Replies on Publishing identified High-tech Enterprises of Zhejiang Province in 2019
(GuoKeHuoZi [2020] No. 32) issued by the leading group office of Zhejiang high-tech enterprise identification
management work on January 20th 2020, the Company’s joint venture subsidiary Hangzhou Kuangxin Technology
Co., Ltd. ("Hangzhou Kuangxin") was recognized as a high-tech enterprise with a validity period of 3 years, from
2019 to 2021. Therefore, the current corporate income tax of Hangzhou Kuangxin is calculated and paid at a tax rate
of 15% (2019: 15%).
Note 2: In accordance with the Notice on Software Product Value-added Tax Policy (Finance and Taxation [2011] No. 100)
of Ministry of Finance and State Administration of Taxation (SAT), as for the self-developed software product sales
of the Company, Hangzhou System, the Company’s joint-venture subsidiaries such as Hangzhou HikRobot
Technology, Hangzhou HikAuto Software, Hangzhou Eziviz Software, Hangzhou HIKStorage, and Hangzhou
Hikmed Imaging, Hangzhou Hikfire, and Hangzhou Rayin, the VAT shall be calculated and paid with tax rate of 17%
at first, then the portion with actual tax bearing excess 3% shall be refunded after State Administration of Taxation
(SAT) reviews.
According to Finance and Tax [2018] No. 32, since May 1st 2018, taxpayers are subject to VAT taxable sales or
imported goods, and the VAT rates have been adjusted from 17%, 11% and 6% to 16%, 10% and 6% respectively.
According to the State Administration of Taxation Announcement No. 39 of 2019, since April 1st 2019, taxpayers are
subject to VAT taxable sales or imported goods, and the VAT rates have been adjusted from 16%, 10% and 6% to 13%,
9%, and 6%, respectively.
The Group chooses to apply a simple collection rate of 5% for part of taxable service income.
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
V. Notes to items in the consolidated financial statements
1. Cash and bank balances
Closing Balance Opening Balance
Item Exchange Exchange
Foreign currency Foreign currency
rate for RMB amount rate for RMB amount
amount amount
conversion conversion
Cash：
RMB - - 21,643.12 - - 26,573.64
INR 2,002,499.47 0.0936 187,433.95 2,522,598.05 0.0975 245,953.31
USD 4,777.60 7.0795 33,823.03 18,379.06 6.9762 128,216.03
EUR 7,875.19 7.9610 62,694.42 9,121.04 7.8155 71,285.50
GBP 6,093.38 8.7144 53,100.15 6,402.60 9.1501 58,584.43
Total other
21,537.74 26,816.77
currencies
Bank
balance：
RMB - - 14,794,794,542.43 - - 18,788,528,237.06
USD 853,438,663.73 7.0795 6,041,919,019.85 961,564,878.01 6.9762 6,708,068,901.97
EUR 55,644,155.82 7.9610 442,983,124.52 52,283,961.33 7.8155 408,625,299.77
INR 248,886,706.20 0.0936 23,295,795.70 1,970,579,846.87 0.0975 192,131,535.07
GBP 12,259,927.22 8.7144 106,837,909.80 10,626,622.96 9.1501 97,234,662.71
Total other
200,049,617.40 252,919,797.33
currencies
Other
currency
funds:
RMB - - 463,501,070.55 - - 552,442,631.48
USD 1,844,430.04 7.0795 13,057,642.48 9,370,708.66 6.9762 65,371,937.73
EUR 344,797.40 7.9610 2,744,932.10 601,625.37 7.8155 4,702,003.07
GBP - - - 67,710.77 9.1501 619,560.32
INR 120,305.98 0.0936 11,260.64 120,305.95 0.0975 11,729.83
Total other
930,937.73 735,193.76
currencies
Total 22,090,506,085.61 27,071,948,919.78
Including:
deposited in
808,042,436.30 1,045,878,239.66
overseas
banks
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Details of other currency funds:
Closing Balance Opening Balance
Foreign Exchange Foreign Exchange
Item currency rate for RMB amount currency rate for RMB amount
amount conversion amount conversion
Capitals with limitations：
Bank acceptance bill - - 24,474,795.27 - - 121,763,423.06
Deposits for letter of
- - 70,112,214.19 - - 60,758,739.37
guarantee
Deposits for letter of Credit in
262,540.34 1.3086 343,560.29 271,326.91 1.7312 469,721.15
BRL
Tax Operation Margin for
120,305.98 0.0936 11,260.64 120,306.05 0.0975 11,729.83
India
Other security deposit - - 506,497.73 - - 505,730.42
Other capitals with limitations - - 371,550,800.00 - - 372,771,567.55
Subtotal 466,999,128.12 556,280,911.38
Capitals without limitations:
Deposit in Alipay, Tenpay, etc. - - 12,867,235.27 - - 65,519,585.97
Other currency funds in USD - - - 298,523.39 6.9762 2,082,558.84
Other capitals without
- - 379,480.11 - - -
limitations
Subtotal 13,246,715.38 67,602,144.81
Total 480,245,843.50 623,883,056.19
2. Held-for-trading financial assets
Unit: RMB
Item Closing Balance Opening Balance
Financial assets measured at fair value through
853,125.46 181.76
current gain and loss
Including: derivative financial assets 853,125.46 181.76
Total 853,125.46 181.76
Derivative financial assets, including forward foreign exchange contracts, currency swaps, and foreign exchange option
contracts that are not designated as hedging instruments, and gains or losses arising from changes in fair value are
recognised directly in current profit or loss.
3. Notes receivable
3.1 Categories of notes receivable
Unit：RMB
Category Closing Balance Opening Balance
Bank acceptance bill 513,913,208.52 696,453,713.94
Commercial acceptance bill 296,339,729.64 276,783,075.08
Total 810,252,938.16 973,236,789.02
107
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
3.2 The pledged notes receivable by the Group at the closing of the current reporting peirod
Unit：RMB
Category Pledged amount at the end of the current reporting period
Bank acceptance bill 2,606,950.00
Total 2,606,950.00
3.3 At the end of the current reporting period, notes receivable endorsed by the Group but not yet due at the
balance sheet day
Unit：RMB
Amount not derecognized by June 30th
Category Derecognized amount by June 30th 2020
2020
Bank acceptance bill Note (V)-29.3 - 326,970,323.42
Total - 326,970,323.42
Note: Transfer of financial assets
As of June 30th 2020, the Group gave RMB 326,970,323.42 (2019: RMB 329,309,522.17) undued bank acceptance bills
to suppliers for endorsement. Since the Group has not transferred almost all the risks and rewards of ownership of financial
assets, the Group has not terminated its confirmation. For details, please refer to Note (V) 29.3.
3.4 As of June 30th 2020, the Group transferred the defaulted notes receivable into accounts receivable.
Unit：RMB
Category Amounts transferred into accounts receivable by June 30th 2020
Bank acceptance bill 233,200,000.00
Total 233,200,000.00
3.5 The Group believes that the acceptors of the bank acceptance bills and commercial acceptance bills held by the Group
have a high credit rating and there is no significant credit risk, so no loss provision is made.
4. Accounts Receivable
4.1 Disclosure by aging
Unit: RMB
Closing Balance
Item
Accounts receivable Bad debt provision Proportion (%)
Within credit period 11,639,453,523.87 38,525,172.09 0.33
Within 1 year after exceeding
8,637,366,711.30 395,878,536.30 4.58
credit period
1-2 years after exceeding credit
1,877,507,580.55 529,687,110.41 28.21
period
2-3 years after exceeding credit
503,854,294.38 288,808,481.26 57.32
period
3-4 years after exceeding credit
191,762,076.08 147,565,638.25 76.95
period
Over 4 years after exceeding
154,168,393.12 154,168,393.12 100.00
credit period
Subtotal 23,004,112,579.30 1,554,633,331.43 6.76
108
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
4.2 Classification and disclosure of by bad debt provision methods
Unit: RMB
Closing Balance
Carrying amount Bad debt provision Book Value
Category
Proportion Proportion
Amount Amount Amount
(%) (%)
Provision for bad debts on a single
- - - - -
basis
Provision for bad debts by portfolios 23,004,112,579.30 100.00 1,554,633,331.43 6.76 21,449,479,247.87
Total 23,004,112,579.30 100.00 1,554,633,331.43 6.76 21,449,479,247.87
Beginning Balance
Carrying amount Bad debt provision Book Value
Category
Proportion Proportion
Amount Amount Amount
(%) (%)
Provision for bad debts on a single
- - - - -
basis
Provision for bad debts by portfolios 22,705,464,020.53 100.00 1,432,499,437.97 6.31 21,272,964,582.56
Total 22,705,464,020.53 100.00 1,432,499,437.97 6.31 21,272,964,582.56
Provision for bad debts by portfolios
Unit: RMB
Closing balance
Customer
Carrying amount Bad debt provision Proportion (%)
Portfolio A 3,720,979,297.39 121,530,291.45 3.27
Portfolio B 14,261,042,967.80 1,279,307,711.61 8.97
Portfolio C 5,022,090,314.11 153,795,328.37 3.06
Total 23,004,112,579.30 1,554,633,331.43 6.76
Description of accounts receivable for bad debt provision by portfolios
As part of the Group's credit risk management, the Group uses the ageing of accounts receivable to assess the expected
credit losses of accounts receivable formed by domestic and overseas sales business, and divides the risk characteristics
into portfolio A, portfolio B and portfolio C, according to the business area and object. These three types of business
involve a large number of customers with the same risk characteristics. Aging information is able to reflect the solvency
of these three types of customers when the accounts receivable are due.
109
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
As of June 30th 2020 and January 1st 2020, the credit risk and expected credit losses of accounts receivable from portfolio A are as follows:
Unit: RMB
Closing balance Beginning balance
Age Estimated Estimated
average loss Carrying value Bad debt provision Book value average loss Carrying value Bad debt provision Book value
rate (%) rate (%)
Within credit period 0.02 2,583,861,124.78 511,133.26 2,583,349,991.52 0.02 3,012,605,457.25 597,158.52 3,012,008,298.73
Within 1 year after exceeding credit
1.63 923,369,296.04 15,078,391.89 908,290,904.15 6.11 624,571,039.13 38,185,783.11 586,385,256.02
period
1-2 years after exceeding credit period 42.59 186,477,467.29 79,424,988.19 107,052,479.10 52.96 42,580,562.72 22,551,710.14 20,028,852.58
2-3 years after exceeding credit period 96.68 22,759,975.06 22,004,343.89 755,631.17 100.00 10,567,300.34 10,567,300.34 -
3-4 years after exceeding credit period 100.00 3,244,269.79 3,244,269.79 - 100.00 361,945.19 361,945.19 -
Over 4 years after exceeding credit period 100.00 1,267,164.43 1,267,164.43 - 100.00 970,003.96 970,003.96 -
Total 3.27 3,720,979,297.39 121,530,291.45 3,599,449,005.94 1.98 3,691,656,308.59 73,233,901.26 3,618,422,407.33
As of June 30th 2020 and January 1st 2020, the credit risk and expected credit losses of accounts receivable from portfolio B are as follows:
Unit: RMB
Closing balance Beginning balance
Age Estimated Estimated
average loss Carrying value Bad debt provision Book value average loss Carrying value Bad debt provision Book value
rate (%) rate (%)
Within credit period 0.62 5,106,544,176.55 31,495,672.98 5,075,048,503.57 0.80 6,293,299,884.71 50,248,953.36 6,243,050,931.35
Within 1 year after exceeding credit
4.55 6,734,910,386.43 306,239,344.33 6,428,671,042.10 5.56 5,693,144,197.77 316,684,963.73 5,376,459,234.04
period
1-2 years after exceeding credit period 25.35 1,633,832,076.85 414,204,900.73 1,219,627,176.12 33.24 1,204,463,575.15 400,380,049.11 804,083,526.04
2-3 years after exceeding credit period 53.65 465,460,881.81 249,733,270.93 215,727,610.88 69.87 359,638,419.88 251,294,454.87 108,343,965.01
3-4 years after exceeding credit period 75.76 176,003,818.80 133,342,895.28 42,660,923.52 88.54 111,524,139.09 98,742,193.82 12,781,945.27
Over 4 years after exceeding credit period 100.00 144,291,627.36 144,291,627.36 - 100.00 86,854,139.13 86,854,139.13 -
Total 8.97 14,261,042,967.80 1,279,307,711.61 12,981,735,256.19 8.76 13,748,924,355.73 1,204,204,754.02 12,544,719,601.71
110
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
As of June 30th 2020 and January 1st 2020, the credit risk and expected credit losses of accounts receivable from portfolio C are as follows:
Unit: RMB
Closing balance Beginning balance
Age Estimated Estimated
average loss Carrying value Bad debt provision Book value average loss Carrying value Bad debt provision Book value
rate (%) rate (%)
Within credit period 0.17 3,949,147,468.41 6,519,476.34 3,942,627,992.07 0.25 4,542,156,207.09 11,532,655.19 4,530,623,551.90
Within 1 year after exceeding credit
7.62 979,087,028.83 74,560,850.08 904,526,178.75 11.63 607,354,998.31 70,646,073.52 536,708,924.79
period
1-2 years after exceeding credit period 63.04 57,198,036.41 36,057,221.49 21,140,814.92 50.83 86,416,837.18 43,926,740.35 42,490,096.83
2-3 years after exceeding credit period 100.00 17,070,866.44 17,070,866.44 - 100 12,516,916.97 12,516,916.97 -
3-4 years after exceeding credit period 100.00 10,978,473.18 10,978,473.18 - 100 10,418,437.21 10,418,437.21 -
Over 4 years after exceeding credit period 100.00 8,608,440.84 8,608,440.84 - 100 6,019,959.45 6,019,959.45 -
Total 3.06 5,022,090,314.11 153,795,328.37 4,868,294,985.74 2.95 5,264,883,356.21 155,060,782.69 5,109,822,573.52
4.3 Bad det provision
Provision, re-collection, or reverse of the bad debt allowance in the current reporting period
Unit: RMB
Expected credit losses for the entire duration Expected credit losses for the entire duration
Bed debt provision Total
(No credit impairment occurred) (Credit impairment has occurred)
Balance on January 1st 2020 487,895,587.43 944,603,850.54 1,432,499,437.97
The book balance of accounts receivable on January 1st 2020
is in the current reporting period
-- Transfer into credit impairment that has occurred (175,202,491.49) 175,202,491.49 -
Provision during the current reporting period 124,133,185.36 - 124,133,185.36
Derecognition of financial assets (including direct write-
- 423,281.01 423,281.01
downs) and transfer out
Other changes (2,422,572.91) - (2,422,572.91)
Balance on June 30th 2020 434,403,708.39 1,120,229,623.04 1,554,633,331.43
111
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
In the current reporting period, the Group accrued a bad debt allowance of RMB 124,133,185.36, and the decrease of bad
debt allowance amount of RMB 2,422,572.91 was due to conversion of financial reports prepared in foreign currency; no
reversal of bad debts during the current reporting period.
Actual write-off of account receivable during current reporting period:
In the current reporting period, the amount of actual accounts receivable write-off is RMB 347,418.33, and RMB
770,699.34 is recollected after writing-off.
4.4 Top five debtors based on corresponding closing balance of account receivables
Unit: RMB
Name of the Relationship with the Book value balance of accounts Closing balance for bad debt Proportion
Party Company receivable provision (%)
Related party A Related Party 518,946,371.75 79,874,659.33 2.26
Company A Third party 457,966,940.28 2,793,598.34 1.99
Company B Third party 150,943,543.00 1,582,304.39 0.66
Company C Third party 67,778,846.15 2,174,038.55 0.29
Company D Third party 65,530,920.73 5,654,941.40 0.28
Total 1,261,166,621.91 92,079,542.01 5.48
4.5 As of June 30th 2020, there is no termination of accounts receivable booking due to transfer of a financial asset.
4.6 As of June 30th 2020, the Group has no assets/liabilities booked due to transferred accounts receivable that the Group
still continue to be involved in.
5. Receivables for financing
5.1 Receivables for financing by catagories
Unit: RMB
Item Closing Balance Opening Balance
Bank acceptance bill 1,183,573,810.59 1,257,385,053.02
Total- 1,183,573,810.59 1,257,385,053.02
5.2 At the end of the reporting period, the Group's pledged receivables for financing
Unit: RMB
Item Pledged amounts at the end of the reporting period
Bank acceptance bill 90,566,739.34
Total- 90,566,739.34
5.3 At the end of the reporting period, receivables for financing endorsed or discounted by the Group that have
not yet expired on the balance sheet date.
Unit: RMB
Derecognized amount at June 30th 2020 Amount not derecognized at June 30th
Item
(note) 2020
Bank acceptance bill 873,723,227.50 -
Total- 873,723,227.50 -
Note:
As of June 30th 2020, the Group has discounted the RMB 873,723,227.50 (2019: RMB 1,601,320,610.86) undue bank
acceptance to banks or other financial institutions or endorsed them to suppliers. According to the discount agreement and
applicable laws, if the issuing bank does not fulfill the payment, the holder of the receivable notes has the right to claim
for recovery from the Group. The Group Management believes that the Group has transferred such receivable notes and
the vast majority of the risks and benefits related to such receivable notes and ownership, therefore the Group could stop
recognizing the book value of these receivable notes and relevant payables when the receivable notes are discounted or
112
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
endorsed to the bank or suppliers. The maximum risk exposure of the Group continues to be involved in for these endorsed
or discounted receivable notes is equivalent to their book value. The Group Management believes that the receivable notes
which the Group has stopped recognizing but continues to be involved in do not have significant fair value.
5.4 The Group believes that the acceptance bank's credit rating of the bank acceptance bill held is high, and there is no
significant credit risk, so no loss provision is made.
6. Prepayments
6.1 Prepayments by aging analysis
Unit: RMB
Closing Balance Opening Balance
Aging
Carrying amount Proportion (%) Carrying amount Proportion (%)
Within 1 year 353,752,268.57 87.34 288,005,514.00 93.00
1-2 years 34,836,409.65 8.60 15,571,671.02 5.03
2-3 years 15,250,057.38 3.76 5,931,322.30 1.92
Over 3 years 1,228,500.10 0.30 177,226.00 0.05
Total 405,067,235.70 100.00 309,685,733.32 100.00
6.2 Closing balances of top five prepayments parties
As of June 30th 2020, the Group’s top five balances of prepayments amounted to RMB 128,471,901.10, accounting for
31.72% of total closing balance of prepayments.
113
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
7. Other receivables
7.1 Summary of other receivables
Unit: RMB
Closing Balance Opening Balance
Other receivables 474,236,839.64 555,246,545.48
Total 474,236,839.64 555,246,545.48
7.2 Other receivables
(1) Other receivables by aging
Unit: RMB
Closing Balance
Item
Other receivables Bad debt provision Proportion (%)
Within credit period 312,760,117.17 1,364,051.15 0.44
Within 1 year after exceeding credit period 89,271,869.95 4,687,025.35 5.25
1-2 years after exceeding credit period 50,274,306.43 5,346,792.20 10.64
2-3 years after exceeding credit period 31,903,443.89 8,419,795.26 26.39
3-4 years after exceeding credit period 20,252,553.30 10,407,787.14 51.39
Over 4 years after exceeding credit period 4,671,115.20 4,671,115.20 100.00
Subtotal 509,133,405.94 34,896,566.30 6.85
(2) Other receivables by nature of the payment
Unit: RMB
Item Closing Balance Opening Balance
Temporary payments for receivables 301,424,480.16 289,318,820.48
Guarantee deposits 182,890,516.51 189,230,714.51
Tax rebates 861,624.66 63,470,351.07
Investment intention fund - 2,968,783.82
Others 23,956,784.61 36,238,521.79
114
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Item Closing Balance Opening Balance
Total 509,133,405.94 581,227,191.67
(3) Provision for bed debts
Unit: RMB
Amount of changes in the current reporting period Difference resulted from
foreign currency
Category Opening balance statements Closing balance
Provision Recollect or reverse Resell or write off
Conversion
Other receivables 25,980,646.19 10,010,654.15 - 930,819.43 (163,914.61) 34,896,566.30
Total 25,980,646.19 10,010,654.15 - 930,819.43 (163,914.61) 34,896,566.30
Changes in bed debt provisions for other receivables
Unit: RMB
Stage 1 Stage 2 Stage 3
bed debts allowance Expected credit loss for the entire Expected credit loss for the entire
Expected credit losses in the Total
duration (credit impairment has not duration (credit impairment has
next 12 months
incurred) occurred)
Balance on January 1st 2020 1,212,041.34 4,892,634.45 19,875,970.40 25,980,646.19
The book balance of other receivables on January 1st
2020 in the current reporting period
--Transfer into stage 2 (267,815.61) 267,815.61 - -
-- Transfer into stage 3 - (2,584,099.35) 2,584,099.35 -
--Transfer back to stage 2 - - - -
-- Transfer back to stage 1 - - - -
Provisions for the current reporting period 583,740.03 2,110,674.64 7,316,239.48 10,010,654.15
Recollection or reversal in the current reporting
- - - -
period
Write-off or re-write in the current reporting period - - (930,819.43) (930,819.43)
Other changes (163,914.61) - - (163,914.61)
Balance on June 30th 2020 1,364,051.15 4,687,025.35 28,845,489.80 34,896,566.30
(4) The actual write-off of other receivables during the current reporting period is RMB 930,819.43.
115
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
(5) Top five debtors based on corresponding closing balance of other receivables
Unit: RMB
Relationship with the Closing balance for bad debt
Entities Nature Closing balance Aging Proportion of total (%)
Company provision
Third party A Third party Guarantee deposits 6,158,813.80 Within 4 years exceeding credit period 1.21 3,165,014.41
Temporary
Third party B Third party payments for 5,996,878.80 Within 4 years after exceeding credit period 1.18 3,081,796.02
receivables
Third party C Third party Guarantee deposits 3,738,423.66 Within 2 year after exceeding credit period 0.73 397,768.28
Third party D Third party Guarantee deposits 3,500,000.00 Within 3 year after exceeding credit period 0.69 1,120,350.00
Third party E Third party Guarantee deposits 3,287,781.43 Within 2 year after exceeding credit period 0.65 349,375.98
Total 22,681,897.69 4.46 8,114,304.69
(6) As of June 30th 2020, the Group does not have other receivables related to government subsidies.
(7) As of June 30th 2020, there is no termination of other receivables booking due to transfer of a financial asset.
(8) As of June 30th 2020, the Group has no assets/liabilities booked due to any transferred other receivable that the Group continues to be involved in.
8. Inventories
(1) Categories of inventories
Unit: RMB
Closing Balance Opening Balance
Provision for decline in Provision for decline in
value of inventories/ value of inventories/
Category
Carrying amount Impairment provision Book value Carrying amount Impairment provision Book value
for contract performance for contract
cost performance cost
Raw materials 5,132,169,849.49 49,762,170.04 5,082,407,679.45 4,900,229,585.04 36,718,275.26 4,863,511,309.78
Work-in-progress 469,770,079.15 - 469,770,079.15 280,637,734.52 - 280,637,734.52
Finished goods 4,854,348,964.89 501,746,705.57 4,352,602,259.32 5,292,845,473.70 405,129,709.25 4,887,715,764.45
Contract performance cost 1,307,628,895.97 - 1,307,628,895.97 724,162,783.66 - 724,162,783.66
Total 11,763,917,789.50 551,508,875.61 11,212,408,913.89 11,197,875,576.92 441,847,984.51 10,756,027,592.41
116
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
(2) Provision for decline in value of inventories
Unit: RMB
Decrease in the current reporting period Effect on conversion of
Increase in the current financial statements
Category Opening balance Closing Balance
reporting period Reversals Write-off denominated in foreign
currencies
Raw materials 36,718,275.26 15,533,523.19 - 2,489,628.41 - 49,762,170.04
Finished goods 405,129,709.25 149,860,635.14 - 51,373,666.93 (1,869,971.89) 501,746,705.57
Subtotal 441,847,984.51 165,394,158.33 - 53,863,295.34 (1,869,971.89) 551,508,875.61
The write-offs of provision for inventories in the current reporting period are due to use or sale of inventories.
117
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
9. Contract assets
(1) Details of contract assets:
Unit: RMB
Closing Balance Opening Balance
Provisions Provisions
Items
Carrying amount for Book value Carrying amount for Book value
impairment impairment
Completed but
unsettled assets
93,401,952.55 - 93,401,952.55 546,921,868.42 - 546,921,868.42
formed by
construction contracts
Maintainence
17,990,679.02 - 17,990,679.02 - - -
services
Total 111,392,631.57 - 111,392,631.57 546,921,868.42 - 546,921,868.42
(2) Completed but unsettled assets formed by construction contracts at June 30th 2020
Unit: RMB
Item Amount
Accumulated occurred costs of construction 2,783,514,715.98
Accumulated booked gross profit margin 487,904,817.48
Less: estimated losses -
Settled amounts 2,245,694,164.58
Completed but unsettled assets formed by construction contracts 1,025,725,368.88
Including: booked in other non-current assets (Note (V) 21) 932,323,416.33
Booked in contract assets 93,401,952.55
10. Non-current assets due within one year
Unit: RMB
Item Closing Balance Opening Balance
Long-term receivables due within one year (Note (V) 12) 781,587,087.34 528,469,701.75
Total 781,587,087.34 528,469,701.75
11. Other current assets
Unit: RMB
Item Closing balance Opening balance
Deductible VAT input 547,293,910.53 616,239,842.99
Prepaid corporate income tax 51,289,122.65 80,344,406.42
Prepaid tariff 18,848,472.17 16,702,795.64
Others 56,475,399.65 41,169,776.67
Total 673,906,905.00 754,456,821.72
118
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
12. Long-term receivables
(1) Details of long-term receivables
Unit: RMB
Closing balance Opening balance
Item Provision for Provision for Range of discount rate
Carrying amount Book value Carrying amount Book value
decline in value decline in value
Financial leases receivables 355,555,388.97 25,793,545.42 329,761,843.55 361,658,264.68 16,387,726.08 345,270,538.60 0.54%-6.05%
Including: Unrealized income from
8,205,399.48 - 8,205,399.48 17,093,256.64 - 17,093,256.64 -
financing
Installments for selling goods 2,085,254,006.45 56,477,947.81 2,028,776,058.64 1,612,991,061.26 47,255,136.89 1,565,735,924.37 4.24%-6.45%
Including: Unrealized income from
497,903,351.98 - 497,903,351.98 399,492,567.10 - 399,492,567.10 -
financing
Less: Non-current assets due within one
853,381,556.84 71,794,469.50 781,587,087.34 580,682,032.92 52,212,331.17 528,469,701.75 -
year (Note (V) 10)
Total 1,587,427,838.58 10,477,023.73 1,576,950,814.85 1,393,967,293.02 11,430,531.80 1,382,536,761.22 -
(2) Bad debt provision
As part of the Group's credit risk management, the Group uses the aging of long-term receivables to assess the expected credit losses of long-term receivables formed by financial leasing
and installment collection business. The customers involved in financial leasing and installment collection business are mainly government department and state-owned enterprises. There
a large number of customers and have the same risk characteristics. The aging information is able to reflect the repayment capability of these customers when the long-term receivables
are due.
119
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
As of June 30th 2020, the credit risk and expected credit losses of long-term receivables of these customers are as follows:
Unit: RMB
Closing balance
Age
Amounts Bed debt provision Estimated average loss rate (%)
Within credit period 2,092,779,901.24 12,986,277.33 0.62
Within 1 year after exceeding credit period 195,112,291.32 8,897,120.48 4.56
1-2 years after exceeding credit period 95,898,525.87 21,088,085.83 21.99
2-3 years after exceeding credit period 28,917,511.16 16,315,259.79 56.42
3-4 years after exceeding credit period 21,827,713.41 16,711,297.38 76.56
Over 4 years after exceeding credit period 6,273,452.42 6,273,452.42 100.00
Total 2,440,809,395.42 82,271,493.23 3.37
The changes in the Group's long-term receivables' expected credit loss provision for the first half of 2020 are as follows:
Unit: RMB
Stage 1 Stage 2 Stage 3
Bed debt provision Expected credit losses for the Expected credit losses for the Total
Expected credit losses in the entire duration entire duration
next 12 months
(No credit impairment occurred) (Credit impairment has occurred)
Balance on January 1st 2020 13,978,436.59 10,724,421.18 38,940,005.20 63,642,862.97
Transfer into credit impairment that has occurred (992,159.26) (20,455,930.96) 21,448,090.22 -
Provision during the current reporting period - 18,628,630.26 - 18,628,630.26
Balance on June 30th 2020 12,986,277.33 8,897,120.48 60,388,095.42 82,271,493.23
(3) As of June 30th 2020,there is no termination of long-term receivables booking due to transfer of a financial asset.
(4) As of June 30th 2020, the Group has no assets/liabilities booked due to any transferred long-term receivable that the Group continue to be involved in.
120
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
13. Long-term equity investment
Unit: RMB
Increase/Decrease in the current reporting period
Closing
balance
Opening Adjustment: Declaration of Closing
The invested entity Investment Profit (Loss) Other for
Balance Additional Investment Other cash dividends Impairment Balance
recognized under the Changes others impairment
Investments reduction comprehensive or profit provision provision
equity Method in equity
income distribution
1. Joint venture companies
Hangzhou Haikang
Intelligent Industrial
50,000,000.00 250,000,000.00 - 2,571,332.72 - - - - - 302,571,332.72 -
Investment Fund
Partnership (L.P.)
Daishan Hailai Yunzhi
13,320,000.00 - - (127,149.41) - - - - - 13,192,850.59 -
Technology Co., Ltd.
Zhejiang Haishi Huayue
Digital Technology Co., - 10,200,000.00 - 23,214.14 - - - - - 10,223,214.14 -
Ltd. (Note 1)
Xuzhou Kangbo Urban
Operation Management
- 4,900,000.00 - (273.88) - - - - - 4,899,726.12 -
Service Co., Ltd. (Note
2)
Subtotal 63,320,000.00 265,100,000.00 - 2,467,123.57 - - - - - 330,887,123.57 -
2. Associated Companies
Wuhu Sensor
48,420,966.46 - - (1,006,663.84) - - - - - 47,414,302.62 -
Technology Co., Ltd.
Maxio Technology
109,929,732.09 - - (9,871,957.98) - - - - - 100,057,774.11 -
(Hangzhou) Co., Ltd.
Zhiguang Hailian Big
Data Technology Co., 8,684,859.27 10,000,000.00 - 913,298.13 - - - - - 19,598,157.40 -
Ltd.
121
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Increase/Decrease in the current reporting period
Closing
balance
Opening Adjustment: Declaration of Closing
The invested entity Investment Profit (Loss) Other for
Balance Additional Investment Other cash dividends Impairment Balance
recognized under the Changes others impairment
Investments reduction comprehensive or profit provision provision
equity Method in equity
income distribution
Sanmenxia Xiaoyun
Vision Technology Co., 4,317,157.18 - - (253,514.88) - - - - - 4,063,642.30 -
Ltd.
Jiaxin Haishi JiaAn
Zhicheng Technology 7,699,011.20 - - (1,103,156.76) - - - - - 6,595,854.44 -
Co., Ltd.
Qinghai Qingtang Big
9,793,595.29 - - 58,897.93 - - - - - 9,852,493.22 -
Data Co., Ltd.
Shenzhen Hikvision City
Service Operation Co., - 2,000,000.00 - (146,743.86) - - - - - 1,853,256.14 -
Ltd. (Note 3)
Subtotal 188,845,321.49 12,000,000.00 - (11,409,841.26) - - - - - 189,435,480.23 -
Total 252,165,321.49 277,100,000.00 - (8,942,717.69) - - - - - 520,322,603.80 -
Note 1: During the period, the Group entered into an agreement with independent third parties, Taizhou Huangyan Broadcasting and Television Network Co., Ltd. (Huangyan Broadcasting
and Television) and Taizhou Huangyan Technology Innovation Investment Co., Ltd. (Huangyan Technology Innovation), in relation to the establishment of the joint venture, Zhejiang
Haishi Huayue Digital Technology Co., Ltd. (Haishi Huayue). The Group made a capital contribution of RMB 10.20 million, which was fully paid up as at the end of the current reporting
period, and the proportion of equity interest acquired was 51%, which was consistent with the voting rights enjoyed by the Group at the general meeting of Haishi Huayue. According to
the articles of association of Haishi Huayue, major issues involving the company's development strategy and long-term planning must be approved by shareholders with more than 2/3 of
the voting rights at the general meeting. The board of directors of Haishi Huayue consists of 5 directors, and 3 of whom are appointed by the Group. According to the articles of association
of Haishi Huayue, major issues involving the company’s operating decisions must be approved by more than 2/3 of the members of the board of directors. Therefore, the Group, Huangyan
Broadcasting and Television and Huangyan Technology Innovation jointly control Haishi Huayue.
122
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Note 2: During the period, the Group entered into an agreement with independent third parties, Xuzhou Parking Technology Co., Ltd. (Xuzhou Parking Technology) and Xuzhou Citizen
Card Co., Ltd. (Xuzhou Citizen Card), in relation to the establishment of the joint venture, Xuzhou Kangbo Urban Operation and Management Service Co., Ltd. (Xuzhou Urban Operation).
The Group has contributed RMB 9.80 million and has paid RMB 4.90 million as at the end of the current reporting period, and the proportion of equity interest acquired was 49%, which
was consistent with the voting rights enjoyed by the Group at the general meeting of Xuzhou Urban Operation. According to the articles of association of Xuzhou Urban Operation, major
issues involving the company's development strategy and long-term planning must be approved by shareholders with more than 2/3 of the voting rights at the general meeting. The board
of directors of Xuzhou Urban Operation consists of 5 directors, of which 2 are appointed by the Group and 2 are appointed by Xuzhou Parking Technology. According to the articles of
association of Xuzhou Urban Operation, major issues involving the company’s operating decisions must be approved by more than 2/3 of the members of the board of directors. Therefore,
the Group and Xuzhou Parking Technology jointly control Xuzhou Urban Operation.
Note 3: During the current reporting period, the Group entered into an agreement with independent third party Shenzhen Huazun Borui Technology Co., Ltd. (Huazun Borui Technology)
for jointly establishing Shenzhen Hikvision Urban Service Operation Co., Ltd. (Shenzhen Urban Operation). The Group has contributed RMB 20.00 million and has paid RMB 2.00
million as at the end of the period, and the proportion of equity interest acquired was 40%. The board of directors of Shenzhen Urban Operation consists of 3 directors, of which 1 director
is appointed by the Group to exert significant influence over Shenzhen Urban Operations.
123
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
14. Other non-current financial assets
Unit: RMB
Additional Investment
investment recovery Changes in fair
Opening during the during the value during the
Invested Entity (Note 1) Shareholding % Closing balance
balance current current current
reporting reporting reporting period
period period
CETC Finance Co., Ltd.
3.83% 247,308,906.45 - - (14,197,198.59) 233,111,707.86
(Note 2)
Hangzhou Confirmware
9.52% 28,732,009.18 - - 1,497,260.32 30,229,269.50
Technology Co., Ltd.
Zhejiang Tuxun
Technology Co.,Ltd. 8.13% 28,358,818.81 - - (317,393.99) 28,041,424.82
(Zhejiang Tuxun)
Zhengzhou Guokong Smart
7.00% 3,500,000.00 - (2,800,000.00) - 700,000.00
City Technology Co., Ltd.
Guangxi Jilian Haibao
10.00% 2,884,220.00 - - - 2,884,220.00
Technical Service Co., Ltd.
Shenzhen Wanyu Security
Service Technology Co., 5.00% 1,000,000.00 - - - 1,000,000.00
Ltd.
Nanwang Information
0.25% 604,313.00 - - - 604,313.00
Industry Group Co., Ltd.
Hangzhou Hikvision Equity
Investment Partnership 0.0017% 10,000.00 - - - 10,000.00
(Limited Partnership)
Total 312,398,267.44 - (2,800,000.00) (13,017,332.26) 296,580,935.18
Note 1: it refers to the Group’s equity investments of private companies. The Group has no control, joint control or
significant influence over the invested company.
Note 2: It is an enterprise controlled by CETC, the ultimate controlling party of the Group.
15. Fixed Assets
(1) Details of fixed assets
Unit: RMB
General-
Building and Special-purpose Transportation
Items purpose Total
construction equipment vehicles
equipment
Total original carrying
amount
1. Opening balance 4,816,088,804.95 773,020,682.47 1,857,736,384.58 91,486,364.54 7,538,332,236.54
2. Increase in the current
211,568,093.89 149,968,632.17 223,141,721.49 7,314,204.79 591,992,652.34
reporting period
1) purchase 101,950,414.18 149,486,353.48 172,969,381.69 7,314,204.79 431,720,354.14
2) transferred from
109,617,679.71 482,278.69 50,172,339.80 - 160,272,298.20
construction in progress
3.Decrease in the current
183,184.39 5,809,483.18 6,757,037.66 1,990,471.41 14,740,176.64
reporting period
1) disposal or write-off 183,184.39 5,809,483.18 6,757,037.66 1,990,471.41 14,740,176.64
4. Effect on conversion of
financial statements
(1,409,159.10) (3,411,448.02) (4,182,355.51) (277,930.31) (9,280,892.94)
denominated in foreign
currencies
124
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
General-
Building and Special-purpose Transportation
Items purpose Total
construction equipment vehicles
equipment
5.Closing Balance 5,026,064,555.35 913,768,383.44 2,069,938,712.90 96,532,167.61 8,106,303,819.30
Accumulated depreciation
1. Opening balance 763,668,628.26 224,369,283.55 713,167,782.03 45,907,821.83 1,747,113,515.67
2. Increase in the current
114,165,750.30 89,366,901.69 155,463,715.38 8,975,603.45 367,971,970.82
reporting period
(1) accrual 114,165,750.30 89,366,901.69 155,463,715.38 8,975,603.45 367,971,970.82
3.Decrease in the
current reporting 27,486.96 4,759,639.78 4,336,488.83 1,570,245.77 10,693,861.34
period
(1) disposal or write-
27,486.96 4,759,639.78 4,336,488.83 1,570,245.77 10,693,861.34
off
4. Effect on conversion of
financial statements
(358,061.63) (1,740,751.36) (1,342,487.38) (183,143.19) (3,624,443.56)
denominated in foreign
currencies
5.Closing balance 877,448,829.97 307,235,794.10 862,952,521.20 53,130,036.32 2,100,767,181.59
Provision for decline in value
1.Opening balance - - - - -
2.Increase in the current
- - - - -
reporting period
3. Decrease in the current
- - - - -
reporting period
4.Closing balance - - - - -
Total book value
Closing balance on book value 4,148,615,725.38 606,532,589.34 1,206,986,191.70 43,402,131.29 6,005,536,637.71
Opening balance on book value 4,052,420,176.69 548,651,398.92 1,144,568,602.55 45,578,542.71 5,791,218,720.87
(2) As of June 30th 2020, the Group did not have any significant idle fixed assets.
(3) Fixed assets leased through financial lease.
Unit: RMB
Accumulated
Item Original book value Provision for impairment Carrying value
depreciation
Fixed assets 76,842,631.49 23,339,788.79 - 53,502,842.70
(4) As of June 30th 2020, the Group had not rent out any fixed asset through operating leasing
(5) Fixed assets of which certificates of title have not been granted as of June 30th 2020.
Unit: RMB
Item Carrying amount Reason for certificates of title not granted
In the process of obtaining the real estate
Office building for branches 19,906,399.28
certificates
In the process of obtaining the real estate
Chongqing Production Base-Phase 1 plant 286,687,284.22
certificates after transferred to fixed assets
In the process of obtaining the real estate
Fuzhou High-tech Zone Innovation Park 94,923,791.72
certificates after transferred to fixed assets
Total 401,517,475.22
125
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
16. Construction in progress
(1) Details of construction in progress
Unit: RMB
Closing balance Opening balance
Item
Carrying amount Provision Book value Carrying amount Provision Book value
Public Security Monitoring Site Project 48,706,874.94 - 48,706,874.94 29,514,953.03 - 29,514,953.03
Hangzhou Innovation Industry Base 237,051,028.73 - 237,051,028.73 113,538,634.58 - 113,538,634.58
Chengdu Science and Technology Base Project 369,398,026.23 - 369,398,026.23 242,931,547.66 - 242,931,547.66
Chongqing Science and Technology Base
185,866,637.47 - 185,866,637.47 111,066,438.98 - 111,066,438.98
Phase II Project
Others 172,933,889.69 - 172,933,889.69 134,503,904.81 - 134,503,904.81
Total 1,013,956,457.06 - 1,013,956,457.06 631,555,479.06 - 631,555,479.06
(2) Changes in significant construction in progress during the current reporting period
Unit: RMB
Including:
Effect on capitalized
Transferred Accumulated Capitalization
conversion Amount interest and
Increase in to fixed capitalized rate for
Budget of financial Other invested as Construction profit/loss
Opening the current assets during Closing interest and interest in the Source of
Item (RMB statements Reductions a proportion in Progress on exchange
0,000)
balance reporting the current
denominated (Note 1)
balance
of budget (%)
profit/loss on
for the
current funds
period reporting exchange reporting
in foreign amount (%) current
period (Note 2) period (%)
currencies reporting
period
Chengdu
Science and Self-
182,000.00 242,931,547.66 126,466,478.57 - - - 369,398,026.23 20.30% 20.30% - - -
Technology financing
Base Project
Hangzhou
Innovation Special
102,600.00 113,538,634.58 123,512,394.15 - - - 237,051,028.73 23.10% 23.10% 32,777,912.50 37,918,104.79 0.65%
Industry loan
Base
126
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Including:
Effect on capitalized
Transferred Amount Accumulated Capitalization
conversion interest and
Increase in to fixed invested as capitalized rate for
Budget of financial Other Construction profit/loss
Opening the current assets during a interest and interest in the Source of
Item (RMB statements Reductions Closing balance in Progress on exchange
0,000)
balance reporting the current
denominated (Note 1)
proportion
(%)
profit/loss on
for the
current funds
period reporting of budget exchange reporting
in foreign current
period amount (%) (Note 2) period (%)
currencies reporting
period
Chongqing
Science and
Technology Self-
76,200.00 111,066,438.98 74,800,198.49 - - - 185,866,637.47 24.39% 24.39% - - -
Base financing
project-
phase 2
Xi’an
Science and Self-
227,800.00 6,171,571.90 1,032,758.02 - - 7,204,329.92 0.32% 0.32% - - -
Technology financing
Base project
Wuhan
Science and Self-
280,600.00 4,339,622.64 - - - - 4,339,622.64 0.15% 0.15% - - -
Technology financing
Base project
Wuhan
Intelligent Self-
238,700.00 2,370,546.89 - - - - 2,370,546.89 0.10% 0.10% - - -
Industry financing
Base project
Self-
Others - 151,137,116.41 218,744,421.65 160,272,298.20 267,632.29 2,150,606.97 207,726,265.18 - - - - -
financing
Total 1,107,900.00 631,555,479.06 544,556,250.88 160,272,298.20 267,632.29 2,150,606.97 1,013,956,457.06 - - 32,777,912.50 37,918,104.79
Note 1: The other reductions in the current reporting period was completed decoration projects that were transferred into long-term deferred expenses.
Note 2: This amount is calculated by interest expense for specific foreign currency borrowings, less interest income for unused borrowing fund and profit/loss on exchange rate difference.
As of June 30th 2020, the Group did not have any sign of impairment of projects under construction; therefore, no provision for impairment loss was booked.
127
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
17. Intangible assets
(1) Details of Intangible assets
Unit: RMB
Intellectual Application Franchise
Item Land use right Total
property right Software
Total original carrying
amount
1.Opening balance 973,043,453.70 66,993,435.51 280,896,635.94 - 1,320,933,525.15
2. Increased 818,200.00 - 49,197,703.37 8,831,030.23 58,846,933.60
(1) Purchase 818,200.00 - 49,197,703.37 8,831,030.23 58,846,933.60
3.Decreased - - 188,227.36 - 188,227.36
(1)Disposal or
- - 188,227.36 - 188,227.36
write-off
4.Effect on
conversion of
financial statements - (126,763.72) (210,543.70) - (337,307.42)
denominated in
foreign currencies
5.Closing balance 973,861,653.70 66,866,671.79 329,695,568.25 8,831,030.23 1,379,254,923.97
Total accumulated
amortization
1.Opening balance 53,291,064.90 51,532,190.15 169,987,762.46 - 274,811,017.51
2.Increased 10,589,910.68 3,425,317.04 62,854,811.42 189,914.63 77,059,953.77
(1)Accrual 10,589,910.68 3,425,317.04 62,854,811.42 189,914.63 77,059,953.77
3.Decreased 187,705.21 187,705.21
- - -
(1)Disposal or
187,705.21 187,705.21
write-off - - -
4.Effect on
conversion of
financial statements (51,561.56) (27,816.03) - (79,377.59)
denominated in
foreign currencies
5. Closing balance 63,880,975.58 54,905,945.63 232,627,052.64 189,914.63 351,603,888.48
Provision for decline in
value
1.Opening balance - - - - -
2.Increased - - - - -
3. Decreased - - - - -
4.Closing balance - - - - -
Total book value
Closing balance on book
909,980,678.12 11,960,726.16 97,068,515.61 8,641,115.60 1,027,651,035.49
value
Opening balance on book
919,752,388.80 15,461,245.36 110,908,873.48 - 1,046,122,507.64
value
128
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
18. Goodwill
(1) Goodwill book value
Unit: RMB
Increased Decreased Effect on
conversion of
Business combination financial
Opening Liquidation
The invested entity not involving statements Closing balance
balance &
enterprises under denominated in
cancellation foreign
common control
currencies
Secure Holdings Limited (SHL) 139,374,307.33 - - 2,007,266.02 141,381,573.35
Henan HuaAn Baoquan Intelligence
Development Co., Ltd. and its 61,322,871.63 - - - 61,322,871.63
subsidiaries
Hangzhou Kuangxin Technology Co.,
59,060,454.06 - - - 59,060,454.06
Ltd.
Hundure Technology (Shanghai) Co.,
13,774,405.88 - - - 13,774,405.88
Ltd.
ZAO Hikvision 67,349.64 - - - 67,349.64
Hangzhou Haikang Zhicheng
Investment and Development Co., 12,573.42 - - - 12,573.42
Ltd.
Total 273,611,961.96 - - 2,007,266.02 275,619,227.98
19. Long-term deferred expenses
Unit: RMB
Difference of
Invested unit Opening Balance Increased Amortized foreign currency Closing balance
translation
Improvement expenditure for
87,611,490.75 29,354,267.40 19,788,072.87 (1,786,501.30) 95,391,183.98
leased fixed asset
Total 87,611,490.75 29,354,267.40 19,788,072.87 (1,786,501.30) 95,391,183.98
20. Deferred tax assets/deferred tax liabilities
(1) Deferred tax assets that are not presented on net off basis
Unit: RMB
Closing balance Opening balance
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
differences differences
Provision for impairment
440,719,434.56 108,352,489.38 272,015,493.85 72,480,367.65
losses of assets
Provision for credit loss 1,548,475,179.99 317,344,792.83 1,409,847,170.59 292,275,236.58
Payroll payables 353,810,837.41 55,990,855.40 353,810,837.41 55,990,855.40
Share-based payment 768,091,431.42 115,213,714.71 273,114,847.21 43,340,918.66
Provisions 70,059,231.54 11,871,480.55 78,353,085.64 15,477,040.83
Expenditure without invoice 178,143,900.00 26,721,585.00 228,359,902.54 52,419,606.75
Unrealized profit from inter-
1,461,445,877.63 219,216,881.64 1,157,820,970.68 187,268,546.98
group transactions
Changes in the fair value of
derivative financial 5,812,489.99 1,453,122.50 652,428.18 163,107.05
instruments
Deferred income 359,257,097.77 62,152,351.64 288,449,840.21 51,155,882.21
Total 5,185,815,480.31 918,317,273.65 4,062,424,576.31 770,571,562.11
129
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
(2) Deferred tax liabilities that are not presented on net off basis
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
differences differences
Difference in fixed asset
717,253,533.41 143,731,936.90 680,837,730.59 129,970,264.62
depreciation
Difference in amortization
2,077,910.54 311,686.58 1,386,714.30 208,007.14
of intangible assets
Changes in the fair value
of derivative financial 853,125.46 213,281.37 181.76 45.44
instruments
Changes in fair value of
other non-current financial 46,373,894.32 6,956,084.15 17,547,234.44 2,632,085.17
assets
Total 766,558,463.73 151,212,989.00 699,771,861.09 132,810,402.37
(3) Deferred tax assets or deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
Closing balance Opening balance
Deferred tax assets or Offset amount at the Deferred tax assets or
Item Offset amount at the end
liabilities at the net beginning of the liabilities at the net
of the reporting period
amount after offset reporting period amount after offset
Deferred tax assets 56,744,733.30 861,572,540.35 81,722,298.41 688,849,263.70
Deferred tax liabilities 56,744,733.30 94,468,255.70 81,722,298.41 51,088,103.96
21. Other non-current assets
Unit: RMB
Item Closing balance Opening balance
Contract assets 932,323,416.33 751,457,739.44
Prepayments for acquisition of land 91,981,842.90 818,200.00
Prepayments for equipment 33,183,431.32 85,573,983.95
Prepayments for infrastructure 13,987,433.50 13,942,203.53
Prepayments for equity investment - 13,794,550.00
Total 1,071,476,124.05 865,586,676.92
22. Short-term borrowings
(1) Categories of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Fiduciary loan-principal 4,441,240,874.66 2,637,513,739.48
Fiduciary loan-interest 3,336,098.23 2,568,745.67
Pledged loans 2,700,000.00 -
Total 4,447,276,972.89 2,640,082,485.15
(2) As of June 30th 2020, the Group did not have any overdue short-term loans that were failed to repay.
23. Held-for-trading financial liabilities
Unit: RMB
Item Closing balance Opening balance
Financial liabilities measured at fair value through
8,951,114.77 652,428.18
current profits and losses
Including: derivative financial liabilities 8,951,114.77 652,428.18
total 8,951,114.77 652,428.18
130
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Derivative financial liabilities include forward foreign exchange contracts, currency swaps, foreign exchange option
contracts, and etc., not designated as a hedging instrument, gains or losses due to changes in fair value is directly included
in the current period profits and losses.
24. Notes payable
Unit: RMB
Item Closing balance Opening balance
Bank acceptance Bill 1,222,676,114.77 1,239,584,016.70
Total 1,222,676,114.77 1,239,584,016.70
As of June 30th 2020, the Group did not have any unpaid matured notes payable.
25. Accounts payable
(1) List of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payments for goods 7,049,636,573.22 12,526,135,911.98
Payables on equipment 248,313,386.38 173,939,395.72
Total 7,297,949,959.60 12,700,075,307.70
(2) As of June 30th 2020, the Group did not have any significant accounts payable with aging above one year.
26. Contract liabilities
(1) List of contract liabilities
Unit: RMB
Item Closing balance Opening balance
Advanced receipts from sales of goods (Note1) 515,383,375.49 535,145,418.68
Advanced receipts from construction contracts (Note 2) 543,022,982.09 485,844,041.93
Service contract (Note3) 114,437,791.33 107,249,547.00
Total 1,172,844,148.91 1,128,239,007.61
Note 1: On June 30th 2020, some of the Group's sales contracts were handed over for acceptance later than the point at
which the customer made payment, resulting in a contract liabilities related to sales contracts.
Note 2: On June 30th 2020, the Group's contract liabilities related to construction contracts were the excess of the progress
billings over the revenue recognized by the Group based on the progress of fulfillment.
Note 3: On June 30th 2020, the Group’s contract liabilities related to service contracts were the excess of service fees paid
by customers over the revenue recognized by the Group based on the progress of fulfillment.
Note 4: The carrying value of the contract liabilities at the beginning of the reporting period was RMB 408,407,826.58,
which was recognized as revenue in the current reporting period.
131
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
27. Payroll payable
(1) Details of payroll payable
Unit: RMB
Increase in the Decrease in the
Item Opening balance current reporting current reporting Closing balance
period period
1.Short-term remuneration 2,350,226,309.38 4,842,900,962.90 5,404,001,351.89 1,789,125,920.39
2. Termination benefits – defined
9,448,330.74 211,303,175.59 203,615,158.79 17,136,347.54
contribution scheme
Total 2,359,674,640.12 5,054,204,138.49 5,607,616,510.68 1,806,262,267.93
(2) List of Short-term remuneration
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
reporting period reporting period
1.Wages or salaries,
bonuses, allowances and 2,194,538,939.13 4,355,194,083.06 4,957,135,568.90 1,592,597,453.29
subsidies
2.Staff welfare 74,284.72 48,073,645.43 48,075,725.43 72,204.72
3.Social insurance
746,726.43 145,815,575.28 141,077,928.93 5,484,372.78
contributions
Including:
671,240.08 136,559,620.72 132,193,552.84 5,037,307.96
Medical insurance
Injury insurance 24,637.32 3,913,989.16 3,649,372.65 289,253.83
Maternity insurance 50,849.03 5,341,965.40 5,235,003.44 157,810.99
4.Housing funds 132,910.00 222,590,244.32 222,589,688.78 133,465.54
5.Labor union and
154,733,449.10 71,227,414.81 35,122,439.85 190,838,424.06
education fund
Subtotal 2,350,226,309.38 4,842,900,962.90 5,404,001,351.89 1,789,125,920.39
(3) Defined contribution scheme (Note)
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
1.Basic pension insurance 9,009,304.85 203,988,931.76 196,416,381.33 16,581,855.28
2.Unemployment insurance 439,025.89 7,314,243.83 7,198,777.46 554,492.26
Subtotal 9,448,330.74 211,303,175.59 203,615,158.79 17,136,347.54
Note：
During the reporting periods, the employees of the Group are the members of state-managed retirement benefit plan, and
unemployment insurance plan, operated by the respective governments of these jurisdictions. The Group is required to
contribute specified percentage out of payroll costs to the retirement benefit schemes and unemployment insurance
schemes to fund the benefits. The Group has no other material obligation for the payment of pension benefits beyond the
contributions described above, and corresponding expenses were booked into profits and losses of related assets during
the current period.
28. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 798,047,576.17 553,486,554.42
Value-added tax 473,711,572.20 331,490,538.56
City construction and maintenance tax 15,233,618.75 21,992,627.00
Education surcharges 6,598,969.38 9,283,542.86
Local education surcharges 4,493,527.21 6,385,473.76
Others 78,606,826.71 68,704,069.31
132
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Item Closing balance Opening balance
Total 1,376,692,090.42 991,342,805.91
29. Other payables
29.1 Categories
Unit: RMB
Item Closing balance Opening balance
Dividend payable 207,013,978.04 108,129,385.24
Other payables 1,705,690,173.64 1,460,615,214.70
Total 1,912,704,151.68 1,568,744,599.94
29.2 Dividends payable
Unit: RMB
Item Closing balance Opening balance
Dividends of incentive restricted shares 207,013,978.04 105,679,385.24
Dividends of common shares - 2,450,000.00
Total 207,013,978.04 108,129,385.24
29.3 Other payables
(1) List of other payables according to the nature of the payment
Unit: RMB
Item Closing balance Opening balance
Accrued expenses 876,154,251.09 608,136,188.75
Unexpired commercial acceptance bills that were endorsed (Note
326,970,323.42 329,309,522.17
(V)-3)
Guarantee and deposit fees 262,444,520.57 240,507,892.79
Collection and payment on behalf 179,553,154.01 220,858,972.11
Investment payable 12,400,000.00 12,400,000.00
Other expense payable 48,167,924.55 49,402,638.88
Total 1,705,690,173.64 1,460,615,214.70
(2) As of June 30th 2020, the Group did not have any significant other payables aging over one year.
30. Non-current liabilities due within one year
Unit：RMB
Item Closing balance Opening balance
Long-term borrowings due within one year (Note (V) 32) 135,866,310.70 69,893,081.33
Long-term payables due within one year (Note (V) 33) 19,169,247.54 16,230,072.73
Total 155,035,558.24 86,123,154.06
133
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
31. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Subscription payment of restricted shares 812,199,945.56 913,534,538.26
Short-term commercial paper (SCP) 1,000,000,000.00 -
Interests on SCP 813,672.87 -
Total 1,813,013,618.43 913,534,538.26
During the period, the Company issued "Hangzhou Hikvision Digital Technology Co., Ltd. 2020 Phase I Short-term
commercial paper (SCP), with product abbreviation "20 Hikvision SCP001", product code "012002014", with an issuance
period of 180 days, value date of June 4th 2020 and maturity date of December 1st 2020. The SCP were issued at a par
value of RMB 100, with a total issue amount of RMB 1 billion and an issuance interest rate of 1.75%. The principal and
interest will be repaid in one lump sum at maturity.
32. Long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged loan (Note 1) 1,522,975,239.25 1,348,034,851.48
Fiduciary loan (Note 2) 3,194,266,785.73 3,136,026,801.28
Other borrowing (Note 3) 190,000,000.00 190,000,000.00
Less：Long-term loans due within one year (Note (V) 30) 135,866,310.70 69,893,081.33
Total 4,771,375,714.28 4,604,168,571.43
Note 1: As of June 30th 2020, RMB 158,445,714.28 of the pledged loan was obtained by the Group with all the rights and
benefits pledged under the Urumqi High-tech Zone (New Urban Area) Safe City & Surveillance system for Social
Comprehensive Management -- PPP Project Agreement; the maturity date is June 20th 2028, the annual interest rate is
4.41%.
RMB 185,600,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under the
MoYu Security Protection and Prevention Control System-- PPP Project Agreement; the maturity date is March 26th 2035,
the annual interest rate is 4.445%.
RMB 227,780,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under the
PiShan Security Protection and Prevention Control System-- PPP Project Agreement; the maturity date is March 26th 2040,
the annual interest rate is 4.445%.
RMB 144,000,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under the
LuoPu Security Protection and Prevention Control System-- PPP Project Agreement; the maturity date is March 26th 2035,
the annual interest rate is 4.445%.
RMB 238,400,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under the
YuTian Safe City-- PPP Project Agreement; the maturity date is March 26th 2034, the annual interest rate is 4.445%.
RMB 567,000,000.00 of the pledged loan was obtained by the Group with all the rights and benefits pledged under the
Xi'an Public Security Video Surveillance Construction Network Application Construction--Public-Private Partnership
(PPP) Project Agreement; the maturity date is November 5th 2031, the annual interest rate is 4.445%.
Note 2: As of June 30th 2020, the credit loan with a book value of RMB 3,184,400,000.00 was 400 million euros in credit
loans, which was mainly used for the investment and construction of the Company's Hangzhou Innovation Industrial Base
project and Xi'an Science and Technology Base project, the maturity date is December 14th 2021, and the interest rate is
0.65%.
Note 3: During 2016, the Group entered into an agreement with CDB Development Fund Ltd. (CDBDF) to jointly inject
capital into Hikvision Electronics Co., Ltd. ("Hangzhou Electronics"), a subsidiary of the Group. Pursuant to the capital
injection agreement, CDBDF would not participate in senior management personnel such as directors, and it would either
134
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
take part in decision-making or make significant influence on Hangzhou Electronics. The Group shall pay a 1.2%
annualized return to CDBDF through dividends or interest payments, and the Group is required to redeem the CDBDF's
equity investment in the current reporting period by installments each year from 2021 to 2024. Therefore, the capital
injection by CDBDF is treated as a long-term loan. As of June 30th 2020, CDBDF has aggregately invested RMB 190
million (December 31st 2019: RMB 190 million).
33. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Payables for financial leasing 32,625,618.86 42,181,416.72
Borrowing 8,000,000.00 8,000,000.00
Total 40,625,618.86 50,181,416.72
Unit: RMB
Details of financial lease payables in long-term payables Closing balance Opening balance
1st year after the balance sheet date 21,781,072.49 19,265,287.22
2nd year after the balance sheet date 21,160,727.89 21,387,869.19
3rd year after the balance sheet date 10,457,384.48 14,137,481.89
Future years 3,619,911.68 10,420,815.85
Total minimum lease payments 57,019,096.54 65,211,454.15
Unrecognized financing costs 5,224,230.14 6,799,964.70
Finance lease payable 51,794,866.40 58,411,489.45
Including: Finance lease payable due within 1 year 19,169,247.54 16,230,072.73
Finance lease payable due after 1 year 32,625,618.86 42,181,416.72
34. Provisions
Unit: RMB
Item Closing balance Opening balance
Product warranty 84,693,948.33 90,570,669.01
Total 84,693,948.33 90,570,669.01
135
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
35. Deferred income
Unit: RMB
Increase in current Decrease in current
Item Opening balance Closing balance Details
reporting period reporting period
Government Subsidies 226,340,284.30 35,179,000.00 8,861,020.08 252,658,264.22 Note 1
Total 226,340,284.30 35,179,000.00 8,861,020.08 252,658,264.22
As of June 30th 2020, the deferred income related to government subsidies:
Unit: RMB
Increase in Amounts booked into Related to
Opening Other
Liability Items current reporting other income during the Closing Balance assets/related to
Balance changes
period current reporting period incomes
Chongqing
Manufacture Base 79,254,065.44 - 1,209,465.00 - 78,044,600.44 Related to assets
construction
Projects of core
electronic devices,
high-end universal 62,827,863.01 - - - 62,827,863.01 Related to incomes
chips and basic
software products
Other special
43,466,515.09 30,904,000.00 5,325,458.06 - 69,045,057.03 Related to assets
subsidies
Other special
40,791,840.76 4,275,000.00 2,326,097.02 - 42,740,743.74 Related to incomes
subsidies
Subtotal 226,340,284.30 35,179,000.00 8,861,020.08 - 252,658,264.22
Note 1: Refer to government subsidies received by the Group for projects of Core Electronic Devices, High-end Universal
Chip and Basic Software Products, Chongqing Manufacture Base construction, and other projects; Actual expenses
occurred in the current reporting period for projects of core electronic devices, high-end universal chips and basic software
products and other special subsidies related to incomes were recognized in other income; and relevant assets for Chongqing
Manufacture Base construction and other special subsidies related to assets were amortized averagely in other income
within the assets’ useful lives.
36. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Subscription for restricted stocks 1,234,739,326.10 1,234,739,326.10
Total 1,234,739,326.10 1,234,739,326.10
37. Share capital
Unit: RMB
Changes for the current reporting period
Opening balance New issue of Transfer from Closing balance
Bonus issue Others Subtotal
shares Capital Reserve
2020.06.30
Total
9,345,010,696.00 - - - - - 9,345,010,696.00
shares
136
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
38. Capital reserves
Unit: RMB
Increase in the Decrease in the
current reporting current reporting
Item Opening balance Closing balance
period period
(Note 1) (note 2)
2020.06.30
Share premium 3,834,418,853.06 21,934,490.45 53,552,843.92 3,802,800,499.59
Other capital reserves 292,524,845.90 481,168,915.75 - 773,693,761.65
Total 4,126,943,698.96 503,103,406.20 53,552,843.92 4,576,494,261.24
Note 1: The increase of RMB 21,934,490.45 in the share premium for the current reporting period was due to the Group’s
integration of the fire control business, and 100% equity of the asset group of the Intelligent Fire Control Business
Department as well as Wuhan Hiksafety and Zhejiang Hiksafety were transferred to the holding subsidiary, Hangzhou
Hikfire, such that the shareholding ratios in the two companies were changed from direct 100% to indirect 60%,
respectively. For details, please refer to Note (VII) 2.
The increase in other capital reserves for the current reporting period was due to equity-settled share-based payments and
included in the capital reserves of RMB 481,168,915.75. For details, please refer to Note (XI).
Note 2: RMB 20,536,489.07 of the share premium reduction for the current reporting period is the portion of the equity-
settled share-based payment shared by minority shareholders in the current reporting period; the Company acquired 42.86%
of the minority interests in each of its subsidiaries i.e. Henan Hua’an Baoquan Intelligence Development Co., Ltd. and
Henan Haikang Hua’an Baoquan Electronics Co., Ltd., respectively, at a consideration of RMB 33,016,354.85. For details
of the difference between the payment of the consideration and the share of identifiable net assets calculated based on the
newly-added shareholding ratio, please refer to Note (VII) 2.
39. Treasury shares
Unit: RMB
Increase in the Decrease in the
Item Opening Balance current reporting current reporting Closing balance
period period (Note 1)
2020.06.30
Restricted shares incentive scheme 2,148,273,864.36 - 101,334,592.80 2,046,939,271.56
Total 2,148,273,864.36 - 101,334,592.80 2,046,939,271.56
Note 1: Treasury shares decreased by RMB 101,334,592.80 in the current reporting period, which is due to the reduction of
treasury shares by the Company's provision of cash dividends on restricted shares.
137
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
40. Other comprehensive income
Unit: RMB
Amounts occurred in the current reporting period
The before- Less: transfer
income-tax to current
Less: Attributable to Attributable to
Opening amount period P/L
Item income the parent minority Closing balance
balance incurred during from previous
tax company (after shareholders
the current other expense tax) (after tax)
reporting comprehensive
period
income
2020.06.30：
Other incomes
that may be
reclassified
(53,541,146.99) (26,796,178.37) - - (24,482,915.47) (2,313,262.90) (78,024,062.46)
subsequently
to profit or
loss
Included:
Effect on
conversion of
financial
(53,541,146.99) (26,796,178.37) - - (24,482,915.47) (2,313,262.90) (78,024,062.46)
statements
denominated
in foreign
currencies
Other
comprehensive (53,541,146.99) (26,796,178.37) - - (24,482,915.47) (2,313,262.90) (78,024,062.46)
income
41. Surplus reserves
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
reporting period reporting period
2020.06.30
Statutory surplus reserves 4,672,505,348.00 - - 4,672,505,348.00
Total 4,672,505,348.00 - - 4,672,505,348.00
42. Retained earnings
Unit: RMB
Item First half of 2020 First half of 2019
Undistributed profit at the end of the previous reporting
28,961,389,145.22 22,360,593,257.53
period
Business merger under the common control - (736,986.11)
Retained Earnings at the close of the prior reporting period 28,961,389,145.22 22,359,856,271.42
Add: Net profit attributable to the parent company for the
4,623,972,830.87 4,216,755,210.24
current reporting period
Dividends payable on common shares (Note) 6,541,507,487.20 5,605,823,858.10
Retained earnings at the end of the current reporting period 27,043,854,488.89 20,970,787,623.56
Note：According to the resolution of 2019 annual General Meeting dated on May 16th 2020, based upon the total capital
share of the Company on the equity distribution date, for each 10 ordinary shares, the Company distributed cash dividends
of RMB 7 (tax inclusive), the rest of retained earnings were all carried forward for future distributions.
138
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
43. Operating income/operating cost
Unit: RMB
First half of 2020 First half of 2019
Item
Revenue Cost Revenue Cost
Operating income 24,068,056,071.82 12,100,735,573.06 23,693,888,435.21 12,727,511,306.82
Other operating income 203,103,171.94 92,984,372.32 229,384,989.29 112,995,026.86
Total 24,271,159,243.76 12,193,719,945.38 23,923,273,424.50 12,840,506,333.68
44. Business Taxes and Surcharges
Unit: RMB
Items First half of 2020 First half of 2019
City construction and maintenance tax 79,448,007.54 81,858,061.74
Education surcharges 34,694,864.30 36,071,455.51
Local education surcharges 23,124,847.79 23,308,866.59
Stamp duty 11,993,613.72 11,130,199.34
Real estate tax 8,518,237.11 11,123,190.25
Tax on use of land 1,810,901.96 1,340,324.67
Vehicle and vessel tax 93,490.92 98,624.36
Others 8,388,201.91 2,617,183.46
Total 168,072,165.25 167,547,905.92
45. Financial Expenses
Unit: RMB
Items First half of 2020 First half of 2019
Interest expenses 117,407,704.24 102,317,635.94
Less：Interest income 306,973,066.18 300,644,265.63
Foreign exchange losses 2,749,318.63 52,456,277.58
Less﹕Capitalized specific loan interests and foreign
50,688,176.68 (5,817,000.63)
exchange differences on specific loan
Others 9,532,013.26 10,109,924.22
Total (227,972,206.73) (129,943,427.26)
46. Other income
Unit: RMB
Item First half of 2020 First half of 2019
VAT Rebates 784,320,169.82 632,531,286.98
Special subsidies 180,572,947.23 84,928,005.35
Tax relief 29,885,277.10 5,106,929.21
Total 994,778,394.15 722,566,221.54
139
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
47. Investment income
Unit: RMB
Item First half of 2020 First half of 2019
Long-term equity investment losses based on equity method (8,942,717.69) (4,215,155.62)
Investment income from disposal of held-for-trading financial assets 9,162,427.25 8,082,291.28
Investment income from other non-current financial assets during the
150,000,000.00 17,357,220.31
holding period
Total 150,219,709.56 21,224,355.97
48. Profits (losses) from changes in fair values
Unit: RMB
Sources of gains/losses from changes in fair values First half of 2020 First half of 2019
Held-for-trading financial assets 849,343.33 586,934.12
Including: gains on the changes in fair value of derivative
financial instruments
849,343.33 586,934.12
Gains (losses) from changes in fair value of other non-current
financial assets
(13,017,332.26) 2,153,238.50
Held-for-trading financial liabilities (8,268,448.03) (873,778.16)
Including: losses on the changes in fair value of derivative
financial instruments
(8,268,448.03) (873,778.16)
Total (20,436,436.96) 1,866,394.46
49. Credit impairment loss
Unit: RMB
Items First half of 2020 First half of 2019
Credit bad debt losses of accounts receivable (124,133,185.36) (115,422,011.62)
Gains (losses) on credit bad debt of other receivables (10,010,654.15) 39,530,792.03
Credit bad debt losses of long-term receivable (18,628,630.26) (58,635,212.98)
Total (152,772,469.77) (134,526,432.57)
50. Impairment losses of assets
Unit: RMB
Items First half of 2020 First half of 2019
Losses on inventory devaluation (165,394,158.33) (80,143,742.65)
Total (165,394,158.33) (80,143,742.65)
140
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
51. Non-operating income
Unit: RMB
The amount booked into current
Item First half of 2020 First half of 2019 period non-recurring profits and
looses
Special subsidies 5,094,743.17 471,298.57 5,094,743.17
Fines and confiscations 21,590,256.57 18,790,241.63 21,590,256.57
Tax refunds - 5,049.70 -
Others 5,036,207.34 19,040,488.70 5,036,207.34
Total 31,721,207.08 38,307,078.60 31,721,207.08
52. Non-operating expenses
Unit: RMB
The amount booked into current period
Item First half of 2020 First half of 2019
non-recurring profits and looses
Local water conservancy construction
572,889.30 326,266.15 -
fund
Others 6,805,876.26 8,087,915.76 6,805,876.26
Total 7,378,765.56 8,414,181.91 7,378,765.56
53. Income tax expenses
Unit: RMB
Item First half of 2020 First half of 2019
Income tax for the current reporting period 1,081,938,656.65 989,900,141.38
Deferred income tax expenses (129,343,124.91) (68,182,595.96)
Differences in filing and payment of income tax in previous
(43,385.77) 12,203,111.26
reporting years
Total 952,552,145.97 933,920,656.68
54. Notes to consolidated cash flow statement items
(1) Other cash receipts relating to operating activities
Unit: RMB
Item First half of 2020 First half of 2019
Interest income 306,973,066.18 300,644,265.63
Government subsidies 211,985,670.32 123,235,083.95
Others 188,964,355.88 160,612,732.43
Total 707,923,092.38 584,492,082.01
(2) Other cash payments relating to operating activities
Unit: RMB
Item First half of 2020 First half of 2019
Office expenses and business expenses 370,845,812.71 358,952,495.22
Advertising and Selling services 557,200,285.44 546,661,309.37
R&D expense 457,282,381.38 467,463,033.83
Shipping and transportation expense 322,420,666.54 348,864,517.36
Travelling expense 141,639,591.57 211,860,989.63
Deposits to restricted monetary funds - 56,039,040.44
Rental expense 101,520,803.75 105,938,464.34
Others 95,397,631.90 38,722,894.70
141
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Item First half of 2020 First half of 2019
Total 2,046,307,173.29 2,134,502,744.89
(3) Other cash receipts relating to investing activities
Unit: RMB
Item First half of 2020 First half of 2019
Receipts of financing lease payments 14,990,732.87 -
Total 14,990,732.87 -
(4) Other cash payments relating to financing activities
Unit: RMB
Item First half of 2020 First half of 2019
Repurchase of restricted shares - 31,290,856.75
The consideration paid for the acquisition of minority
64,290,000.00 -
shareholders' equity
Total 64,290,000.00 31,290,856.75
55. Supplementary information about cash flow statement
(1) Supplementary information about cash flow statement
Unit: RMB
Supplementary information First half of 2020 First half of 2019
1. Reconciliation of net profit to cash flows from operating activities:
Net profit 4,666,871,541.00 4,223,761,290.19
Add: Impairment of assets 165,394,158.33 80,143,742.65
Provision for credit impairment losses 152,772,469.77 134,526,432.57
Fixed assets depreciation 367,971,970.82 269,340,120.34
Amortization of intangible assets 77,059,953.77 40,228,458.41
Long-term deferred expenses amortization 19,788,072.87 6,022,357.25
Gains on disposal of fixed assets, intangible assets and other
(21,554.99) (810,043.90)
long-term assets
Losses of retirement of fixed assets, intangible assets and other
1,112,772.90 4,464,360.56
long-term assets
Losses (Gains) from changes in fair value 20,436,436.96 (1,866,394.46)
Financial expenses 64,849,445.01 157,920,883.55
Investment income (150,219,709.56) (21,224,355.97)
Share-based payment based on equity settlement 481,168,915.75 250,128,589.34
Changes in other currency funds 89,281,783.26 (56,039,040.44)
Increase in deferred income tax assets (172,723,276.65) (68,182,595.96)
Increase in deferred income tax liabilities 43,380,151.74 -
Increase in inventories (107,946,257.22) (2,953,673,953.50)
Increase in operating receivables (355,309,356.48) (2,693,537,605.46)
Increase (decrease) in operating payables (5,320,219,156.63) 196,409,532.04
Increase in deferred income 26,317,979.92 1,324,429.61
Net cash flows from operating activities 69,966,340.57 (431,063,793.18)
2. Significant investing and financing activities not involving cash
receipts and payments:
3. Net changes in cash and cash equivalents:
Ending balance of cash 21,623,506,957.49 21,261,201,514.71
142
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Supplementary information First half of 2020 First half of 2019
Less: Opening balance of cash 26,515,668,008.40 26,031,011,733.89
Add: Ending balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net decrease in cash and cash equivalents (4,892,161,050.91) (4,769,810,219.18)
(2) Constituents of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
Cash 21,623,506,957.49 26,515,668,008.40
Including: Cash on hand 380,232.41 557,429.68
Bank deposit for payment at any time 21,609,880,009.7 26,447,508,433.91
Other monetary capital for payment at any time 13,246,715.38 67,602,144.81
Cash equivalents - -
Closing balance of cash and cash equivalents 21,623,506,957.49 26,515,668,008.40
Among the total balance of RMB 480,245,843.50 of the other monetary fund(s) at the end of the reporting period
(December 31st 2019: RMB 623,883,056.19), RMB 466,999,128.12 are various guarantee deposits and other restricted
funds, etc. (December 31st 2019: RMB 556,280,911.38), not cash and cash equivalents.
56. Assets with restriction in ownership or use rights
Unit: RMB
Book value at the end of the current
Item Cause of restriction
reporting period
Monetary fund(s) 466,999,128.12 Various guarantee deposits and other restricted funds
Notes receivable 326,970,323.42 Endorsed to suppliers
Notes receivable 2,606,950.00 Pledged for issuing bank acceptance bills
Receivables for financing 90,566,739.34 Pledged for issuing bank acceptance bill
Accounts receivable 4,749,676.59 Pledged for short-term borrowings
Fixed assets 53,502,842.70 Sale and leaseback of fixed assets
Long-term receivables 1,158,287,191.19 Pledged for long-term borrowings
Total 2,103,682,851.36
57. Monetary items of foreign currencies
(1) foreign currencies
Unit: RMB
Balance in foreign currency at Exchange rate for Balance of RMB converted at
Item
the end of the reporting period conversion the end of the reporting period
Monetary funds
Including: USD 840,956,677.16 7.0795 5,953,552,795.94
EUR 48,567,036.11 7.9610 386,642,174.46
GBP 283,167.09 8.7144 2,467,631.25
Accounts receivable
Including: USD 316,977,846.51 7.0795 2,244,044,664.37
EUR 51,518,042.75 7.9610 410,135,138.37
143
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Balance in foreign currency at Exchange rate for Balance of RMB converted at
Item
the end of the reporting period conversion the end of the reporting period
Short-term borrowing
Including: GBP 9,577,501.93 8.7144 83,462,182.78
Accounts Payable
Including: USD 139,110,479.64 7.0795 984,832,640.60
Non-current liabilities due within
one year
Including: EUR 1,206,111.11 7.9610 9,601,850.55
Long-term borrowings
Including: EUR 400,000,000.00 7.9610 3,184,400,000.00
(2) Details of Overseas Operational Entities
Main overseas
Recording
Name of overseas subsidiaries operational Basis of selection
Currency
office
Hongkong
HDT International Ltd. HKD Selection based on local economic environment
China
Hikvision Europe BV Netherlands USD Selection based on local economic environment
Prama Hikvision Indian Private Limited India INR Selection based on local economic environment
Hikvision UK Limited UK GBP Selection based on local economic environment
Hikvision Italy (S.R.L.) Italy EUR Selection based on local economic environment
Hongkong
Hikvision International Co., Limited USD Selection based on local economic environment
China
Hikvision Australia PTY Ltd. Australia AUD Selection based on local economic environment
Hikvision Spain, S.L. Spain EUR Selection based on local economic environment
Hikvision France SAS France EUR Selection based on local economic environment
Hikvision Singapore Pte. Ltd Singapore SGD Selection based on local economic environment
Hikvision South Africa (Pty) Ltd. South Africa ZAR Selection based on local economic environment
Hikvision FZE Dubai USD Selection based on local economic environment
Hikvision Poland Spolka Z ograniczona
Poland PLN Selection based on local economic environment
Odpowiedzialnoscia.
Hikivision do Brasil Comercio de Equipamentos de
Brazil BRL Selection based on local economic environment
Segurana Ltda.
Hikvision LLC Russia RUB Selection based on local economic environment
EZVIZ Inc. USA USD Selection based on local economic environment
Cooperative Hikvision Europe U.A. Netherlands USD Selection based on local economic environment
Hikvision Korea Limited Korea KRW Selection based on local economic environment
Hikvision Colombia SAS Columbia COP Selection based on local economic environment
Hikvision Kazakhstan limited liability partnership Kazakhstan KZT Selection based on local economic environment
Pyronix Ltd UK GBP Selection based on local economic environment
Microwave Solutions Limited UK GBP Selection based on local economic environment
Secure Holdings limited UK GBP Selection based on local economic environment
Hikvision Turkey Technology And Security
Turkey TRY Selection based on local economic environment
Systems Commerce Corporation
ZAO Hikvision Russia RUB Selection based on local economic environment
Hikvision Hungary Limited Hungary HUF Selection based on local economic environment
Hikvision New Zealand Limited New Zealand NZD Selection based on local economic environment
Hikvision Czech s.r.o. Czech CZK Selection based on local economic environment
144
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Main overseas
Recording
Name of overseas subsidiaries operational Basis of selection
Currency
office
Hikvision Deutschland GmbH Germany EUR Selection based on local economic environment
Hikvision Kenya (Pty) Ltd Kenya KES Selection based on local economic environment
LLC Hikvision Tashkent Uzbekistan UZS Selection based on local economic environment
Hikvision (Malaysia) SDN. BHD Malaysia MYR Selection based on local economic environment
Hikvision USA,Inc. USA USD Selection based on local economic environment
Hikvision Canada INC. Canada CAD Selection based on local economic environment
Hikvision Mexico S.A.de C.V. Mexico MXN Selection based on local economic environment
Hikvision Panama Commercial S.A. Panama USD Selection based on local economic environment
Hikvision Pakistan (SMC-Private) Limited Pakistan PKR Selection based on local economic environment
Hikvision Peru Closed Stock Company Peru PEN Selection based on local economic environment
Hikvision Technology Israel Ltd. Israel ILS Selection based on local economic environment
Hikvision Central America S.A. Panama USD Selection based on local economic environment
Hikvision Technology Egypt JSC Egypt EGP Selection based on local economic environment
PT. Hikvision Technology Indonesia Indonesia IDR Selection based on local economic environment
Hikvision Technologies S.R.L., Romania RON Selection based on local economic environment
Hikvision IOT (Thailand) CO.,LTD. Thiland THB Selection based on local economic environment
Hikvision West Africa Limited Nigeria NGN Selection based on local economic environment
Ezviz International Limited Honkong China HKD Selection based on local economic environment
Hikvision Azerbaijan Limited Liability Azerbaijan AZN Selection based on local economic environment
Hikvision Japan K.K. Japan JPY Selection based on local economic environment
Hikvision Argentina S.R.L. Argentina ARS Selection based on local economic environment
Hikvision Morocco LLC Morocco MAD Selection based on local economic environment
58. Government Subsidies
(1) Categories
Unit: RMB
Amount booked in
Category Amount Financial Report Items
current profit and loss
VAT Rebate 784,320,169.82 Other Income 784,320,169.82
Special subsidies 438,325,954.62
Deferred income / Other income/ Non-
Including: other special subsidies 296,244,026.17 184,458,225.40
operating income
core electronic devices,
high-end universal chip
62,827,863.01 Deferred income / Other income -
and basic software
product projects
Chongqing Manufacture
Base construction 79,254,065.44 Deferred income / Other income 1,209,465.00
subsidies
Tax Refund/Reduction 29,885,277.10 Other income/ Non-operating income 29,885,277.10
Total 1,252,531,401.54 999,873,137.32
(2) There was no refund of government subsidies during the current reporting period.
145
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
VI. Changes in consolidation scope
1. Changes of consolidation scope due to other causes
The subsidiaries newly established and incorporated in the consolidation scope during the current reporting period as follows:
Ratio of
Time of Amount of contribution of
Company Name Registered capital contribution
establishment the Group
(%)
Hangzhou Rayin Technology Co., Ltd.
January 2020 RMB 100 mn RMB 60 mn 60
(Note 1)
Hikvision Morocco LLC (Note 2) March 2020 MAD 1,800,000 MAD 1,800,000 100
Note 1: At the end of the reporting period, the actual paid-up capital of Hangzhou Rayin Technology Co., Ltd. was RMB
100,000,000.00, among them, RMB 60,000,000.00 was paid by the Group and RMB 40,000,000.00 was invested by
minority shareholder of Hangzhou Hikvision Equity Investment Partnership (Limited Partnership)
Note 2: At the end of the reporting period, Hikvision Morocco LLC has not yet completed the paid-in capital, so there is
no paid-in capital.
None of the subsidiaries was cancelled in the current reporting period.
VII. Interest in other entities
1. Equity in subsidiaries
(1) Composition of the corporate group
Shareholding
Location of Place of Acquisition
Name Nature of business ratio (%)
operation registration Method
Direct Indirect
System integration,
Hangzhou Hikvision System Technology Hangzhou, 100.00 -
Hangzhou Technology Establishment
Co., Ltd. Zhejiang
development
Hangzhou Hikvision Technology Co., Hangzhou, 100.00 -
Hangzhou manufacture Establishment
Ltd. Zhejiang
Hangzhou Hikvision Security Equipment Hangzhou, 100.00 -
Hangzhou Finance lease Establishment
Leasing Services Co., Ltd. Zhejiang
Chongqing Hikvision System Technology 100.00 -
Chongqing Chongqing System integration Establishment
Co., Ltd.
Hikvision USA, Inc. USA Los Angeles Sales 100.00 - Establishment
Hong Kong Hong Kong
HDT International Ltd. Sales 95.00 5.00 Establishment
China China
Business
combination
not involving
Prama Hikvision Indian Private Limited India Mumbai Sales 58.00 -
enterprises
under common
control
Hikvision Europe BV Europe Amsterdam Sales - 100.00 Establishment
Hikvision FZE Dubai Dubai Sales 100.00 - Establishment
Hikvision Singapore Pte. Ltd Singapore Singapore Sales 100.00 - Establishment
Chongqing Hikvision Technology Co., 100.00
Chongqing Chongqing Manufacture - Establishment
Ltd.
Hangzhou Fuyang Hik Baotai Security Hangzhou, 51.00
Hangzhou Construction - Establishment
Technology Services Co., Ltd. (Note 1) Zhejiang
South
Hikvision South Africa (Pty) Co., Ltd. South Africa Sales 100.00 - Establishment
Africa
Hikvision Italy S.R.L. Italy Milan Sales - 100.00 Establishment
Hikvision do Brasil Comercio de Brazil Brazil Sales 95.00 5.00 Establishment
146
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Shareholding
Location of Place of Acquisition
Name Nature of business ratio (%)
operation registration Method
Direct Indirect
Equipamentos de Segurana Ltda.
Hikvision Australia PTY Co., Ltd. Australia Australia Sales 100.00 - Establishment
Hong Kong Hong Kong
Hikvision International Co., Limited Sales 100.00 - Establishment
China China
Hikvision France SAS France France Sales - 100.00 Establishment
Hikvision Spain,S.L. Spain Spain Sales - 100.00 Establishment
Business
combination
Shanghai Goldway Intelligent Traffic 100.00 - not involving
Shanghai Shanghai Manufacture
System Co., Ltd. enterprises
under common
control
Business
combination
not involving
ZAO Hikvision Russia St. Peterburg Sales - 100.00
enterprises
under common
control
Acquisition of
Henan Hua’an Intelligence Zhengzhou
Zhengzhou Construction 93.86 - minority
Development Co., Ltd. (Note 2) Henan
shareholders
Acquisition of
Henan Hua’an Security Services Co., Ltd. Zhengzhou
Zhengzhou Services - 84.47 minority
(Note 2) Henan
shareholders
Business
combination
100.00 - not involving
Hundure Technology (Shanghai) Co., Ltd. Shanghai Shanghai Manufacture
enterprises
under common
control
Hikvision UK Limited UK UK Sales - 100.00 Establishment
Hikvision Poland Spolka Z Ograniczona
Poland Poland Sales - 100.00 Establishment
Odpowiedzialnoscia
Hangzhou Hikvision Electronics Co., Ltd. Hangzhou
Hangzhou Manufacture 71.30 - Establishment
（Note 3） Zhejiang
Netherland
Cooperative Hikvision Europe U.A. Netherlands Sales 99.00 1.00 Establishment
s
Hikvision Canada Inc. Canada Canada Sales 100.00 - Establishment
Hikvision LLC Moscow Moscow Sales 100.00 - Establishment
Hikvision Korea Limited Korea Korea Sales 100.00 - Establishment
Hangzhou Technology 60.00
Hangzhou EZVIZ Network Co., Ltd. Hangzhou - Establishment
Zhejiang development
EZVIZ Inc. USA Los Angeles Sales - 60.00 Establishment
Business
combination
Hangzhou Haikang Zhicheng Investment Hangzhou - not involving
Hangzhou System integration 80.00
Development Ltd Zhejiang enterprises
under common
control
Hangzhou Technology
Hangzhou Hikrobot Technology Co., Ltd. Hangzhou 60.00 - Establishment
Zhejiang development
Hangzhou Hikvision Investment Hangzhou Investment 100.00
Hangzhou - Establishment
Management Co., Ltd. Zhejiang Management
Hangzhou Technology 60.00
Hangzhou HikAuto Technology Co., Ltd. Hangzhou - Establishment
Zhejiang development
Hangzhou Hikvision Communication Hangzhou Technology 70.00
Hangzhou - Establishment
Technology Co., Ltd. Zhejiang development
Hangzhou Hikmicro Sensing Technology Hangzhou Technology 60.00
Hangzhou - Establishment
Co., Ltd. Zhejiang development
147
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Shareholding
Location of Place of Acquisition
Name Nature of business ratio (%)
operation registration Method
Direct Indirect
Hikvision Turkey Technology And
Turkey Istanbul Sales 100.00 - Establishment
Security Systems Commerce Corporation
Hikvision Colombia SAS Columbia Santa Fe Bogota Sales 100.00 - Establishment
Hikvision Kazakhstan limited liability
Kazakhstan Astana Sales 100.00 - Establishment
partnership
Business
combination
100.00 not involving
Secure Holding Limited British Sheffield Manufacture -
enterprises
under common
control
Business
combination
100.00 not involving
Pyronix Limited British Sheffield Manufacture -
enterprises
under common
control
Business
combination
100.00 not involving
Microwave Solutions Limited British Sheffield Manufacture -
enterprises
under common
control
Hikvision Hungary Limited Hungary Hungary Sales - 100.00 Establishment
New
Hikvision New Zealand Limited Auckland Sales - 100.00 Establishment
Zealand
Urumqi HaiShi Xin’An Electronic Urumqi,
Urumqi Construction - 90.00 Establishment
Technology Co., Ltd. Xinjiang
Business
combination
Hangzhou Ximu Intelligent Technology Hangzhou,
Hangzhou Manufacture - 60.00 involving
Co., Ltd. Zhejiang
enterprises under
common control
LLC Hikvision Tashkent Uzbekistan Tashkent Sales 100.00 - Establishment
Hikvision Kenya (Pty) Ltd Kenya Kenya Sales - 100.00 Establishment
Hangzhou, Technology
Hangzhou HikAuto Software Co., Ltd. Hangzhou - 60.00 Establishment
Zhejiang Development
Hangzhou, Technology
Hangzhou Intelligent Technology Co., Ltd. Hangzhou - 60.00 Establishment
Zhejiang Development
Chengdu Hikvision Digital Technology Chengdu Technology -
Chengdu 100.00 Establishment
Co., Ltd. Sichuan development
MoYuHaiShi Electronic Technology Co., Hetian 85.00
Hetian Construction - Establishment
Ltd. Xinjiang
Hangzhou Technology 60.00
Hangzhou EZVIZ Software Co., Ltd. Hangzhou - Establishment
Zhejiang development
PiShan HaiShi YongAn Electronic Hetian 90.00
Hetian System integration - Establishment
Technology Co., Ltd. Xinjiang
Acquisition of
Henan Haikang Hua’an BaoQuan Zhengzhou 93.86 -
Zhengzhou Construction minority
Electronics Co., Ltd. (Note 2) Henan
shareholders
Hikvision Czech s.r.o. Czech Czech Sales - 100.00 Establishment
Hikvision (Malaysia) SDN. BHD Malaysia Malaysia Sales - 100.00 Establishment
Hikvision Deutschland GmbH Germany Germany Sales - 100.00 Establishment
148
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Shareholding
Location of Place of Acquisition
Name Nature of business ratio (%)
operation registration Method
Direct Indirect
Hikvision Xi’an Xueliang Construction Xi’an Xi’an Shanxi Construction - 99.00 Establishment
Project Management Co., Ltd.
Luo Pu District HaiShi Ding Xin Hetian
Hetian System integration - 90.00 Establishment
Electronic Technology Co., Ltd. Xinjiang
Yu Tian HaiShi Mei Tian Electronic Hetian
Hetian System integration - 98.00 Establishment
Technology Co., Ltd. Xinjiang
Xi’An Hikvision Digital Technology Co., Technology
Xi’An Xi’an Shanxi 100.00 - Establishment
Ltd. development
Technology
Wuhan Hikvision Technology Co., Ltd. Wuhan Wuhan Hubei 100.00 - Establishment
development
Wuhan Hikvision Science and
Wuhan Wuhan Hubei Sales 100.00 - Establishment
Technology Co., Ltd.
Wuhan Hiksafety Technology Co., Ltd. Establishment
Wuhan Wuhan Hubei Sales - 60.00
(Note 4)
Hainan Hikvision System Technology Lingshui Establishment
Hainan System integration 100.00 -
Co., Ltd. Hainan
Hangzhou Hikmed Imaging Technology Hangzhou, Technology
Hangzhou 60.00 - Establishment
Co., Ltd. Zhejiang development
Hikvision Mexico S.A.de C.V. Mexico Mexico Sales - 100.00 Establishment
Guizhou Hikvision Transportation Big Guiyang, Technology
Guiyang 55.00 - Establishment
Data Co., Ltd. Guizhou development
Xinjiang CET Yihai Information Urumqi,
Urumqi System integration 60.00 - Establishment
Technology Co., Ltd. Xinjiang
Hikvision Panama Commercial S.A Panama Panama Sales - 100.00 Establishment
Hikvision Pakistan (SMC-Private)
Pakistan Pakistan Sales - 100.00 Establishment
Limited
Hikvision Peru Closed Stock Company Peru Peru Sales 95.00 5.00 Establishment
Hikvision Technology Israel Co., Ltd. Israel Israel Sales - 100.00 Establishment
Nanjing Hikvision Digital Technology Nanjing, Establishment
Nanjing Sales 100.00 -
Co., Ltd. Jiangsu
Shijiazhuang Hikvision Technology Co., Shijiazhuang Technology
Shijiazhuang 100.00 - Establishment
Ltd. Hebei development
Zhengzhou Hikvision Digital Technology Zhengzhou Sales
Zhengzhou 100.00 - Establishment
Co., Ltd. Henan
Hikvision Central America S.A. Panama Panama Sales - 100.00 Establishment
Hikvision West Africa Limited Nigeria Nigeria Sales 94.00 6.00 Establishment
Hikvision Technology Egypt JSC Egypt Egypt Sales - 100.00 Establishment
Business merger
Hangzhou
Hangzhou EZVIZ Technology Co., Ltd. Hangzhou Sales - 60.00 under the common
Zhejiang
control
Business merger
not involving
Hangzhou Kuangxin Technology Co., Hangzhou Technology
Hangzhou 80.00 - enterprises under
Ltd. Zhejiang development
the common
control
Hikvision Digital Technology (Shanghai) Establishment
Shanghai Shanghai R&D, sales 100.00 -
Co., Ltd.
Nanchang Hikvision Digital Technology Nanchang Technology Establishment
Nanchang 100.00 -
Co., Ltd. Jiangxi development
Zhejiang Hiksafety Technology Co., Ltd. Jiangshan Technology Establishment
Jiangshan - 60.00
(Note 4) Zhejiang development
Zhenping County Haikang Juxin Digital Zhenping Establishment
Zhenping System integration - 90.00
Technology Co., Ltd. Henan
Hefei Hikvision Digital Technology Co., Hefei Technology Establishment
Hefei 100.00 -
Ltd. Anhui development
Tianjin Hikvision Information Technology Establishment
Tianjin Tianjin 100.00 -
Technology Co., Ltd. development
149
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Shareholding
Location of Place of Acquisition
Name Nature of business ratio (%)
operation registration Method
Direct Indirect
Fuzhou Hikvision Digital Technology Fuzhou System integration Establishment
Fuzhou 100.00 -
Co., Ltd. Fujian
Anhui Hikvision Urban Operation Service Xuancheng
Anhui System integration - 100.00 Establishment
Co., Ltd. (Note 5) Anhui
Ningbo Haikang Parking System Ningbo Technology Establishment
Ningbo 70.00 -
Operation Co., Ltd. Zhejiang development
Guangzhou Hikvision Technology Co., Guangzhou Technology Establishment
Guangzhou 100.00 -
Ltd. Guangdong development
Hangzhou Hikfire Technology Co., Ltd. Hangzhou Technology Establishment
Hangzhou 60.00 -
(Note 4) Zhejiang development
PT. Hikvision Technology Indonesia Indonesia Indonesia Sales - 100.00 Establishment
Hongkong Sales Establishment
Ezviz International Limited Hongkong - 60.00
China
Hikvision Technologies S.R.L., Romania Romania Sales - 100.00 Establishment
Hikvision Azerbaijan Limited Liability Azerbaijan Azerbaijan Sales - 100.00 Establishment
Hikvision IOT (Thailand) CO.,LTD. Thailand Thailand Sales - 100.00 Establishment
Hikvision Japan K.K. Japan Japan Sales - 100.00 Establishment
Hikvision Argentina S.R.L. Argentina Argentina Sales 95.00 5.00 Establishment
Hangzhou HikStorage Technology Co., Hangzhou Technology Establishment
Hangzhou - 60.00
Ltd. Zhejiang development
Hangzhou Technology Establishment
Hangzhou Rayin Technology Co., Ltd. Hangzhou 60.00 -
Zhejiang development
Hikvision Morocco LLC Morocco Morocco Sales 100.00 - Establishment
Note 1: Hangzhou Fuyang HIK Baotai Security Technology Services Co., Ltd. is a subsidiary controlled by Hangzhou
System, who holds 51% equity interests. According to the Articles of Association of the Company, Hangzhou System
has a 50% dividend payout ratio in the said company (Fuyang Baotai).
Note 2: During the period, the Group acquired 42.86% of the minority interests in each of its subsidiaries i.e. Henan
Hua’an Baoquan Intelligence Development Co., Ltd. and Henan Haikang Hua’an Baoquan Electronics Co., Ltd.,
respectively, such that the shareholding ratios in the two companies were changed from 51% to 93.86%, and the
shareholding ratio in Henan Hua’an Security Services Co., Ltd., a subsidiary of Henan Hua’an Baoquan Intelligence
Development Co., Ltd., was changed from indirect 45.9% to 84.47%. For details, please refer to Note (VII) 2.
Note 3: The remaining 28.70% equity interests of Hangzhou Hikvision Electronics Co., Ltd. is held by China
Development Bank Fund. Please refer to Note (V) 32 for details.
Note 4: Wuhan Hikvision Fire Control Technology Co., Ltd. has been renamed to Wuhan Hiksafety Technology Co., Ltd.
(Wuhan Hiksafety) in 2020, while Zhejiang Hikvision Fire Control Technology Co., Ltd. has been renamed as Zhejiang
Hiksafety Technology Co., Ltd. (Zhejiang Hiksafety) in 2020. During the current reporting period, the Group carried out
the integration of the fire control businesses and transferred 100% of the equity of Wuhan Hiksafety and Zhejiang
Hiksafety to its holding subsidiary, Hangzhou Hikfire Technology Co., Ltd. (Hangzhou Hikfire), such that the shareholding
ratios in the two companies were changed from direct 100% to indirect 60%, respectively. For details, please refer to Note
(VII) 2.
Note 5: Ningguo Hikvision Urban Operation Service Co., Ltd. has been renamed as Anhui Hikvision Urban Operation
Service Co., Ltd. in 2020.
150
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
2. Transaction in which the share of owner’s equity in the subsidiaries has been changed and the subsidiaries
are still under control
(1) Description of changes in the share of owner’s equity in the subsidiaries
During the period, the Company entered into an equity transfer agreement with four shareholders (natural persons)
including Feng Jianwen to acquire 42.86% equity of Henan Hua’an Baoquan Intelligence Development Co., Ltd. (Hua’an
Baoquan Intelligence), and 42.86% equity of Henan Haikang Hua’an BaoQuan Electronics Co., Ltd. (Hua’an BaoQuan
Electronics) held in aggregate by four shareholders (natural persons) including Feng Jianwen at a consideration of RMB
30,859,200.00 and RMB 33,430,800.00, respectively. The Company’s shareholding ratios in the two companies were both
changed from 51% to 93.86%, and the shareholding ratio in Henan Hua’an Security Services Co., Ltd. (Hua’an Security
Services), a subsidiary of Hua’an Baoquan Intelligence, was changed from indirect 45.90% to 84.47%. As of June 30th
2020, the equity transfer payment has been made by the Company and the acquisition has been completed.
In April 2020, the Company entered into an equity transfer agreement with the holding subsidiary, Hangzhou Hikfire
Technology Co., Ltd. (Hangzhou Hikfire) to transfer 100.00% equity of Wuhan Hiksafety Technology Co., Ltd. (Wuhan
Hiksafety) and Zhejiang Hiksafety Technology Co., Ltd. (Zhejiang Hiksafety), at a consideration of RMB 0. 00Upon the
completion of the transfer, the Company’s shareholding ratios in Wuhan Hiksafety and Zhejiang Hiksafety were changed
to indirect 60.00%. As of June 30th 2020, the transfer has been completed.
In May 2020, the Company signed an asset group transfer agreement with Hangzhou Hikfire to transfer the asset group of
the Intelligent Fire Control Business Department at a consideration of RMB 49,770,000.00. As of June 30th 2020, the
transfer of the asset group has been completed.
(2) The impact of the transactions on minority shareholders' equity and the owner's equity attributable to the
parent company
Unit: RMB
Hua’an Baoquan Intelligence and its subsidiaries Hua’an Baoquan Electronics
Purchase cost
-Cash 30,859,200.00 33,430,800.00
Total purchase cost 30,859,200.00 33,430,800.00
Less: the difference of the subsidiary's net asset share
calculated according to the proportion of the acquired 26,501,971.03 4,771,674.12
equity
Of which: adjusted capital reserve 4,357,228.97 28,659,125.88
Unit: RMB
Intelligent Fire
Control Business
Wuhan Hiksafety Zhejiang Hiksafety
Department
Asset Group
Disposal consideration
-other receivables - - 49,770,000.00
Total disposal consideration - - 49,770,000.00
Less: the difference of the subsidiary's net assets
(liabilities) share calculated based on the proportion of (795.98) (2,379,712.83) 30,216,018.36
the disposed equity
Of which: adjusted capital reserve 795.98 2,379,712.83 19,553,981.64
3. Equity in joint ventures or associates
(1) Aggregated financial information of insignificant joint-ventures and associates
Unit：RMB
Closing balance / Amount for Opening balance / Amount for
first half of 2020 first half of 2019
Associates：
The aggregate carrying amount of investments in associates 189,435,480.23 188,845,321.49
151
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Closing balance / Amount for Opening balance / Amount for
first half of 2020 first half of 2019
The aggregate amount of the following items calculated based on the
Company’s equity share percentage of the associates
--Net losses and total comprehensive losses (11,409,841.26) (4,215,155.62)
Joint Ventures:
Total investment book value 330,887,123.57 63,320,000.00
The sum of the following items calculated according to the
shareholding ratio
- Net income and comprehensive income 2,467,123.57 -
The Group uses the equity method to account for the aforementioned associates and joint ventures.
VIII. Risks associated with financial instrument
The Group's principal financial instruments include cash and bank balances, other non-current financial assets, notes
receivable, accounts receivable, receivables for financing, some of the other receivables, long-term receivables,
borrowings, notes payable, accounts payable, other payables, other current liabilities, long-term payables, derivative
financial instruments, etc. Details of these financial instruments are set out in Note (V). Below are the risks associated
with such financial instruments and the risk management policies adopted by the Group to mitigate such risks. The
management of the Group manages and monitors such risk exposures to ensure such risks are contained within a prescribed
scope.
1. Classification of financial instruments
Unit: RMB
Ending balance of the current Ending balance of the prior year
Items
reporting period (on December 31st 2019)
Financial assets：
Measured at fair value through current profit and loss
Held –for-trading financial assets 853,125.46 181.76
Other non-current financial assets 296,580,935.18 312,398,267.44
Measured at fair value through other comprehensive income
Receivables for financing 1,183,573,810.59 1,257,385,053.02
Measured at amortized cost
Cash and bank balances 22,090,506,085.61 27,071,948,919.78
Notes receivable 810,252,938.16 973,236,789.02
Accounts receivable 21,449,479,247.87 21,307,927,200.28
Other receivable 473,375,214.98 491,776,194.41
Long-term receivalbes 1,576,950,814.85 1,382,536,761.22
Financial liabilities
Measured at fair value through current profit and loss
Held-for-trading financial liabilities 8,951,114.77 652,428.18
Measured at amortized cost
Short-term borrowings 4,447,276,972.89 2,640,082,485.15
Notes payable 1,222,676,114.77 1,239,584,016.70
Accounts payable 7,297,949,959.60 12,700,075,307.70
Other payables 1,912,704,151.68 1,568,744,599.94
Non-current liabilities due within one year 155,035,558.24 86,123,154.06
152
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Other current liabilities 1,813,013,618.43 913,534,538.26
Long-term debt 4,771,375,714.28 4,604,168,571.43
Long-term payables 40,625,618.86 50,181,416.72
Other non-current liabilities 1,234,739,326.10 1,234,739,326.10
The Group adopts sensitivity analysis techniques to analyze the possible effects of rational and probable changes in risk
variables to profit or loss for the period or to the interests of shareholders. Since risk variables seldom change on a stand-
alone basis, while the correlation between variables may have significant influence to the ultimate amount of change
effected by the change in a single risk variable, the analysis below is based on the assumption that the changes in each
variable occurred separately.
2. Objectives and policies of risk management
The Group engages in risk management with the aim of achieving an appropriate balance between risk and return, where
the negative effects of risks against the Group’s operating results are minimized, in order to maximize the benefits of
shareholders and other stakeholders. Based on such objective in risk management, the underlying strategy of the Group’s
risk management is to ascertain and analyze all types of risks exposures of the Group, establish appropriate risk tolerance
thresholds, carry out risk management procedures and perform risk monitoring on all kinds of risks in a timely and reliable
manner, thus containing risk exposures within a prescribed scope.
2.1 Market risks
2.1.1 Foreign exchange risks
Foreign exchange risks refer to the risk that losses will occur because of changes in foreign exchange rates. The Company
is primarily exposed to risks relating to the currencies such as USD and EUR. The Group’s subsidiaries in the mainland
of China whose procurement, sales and financing are denominated in RMB, USD and EUR, other principal activities are
settled in RMB. The Group’s subsidiaries in Hong Kong and outside China are principally engaged in procurement, sales,
financing and other major business activities in local currencies such as USD, EUR, GBP, RUB, and etc.
As of June 30th 2020, except for monetary items of foreign currencies set out in Note (V) 57, the Group mainly adopted
the functional currency of each of its subsidiary to present the balance of its assets and liabilities. The foreign exchange
risks arising from assets and liabilities denominated in USD and EUR (which has been converted into RMB) as follows
may generate significant impact on the operating results of the Group.
Unit: RMB
Assets Liabilities
Currencies
Closing balance Opening balance Closing balance Opening balance
USD 8,197,597,460.31 8,990,808,097.16 984,832,640.60 2,680,807,278.88
EUR 796,777,312.83 396,683,098.55 3,194,001,850.55 3,135,739,251.94
153
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
The Group has been paying close attention to the effect of fluctuation in exchange rate on the foreign exchange risks of
the Group, and has purchased various financial derivative instruments, such as forward foreign exchange contracts,
currency swaps, and foreign exchange options and etc., to mitigate the foreign exchange risk exposure.
Sensitivity analysis on exchange rate risk
With other variables unchanged, the exchange rate might float within a reasonable range, and has the following before-
tax effect on profit or loss and shareholders’ equity for the current period:
Unit: RMB
First half of 2020 First half of 2019
Change in foreign exchange rates Effect on shareholders’ Effect on
Effect on profit Effect on profit
equity shareholders’ equity
5% appreciation of USD against functional 360,638,240.99 360,638,240.99 211,535,093.49 211,535,093.49
currency
5% depreciation of USD against functional (360,638,240.99) (360,638,240.99) (211,535,093.49) (211,535,093.49)
currency
5% appreciation of EUR against functional (119,861,226.89) (119,861,226.89) (145,882,455.26) (145,882,455.26)
currency
5% depreciation of EUR against functional 119,861,226.89 119,861,226.89 145,882,455.26 145,882,455.26
currency
2.1.2. Interest rate risk
The interest rate risk of the Group mainly arises from interest-bearing debts such as long-term bank borrowings and short-
term bank borrowings. The Group exposes to cash flow interest rate risk arising from financial liabilities bearing variable
interest rate, and exposes to fair value interest rate risk arising from financial liabilities bearing fixed interest rate.
The Group determines the relative proportion of fixed interest rate contracts and variable interest rate contracts based on
prevailing market environment. As of June 30th 2020, the Group’s long-term interest-bearing debts bearing fixed interest
rates were mainly Euro-denominated borrowing contracts bearing fixed interest rate with an amount of RMB
3,184,400,000.00 (Note (V), 32) (December 31st 2019: RMB 3,126,200,000.00)
The headquarter finance department of the Group continuously monitors the level of interest rate of the Group. Rising
interest rates will increase the cost of newly incurred interest-bearing debts and the Group’s interest expenses on
outstanding interest-bearing debts with variable interest rates, and have a significant adverse impact on the financial
performance of the Group. The management will make adjustments on a timely basis based on the latest market conditions,
including arrangements for interest rate swaps to reduce interest rate risk. The Group did not have any interest rate swap
arrangement in the first half of 2020 and the year of 2019.
At the end of the current reporting period, the amount of borrowings of the Group bearing variable interest rate is not
significant, and the risk of changes in cash flow of financial instruments due to changes in interest rates is low. Therefore,
no interest rate sensitivity analysis is conducted.
154
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
2.1.3. Other price risks
The Group’s price risk mainly arises from investments in held-for-trading equity instruments and derivative financial
instruments. Held-for-trading equity instrument investments are all investments in unlisted held-for-trading equity
instruments.
The Group is exposed to price risk due to the holding of financial assets measured at fair value. The fair value of certain
financial instruments is determined by the general pricing model based on discounted future cash flow method or other
valuation techniques, while the valuation techniques are based on certain valuation assumptions. Therefore, the valuation
results are highly sensitive to valuation assumptions. However, at the end of the current reporting period, the amount of
investment in held-for-trading equity instruments and derivative financial instruments is not significant, and the risk
exposure due to changes in price of financial instruments as a result of change in valuation assumptions is low, accordingly,
no sensitivity analysis is conducted.
2.2 Credit Risk
As of June 30th 2020, the largest credit risk exposure that may result in financial losses of the Group is mainly due to the
loss of the Group’s financial assets arising from the failure of the counterparty to perform its obligations, including: cash
and bank balance (Note (V). 1), notes receivable (Note (5). 3), accounts receivable (Note (V). 4), receivables for financing
(Note (V). 5), other receivables (Note (V). 7), non-current assets due within one year (Note (V). 10), long-term receivables
(Note (V). 12), etc., and derivative financial assets that are not included in the scope of impairment assessment and are
measured at fair value through current profit or loss (Note (V). 2). As of the balance sheet date, the book value of the
Group’s financial assets represents its maximum credit risk exposure.
In order to reduce credit risk, the Group has formed a team to determine the credit limit, conduct credit approval, and
implement other monitoring procedures to ensure that necessary measures are taken to recover over-credit period debt. In
addition, the Group reviews the recovery of financial assets on each balance sheet date to ensure that sufficient credit loss
provisions are made for relevant financial assets. Therefore, the management of the Group believes that the credit risk
exposure of the Group has been reduced significantly.
The credit risk on cash and bank balances of the Group is low as they are deposited with banks with high credit ratings.
For accounts receivable and long-term receivables, the Group has put in place relevant policies to control credit risk
exposure. The Group assesses credit quality of customers and sets corresponding credit period based on the customer’s
financial status, the possibility of obtaining guarantees from third parties, credit history and other factors such as current
market conditions. The Group will regularly monitor the credit history of its customers. For customers with poor credit
history, the Group takes various measures, such as written payment reminders, shorten or cancel the credit period, to ensure
that the overall credit risk of the Group is maintained in a controllable range. For accounts receivable, the Group uses a
simplified method, that is, to measure the loss provision based on the amount equivalent to the expected credit loss for the
entire duration. For details of the relevant expected credit loss measurement, see (Note (V). 4). For long-term receivables,
the Group calculates the expected credit losses based on the expected credit loss rate in the next 12 months or the entire
duration based on the default risk exposure. For details of the related expected credit loss measurement, see (Note (V).
12).
The Group’s notes receivable and receivables for financing are mainly bank acceptance notes and commercial acceptance
notes with high credit ratings of the counterparties, which the Group does not consider to be subject to significant credit
risk and will not incur any material loss due to default by the counterparties.
For other receivables, the Group regularly monitors the debtor’s credit history. For debtors with poor credit history, the
Group takes various measures such as written payment reminders to ensure that the Group’s overall credit risk is
maintained in a controllable range. For other receivables, the Group calculates the expected credit loss based on the
expected credit loss ratio in the next 12 months or the entire duration based on the default risk exposure. For details of the
relevant expected credit loss measurement, see (Note (V). 7).
The Group’s risk exposure is distributed among multiple contractors and multiple customers, so the Group has no
significant credit concentration risk.
155
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
2.3. Liquidity risk
The Group maintains and monitors a level of cash and cash equivalents deemed adequate by the management to meet the
operation needs of the Group and to reduce the effect of cash flow movements when managing liquidity risk. The
management of the Group monitors the usage of bank borrowings, and ensures compliance with borrowing agreements.
According to the term to maturity of non-discounted and remaining contract obligations, the financial liabilities held by
the Group are analyzed as below:
Unit：RMB
June 30th 2020
Within one year 1-5 years More than five years Total
Non-derivative financial
liabilities
Short-term borrowings 4,525,013,895.06 - - 4,525,013,895.06
Notes payable 1,222,676,114.77 - - 1,222,676,114.77
Accounts payable 7,297,949,959.60 - - 7,297,949,959.60
Other payables 1,912,704,151.68 - - 1,912,704,151.68
Other current liabilities 1,820,830,082.55 - - 1,820,830,082.55
Other non-current liabilities - 1,234,739,326.10 - 1,234,739,326.10
Long-term debt (including those
213,723,739.03 4,181,705,960.60 1,018,616,196.30 5,414,045,895.93
due within one year)
Long-term payables (including
21,781,072.49 35,238,024.05 8,000,000.00 65,019,096.54
those due within one year)
Derivative financial liabilities
Forward foreign exchange
contracts- settled in the gross
amount
- Cash inflow 350,411,284.74 - - 350,411,284.74
- Cash outflow 359,362,399.51 - - 359,362,399.51
- Net cash outflow 8,951,114.77 - - 8,951,114.77
IX. Fair value disclosure
1. The financial assets and financial liabilities measured at fair value at the end of the reporting period
Unit：RMB
Closing fair value
Items
Level 1 Level 2 Level 3 Total
I. Continuous fair value measurement
(I) Financial assets measured at fair value through profit and loss
1. Held-for-trading Financial Assets
-- Derivative financial assets - 853,125.46 - 853,125.46
2. Other non-current financial assets - - 296,580,935.18 296,580,935.18
(II) Receivables for financing - 1,183,573,810.59 - 1,183,573,810.59
Total assets measured continuously at fair value - 1,184,426,936.05 296,580,935.18 1,481,007,871.23
(III) Financial liabilities measured at fair value through profit and loss
1. Held-for-trading Financial Liabilities
- Derivative financial liabilities - 8,951,114.77 - 8,951,114.77
Total liabilities measured continuously at fair value - 8,951,114.77 - 8,951,114.77
156
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
2. Information on the estimation technique and important parameters adopted as for continuous Level 2 fair
value measurement items
Unit: RMB
Fair value at
Estimation technique Inputs
June 30th 2020
Forward exchange rate
Forward Foreign Exchange
853,125.46 Discounted cash flow approach Discounted rate that reflects the credit risk of
Contracts (Assets)
counterparty
Forward exchange rate
Forward Foreign Exchange
(8,951,114.77) Discounted cash flow approach Discounted rate that reflects the credit risk of
Contracts (Liabilities)
counterparty
Discounted rate that reflects the credit risk of
Receivables for financing 1,183,573,810.59 Discounted cash flow approach
counterparty
3. The third level of fair value measurement item, the valuation techniques and important parameters used
Unit: RMB
Fair value at
Items Valuation techniques Inputs
June 30th 2020
Other non-current financial Comparable public companies’ PB (price/book
assets-- Investment in equity Market approach
296,580,935.18 value) ratio within the same industry
instruments of private /Income approach
companies /Future cash flows, Discount rate
4. The third level of fair value measurement item, adjustment information between the opening and closing
book value
Unit: RMB
Other non-current financial assets Amount
Book value on January 1st 2020 312,398,267.44
Increase in the current reporting period -
Decrease in the current reporting period (2,800,000.00)
Changes in fair value booked into profit and loss during the current reporting
(13,017,332.26)
period
Book value on June 30th 2020 296,580,935.18
The total amount included in profit or loss in the first half of 2020 includes unrealized losses of RMB 13,017,332.26 (June
30th 2019: unrealized gains of RMB 2,153,238.50) related to financial assets measured at fair value at the end of the
reporting period, and such gains or losses are included in the gains or losses from changes in fair value; The realized gains
of financial assets measured at fair value at the end of the period which were included in investment income in the current
reporting period was RMB 150,000,000.00 (June 30th 2019: RMB 17,357,220.31).
5. Items measured at continuous fair value. There were no transfers between levels for the current reporting
period. There was no estimation technique change for the current reporting period
6. Fair values of financial assets and financial liabilities that not measured at fair value
The Group’s management believes that the carrying amounts of financial assets and financial liabilities stated in current
assets and current liabilities in financial statements, which are not subsequently measured at fair values by the Group,
approximate to their respective fair values.
The Group's financial assets which are not subsequently measured at fair values by the Group include long-term
receivables, has insignificant difference between their book value and fair value.
The financial liabilities which are not subsequently measured at fair values by the Group include long-term borrowings,
long-term payables, and other non-current liabilities, has insignificant difference between their book value and fair
value.
157
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
X. Related parties and related-party transactions
1. Information on parent company of the Company
Percentage of voting
Shareholding ratio of
Place of Nature of rights of parent
Name Registered capital parent company in the
registration business company to the
Company (%)
Company (%)
China Electronics Technology
Hangzhou, Industrial
HIK Group Co., Ltd. RMB 660 million 38.88 38.88
Zhejiang investment
(CETHIK)
The ultimate controlling party of the Company is China Electronics Technology Group Co., Ltd. ("CETE").
2. Information on the subsidiaries of the Company
For details of the subsidiaries of the Company, see Note (VII).
3. Information on the joint ventures and associated companies of the Company
For details of the associates and joint ventures of the Company, see Note (V) 13.
Other joint ventures and associates that had related party transactions with the Group in the current reporting period, or in
the prior periods and formed balances are as follows:
Name of the associates or joint ventures Relationship with the Company
Wuhu Sensor Technology Co., Ltd. (Wuhu SensorTech) Associated company
Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries (Maxio Technology and
Associated company
its subsidiaries)
Zhiguang Hailian Big Data Technology Co., Ltd. (Zhiguang Hailian and its
Associated company
subsidiaries)
Sanmenxia Xiaoyun Vision Technology Co., Ltd. (Xiaoyun Vision Technology) Associated company
Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. (Haishi JiaAn) Associated company
Daishan Hailai Yunzhi Technology Co., Ltd. (Daishan Hailai) Joint venture
Zhejiang Haishi Huayue Digital Technology Co., Ltd. (Haishi Huayue) Joint venture
Xuzhou Kangbo Urban Operation Management Service Co., Ltd. (Xuzhou Kangbo) Joint venture
Qinghai Qingtang Big Data Co., Ltd. (Qinghai Qingtang) Associated company
4. Information on other related parties
Name Relationship
Major shareholder and director of the company that holds more
Gong Hongjia
than 5% of the share of the Company
Shanghai Fullhan Microelectronics Co., Ltd. (Shanghai Fullhan Micro) Gong Hongjia or his relative(s) serve(s) as the director(s)
Zhejiang Tuxun Technology Co.,Ltd. (Zhejiang Tuxun) The Group’s senior management serve(s) as director(s) of this
company (Note 1)
The Group’s senior management serve(s) as director(s) of this
Confirmware Technology(Hangzhou) Co., Ltd. (Hangzhou Confirmware)
company (Note 2)
Under common control of the ultimate controlling party of the
Subsidiaries of CETE (Note 3)
Company
Shenzhen Wanyu Security Service Technology Co., Ltd. (Shenzhen The Group’s senior management serve(s) as director(s) of this
Wanyu Security Service) company
Note 1: the senior management of the Group had left the post, and 2019 was one year after his departure, therefore,
Zhejiang Tuxun was still identified as a related party of the Group in 2019, and was no longer recognized as a realted party
of the Company in the current reporting period.
158
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Note 2: Due to the departure of the senior management of the Group, the current reporting period was within one year after
he/she left the position, therefore, Hangzhou Confirmware was still recognized as a related party of the Group in the current
reporting period.
Note 3: Subsidiaries of CETC, excluding Hikvision and its subsidiaries.
5. Related party transactions
(1) Related party transactions regarding sales and purchases of goods, provision of services and receiving services
Purchase of commodities / receiving of services:
Unit: RMB
Amount occurred in the first Amount occurred in the first half
Related party Transaction type
half of 2020 of 2019
Purchase of materials and
Subsidiaries of CETE 323,746,490.02 101,307,210.65
receiving of services
Purchase of materials and
Shanghai Fullhan Micro 118,628,840.93 142,526,819.64
receiving of services
Purchase of materials and
Maxio Technology and its subsidiaries 19,810,600.40 7,445,856.29
receiving of services
Purchase of materials and
Wuhu SensorTech 14,756,006.59 27,029,115.54
receiving of services
Purchase of materials and
Zhiguang Hailian and its subsidiaries 135,782.26 -
receiving of services
Total 477,077,720.20 278,309,002.12
Sales of commodities / rendering of services:
Unit: RMB
Amount occurred in the Amount occurred in the first
Related party Transaction content
first half of 2020 half of 2019
Sales of products and 101,516,082.64
Subsidiaries of CETE 259,100,324.49
rendering of services
Sales of products and
Daishan Hailai 10,415,978.76 -
rendering of services
Sales of products and
Haishi Jia’an 7,210,092.95 81,415.93
rendering of services
Sales of products and
Zhiguang Hailian and its subsidiaries 7,162,512.65 320,293.75
rendering of services
Sales of products and 788,831.51
Wuhu Sensor Tech 262,495.39
rendering of services
Sales of products and 684,022.41
Xuzhou Kangbo -
rendering of services
Sales of products and 654,410.58
Haishi Huayue -
rendering of services
Sales of products and 518,530.99
Xiaoyun Vision Technology 5,973,121.16
rendering of services
Sales of products and 297,876.12
Hangzhou Confirmware 23,854.33
rendering of services
Sales of products and 198,230.06
Shenzhen Wanyu Security Service -
rendering of services
Sales of products and 106,463.72
Maxio Technology and its subsidiaries -
rendering of services
Sales of products and 3,008.85
Qinghai Qingtang -
rendering of services
Sales of products and Not applicable
Zhejiang Tuxun 23,144.73
rendering of services
Total 129,556,041.24 265,784,649.78
159
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Statement of capital deposits:
Unit: RMB
Balance at the
Amount occurred
Content of related Amount occurred in end of the
Related Party in the first half of Opening Balance
party transaction the first half of 2020 current reporting
2019
period
Subsidiaries of CETE Deposit into fixed
- 4,000,000,000.00 - 4,000,000,000.00
(Note) deposits
Total - 4,000,000,000.00 - 4,000,000,000.00
Note: the fixed deposits and call deposits that the Group deposited into China Electronic Technology Finance Co., Ltd.
The above transactions are executed at market prices.
(2) Guaranteed by the related party
As required by the project owner, China Electronics Technology Group Co., Ltd. has provided a joint guarantee to
responsibility and duties of construction projects of “Safe Chongqing, Emergency Control System Digital Construction
Project”, including 41 districts and counties, signed by the Group’s subsidiary Chongqing Hikvision System Technology
Ltd. (Chongqing System) Meanwhile, the Company, Hikvision, provides a counter guarantee to China Electronics
Technology Group Co., Ltd.
(3) Other related party transactions
Pursuant to resolution of the Company’s 7th meeting of the fourth session of the Board of Directors held on December 3rd
2018, the Group’s subsidiary Hangzhou Hikmicro signed a financial leasing contract with a subordinate company of CETC,
HikMicro will carry out sale and leaseback business of part of its self-owned equipment with the CETC’s subordinate
company. The new financing amount in 2019 was RMB 70 million, with lease term of 48 months, and the annual lease
rate is 3.8%. In the first half of 2020, the relevant rent paid was RMB 7,211,993.57.
6. Receivables from related parties and payables to related parties
(1) Receivables from related parties
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Bad debt provision Carrying balance Bad debt provision
Accounts receivable Subsidiaries of CETE 705,277,676.44 92,470,970.59 761,252,308.57 54,524,384.59
Accounts receivable Xiaoyun Vision
7,482,517.21 316,510.48 6,896,577.22 382,760.04
Technology
Accounts receivable Wuhu Sensor Tech 4,682,120.12 198,053.68 4,486,674.99 249,010.46
Accounts receivable Zhiguang Hailian and its
4,512,230.97 27,541.51 4,270,910.00 47,006.81
subsidiaries
Accounts receivable Haishi JiaAn 8,326,716.84 112,039.28 541,468.80 21,296.76
Accounts receivable Maxio Technology and
100,510.00 2,023.10 158,025.60 1,295.81
its subsidiaries
Accounts receivable Zhejiang Tuxun Not Applicable 130,838.99 1,072.88
Accounts receivable Hangzhou Confirmware 136,600.00 833.26 - -
Accounts receivable Daishan Hailai 9,688,415.97 209,802.43 - -
Accounts receivable Haishi Huayue 739,484.00 31,280.17 - -
Total 740,946,271.55 93,369,054.50 777,736,804.17 55,226,827.35
Subsidiaries of CETE
Notes receivable 122,889,807.70 - 162,553,909.93 -
(Note)
Zhiguang Hailian and its
Notes receivable 2,137,744.00 - 244,719.00 -
subsidiaries
Total 125,027,551.70 - 162,798,628.93 -
160
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Closing balance Opening balance
Item Related Party
Carrying balance Bad debt provision Carrying balance Bad debt provision
Receivables for
Subsidiaries of CETE 6,513,782.05 - - -
financing
Total 6,513,782.05 - - -
Other receivables Wuhu Sensor Tech 84,649.61 372.46 - -
Total 84,649.61 372.46 - -
Long-term
Subsidiaries of CETE 74,262,466.35 854,427.29 20,000,000.00 164,000.00
receivables
Total 74,262,466.35 854,427.29 20,000,000.00 164,000.00
Prepayments Subsidiaries of CETE 917,221.82 - 1,399,872.38 -
Total 917,221.82 1,399,872.38 -
Note: Among them, the RMB 20,877,611.05 (2019: RMB 32,697,400.57) notes receivable are the acceptance bills of
which the drawer is the related party, and the former endorsers are unrelated third parties.
(2) Payables to related parties
Unit: RMB
Item Related Party Closing balance Opening balance
Accounts payable Subsidiaries of CETE 167,179,676.71 226,498,160.40
Accounts payable Shanghai Fullhan Micro 11,528,375.54 143,284,053.29
Accounts payable Maxio Technology and its
70,125.02 12,763,683.98
subsidiaries
Accounts payable Wuhu Sensor Tech 1,985,947.03 9,203,484.14
Total 180,764,124.30 391,749,381.81
Notes Payable Subsidiaries of CETE 15,764,013.94 13,054,828.27
Notes Payable Shanghai Fullhan Micro 21,535,491.00 7,110,446.00
Total 37,299,504.94 20,165,274.27
Contract liabilities Subsidiaries of CETE 5,487,710.31 7,172,635.75
Contract liabilities Xuzhou Kangbo 33,129.88 -
Total 5,520,840.19 7,172,635.75
Other payables Subsidiaries of CETE 54,819,638.40 56,022,589.40
Other payables Shanghai Fullhan Micro 100,000.00 100,000.00
Other payables Wuhu Sensor Tech 51,200.00 51,200.00
Total 54,970,838.40 56,173,789.40
Non-current liabilities due within
Subsidiaries of CETE 18,100,154.66 14,601,376.90
one year
Long-term payables Subsidiaries of CETE 32,447,444.95 41,213,376.82
Total 50,547,599.61 55,814,753.72
XI. Share-based payments
1. Overview of share-based payments
According to the Approval of the Implementation of the Restrictive Share Incentive Scheme of Hangzhou Hikvision Digital
Technology Co., Ltd. (关于杭州海康威视数字技术股份有限公司实施限制性股票激励计划的批复) (Guo Zi Fen Pei
161
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
[2012] No. 426) issued by the State-owned Assets Supervision and Administration Commission of the State Council and
the Opinion the Restrictive Share Incentive Scheme of Hangzhou Hikvision Digital Technology Co., Ltd. (关于杭州海康
威视数字技术股份有限公司限制性股票激励计划的意见) (Shang Shi Bu Han [2012] No. 353) issued by China
Securities Regulatory Commission, the Company convened the ninth meeting of the second session of the Board of
Directors on July 25th 2012 and the first extraordinary general meeting for 2012 on August 13th 2012, whereat the Proposal
Relating to the Restrictive Share Scheme (Amendments to the Draft) of the Company and Highlights was reviewed and
passed. The purpose of the Share Incentive Scheme is to: further improve the Company’s governance structure to establish
a good and balanced value allocation system; establish a profit-sharing and restriction mechanism among shareholders,
the Company and its employees, so as to provide shareholders with sustainable return; fully mobilize the positivity of core
employees to support the Company in realizing its strategies and long-term sustainable development; attract and retain
core employees to ensure the Company’s long-term development.
The Scheme shall be effective for a term of 10 years commencing from the date of approval by general meeting of the
Company, during which the Company may grant restricted shares to grantees under the Scheme. In principle, each grant
should be at an interval of two years. After the expiry of the Scheme, no restricted shares could be granted to grantees
under the Scheme. However, all the provisions of the Scheme remain valid to the restricted shares granted under the
Scheme.
The total number of subject Shares related to the Restricted Shares granted under the Scheme (excluding lapsed restricted
shares) and the total number of subject Shares related to other effective share incentive schemes of the Company (if any)
in aggregate shall not exceed 10% of the total issued share capital of the Company. Unless approval is obtained at the
general meeting by way of special resolution, the total number of Restricted Shares granted or to be granted to any
Participant under this Scheme or other effective share incentive schemes of the Company (if any) in aggregate shall not
exceed 1% of the total issued share capital of the Company.
The grant price for restricted shares, being the purchase price by staff, shall be determined by the Board of Directors. The
grant price shall not be lower than 50% of the following price, whichever is the highest:
(I) The closing price of the subject shares of the Company for one trading day prior to publication of the summary Share
Incentive Scheme draft;
(II) The average closing price of the subject shares of the Company for 30 trading days prior to publication of the summary
Share Incentive Scheme draft;
(III) The average price of the subject shares of the Company for 20 trading days prior to publication of the summary Share
Incentive Scheme draft; or
(IV) The unit nominal value of the subject shares of the Company.
Each batch of restricted shares shall not be unlocked unless fulfilling, each time, by the Company its unlock performance
criteria (including net asset yield and operating income growth rate), and by grantees’ individual performance criteria
simultaneously. Where, during any year of the unlocking period, any one or more unlock criteria for the Company or
individuals is or are not fulfilled, such portion of subject shares shall be cancelled, and no grantees shall be entitled to
make another application for unlocking those subject shares in the future years. The cancelled restricted shares will be
repurchased by the Company based on the grant price.
On October 24th 2014, after consideration and approval by the general meeting, the Company granted 52,910,082 restricted
shares to grantees at a grant price of RMB 9.25 per share (“2014 Share Incentive Scheme”). The Lock-up Period of the
Subject Shares shall last for a period of 24 months commencing on the grant date, during which the Subject Shares granted
to grantees under the scheme shall be subject to lock-up and shall not be transferable. The Unlocking Period shall be the
24 to 60 months following the grant of restricted shares (including Lock-up Period), during which grantees may, subject
to unlocking conditions stipulated by the scheme being satisfied, apply for unlocking in 3 tranches: the first unlocking
period shall be the 24 to 36 months following the grant date and the number of shares to be unlocked shall be 40% of the
aggregate number of the Subject Shares granted; the second unlocking period shall be the 36 to 48 months following the
grant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted;
the third unlocking period shall be the 48 to 60 months following the grant date and the number of shares to be unlocked
shall be 30% of the aggregate number of the Subject Shares granted. As of December 31st 2019, the restricted stock granted
in 2014 has all vested.
On December 23rd 2016, after consideration and approval by the general meeting, the Company granted 52,326,858
restricted shares to grantees at a grant price of RMB 12.63 per share (“2016 Share Incentive Scheme”). The Lock-up
Period of the Subject Shares shall last for a period of 24 months commencing on the grant date, during which the Subject
162
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Shares granted to grantees under the scheme shall be subject to lock-up and shall not be transferable. The Unlocking Period
shall be the 24 to 60 months following the grant of restricted shares (including Lock-up Period), during which grantees
may, subject to unlocking conditions stipulated by the scheme being satisfied, apply for unlocking in 3 tranches: the first
unlocking period shall be the 24 to 36 months following the grant date and the number of shares to be unlocked shall be
40% of the aggregate number of the Subject Shares granted; the second unlocking period shall be the 36 to 48 months
following the grant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject
Shares granted; the third unlocking period shall be the 48 to 60 months following the grant date and the number of shares
to be unlocked shall be 30% of the aggregate number of the Subject Shares granted.
On December 20th 2018, authorized by the 2nd extraordinary general meeting of 2018 and reviewed by the board of
directors, the Company granted 121,195,458 restricted shares to grantees at a grant price of RMB 16.98 per share (“2018
Share Incentive Scheme”). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing on
the grant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up and are
not transferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares (including
Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by the scheme being satisfied,
apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months following the grant date and the
number of shares to be unlocked shall be 40% of the aggregate number of the Subject Shares granted; the second unlocking
period shall be the 36 to 48 months following the grant date and the number of shares to be unlocked shall be 30% of the
aggregate number of the Subject Shares granted; the third unlocking period shall be the 48 to 60 months following the
grant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted.
The Company has completed the equity registration work in January 2019.
Unit: share
2016 Share Incentive Scheme First half of 2020 2019
Total of equity instruments outstanding at the beginning of the reporting
21,974,740 45,404,512
period
Total of equity instruments granted during the current reporting period - -
Total of equity instruments vested during the current reporting period - 21,836,266
Total of equity instruments forfeited during the current reporting period
- 1,593,506
(Note)
Total of equity instruments outstanding at the end of the reporting period 21,974,740 21,974,740
The exercise price (ex-rights) of the outstanding Share-based payments RMB 8.42 per share & RMB 8.42 per share &
of the Company at the end of the reporting period and the remaining
period of the contract 18 months 24 months
Note: On December 24th 2019, authorized by the Company's second extraordinary shareholders' meeting in 2016 and
according to the resolutions and the revised articles of association of the 14th meeting of the fourth board of directors, the
Company repurchased and cancelled the granted but not yet unlocked 1,593,506 restricted RMB treasury shares in cash.
As of the reporting date, the Company has not completed the equity registration procedures.
Unit: share
2018 Share Incentive Scheme First half of 2020 2019
Total of equity instruments outstanding at the beginning of the
121,195,458 121,195,458
reporting period
Total of equity instruments granted (share dividend) during the current
- -
reporting period
Total of equity instruments vested during the current reporting period - -
Total of equity instruments forfeited during the current reporting
- -
period
Total of equity instruments outstanding at the end of the reporting
121,195,458 121,195,458
period
The exercise price (ex-rights) of the outstanding Share-based payments
RMB 16.98 per share RMB 16.98 per share
of the Company at the end of the reporting period and the remaining
& 42 months & 48 months
period of the contract
163
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
2. Information of the share-based payment through equity settlements
Unit: RMB
2014 Share Incentive 2016 Share Incentive 2018 Share Incentive
Scheme Scheme Scheme
Determined based on stock Determined based on stock Determined based on stock
Method of determine the fair value of price at the grant date and the price at the grant date and the price at the grant date and the
equity instruments at the grant date costs of restricted shares costs of restricted shares during costs of restricted shares during
during Lock-up Period Lock-up Period Lock-up Period
Determined based on the Determined based on the Determined based on the
Recognition basis of the number of the
results estimation of each results estimation of each results estimation of each
equity instruments qualified for vesting vesting period release period release period
Reasons of the significant difference
between the estimates of the current None
None None
reporting period with that of the prior
year
Accumulative amount of share-based
payment through equity settlement and 363,191,911.52 334,961,272.80 678,315,828.99
further included in the capital reserve
Total amount of the expenses recognized
according to share-based payment
- 13,884,678.00 467,284,237.75
through equity settlement in the current
reporting period
3. There is no share-based payment through cash settlements
XII. Commitments and contingencies
1. Significant commitments
(1) Capital commitments
Unit: RMB’000
Closing balance Opening balance
Contracted but not yet recognized in financial statements
- Commitment on construction of long-term assets 10,570,008 10,905,300
- Commitment on external investments 300,000 550,000
Total 10,870,008 11,455,300
(2) Operating lease commitments
As of the balance sheet date, the Group had the following external commitments in respect of non-cancellable operating
leases:
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Unit: RMB’000
Closing balance Opening balance
Minimum lease payments under non-cancellable operating leases:
First year subsequent to the balance sheet date 184,825 235,585
Second year subsequent to the balance sheet date 110,078 154,430
Third year subsequent to the balance sheet date 60,986 92,851
Subsequent years 84,392 129,063
Total 440,281 611,929
(3) As of June 30th 2020, the Group has no other significant commitments need to be disclosed.
2. Contingencies
The Group has no significant contingencies to be disclosed.
XIII. Events after the balance sheet date
1. Significant unadjusted events
1.1 Assessment of the impact of the COVID-19 epidemic
In January 2020, the outbreak of COVID-19 Epidemic (the “Epidemic”) broke out across China, which had an adverse
impact on the macro-economic conditions. The Group expects that the Epidemic may have certain impact on future sales,
collection of accounts receivable, borrowings and etc., while the degree of which will depend on the progress and duration
of global Epidemic prevention and control as well as the implementation of prevention and control policies in various
places. As of the approval date of the financial statements disclosure, the epidemic situation in China has been basically
controlled, and the order of production and life has been basically restored. However, the situation of epidemic prevention
and control in some overseas regions is still severe, and the Group will closely monitor the development of epidemic
situation, continue to assess and respond to the possible impact of the epidemic situations on the Group’s performance and
operations.
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
XIV. Other significant events
1. Segment information
1.1 Report segment determining and accounting policy
According to the Group's internal organization structure, management requirements and internal report principles, the
Group has only one operating segment, which is the research and development, production and sales of video products
and video services.
1.2 Segment financial reporting
External revenue by product or business segments
Unit: RMB
Item The first half of 2020
Operating income Operating cost
Front-end equipment 12,125,236,914.65 4,828,656,372.00
Back-end equipment 2,404,613,230.54 1,254,053,775.83
Video Surveillance Central control equipment 3,421,976,609.49 1,827,320,658.46
Construction contract 300,094,975.52 235,236,267.84
Other 3,508,460,773.13 2,506,581,933.99
Innovative Business Smart home business 1,179,170,706.81 741,575,630.80
Robotic business 542,724,420.13 271,967,778.00
Other innovative business 788,881,613.49 528,327,528.46
Total 24,271,159,243.76 12,193,719,945.38
Unit: RMB
Item The first half of 2019
Operating income Operating cost
Front-end equipment 11,399,609,062.38 5,514,282,317.87
Back-end equipment 3,196,070,064.43 1,622,327,866.91
Video Central control equipment 3,486,737,083.16 1,549,258,451.92
Surveillance
Construction contract 477,564,284.57 348,868,121.15
Other 3,575,048,602.41 2,714,505,626.31
Innovative Smart home business 1,139,058,349.43 699,890,662.72
Business Robotic business 370,499,077.30 179,227,186.56
Other innovative business 278,686,900.82 212,146,100.24
Total 23,923,273,424.50 12,840,506,333.68
External revenue by geographical area & non-current assets by geographical location
Unit: RMB
Item The first half of 2020 The first half of 2019
External revenue generated in domestic area 16,728,998,825.16 16,980,210,416.78
External revenue generated in overseas area 7,542,160,418.60 6,943,063,007.72
Total 24,271,159,243.76 23,923,273,424.50
Unit: RMB
Item (Note) At June 30th 2020 At January 1st 2020
Non-current assets in domestic area 9,068,008,660.19 8,401,009,239.65
Non-current assets in overseas area 421,622,006.08 294,697,597.55
Total 9,489,630,666.27 8,695,706,837.20
Note: the non-current assets above did not include other non-current financial assets, long-term receivables, long-term
equity investment, and deferred tax assets.
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
XV. Notes to major items of financial statements of the parent company
1. Accounts receivable
(1) Disclosure by age
Unit: RMB
Closing Balance
Aging
Accounts receivable Bad debt provision Proportion (%)
Within credit period 8,813,221,234.86 7,895,095.09 0.09
Within 1 year after exceeding credit period 18,774,666,701.65 88,337,789.67 0.47
1-2 years after exceeding credit period 420,298,480.39 85,826,033.37 20.42
2-3 years after exceeding credit period 96,794,473.49 50,710,624.66 52.39
3-4 years after exceeding credit period 35,900,248.04 25,521,633.00 71.09
Over 4 years after exceeding credit period 97,221,459.99 97,221,459.99 100.00
Subtotal 28,238,102,598.42 355,512,635.78 1.26
(2) Classification and disclosure of by bad debt provision methods
Unit: RMB
Closing balance Opening balance
Carrying balance Bad debt provision Book value Carrying balance Bad debt provision Book value
Category
Percentage Percentage Percentage Percentage
Amount Amount Amount Amount Amount Amount
(%) (%) (%) (%)
Provision for bad debts on a
- - - - - - - - - -
single basis
Provision for bad debts by
28,238,102,598.42 100 355,512,635.78 1.26 27,882,589,962.64 25,454,740,943.40 100 346,775,018.32 1.36 25,107,965,925.08
portfolios
Total 28,238,102,598.42 100 355,512,635.78 1.26 27,882,589,962.64 25,454,740,943.40 100 346,775,018.32 1.36 25,107,965,925.08
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Accounts receivable provision for bad debts by portfolios
Unit: RMB
Closing balance
Customer
Carrying balance Bad debt provision Proportion (%)
Subsidiaries’ customers 24,203,087,503.31 - -
Portfolio A 3,729,392.28 216,083.49 5.79
Portfolio B 4,031,062,606.54 355,073,456.00 8.81
Portfolio C 223,096.29 223,096.29 100.00
Total 28,238,102,598.42 355,512,635.78 1.26
Description of accounts receivable for bad debt provision by portfolios
As part of the Company's credit risk management, the Company uses the ageing of accounts receivable to assess the expected credit losses of accounts receivable formed by domestic and
overseas sales businesses, and the risk characteristics are divided according to different business area and target into portfolio A, portfolio B and portfolio C. For the accounts receivable
generated by the Group’s related parties, because the payment time is arranged by the Group according to the cash flow of the companies in the Group, the Company believes that the
credit risk is low and no provision for credit loss is required. The aging information can reflect the solvency of these three types of customers when the accounts receivable are due.
(3) Bad debt provision
The provision for bad debts in the current reporting period is RMB 8,732,007.47.
There was no significant recollection or reversal of bad debt provision during the current reporting period.
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
(4) Top five debtors based on corresponding closing balance of account receivables
Unit: RMB
Name of the Relationship with the Book value balance of accounts Closing balance for bad debt Proportion
Party Company receivable provision (%)
Subsidiary A Subsidiary 24,143,433,132.08 - 85.50
Company A Related party 176,545,416.37 14,067,406.80 0.63
Company B Third party 63,829,643.35 2,128,516.24 0.23
Company C Third party 55,596,998.23 1,588,520.88 0.20
Company D Third party 35,331,789.82 4,011,666.29 0.13
Total 24,474,736,979.85 21,796,110.21 86.69
(5) As of June 30th 2020, there is no termination of accounts receivable booking due to transfer of a financial asset.
(6) As of June 30th 2020, the Company has no assets/liabilities booked due to transferred accounts receivable that the
Group still continue to be involved in.
2. Other receivables
2.1 By categories
Unit：RMB
Category Closing balance Opening Balance
Dividends receivable - 2,550,000.00
Other receivables 1,488,158,636.58 918,725,388.15
Total 1,488,158,636.58 921,275,388.15
2.2 Dividends receivable
Unit：RMB
Invested company Closing balance Opening Balance
Subsidiaries of CETE - 2,550,000.00
Total - 2,550,000.00
2.3 other receivables
(1) Other receivables by aging
Unit: RMB
Closing Balance
Item
Other receivables Bad debt provision Proportion (%)
Within credit period 1,419,056,233.01 1,052,778.21 0.07
Within 1 year after exceeding credit
46,056,765.28 2,548,807.71 5.53
period
1-2 years after exceeding credit period 15,416,651.97 1,637,937.77 10.62
2-3 years after exceeding credit period 16,169,023.05 5,137,292.28 31.77
3-4 years after exceeding credit period 3,733,418.21 1,896,638.97 50.80
Over 4 years after exceeding credit
3,025,243.27 3,025,243.27 100.00
period
Subtotal 1,503,457,334.79 15,298,698.21 1.02
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
(2) Other receivables by nature of the payment
Unit: RMB
Nature Closing balance Opening balance
Payments by related parties within the Group 1,185,213,157.61 678,798,902.79
Temporary payments for receivables 212,442,107.55 196,954,698.49
Guarantee deposit 52,811,631.20 45,527,954.39
Acquisition of asset group 49,885,056.06 -
Others 3,105,382.37 7,240,271.59
Total 1,503,457,334.79 928,521,827.26
(3) Provision for bed debts
The provision for bad debts in the current reporting period is RMB 5,502,259.10.
There was no significant recollection or reversal of bad debt provision during the current reporting period.
(4) The actual write-off of other receivables in the current reporting period was nil.
(5) Top 5 debtors of other receivables in terms of closing balance
Unit：RMB
Relationship with the Company Percentage to total other Closing balance for bad
The name of entity Nature Closing balance Aging
receivables (%) debt provision
Subsidiary B Subsidiary Internal Payment 458,831,401.49 Within credit period 30.52 -
Subsidiary C Subsidiary Internal Payment 268,229,108.63 Within credit period 17.84 -
Subsidiary D Subsidiary Internal Payment 135,962,113.29 Within credit period 9.04 -
Subsidiary E Subsidiary Internal Payment 91,688,306.80 Within credit period 6.10 -
Subsidiary F Subsidiary Internal Payment 72,841,062.51 Within credit period 4.84 -
Total 1,027,551,992.72 68.34 -
(6) At the end of the current reporting period, the Company had no other receivables involving government subsidies.
(7) At the end of the current reporting period, there were no other receivables derecognized due to the transfer of financial assets.
(8) At the end of the current reporting period, there were no assets or liabilities formed by continuing involvement in transferred other receivables
170
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
3. Long-term equity investment
Unit: RMB
Closing Balance Opening Balance
Item
Carrying Balance Provisions Book Value Carrying Balance Provisions Book Value
Investment in subsidiaries 5,465,142,950.49 - 5,465,142,950.49 4,878,400,682.40 - 4,878,400,682.40
Inestments in associated enterprises and
469,088,397.15 - 469,088,397.15 195,617,348.04 - 195,617,348.04
joint ventures
Total 5,934,231,347.64 - 5,934,231,347.64 5,074,018,030.44 - 5,074,018,030.44
(1) Investment in subsidiaries
Unit：RMB
Write-off of Blance of
Increase during Decrease during impairment impairment loss
Opening Closing
Name of investee the current the current provision during the provision at the end
balance balance
reporting period reporting period current reporting of the current
period reporting period
Hangzhou Hikvision System Technology Co., Ltd. 776,276,512.41 52,814,104.72 - 829,090,617.13 - -
Hangzhou Hikvision Security Equipment Leasing Services Co.,
200,000,000.00 - - 200,000,000.00 - -
Ltd.
Shanghai Goldway Intelligent Traffic System Co., Ltd. 23,000,000.00 - - 23,000,000.00 - -
Chongqing Hikvision System Technology Co., Ltd. 700,000,000.00 - - 700,000,000.00 - -
Hundure Technology (Shanghai) Co., Ltd. 37,247,790.28 - - 37,247,790.28 - -
Hangzhou EZVIZ Network Co., Ltd. 9,150,235.55 49,640,713.23 - 58,790,948.78 - -
Hangzhou Haikang Zhicheng Investment and Development Co., 24,000,000.00 - - 24,000,000.00 - -
171
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Write-off of Blance of
Increase during Decrease during impairment impairment loss
Opening Closing
Name of investee the current the current provision during the provision at the end
balance balance
reporting period reporting period current reporting of the current
period reporting period
Ltd.
Hangzhou Hikrobot Technology Co., Ltd. 123,598,406.81 11,653,016.37 - 135,251,423.18 - -
Hangzhou Hikvision Investment Management Co., Ltd. 100,000.00 - - 100,000.00 - -
Hangzhou HikAuto Technology Co., Ltd. 183,723,427.59 1,578,926.10 - 185,302,353.69 - -
Hangzhou Hikvision Communication Technology Co., Ltd. 7,000,000.00 - - 7,000,000.00 - -
Hangzhou Hikmicro Sensing Technology Co., Ltd. 120,513,668.74 61,137,409.40 - 181,651,078.14 - -
HDT International Ltd. 87,786.14 - - 87,786.14 - -
Prama Hikvision Indian Private Limited 1,585,696.80 - - 1,585,696.80 - -
Hikvision International Co., Limited 79,423.52 - - 79,423.52 - -
Hikvision Australia Pty Ltd. 2,866,850.00 - - 2,866,850.00 - -
Hikvision Singapore Pte. Ltd. 1,900,590.00 - - 1,900,590.00 - -
Hikvision South Africa (Pty) Ltd. 1,578,650.00 - - 1,578,650.00 - -
Hikvision Dubai FZE 1,870,351.40 - - 1,870,351.40 - -
Hikvision Brazil Participacoes Ltda. 4,579,750.50 - - 4,579,750.50 - -
Hikvision Limited Liability Company 647,249.19 - - 647,249.19 - -
Coperatief Hikvision Europe U.A. 65,485.53 - - 65,485.53 - -
Hikvision Korea Limited 1,535,850.00 - - 1,535,850.00 - -
172
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Write-off of Blance of
Increase during Decrease during impairment impairment loss
Opening Closing
Name of investee the current the current provision during the provision at the end
balance balance
reporting period reporting period current reporting of the current
period reporting period
Hikvision Colombia SAS 1,337,440.00 - - 1,337,440.00 - -
Hikvision Kazakhstan limited liability partnership 4,758.69 - - 4,758.69 - -
Hikvision Turkey Technology And Security Systems Commerce
1,148,115.83 - - 1,148,115.83 - -
Corporation
Chongqing Hikvision Technology Co., Ltd. 100,541,006.38 1,197,942.68 - 101,738,949.06 - -
Hikvision USA, Inc. 1,546,160.00 - - 1,546,160.00 - -
Hikvision Canada, Inc. 994,442.54 - - 994,442.54 - -
Henan Hua’An Bao Quan Intelligent Development Co., Ltd. 67,475,000.00 30,859,200.00 - 98,334,200.00 - -
Henan Haikang Hua’An Bao Quan Electronics Co., Ltd. 510,000.00 33,430,800.00 - 33,940,800.00 - -
Hangzhou Hikvision Technology Co., Ltd. 1,034,004,725.85 24,485,609.25 - - -
1,058,490,335.10
Hangzhou Hikvision Electronics Co., Ltd. 401,092,310.36 7,465,908.74 - 408,558,219.10 - -
Wuhan HikStorage Technology Co., Ltd. 60,869,464.15 - - 60,869,464.15 - -
Chengdu Hikvision Digital Technology Co., Ltd. 300,000,000.00 - - 300,000,000.00 - -
Hangzhou HikAuto Software Co., Ltd. 5,483,004.52 6,996,457.16 - 12,479,461.68 - -
Hangzhou Haikang Intelligent Technology Co., Ltd. 2,726,015.34 4,546,509.92 - 7,272,525.26 - -
Hangzhou EZVIZ Software Co., Ltd. 12,535,758.31 15,793,218.66 - 28,328,976.97 - -
173
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Write-off of Blance of
Increase during Decrease during impairment impairment loss
Opening Closing
Name of investee the current the current provision during the provision at the end
balance balance
reporting period reporting period current reporting of the current
period reporting period
LLC Hikvision Tashkent 833,014.00 - - 833,014.00 - -
Xi’An Hikvision Digital Technology Co., Ltd. 75,000,000.00 - - 75,000,000.00 - -
Wuhan Hikvision Technology Co., Ltd. 12,600,000.00 - - 12,600,000.00 - -
Wuhan Hikvision Science and Technology Co., Ltd. 65,250,000.00 - - 65,250,000.00 - -
Hangzhou Hikmed Technology Co., Ltd. 48,769,806.64 1,704,571.84 - 50,474,378.48 - -
Guizhou Haikang Transportation Big Data Co., Ltd. 16,500,000.00 5,500,000.00 - 22,000,000.00 - -
Xinjiang CET Yihai Information Technology Co., Ltd. 24,000,000.00 - - 24,000,000.00 - -
Nanjing Hikvision Digital Technology Co., Ltd. 35,000,000.00 - - 35,000,000.00 - -
Hangzhou Kuangxin Technology Co., Ltd. 112,000,000.00 - - 112,000,000.00 - -
Zhengzhou Hikvision Digital Technology Co., Ltd. 55,000,000.00 - - 55,000,000.00 - -
Nanchang Hikvision Digital Technology Co., Ltd. 20,000,000.00 60,000,000.00 - 80,000,000.00 - -
Hikvision Digital Technology (Shanghai) Co., Ltd. 80,000,000.00 - - 80,000,000.00 - -
Hefei Hikvision Digital Technology Co., Ltd. 35,000,000.00 - - 35,000,000.00 - -
Tianjin Hikvision Information Technology Co., Ltd. 50,000,000.00 - - 50,000,000.00 - -
Ningbo Hikvision Parking System Operation Co., Ltd. 35,000,000.00 - - 35,000,000.00 - -
Hikvision Peru Closed Stock Company 1,598,042.50 - - 1,598,042.50 - -
Hangzhou HikStorage Technology Co., Ltd. 173,892.83 2,310,290.48 - 2,484,183.31 - -
174
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Write-off of Blance of
Increase during Decrease during impairment impairment loss
Opening Closing
Name of investee the current the current provision during the provision at the end
balance balance
reporting period reporting period current reporting of the current
period reporting period
Shijiazhuang Hikvision Technology Co., Ltd. - 45,000,000.00 - 45,000,000.00 - -
Fuzhou Hikvision Digital Technology Co., Ltd. - 50,000,000.00 - 50,000,000.00 - -
Hangzhou Hikfire Technology Co., Ltd. - 60,627,589.54 - 60,627,589.54 - -
Hangzhou Rayin Technology Co., Ltd. - 60,000,000.00 - 60,000,000.00 - -
Total 4,878,400,682.40 586,742,268.09 - 5,465,142,950.49 - -
(2) Inestments in associated enterprises and joint ventures
Unit：RMB
Increase/Decrease during the current reporting period
Blance of
Investment
Other impairment loss
income Other Declared cash Provision
Name of investee Opening balance Additional Reduce comprehensive Closing Balance provision at the
recognized changes dividends or for Others
Investments Investments income end of the current
under the equity in equity profits impairment
adjustment reporting period
method
1.Joint Ventures
Hangzhou Haikang Intelligent
Industry Equity Investment Fund 50,000,000.00 250,000,000.00 - 2,571,332.72 - - - - - 302,571,332.72 -
Partnership (Limited Partnership)
Daishan Hailai Yunzhi Technology
13,320,000.00 - - (127,149.41) - - - - - 13,192,850.59 -
Co., Ltd.
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Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Increase/Decrease during the current reporting period
Blance of
Investment
Other impairment loss
income Other Declared cash Provision
Name of investee Opening balance Additional Reduce comprehensive Closing Balance provision at the
recognized changes dividends or for Others
Investments Investments income end of the current
under the equity in equity profits impairment
adjustment reporting period
method
Zhejiang Haishi Huayue Digital
- 10,200,000.00 - 23,214.14 - - - - - 10,223,214.14 -
Technology Co., Ltd.
Xuzhou Kangbo Urban
Operation Management Service - 4,900,000.00 - (273.88) - - - - - 4,899,726.12 -
Co., Ltd.
Subtotal 63,320,000.00 265,100,000.00 - 2,467,123.57 - - - - - 330,887,123.57 -
2.Associated Enterprises
Wuhu Sensor Tech Intelligent
48,420,966.46 - - (1,006,663.84) - - - - - 47,414,302.62 -
Technology Co., Ltd.
Maxio Technology (Hangzhou)
65,397,927.02 - - (5,914,862.82) - - - - - 59,483,064.20 -
Co., Ltd.
Zhiguang Hailian Big Data
8,684,859.27 10,000,000.00 - 913,298.13 - - - - - 19,598,157.40 -
Technology Co., Ltd.
Qinghai Qingtang Big Data Co.,
9,793,595.29 - - 58,897.93 - - - - - 9,852,493.22 -
Ltd.
Shenzhen Hikvision Urban Service
- 2,000,000.00 - (146,743.86) - - - - - 1,853,256.14 -
Operation Co., Ltd.
Subtotal 132,297,348.04 12,000,000.00 - (6,096,074.46) - - - - - 138,201,273.58 -
176
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Increase/Decrease during the current reporting period
Blance of
Investment
Other impairment loss
income Other Declared cash Provision
Name of investee Opening balance Additional Reduce comprehensive Closing Balance provision at the
recognized changes dividends or for Others
Investments Investments income end of the current
under the equity in equity profits impairment
adjustment reporting period
method
Total 195,617,348.04 277,100,000.00 - (3,628,950.89) - - - - - 469,088,397.15 -
(3) As of June 30th 2020, there were no restrictions on the capability of transferring fund to the Company from investees in which the Company held long-term equity
investment.
177
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
4. Operating income and operating cost
Unit：RMB
First half of 2020 First half of 2019
Item
Income Cost Income Cost
Operating income 10,618,881,901.13 2,861,919,283.95 8,967,800,195.36 2,954,372,023.48
Other operating
965,386,184.10 60,087,713.53 1,466,443,783.23 125,408,625.44
income
Total 11,584,268,085.23 2,922,006,997.48 10,434,243,978.59 3,079,780,648.92
5. Investment income
(1) Details of investment income
Unit：RMB
Item First half of 2020 First half of 2019
Long-term equity investment income (losses) calculated by cost
(2,550,000.00) 1,400,000.00
method
Long-term equity investment losses measured by equity method (3,628,950.89) (2,874,991.72)
Investment income of other non-current financial assets during
150,000,000.00 17,357,220.31
the holding period
Investment income from disposal of asset group 48,884,954.09 -
Investment income from disposal of long-term equity
- 0.56
investments
Investment income from disposal of held-for-trading financial
- 1,168,699.00
assets
Total 192,706,003.20 17,050,928.15
XVI. Supplementary information
1. Details of current non-recurring gains and losses
Unit：RMB
Description
Item Amount
Profit or loss from disposal of non-current assets 21,554.99 /
The government subsidies included in the current profits and
losses (excluding the government subsidy closely related to
regular course of business of the Company and government 215,000,303.92 /
subsidy based on standard quota or quantitative continuous
enjoyment according to the state industrial policy)
Net profit or loss of the subsidiary from the beginning of the
reporting period to the merger date, for business combination - /
involving enterprises under common control
Held- for-trading financial assets, profits and losses from change
in fair value of held-for-trading financial liabilities, and
investment income from disposal of held-for-trading financial
(11,274,009.71) /
assets and 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 expense except the items
20,025,782.33 /
mentioned above
Impact of income tax (51,090,433.75) /
178
Hikvision 2020 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2020 to June 30th 2020
Description
Item Amount
The impact of minority equity (12,208,744.59) /
Total 160,474,453.19 /
2. Return on net assets and earnings per share
The return on net assets and earnings per share have been prepared by Hangzhou Hikvision Digital Technology Co.,
Ltd. in accordance with the Information Disclosure and Presentation Rules for Companies Making Public Offering
of Securities No. 9 – Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revised in 2010)
issued by China Securities Regulatory Commission.
Unit：RMB
Weighted Earnings per share
Profit for the reporting period average return on
Basic earnings per Diluted earnings per
net assets (%)
share share
Net profit attributable to ordinary shareholders of the
9.75% 0.493 0.493
Company
Net profit excluding non-recurring items of profit or loss
9.41% 0.476 0.476
attributable to ordinary shareholders of the Company
179
Hikvision 2020 Half Year Report
Section XII Documents Available for Reference
1. The financial report was signed by the Company's legal representative.
2. The financial report was signed and sealed by the person in charge of the Company, the person in
charge of accounting work and person in charge of accounting organization.
3. Original copy of all the Company's documents and announcements were published on the
newspapers designated by CSRC within the reporting period.
The above documents are completely placed at the Company's board of directors’ office.
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Hikvision 2020 Half Year Report
Section XIII Other Disclosure Information
I. Other major social security issues
Whether there is any other major social security issues for the listed compay and its subsidiaries
□Yes √No □Not applicable
Whether the company was administratively punished during the reporting period
□Yes √No □Not applicable
II. Reception of activities including research, communication and interviews during the report period
√ Applicable □ Inapplicable
(1) Reception of research activities during the reporting period.
Type of
Location of Method of
Time of reception reception Index of basic situation of the research
reception reception
object
Headquarters Site Research and Institutional
From December 23rd CNINF, Investor Relations Activity Record: From
meeting room of telephone investors
2019 to January 3rd 2020 December 23rd 2019 to January 3rd 2020
the Company communication
Headquarters Site Research and Institutional
From January 6th 2020 to CNINF, Investor Relations Activity Record: From
meeting room of telephone investors
January 17th 2020 January 6th 2020 to January 17th 2020
the Company communication
Headquarters Telephone Institutional
From February 10th 2020 CNINF, Investor Relations Activity Record: From
meeting room of communication investors
to February 21st 2020 February 10th 2020 to February 21st 2020
the Company
Headquarters Telephone Institutional CNINF, Investor Relations Activity Record: From
From February 24th 2020
meeting room of communication investors February 24th 2020 to March 6th 2020
to March 6th 2020
the Company
Headquarters Telephone Institutional CNINF, Investor Relations Activity Record: From
From March 9th 2020 to
meeting room of communication investors March 9th 2020 to March 25th 2020
March 25th 2020
the Company
Headquarters Performance Institutional
CNINF, Investor Relations Activity Record: April
April 25th 2020 meeting room of result conference investors;
25th 2020
the Company call individuals
Headquarters Institutional
April 27th 2020 to May Telephone CNINF, Investor Relations Activity Record: From
meeting room of investors
9th 2020 communication April 27th 2020 to May 9th 2020
the Company
Headquarters Site Research and Institutional
May 11th 2020 to May CNINF, Investor Relations Activity Record: From
meeting room of telephone investors
22nd 2020 May 11th 2020 to May 22nd 2020
the Company communication
May 23rd 2020 to June 5th Headquarters Site Research and Institutional CNINF, Investor Relations Activity Record: From
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Hikvision 2020 Half Year Report
Type of
Location of Method of
Time of reception reception Index of basic situation of the research
reception reception
object
2020 meeting room of telephone investors May 23rd 2020 to June 5th 2020
the Company communication
Headquarters Site Research and
June 8th 2020 to June 24th Institutional CNINF, Investor Relations Activity Record: From
meeting room of telephone
2020 investors June 8th 2020 to June 24th 2020
the Company communication
(2) Participation of conferences for investor relationship activities during the reporting period.
Time of Type of
Location Conference Name Method of reception
conference reception object
Morgan Stanley 2020 China New Economy All kinds of One-on-One, One-on-multi, small
January 2020 Beijing
Summit investors group Meetings, and etc.
January 2020 All kinds of One-on-One, One-on-multi, small
Beijing NDR- GF Securities
investors group Meetings, and etc.
January 2020 All kinds of One-on-One, One-on-multi, small
Shanghai NDR- GF Securities
investors group Meetings, and etc.
January 2020 All kinds of One-on-One, One-on-multi, small
Shanghai UBS 20th Greater China Conference 2020
investors group Meetings, and etc.
Online All kinds of One-on-One, One-on-multi, small
February 2020 JP Morgan China Opportunities Forum
meeting investors group Meetings, and etc.
Online 2020 Daiwa Securities Tokyo Investment All kinds of One-on-One, One-on-multi, small
March 2019
meeting Seminar investors group Meetings, and etc.
March 2019 Online Huatai Securities Spring Online Investment All kinds of One-on-One, One-on-multi, small
meeting Conference investors group Meetings, and etc.
March 2019 Online Guotai Junan Securities Spring Investment All kinds of One-on-One, One-on-multi, small
meeting Strategy-Online Conference investors group Meetings, and etc.
March 2019 Online Shenwan Hongyuan Securities Spring TMT All kinds of One-on-One, One-on-multi, small
meeting Online Investment Strategy Conference investors group Meetings, and etc.
May 2020 Online Credit Suisse 7th China A-Shares Virtual All kinds of One-on-One, One-on-multi, small
meeting Conference investors group Meetings, and etc.
May 2020 Online All kinds of One-on-One, One-on-multi, small
2020 Orient Securities Spring Conference
meeting investors group Meetings, and etc.
May 2020 Online All kinds of One-on-One, One-on-multi, small
Huachuang Securities Online Conference
meeting investors group Meetings, and etc.
May 2020 Online All kinds of One-on-One, One-on-multi, small
HSBC 7th Annual China Conference
meeting investors group Meetings, and etc.
May 2020 Online 2020 Daiwa Securities A-Share Summit All kinds of One-on-One, One-on-multi, small
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Hikvision 2020 Half Year Report
Time of Type of
Location Conference Name Method of reception
conference reception object
meeting investors group Meetings, and etc.
May 2020 Online Goldman Sachs TechNet Conference Asia Pacific All kinds of One-on-One, One-on-multi, small
meeting 2020 investors group Meetings, and etc.
May 2020 Online CICC Investment Conference for the Second All kinds of One-on-One, One-on-multi, small
meeting Half of 2020-TMT investors group Meetings, and etc.
May 2020 Online All kinds of One-on-One, One-on-multi, small
Morgan Stanley Virtual China BEST Conference
meeting investors group Meetings, and etc.
May 2020 Online All kinds of One-on-One, One-on-multi, small
Citi Regional Tech Investor Conference 2020
meeting investors group Meetings, and etc.
June 2020 Online All kinds of One-on-One, One-on-multi, small
Nomura Investment Forum Asia 2020
meeting investors group Meetings, and etc.
June 2020 Online All kinds of One-on-One, One-on-multi, small
Jefferies Virtual Industrial Days 2020
meeting investors group Meetings, and etc.
June 2020 Online Guotai Junan Online Annual Mid-term All kinds of One-on-One, One-on-multi, small
meeting Conference investors group Meetings, and etc.
June 2020 Online All kinds of One-on-One, One-on-multi, small
CITIC Securities 2020 Capital Market Forum
meeting investors group Meetings, and etc.
June 2020 Online All kinds of One-on-One, One-on-multi, small
Morgan Stanley Virtual Asia BEST Conference
meeting investors group Meetings, and etc.
June 2020 Online All kinds of One-on-One, One-on-multi, small
Cinda Securities 2020 Interim Conference
meeting investors group Meetings, and etc.
June 2020 Online Huatai Securities 2020 Summer Online All kinds of One-on-One, One-on-multi, small
meeting Conference investors group Meetings, and etc.
June 2020 Online All kinds of One-on-One, One-on-multi, small
J.P. Morgan China Investor Conference
meeting investors group Meetings, and etc.
June 2020 Online Everbright Securities 2020 Mid-term Online All kinds of One-on-One, One-on-multi, small
meeting Conference investors group Meetings, and etc.
June 2020 Online All kinds of One-on-One, One-on-multi, small
Daiwa Securities China A-Share Summit
meeting investors group Meetings, and etc.
June 2020 Online All kinds of One-on-One, One-on-multi, small
Macquarie Asia Tech Virtual Conference
meeting investors group Meetings, and etc.
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Hikvision 2020 Half Year Report
(3) Investor relations activity statistics during the current year
Number of daily research received (On-site and telephone
120
conference, times)
Number of institutional investors received (ppl) 1904
Number of individual investors received (ppl) 26
Number of investor relations conference participated 29
Hangzhou Hikvision Digital Technology Co., Ltd.
Chairman: Chen Zongnian
July 25th 2020
Note:
This document is a translated version of the Chinese version 2020 Half Year Report (“2020 年半年
度报告”), and the published announcements in the Chinese version shall prevail. The complete
published Chinese 2020 Half Year Report may be obtained at www.cninfo.com.cn.
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