Hangzhou Hikvision Digital Technology Co., Ltd.
2021 Half Year Report
January to June 2021
July 24th 2021
Hikvision 2021 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 half year 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 shares, or distribute shares from capital reserve during the
current reporting period.
Note:
This document is a translated version of the Chinese version 2021 Half Year Report (“2021 年半年
度报告”), and the published announcements in the Chinese version shall prevail. The complete
published Chinese 2021 Half Year Report may be obtained at www.cninfo.com.cn.
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Hikvision 2021 Half Year Report
Please read the full annual report and pay particular attention to the following risk factors:
1) Global COVID-19 epidemic risk: The global threat of COVID-19 epidemic has not yet been eliminated,
and there are uncertainties in economic development. If the epidemic situation in the area where the
Company's business is located intensifies, the adverse impact on the Company's business operations will
increase accordingly.
2) Supply chain risks: COVID-19 epidemic and political conflicts have brought adverse impact on the
global raw material supply system. The Company has been making efforts to enhance management 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.
3) Risk of technology upgrade: Technologies such as artificial intelligence (AI), big data, cloud computing,
and edge computing are developing rapidly. The speed of technology diffusion is accelerating. If the
Company is unable to closely track and adapt to the changes in cutting-edge technologies, or fails to
quickly realize business innovation, the risk of uncertainty in the company's future development will
increase.
4) Risk of internal management: The continual expansion of business scale, the continuous increase of
new products and new businesses, and the continuous growth in total number of employees led to a
significant rise of internal management complexity and higher requirements on the Company's
management system. The Company’s sustainable development will face certain risks if the management
level fails to proportionally address the Company’s business expansion.
5) Global business risks: The Company operates in more than 150 countries and regions around the world.
As the potential risks of epidemic, 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.
6) Legal and compliance risk: The world's multilateral trading system is facing adverse impacts. The laws
and regulations of various regions that need to be complied with for business activities are very
complicated. China and overseas countries have stricter data supervision and business compliance
requirements. If the Company's legal compliance capbilities cannot keep up with the situation, it will bring
adverse impacts on the Company's operations.
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Hikvision 2021 Half Year Report
7) 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, procurement and
financing, which could likely affect the profitability level of the Company.
8) Risk of cybersecurity: The Company has always attached great 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.
9) 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 2021 Half Year Report
CONTENTS
Section I Important Notes, Contents and Definitions ...................................................................................... 1
Section II Corporate Profile & Key Financial Data......................................................................................... 7
Section III Management Discussion and Analysis ......................................................................................... 11
Section IV Corporate Governance .................................................................................................................. 29
Section V Environmental and Social Responsibility ...................................................................................... 33
Section VI Significant Events ........................................................................................................................... 34
Section VII Changes in Shares and Information about Shareholders ......................................................... 49
Section VIII Information of Preferred Shares ............................................................................................... 63
Section IX Bonds ............................................................................................................................................... 64
Section X Financial Report .............................................................................................................................. 65
Section XI Documents Available for Reference ........................................................................................... 207
Section XII Other Disclosure Information ................................................................................................... 208
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Hikvision 2021 Half Year Report
Definitions
Term Definition
Reporting Period From January 1st 2021 to June 30th 2021
Articles of Associations Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd
Hikvision, our Company, the
Hangzhou Hikvision Digital Technology Co., Ltd
Company
CETC China Electronics Technology Group Ltd., the actual controller of the Company
CETHIK CETHIK Group Co., Ltd. Controlling Shareholder of the Company
Hangzhou Qianmo Jiaying Equity Investment Partnership (Limited Partnership)
Qianmo Jiaying (formerly Hangzhou Hikvision Equity Investment Partnership (Limited
Partnership))
EZVIZ, EZVIZ Network, Hangzhou EZVIZ Network Co., Ltd.(According to the context, also refers to the
Smart Home 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, Hikstorage Wuhan Hikstorage Technology Co., Ltd. (According to the context, also refers to
the corresponding business)
HikImaging Hangzhou Hikimaging Technology Co., Ltd. (According to the context, also refers
to the corresponding business)
HikFire Hangzhou Hikfire Technology Co., Ltd. (According to the context, also refers to the
corresponding business)
HikSecurityCheck, Hangzhou Rayin Technology Co,. Ltd. (According to the context, also refers to the
HikRayin corresponding business)
Hangzhou Innovation Located in Hangzhou, Zhejiang Province, the planned use is for R&D, office space
Industry Park and supporting facilities.
Chengdu Science and Located in Chengdu, Sichuan Province, the planned use is for R&D, office space
Technology Park and supporting facilities.
Chongqing Science and Located in Chongqing, the planned use is for production plants, warehouses and
Technology Park supporting facilities.
Xi’an Science and Located in Xi'an, Shaanxi Province, the planned use is for R&D, office space and
Technology Park supporting facilities.
Shijiazhuang Science and Located in Shijiazhuang City, Hebei Province, the planned use is R&D, office
Technology Park space and supporting facilities.
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Hikvision 2021 Half Year Report
Term Definition
Wuhan Science and Located in Wuhan, Hubei Province, the planned use is for R&D, office space and
Technology Park supporting facilities.
Wuhan Intelligence Industry Located in Wuhan, Hubei Province, the planned use is for production plants,
Park warehouses and supporting facilities.
Zhengzhou Science and Located in Zhengzhou, Henan Province, the planned use is R&D, office space and
Technology Park supporting facilities, etc.
EZVIZ smart home product industry park, located in Hangzhou, Zhejiang Province,
EZVIZ Industry Park is planned to be used for R&D, office space and supporting facilities of Hangzhou
EZVIZ Network Co., Ltd.
A long investment cycle, business prospects uncertain, has the high risk and
uncertainty, in need for direct or indirect investment in exploration, in order for the
Company to timely enter into new areas of business. Initially disclosed in
Announcement about Management Measures for Core Staff Investment in
Innovative Business 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, HikRobot, HikAuto,
HikMicro, HikStorage, HikImaging, HikFire, HikRayin and their related business
or products.
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Hikvision 2021 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 杭州海康威视数字技术股份有限公司
Abbr. of the Company name in Chinese (if any) 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 Zhou Xinyi
No. 518 WuLianWang Street, Binjiang No. 518 WuLianWang Street, Binjiang
Address
District, Hangzhou District, Hangzhou
Tel. 0571-88075998; 0571-89710492 0571-89710492
Fax 0571-89986895 0571-89986895
E-mail hikvision@hikvision.com 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 2020 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 current reporting period.
√ Applicable □Inapplicable
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Hikvision 2021 Half Year Report
Newspaper designated by the Company for information disclosure Securities Times, China Securities Journal
Website for release of the Half Year Report www.cninfo.com.cn
Place where the Half Year Report is available for inspection Office of the Board of Directors of the Company
3. Other relevant information
Whether other relevant information has changed during the current 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
First half year of 2021 First half year of 2020 YoY Change (%)
Operating income (RMB) 33,902,098,368.10 24,271,159,243.76 39.68%
Net profit attributable to shareholders of
6,481,424,653.39 4,623,972,830.87 40.17%
the Company (RMB)
Net profit attributable to shareholders of
the Company excluding non-recurring 6,221,476,627.98 4,463,498,377.68 39.39%
gains and losses (RMB)
Net cash flows from operating activities
1,962,853,772.15 69,966,340.57 2,705.43%
(RMB)
Basic earnings per share (RMB/share) 0.695 0.493 40.97%
Diluted earnings per share (RMB/share) 0.695 0.493 40.97%
Weighted average ROE 11.62% 9.75% 1.87%
Change(%) between
On December 31st
On June 30th 2021 December 31st 2020 and
2020
June 30th 2021
Total assets (RMB) 87,118,829,064.12 88,701,682,384.20 -1.78%
Net assets attributable to shareholders of
52,905,875,478.79 53,794,311,162.05 -1.65%
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
9,335,806,114
(share)
Fully diluted earnings per share (RMB/share) calculated with the latest share capital 0.6943
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Hikvision 2021 Half Year Report
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.
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
-1,805,042.17
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
224,341,379.44
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,
45,938,231.46
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 28,546,193.64
Less: Impact of income tax 12,489,507.02
Impact of the minority interests (after tax) 24,583,229.94
Total 259,948,025.41
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Hikvision 2021 Half Year Report
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 2021 Half Year Report
Section III Management Discussion and Analysis
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 current reporting period.
Please refer to 2020 Annual Report for details.
II. Core Competitiveness Analysis
There was no significant change in the Company's core competitiveness during the current reporting period.
For details, Please refer to 2020 Annual Report for details.
III. Core business analysis
Whether consistent with the Company’s core business disclosure during the current reporting period
√ yes □ no
In the first half year of 2021, some countries and regions continued to suffer periodical economic stagnation
and recession as the outbreak of COVID-19 epidemic was not effectively controlled. At the same time, the U.S.
government continued to put pressure on Chinese science-and-technology enterprises, which further affected global
supply chains and market conditions. In the face of the conflicts and changes in the global environment, the
Company has always taken technological innovation as the most important means for its survival and development,
and has continued to promote its sound development.
During the reporting period, the Company achieved a total operating income of RMB 33.90 billion, with year
over year growth of 39.68%; the net profits attributable to shareholders of the listed company was RMB 6.48 billion,
with year over year growth of 40.17%. The Company's overall gross profit margin for the first half year of 2021
was 46.30%.
(1) Increase inputs in R&D and consolidate basic capabilities to embrace opportunities and challenges
During the reporting period, the Company continued to adhere to technological innovation and maintained
inputs in research and development (R&D). In the first half year of 2021, the Company invested RMB 3.88 billion
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Hikvision 2021 Half Year Report
in R&D, which accounted for 11.44% of the Company's operating income, representing a further increase of the
R&D expense ratio. In terms of hardware, the Company continued to strengthen its dominant position in the field
of video products, and actively implemented intellectualized upgrade of non-video products. In terms of software,
the Company continued to build its supporting capacities for large system software so as to support the rapid
development and iteration of industry applications. Hikvision continues to improve its technology system with IoT
perception, artificial intelligence and big data as the core, and its comprehensive competitiveness is further enhanced.
(2) Forge ahead with determination, innovative businesses is creating a new pattern
During the reporting period, the spin-off of smart home business was steadily and orderly rolled out, and
EZVIZ Network as a whole was changed to a limited liability company by shares and entered the stage of pre-listing
counseling period. With solid accumulation of algorithm and strong hardware and software development
capabilities, Hikrobot focused on mobile robot and machine vision business, and continued to help the development
of global intelligent manufacturing. Other innovative businesses continued to develop rapidly and gradually
openning up new opportunities. The innovative businesses as a whole accounted for 16.46% of the Company's
revenue in the first half year of 2021 and is gradually becoming a new driving force for the Company's further
development.
(3) Conduct prudent operation and ensure supply chain security
During the reporting period, the Company worked closely with its supplier partners and continued the high
inventory strategy for raw materials, continuously promoting the replenishment and optimization of raw materials
to cope with the uncertainty of overseas political and epidemic situations and to safeguard the supply chain.
Meanwhile, the Company strengthened the fine management of supply chain, optimized delivery efficiency, and
ensured stable delivery of products and solutions.
(4) Improve operations and continue to promote the construction of a compliance system
Hikvision has always adhered to the business philosophy of "professionalism, integrity and honesty". Facing
external pressure, the Company has strengthened its cost control and optimization efforts and strived to improve its
internal operation. Meanwhile, the Company continues to promote the construction of a global compliance system
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Hikvision 2021 Half Year Report
to further drive internationalization of the Company's governance system and control level, and to ensure a healthy
and sustainable business development.
Year-over-Year Changes in Key financial data
Unit: RMB
First half year of First half year of
YoY (%) Note of Change
2021 2020
Market demand has grown steadily, and
Operating Income 33,902,098,368.10 24,271,159,243.76 39.68%
operating income has grown accordingly
Increase in accordance with operating
Operating costs 18,205,195,764.46 12,193,719,945.38 49.30%
income growth
Selling expenses 4,190,678,349.80 3,420,291,518.42 22.52% No significant change
Administrative expenses 880,577,747.56 864,959,489.94 1.81% No significant change
Affected by fluctuation in foreign
Financial expenses -122,524,438.07 -227,972,206.73 46.25% exchange rate, increase in foreign
currency exchange losses
The evaluation and appraisal time period
of key software company for the
Company was inconsistent (the evaluation
and appraisal time period of the previous
Income Tax Expenses 427,530,365.26 952,552,145.97 -55.12%
year was in the third quarter), led to
inconsistent confirmation and recognition
time period for income tax settlement and
tax difference, resulting in fluctuations
R&D investments 3,877,769,884.09 3,063,423,679.69 26.58% No significant change
Net cash flows from Operating
1,962,853,772.15 69,966,340.57 2705.43% Increase in sales collection in this period
Activities
Net cash flows from Investment
-1,093,875,260.68 -1,494,484,813.41 26.81% No significant change
Activities
Increase in net outflow of borrowings and
Net cash flows from Financing
-8,179,553,539.73 -3,478,066,296.84 -135.18% dividend payments during the current
Activities
reporting period
Affected by the increase in financing
Net increase in cash and cash
-7,384,873,758.46 -4,892,161,050.91 -50.95% expenditures in the current reporting
equivalents
period
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.
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Hikvision 2021 Half Year Report
Operating income structure
Unit：RMB
First half year of 2021 First half year of 2020
YoY Change
Proportion to Proportion to (%)
Amount Amount
operating income operating income
Total operating income 33,902,098,368.10 100.00% 24,271,159,243.76 100.00% 39.68%
Classified by industry
Video products and video
33,902,098,368.10 100.00% 24,271,159,243.76 100.00% 39.68%
services
Classified by product/business
Products and Services 27,912,531,793.59 82.33% 21,460,287,527.81 88.42% 30.07%
Constructions 411,198,176.84 1.21% 300,094,975.52 1.24% 37.02%
Subtotal 28,323,729,970.43 83.54% 21,760,382,503.33 89.66% 30.16%
1,871,108,774.85 5.52% 1,179,170,706.81 4.86% 58.68%
Smart home business
Robotic business 1,220,189,435.48 3.60% 542,724,420.13 2.23% 124.83%
Other innovative businesses 2,487,070,187.34 7.34% 788,881,613.49 3.25% 215.27%
Note
Subtotal 5,578,368,397.67 16.46% 2,510,776,740.43 10.34% 122.18%
Classified by region
24,434,618,189.74 72.07% 16,728,998,825.16 68.93% 46.06%
Domestic
Overseas 9,467,480,178.36 27.93% 7,542,160,418.60 31.07% 25.53%
Note: “Other innovative businesses” include products of the corresponding businesses of the innovative business subsidiary HikAuto,
HikMicro, HikSemi, HikImaging, HikFire, Rayin and others. Same below.
Composition of operating income of the three major business groups in ChinaNote
Unit: 100mn
First half year of 2021 First half year of 2020 YoY Change (%)
PBG 77.17 59.68 29.31%
EBG 72.19 59.14 22.07%
SMBG 61.74 30.00 105.80%
Total 211.10 148.82 41.85%
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.
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Hikvision 2021 Half Year Report
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 33,902,098,368.10 18,205,195,764.46 46.30% 39.68% 49.30% -3.46%
video services
Classified by product/business
Products and Services 27,912,531,793.59 14,658,060,589.78 47.49% 30.07% 40.72% -3.98%
Constructions 411,198,176.84 291,842,825.70 29.03% 37.02% 24.06% 7.42%
Subtotal 28,323,729,970.43 14,949,903,415.48 47.22% 30.16% 40.35% -3.83%
Smart home business 1,871,108,774.85 1,172,850,667.99 37.32% 58.68% 58.16% 0.21%
Robotic business 1,220,189,435.48 642,233,986.43 47.37% 124.83% 136.14% -2.52%
Other innovative 2,487,070,187.34 1,440,207,694.56 42.09% 215.27% 172.60% 9.06%
businesses
Subtotal 5,578,368,397.67 3,255,292,348.98 41.64% 122.18% 111.13% 3.05%
Classified by region
24,434,618,189.74 13,251,763,818.92 45.77% 46.06% 49.62% -1.28%
Domestic
Overseas 9,467,480,178.36 4,953,431,945.54 47.68% 25.53% 48.46% -8.08%
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
First half year of 2021 First half year of 2020 Increase/
Industry Item Proportion to Proportion to decrease over
Amount Amount
operating cost operating cost previous year
Video products
and video Operating cost 18,205,195,764.46 100.00% 12,193,719,945.38 100.00% 49.30%
services
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Hikvision 2021 Half Year Report
Classified by product/business
Unit: RMB
First half year of 2021 First half year of 2020
YoY Change
Product/business Item Proportion to Proportion to
Amount Amount (%)
operating cost operating cost
Products and
Operating cost 14,658,060,589.78 80.52% 10,416,612,740.28 85.43% 40.72%
Services
Constructions Operating cost 291,842,825.70 1.60% 235,236,267.84 1.93% 24.06%
Subtotal Operating cost 14,949,903,415.48 82.12% 10,651,849,008.12 87.36% 40.35%
Smart home
Operating cost 1,172,850,667.99 6.44% 741,575,630.80 6.08% 58.16%
business
Robotic business Operating cost 642,233,986.43 3.53% 271,967,778.00 2.23% 136.14%
Other innovative
Operating cost 1,440,207,694.56 7.91% 528,327,528.46 4.33% 172.60%
businesses
Subtotal Operating cost 3,255,292,348.98 17.88% 1,541,870,937.26 12.64% 111.13%
Explanations on relevant data changed for more than 30% on a year-over-year base
√Applicable □Inapplicable
Affected by the COVID-19 epidemic in the first half year of 2020, the Company's performance had been
significantly impacted. In 2021, the economy is recovering, and various business sectors are growing rapidly, while
various innovative businesses have also maintained rapid growth.
IV. Non-Core Business Analysis
□Applicable √Inapplicable
V. Analysis of assets and liabilities
1. Material changes of asset items
Unit：RMB
June 30th 2021 December 31st 2020
YoY
Percentage Percentage Change Note of significant change
Amount of total Amount of total (%)
assets assets
Cash dividend distributions lead
Cash and bank balances 27,732,252,975.47 31.83% 35,459,729,108.27 39.98% -8.15%
to a decrease in monetary funds
Accounts receivable 23,802,312,768.61 27.32% 21,979,380,716.86 24.78% 2.54% No significant change
Contract assets 184,239,074.35 0.21% 245,754,510.98 0.28% -0.07% No significant change
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Hikvision 2021 Half Year Report
June 30th 2021 December 31st 2020
YoY
Percentage Percentage Change Note of significant change
Amount of total Amount of total (%)
assets assets
Expansion of production and
Inventories 15,094,505,445.05 17.33% 11,477,906,040.70 12.94% 4.39% sales scale led to increased
procurement and stocking
Long-term equity No significant change
861,206,603.12 0.99% 864,026,710.23 0.97% 0.02%
investment
Fixed assets 6,258,625,760.95 7.18% 5,876,007,536.60 6.62% 0.56% No significant change
Increase in construction
investments on Science and
Construction in process 1,705,622,399.38 1.96% 1,425,235,193.72 1.61% 0.35%
Technology Parks in various
locations
Impact of the implementation of
Right-of-use assets 379,766,223.73 0.44% - - 0.44%
the new lease standard in 2021
decrease in demands for
Short-term borrowings 3,142,918,040.93 3.61% 3,999,246,634.59 4.51% -0.90%
temporary capital turnover
No significant change
Contract liabilities 2,490,674,992.63 2.86% 2,161,166,671.26 2.44% 0.42%
Long-term borrorwings 1,911,015,151.08 2.19% 1,961,167,761.30 2.21% -0.02% No significant change
Impact of the implementation of
Lease liabilities 199,494,520.78 0.23% - - 0.23%
the new lease standard in 2021
2. Main overseas assets
□ Applicable √ Inapplicable
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Hikvision 2021 Half Year Report
3. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB
Provision
Profit or loss Cumulative for decline
Purchased
from change in changes in fair in value Sales
amount
Item Opening balance fair value during value included in during the during the Closing balance
during the
the current equity current period
period
reporting period reporting
period
Financial assets
Derivative
22,679,846.77 9,989,549.68 32,620,061.54
financial assets
Other non-current
491,939,067.27 -23,277,319.84 468,661,747.43
financial assets
Receivables for
1,959,601,195.25 1,120,170,492.09
financing
Subtotal of
2,474,220,109.29 -13,287,770.16 1,621,452,301.06
financial assets
Financial
7,405,771.15 3,738,240.76 3,651,541.77
Liabilities
Whether there were any material changes on the measurement attributes of major assets of the Company during the
reporting period:
□ Yes √ No
4. Assets right restrictions as of the end of reporting period
Unit: RMB
Item Closing Book Value (RMB) Reasons for being restricted
Cash and bank balance 92,288,855.62 Various cash deposits and other restricted funds
Notes receivable 610,856,089.84 Endorsed to suppliers
Right-of-use assets 34,568,644.07 Right-of-use assets resulted from sale and leaseback
Long-term receivables 1,812,883,463.06 Pledge for long-term borrowings
Total 2,550,597,052.59
VI. Analysis of Investments
1. Overview
√Applicable □ Inapplicable
18
Hikvision 2021 Half Year Report
Investment during the first half year of Investment during the first half year of
YoY (%)
2021 (RMB) 2020 (RMB)
1,097,198,077.60 1,309,423,538.62 -16.21%
2. Significant equity investment during the current reporting period
□Applicable √Inapplicable
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Hikvision 2021 Half Year Report
3. Significant non-equity investment during the current reporting period
√ Applicable □ Inapplicable
Unit: RMB
Reasons
for not
Investment Cumulative amount of reaching
Fixed assets
Invest Project during the investment by the end Source of Project planned Disclosure Date
Project name investment or Disclosure Index (if applicable)
method industry current reporting of the current reporting funds schedule progress (if applicable)
not
period period and
expected
benefits
Video Announcement on Investment and
Chengdu Science and
Self- product and September 23rd Construction of Chengdu Science
Technology Park YES 128,026,667.79 649,653,461.12 Self-fund 32.99% None
built video 2017 and Technology Park Project in
Project
service Chengdu (No. 2017-033)
Video Announcement on Investment and
Chongqing Science
Self- product and September 23rd Construction of Chongqing
and Technology Park YES 144,149,199.63 393,959,450.42 Self-fund 100.00% None
built video 2017 Science and Technology Park in
Project-phase 2
service Chongqing (No. 2017-035)
Video Announcement on Investment and
Hangzhou Innovation Self- product and Specific September 23rd Construction of Hangzhou
YES 24,816,079.94 362,637,782.43 35.34% None
Industry Park built video Loan 2017 Innovation Industry Park Project
service in Hangzhou (No. 2017-034)
Video Announcement on Investment and
Xi’an Science and
Self- product and September 23rd Construction of Xi’an Science and
Technology Park YES 115,889,658.76 128,568,833.69 Self-fund 5.64% None
built video 2017 Technology Park in Xi’an (2017-
Project
service 031)
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Hikvision 2021 Half Year Report
Reasons
for not
Investment Cumulative amount of reaching
Fixed assets
Invest Project during the investment by the end Source of Project planned Disclosure Date
Project name investment or Disclosure Index (if applicable)
method industry current reporting of the current reporting funds schedule progress (if applicable)
not
period period and
expected
benefits
Video None Announcement on Investment and
Shijiazhuang Science
Self- product and Self-fund March 22nd 201 Construction of Shijiazhuang
and Technology Park YES 46,522,461.29 48,583,014.75 5.41%
built video 8 Science and Technology Park in
Project
service Shijiazhuang (2018-016)
Video None
EZVIZ Industry Self- product and Self-fund
YES 41,416,910.43 43,748,977.51 5.48% - -
Park built video
service
Video None
Zhengzhou Science
Self- product and Self-fund
and Technology YES 4,800,801.74 18,330,211.27 3.78% - -
built video
Park Project
service
Video None Announcement on Investment and
Wuhan Intelligence Self- product and Self-fund September 23rd Construction of Wuhan
YES - 4,339,622.64 0.15%
Industry Park Project built video 2017 Intelligence Industry Park in
service Wuhan (2017-036)
Video None Announcement on Investment and
Wuhan Science and
Self- product and Self-fund September 23rd Construction of Wuhan Science
Technology Park YES 2,043,915.61 4,414,462.50 0.34%
built video 2017 and Technology Park Project in
Project
service Wuhan (2017-032)
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Hikvision 2021 Half Year Report
Reasons
for not
Investment Cumulative amount of reaching
Fixed assets
Invest Project during the investment by the end Source of Project planned Disclosure Date
Project name investment or Disclosure Index (if applicable)
method industry current reporting of the current reporting funds schedule progress (if applicable)
not
period period and
expected
benefits
Total -- -- -- 507,665,695.19 1,654,235,816.33 -- --
Note: In accordance with the Company's Authorization Management System, EZVIZ Industry Park and Zhengzhou Science and Technology Park project were approved
by the chairman of the board of directors.
4. Financial asset investment
(1) Securities Investments
□ Applicable √ Inapplicable
There no such case in the reporting period.
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Hikvision 2021 Half Year Report
(2) Derivatives Investments
√ Applicable □ Inapplicable
Unit: 0,000 RMB
Proportion
of closing
investment Actual
Sold
Initial amount to gain or
Operation amount
Whether Whether Type of investment Opening Purchased amount Impairment Closing the loss
party of Termination during
Related related derivatives amount of Initial date investment during the reporting provisions investment Company’s during
derivatives date the
party transaction investment derivatives amount period (if any) amount net assets the
investment reporting
investment at the end reporting
period
of the period
reporting
period
foreign
Commercial
No No exchange 351,670.38 October 21st 2020 December 351,670.38 295,153.42 269,295.04 4.99% 7,044.03
bank
contract 20th 2021
Total 351,670.38 -- -- 351,670.38 295,153.42 269,295.04 4.99% 7,044.03
Capital source of derivatives investment Company’s own fund
Prosecution (if applicable) Nil
Announcement date for approvals of
derivatives investment from the board of December 25th 2019/April 17th 2021
directors (if any)
Announcement date for approvals of
derivatives investment from the general May 16th 2020
meeting of shareholders (if any)
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Hikvision 2021 Half Year Report
Risk analysis and control measures (including
For details of the risk analysis and control measures, please refer to the Announcement on Conducting Foreign Exchange Hedging Transactions
but not limited to, market risk, liquidity risk,
in 2020 (NO. 2019-065) dated December 25th 2019 and the Announcement on Conducting Foreign Exchange Hedging Transactions in 2021
credit risk, operational risk, legal risk, etc.) of
(NO. 2021-030) dated April 17th 2021 of the Company
holding derivatives during the reporting period
Change of market price or fair value of
invested derivatives during the reporting The Company’s accounting of derivatives’ fair value is mainly about the outstanding contracts signed with banks for forward exchange
period; specific methods, related assumptions settlement during the reporting period. Held-for-trading financial assets/liabilities are determined with difference between the quoted price and
and parameter setting of the derivatives’ fair forward exchange price in outstanding forward exchange contracts at the end of the period.
value analysis should be disclosed
During the current reporting period, whether
there was significant changes of accounting
policies and accounting principles of the Nil
Company’s derivatives comparing to the prior
reporting period
Specific opinions on the Company’s
derivatives investments and risk control from Nil
independent directors
VII. Disposal of significant assets and equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable
There is no disposal of significant assets for the Company during the current reporting period.
2. Sale of significant equity:
□ Applicable √ Inapplicable
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Hikvision 2021 Half Year Report
VIII. Analysis of major subsidiaries and holding companies
√Applicable □Inapplicable
Information about major subsidiaries, and holding companies that contribute above 10% of the Company’s net
profit
Company Company Registered
Principal business Total assets Net assets Net profit
name type capital
General projects: technical services,
technology development, technical
consultation, technical exchanges,
technology transfer, technology promotion;
digital video surveillance system
manufacturing; digital video surveillance
system sales; security equipment
manufacturing; security equipment sales;
computer software, hardware and peripheral
equipment manufacturing; computers
Wholesale of software, hardware and
auxiliary equipment; Electronic components
manufacturing; electronic components
wholesale; Internet of Things equipment
manufacturing; Internet of Things
equipment sales; mobile terminal equipment
Hangzhou
manufacturing; mobile terminal equipment
Hikvision 1,000
Subsidiary sales; communication equipment 39,935,834,510.78 4,542,786,482.29 42,871,317.85
Technology million
manufacturing; communication equipment
Co., Ltd.
sales; Production of special labor protection
products; sales of special labor protection
products; manufacturing of refrigeration
and air-conditioning equipment; sales of
refrigeration and air-conditioning
equipment; Manufacturing of electrical
machinery and equipment; sales of
electrical machinery and equipment;
manufacturing of transformers, rectifiers
and inductors; Research and development
of power distribution switch control
equipment; sales of power distribution
switch control equipment; sales of batteries;
sales of electronic products; Artificial
intelligence hardware sales; software
development; computer system services;
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Hikvision 2021 Half Year Report
security system monitoring services;
information technology consulting services;
information system integration services;
information system operation and
maintenance services; Big data services;
Internet data services; data processing and
storage support services; Internet of Things
technical services; Internet of Things
application services; marketing planning
(except for projects that must be approved
in accordance with the law, carry out
business activities independently according
to law with business license).
Licensed items: import and export of
goods; import and export of technology
(items that are subject to approval in
accordance with the law can only be carried
out after approval by the relevant
departments, and the specific business items
are subject to the approval results).
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Hikvision 2021 Half Year Report
Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable
Equity acquisition and disposal
Company name Impact on overall production results
method during the reporting period
Shanghe Smart City Technology Co., Ltd. Cash contribution Business development
Chongqing EZVIZ Electronics Co., Ltd. Cash contribution Business development
Hangzhou EZVIZ Technology Co., Ltd. Releasing the entrustment Reorganization
agreement
Hundure Technology (Shanghai) Co., Ltd. Liquidation & cancellation Reorganization
IX. Structural entities controlled by the Company
□ 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 global epidemic outbreak: The Company strengthened epidemic control and strove to protect
the health of its employees at home and abroad. Meanwhile, the Company relied on its own technical reserves and
product capabilities to help control the epidemic outbreak. The Company will keep on paying close attention to the
impact of the outbreak and make active adjustments to cope with the outbreak.
(2) Supply chain risk: The Company made its best efforts to make appropriate arrangements for supply chain,
reasonably regulated and controlled its inventory, and formulated effective alternative solutions in a timely manner.
In the meantime, the Company reinforced its R&D efforts in basic areas and enhanced the accumulation of
underlying fundamental technologies.
(3) Risk of technological upgrading: the Company maintained its investments in R&D, explored cutting-
edge technologies in depth, and held the lead in core and key technologies; The Company has formed effective and
market-oriented R&D through stable and reliable R&D management, kept its products and technologies constantly
responsive to market demands and achieved sustainable development of its business.
(4) Internal management risk: The Company continued to implement management reforms and learn from
outstanding companies, learned successful management practices and continuously optimized its organizational
capabilities.
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Hikvision 2021 Half Year Report
(5) Global business risk: The Company proactively studied and researched policies, trade laws, regulations
and relevant substantial changes of various countries around the world, and developed countermeasures to reduce
various potential trade compliance risks.
(6) Legal compliance risk: The Company continued to strengthen the construction of compliance and risk
control system, conducted immediate and full-cycle risk supervision and control of business, and improved its legal
compliance capability.
(7) Exchange rate fluctuation risk: The Company attached great importance to the control of exchange rate
risk, and hedged and avoided exchange rate risk by various means while ensuring security and liquidity. For
exchange rate risk exposure, the Company actively adopted financial hedging tools (e.g., hedging), not taking
speculation as the purpose, and conducted risk management in a reasonable manner.
(8) Network security risk: The Company has always attached great importance to and actively taken
measures to improve the security performance of its products and systems, established the product security system
by setting up a professional information security team, integrated product security requirements, security design,
security development, security testing and other links into the product development process, ensured continuous
improvement of product and system security and provided customers with more secure products and solutions in
the Internet/IoT application environment.
(9) Risk of intellectual property rights: The Company has set up a professional team for intellectual
property rights which is responsible for the daily management and maintenance of intellectual property rights (e.g.,
trademarks and patents) and for combating infringement against the Company's intellectual property rights by
various legal means (e.g., administrative investigation and court litigation).
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Hikvision 2021 Half Year Report
Section IV Corporate Governance
I. Annual General Meeting and Extraordinary General Meetings convened during the Reporting
Period
1. Annual General Meeting convened during the reporting period
Proportion
of Resolution of the
Meeting Nature Convened Date Disclosure Date
participating Meeting
investors
9 proposals including the
Proposal on Election of
Non-Independent
Directors of the Fifth
The first Extraordinary Extraordinary Session of the Board of
General Meeting of General Meeting 70.0131% March 5th 2021 March 6th 2021 Directors were reviewed
Shareholders in 2021 of Shareholders and voted. For details,
please refer to the
Company's
announcement: No.
2021-020.
20 proposals including
the 2020 Annual Report
and Summary were
Annual General reviewed and voted. For
2020 Annual General Meeting 70.2837% May 14th 2021 May 15th 2021
Meeting details, please refer to the
Company's
announcement: No.
2021-039.
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ Inapplicable
II. Changes of directors, supervisors and senior management personnel
√Applicable □Inapplicable
29
Hikvision 2021 Half Year Report
Name Position Types of change Data Reason
Left the position after the
Gong Hongjia Director March 5th 2021 General election
expiry of his tenure
Left the position after the March 5th 2021 General election
Cheng Tianzong Independent Director
expiry of his tenure
Left the position after the March 5th 2021 General election
Wang Zhidong Independent Director
expiry of his tenure
Appointment and March 5th 2021 General election
Wang Qiuchao Director
dismissal
Wu Xiaobo Independent Director Elected March 5th 2021 General election
Hu Ruimin Independent Director Elected March 5th 2021 General election
Li Shuhua Independent Director Elected March 5th 2021 General election
Guan Qingyou Independent Director Elected March 5th 2021 General election
Chairman of the Left the position after the March 5th 2021 General election
Chneg Huifang
Supervisory Board expiry of his tenure
Chairman of the Appointment and March 5th 2021 General election
Hong Tianfeng
Supervisory Board dismissal
Appointment and March 5th 2021 General election
Lu Jianzhong Supervisor
dismissal
Left the position after the General election
Gong Hongjia Vice Chairman March 12th 2021
expiry of his tenure
Senior deputy general Left the position after the March 12th 2021 General election
Fu Baijun
manager expiry of his tenure
Senior deputy general Left the position after the March 12th 2021 General election
Jiang Yufeng
manager expiry of his tenure
Senior deputy general March 12th 2021 General election
Xu Peng Hired
manager
Senior deputy general March 12th 2021 General election
Guo Xudong Hired
manager
III. Profit distribution and capitalizing of capital reserves 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 2021.
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Hikvision 2021 Half Year Report
IV. The implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or other incentive plans
√Applicable □Inapplicable
During the reporting period, the Company has completed the third vesting, repurchase and cancellation of the
2016 Restricted Share Incentive Sheme and the first vesting, repurchase and cancellation of the 2018 Restricted
Share Incentive Sheme
On December 25th 2020, the Proposal on Vesting Conditional Achievements for the Third Vesting Period of
the 2016 Restricted Share Incentive Scheme, the Proposal on the Third Repurchase and Cancellation of the
Granted but Unvested Restricted Shares under the Restricted Share Incentive Scheme of 2016, the Proposal on
Vesting Conditional Achievements for the First Vesting Period of the 2018 Restricted Share Incentive Scheme, and
the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under the
Restricted Share Incentive Scheme of 2018 were deliberated and adopted by the 20th Meeting of the fourth session
of the Board of Directors and the 17th Meeting of the fourth session of the Board of Supervisors of the Company.
According to the authorization of the 2nd Extraordinary General Meeting of 2016 and the 2nd Extraordinary
General Meeting of 2018 of the Company, The Company handled the vesting of a total of 66,796,439 restricted
shares for 5,937 incentive grantees. The restricted shares were listed for circulation on January 20th 2021; at the
same time, 7,611,076 granted but unvested shares that did not meet the incentive conditions were repurchased and
cancelled, and the repurchase and cancellation procedures were completed as of June 30th 2021.
For details, please refer to the Indicative Announcement on Vesting, Listing and Circulation of Shares in the
Third Vesting Period of the 2016 Restricted Share Incentive Scheme (Announcement No.: 2021-004), Indicative
Announcement on Vesting, Listing and Circulation of Shares in the First Vesting Period of the 2018 Restricted Share
Incentive Scheme (Announcement No. 2021-005), and Announcement on the Completion of the Third Repurchase
and Cancellation of the Granted but Unvested Restricted Shares under the 2016 Restricted Share Incentive Scheme
and the First Repurchase and Cancellation of the Granted but Unvested Restricted Shares under the 2018 Restricted
Share Incentive Scheme (Announcement No.: 2021-042) issued by the Company on January 18th 2021 ad July 2nd
2021, respectively.
As of the end of the current reporting period, the Company has a total of 68,762,683 granted but unvested
shares, accounting for 0.74% of the Company's total share capital.
The Company performs accounting treatments related to restricted share incentive plans in accordance with
31
Hikvision 2021 Half Year Report
the requirements of Accounting Standards for Business Enterprises No. 11-Share Payments and other related
accounting standards. The cost of the shares granted by the 2018 Restricted Share Incentive Scheme is amortized
during the vesting period.
During the reporting period, the amortization cost of the Company's 2018 Restricted Share Incentive Scheme
had no significant impact on the Company's financial status and operating results. For details, please refer to
Financial Statement Note (XI)-Share-based Payment.
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Hikvision 2021 Half Year Report
Section V Environmental and Social Responsibility
I. Significant environmental issues
Whether the Company or any of its subsidiarids should be categorized as a critical pollutant enterprises published
by national environmental protection department
□Yes √No.
II. Social responsibilities
During the reporting period, the Company has not yet carried out poverty alleviation and rural revitalization.
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Hikvision 2021 Half Year Report
Section VI Significant Events
I. Complete and incomplete commitments of the Company and its actual controller, shareholders, related
parties, acquirers, and other related parties for the commitments during the current reporting period.
□Applicable √Inapplicable
No such case during the current reporting period.
II. The Company’s funds used by the controlling shareholder or its related parties for non-operating
purposes.
□ Applicable √ Inapplicable
No such case duiring the current reporting period.
III. Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
No such case in the current reporting period.
IV. Engagement and disengagement of the CPA firm
Has the half year report been audited?
□ Yes √ No
The Company's half year report has not been audited.
V. Explanation given by the board of directors, supervisory committee and independent directors (if
applicable) regarding the “non-standard auditor’s report” issued by the CPA firm for the current reporting
period
□ Applicable √ Inapplicable
VI. Explanation given by the board of directors regarding the “non-standard auditor’s report” for
the prior reporting period
□ Applicable √ Inapplicable
34
Hikvision 2021 Half Year Report
VII. Bankruptcy and restructuring
□ Applicable √ Inapplicable
No such case during the reporting period.
VIII. Material litigations
Material litigation and arbitration
□ Applicable √ Inapplicable
The Company had no material litigation or arbitration during the current reporting period.
Other litigation matters
□ Applicable √Inapplicable
IX. Punishments and rectifications
□ Applicable √ Inapplicable
No such case during the reporting period.
X. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Inapplicable
XI. Significant related-party transaction
1. Related-party transactions arising from routine daily operations
√Applicable □Inapplicable
35
Hikvision 2021 Half Year Report
Proportion Approved Whether
Pricing Trading
Type of Content of to the trading exceed
principles for Amount Settlement Disclosure Disclosure
Related party Relationship related related amount of quota the
related party （0’000 method date reference
transaction transaction similar (0’000 approved
transactions RMB）
transactions. RMB） quota
Under the common
Subsidiaries or
control of the Payment on
research institutes of Procurement 95,404.99 4.25% 150,000 No
Company’s actual delivery
CETC
controller.
The Company’s
shareholder who holds
Shanghai Fullhan
more than 5% of the Payment on
Micro Co., Ltd. and Procurement 43,502.85 1.94% 90,000 No
Company’s shares, Gong delivery
its subsidiaries Announcement on
Hongjia is the director of
Reference the forecast of
the related party Procurement,
market price; March 13th daily related-
Maxio Technology Wu Weiqi, director of receiving
Agreed on Payment on 2021 party transactions
(Hangzhou) Co., Ltd. the Company, served as Procurement services 9,276.50 0.41% 20,000 No
price delivery in 2021 (No.
and its subsidiaries director of this company
2021-024)
Wuhu Sensor
Wu Weiqi, director of
Technology Co., Payment on
the Company, served as Procurement 5,364.45 0.24% 15,000 No
Ltd.and its delivery
director of this company
subsidiaries
Zhiguang Hailian Big
Data Technology Co., An associated company Payment on
Procurement - 0.00% 500 No
Ltd. and its held by the company delivery
subsidiaries
36
Hikvision 2021 Half Year Report
Proportion Approved Whether
Pricing Trading
Type of Content of to the trading exceed
principles for Amount Settlement Disclosure Disclosure
Related party Relationship related related amount of quota the
related party （0’000 method date reference
transaction transaction similar (0’000 approved
transactions RMB）
transactions. RMB） quota
A joint venture company Procurement
held by the company;
Zhejiang Haishi
The Company’s senior Payment on
Huayue Digital - 0.00% 500 No
management is delivery
Technology Co., Ltd.
appointed as this
company’s chairman
Shenzhen Hikvision Procurement
City Service A joint venture company Payment on
3.10 0.00% 500 No
Operation Co., Ltd. held by the company delivery
and its subsidiaries
Under the common
Subsidiaries or
control of the Payment on
research institutes of Sales 23,576.67 0.70% 70,000 No
Company’s actual delivery
CETC
controller.
Daishan Hailai Yunzhi A joint venture company Providing Payment on Announcement on
Sales 1,685.88 0.05% 5,000 No
Technology Co., Ltd. held by the company services, Reference delivery the forecast of
Wuhu Sensor selling market price; March 13th daily related-
Wu Weiqi, director of
Technology Co., products, Agreed on Payment on 2021 party transactions
the Company, served as Sales 46.55 0.00% 1,000 No
Ltd.and its commercial price delivery in 2021 (No.
director of this company
subsidiaries goods 2021-024)
A joint venture company
Zhejiang Haishi
held by the company; Payment on
Huayue Digital Sales 757.13 0.02% 5,000 No
The Company’s senior delivery
Technology Co., Ltd.
management is
37
Hikvision 2021 Half Year Report
Proportion Approved Whether
Pricing Trading
Type of Content of to the trading exceed
principles for Amount Settlement Disclosure Disclosure
Related party Relationship related related amount of quota the
related party （0’000 method date reference
transaction transaction similar (0’000 approved
transactions RMB）
transactions. RMB） quota
appointed as this
company’s chairman
Sanmenxia Xiaoyun
An associated company Payment on
Vision Technology Sales - 0.00% 1,000 No
held by the company delivery
Co., Ltd.
Shenzhen Wanyu The Company’s senior
Security Service management is Payment on
Sales - 0.00% 500 No
Technology Co., Ltd. appointed as directors of delivery
and its subsidiaries this company
Maxio Technology Wu Weiqi, director of
Payment on
(Hangzhou) Co., Ltd. the Company, served as Sales 10.84 0.00% 1,000 No
delivery
and its subsidiaries director of this company
Qinghai Qingtang Big An associated company Payment on
Sales 52.37 0.00% 1,000 No
Data Co., Ltd. held by the company delivery
Zhiguang Hailian Big An associated company
Data Technology Co., held by the company Payment on
Sales 2,307.94 0.07% 5,000 No
Ltd. and its delivery
subsidiaries
Jiaxin Haishi JiaAn
An associated company Payment on
Zhicheng Technology Sales 809.85 0.02% 7,000 No
held by the company delivery
Co., Ltd.
Xuzhou Kangbo A joint venture company Payment on
Sales 1.17 0.00% 1,000 No
Urban Operation held by the company delivery
38
Hikvision 2021 Half Year Report
Proportion Approved Whether
Pricing Trading
Type of Content of to the trading exceed
principles for Amount Settlement Disclosure Disclosure
Related party Relationship related related amount of quota the
related party （0’000 method date reference
transaction transaction similar (0’000 approved
transactions RMB）
transactions. RMB） quota
Management Service
Co., Ltd.
Guangxi Haishi A joint venture company
Urban Operation held by the company Payment on
Sales 34.74 0.00% 2,000 No
Management Co., Ltd. delivery
and its subsidiaries
Zhejiang City Digital A joint venture company Payment on
Sales 1,276.85 0.04% 6,000 No
Technology Co., Ltd. held by the company delivery
Shenzhen Hikvision A joint venture company
City Service held by the company Payment on
Sales 1,097.71 0.03% 6,000 No
Operation Co., Ltd. delivery
and its subsidiaries
Yunnan Yinghai A joint venture company
Payment on
Parking Service Co., held by the company Sales - 0.00% 4,000 No
delivery
Ltd.
Total 185,209.59 - 392,000 - - - -
Details on significant sales return None
Total amount of related transactions projected based on
different categories, and the actual performance during the None
current reporting period (if any)
Reasons on significant difference between trading price and
Not applicable
market referencing price (if applicable)
39
Hikvision 2021 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. Deals with related-party financial companies and financial companies controlled by the Company
√Applicable □Inapplicable
Deposit business
Maximum daily Clsoing
Deposit interest Opening Balance Amout incurred
Related Party Relationship deposit limit Balance(0,000
rate range (0,000 RMB) (0,000 RMB)
(0,000 RMB) RMB)
CETC Finance Under the
Co., Ltd. common control
of the Company's 1,089,594.87 2.00% 400,000.00 - 400,000.00
ultimate
controller
Credit or other financial services
Total Amount Actual amout incurred
Related Party Relationship Busiess Type
(0,000 RMB) (0,000 RMB)
CETC Finance Co., Ltd. Under the common control of
the Company's ultimate Credit 300,000.00 -
controller
6. Other significant related party transactions
√Applicable □Inapplicable
40
Hikvision 2021 Half Year Report
On April 18th 2019, the Proposal on Entering into the Entrusted Management Agreement and Related-Party
Transaction with the Controlling Shareholder was deliberated and adopted by the 10th Meeting of the fourth session
of the Board of Directors of the Company. On April 19th 2019, the Company entered into the Entrusted Management
Agreement with CETHIK and Hangzhou EZVIZ Technology Co., Ltd. (hereinafter referred to as "EZVIZ
Technology"), agreeing that CETHIK shall entrust EZVIZ Network to enforce the actual operation and management
rights over its wholly-owned subsidiary EZVIZ Technology. On March 27th 2021, to further optimize the business
process of EZVIZ Network, based on the actual production and operation needs of EZVIZ Network, and upon
consensus of the three parties through amicable and full negotiation, EZVIZ Network signed the Termination
Agreement of the Entrusted Management Agreement with CETHIK and EZVIZ Technology. EZVIZ Network will
no longer exercise the actual operation and management rights over EZVIZ Technology or be responsible for the
production, operation and management of EZVIZ Technology.
Disclosure website for provisional reports on significant related-party transactions:
Title of provisional repo/rts Disclosure date Disclosure website
Announcement on the Signing of the " ntrusted Management Agreement"
and Related Party Transactions with the Controlling Shareholders April 20th 2019 www.cninfo.com.cn
(Announcement No. 2019-026)
Announcement on the Signing of the " ntrusted Management Agreement"
Termination Agreement and Related Party Transactions Progress March 30th 2021 www.cninfo.com.cn
(Announcement No. 2021-025)
XII. 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
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Hikvision 2021 Half Year Report
On December 3rd 2018, the Proposal on Carrying out Financial Leasing Related Party Transactions between
the Holding Innovative Business Subsidiary and China Electronics Technology Leasing Co. Ltd. was approved at
the 7th meeting of the 4th Board of Directors of the Company. In 2019, the Company's holding subsidiary Hangzhou
HikMicro Sensing Technology Ltd. and China Electronics Technology Leasing Co. Ltd. signed the Financial
Leasing Contract, where HIKMICRO used some of its own equipment to start leaseback business with China
Electronics Technology Leasing Co. Ltd.; the financing amount was RMB 70 million, term of lease 48 months and
annual lease rate 3.80%.
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Hikvision 2021 Half Year Report
2. Significant guarantees
√Applicable □ Inapplicable
Unit: RMB’0000
Guarantees provided by the Company to its subsidiaries
Disclosure date of announcement of Actual Guarantee
Guarantee Actual Term of Fulfilled or
Guaranteed party guaranteed Type of guarantee for a related
the guarantee cap Cap occurrence date guarantee not
amount party or not
Hangzhou Hikvision Technology October 24th 2019.10.24-
April 17th 2021 1,010,000.00 415,499.35 Joint guarantee No Yes
Co., Ltd. 2019 2025.09.25
Urumqi HaiShi Xin’An Electronic April 17th 2021 March 29th Joint guarantee 2019.03.29-
40,000.00 26,307.14 No Yes
Technology Co., Ltd. 2019 2028.06.20
Luo Pu HaiShi Ding Xin Electronic April 17th 2021 March 26th Joint guarantee 2019.03.26-
30,000.00 22,240.00 No Yes
Technology Co., Ltd. 2019 2035.06.26
Pi Shan HaiShi Yong An Electronic April 17th 2021 March 26th Joint guarantee 2019.03.26-
30,000.00 21,978.00 No Yes
Technology Co., Ltd. 2019 2040.06.26
Mo Yu HaiShi Electronic April 17th 2021 March 26th Joint guarantee 2019.03.26-
25,000.00 17,980.00 No Yes
Technology Co., Ltd. 2019 2035.03.26
Hangzhou Hikvision System April 17th 2021 November 29th Joint guarantee 2019.11.29-
46,000.00 14,558.33 No Yes
Technology Co., Ltd. 2019 2023.11.17
Yu Tian HaiShi Mei Tian Electronic April 17th 2021 March 26th Joint guarantee 2019.03.26-
30,000.00 9,560.00 No Yes
Technology Co., Ltd. 2019 2034.03.26
April 17th 2021 September 15th Joint guarantee 2020.09.15-
Hikvision Singapore Pte. Ltd. 78,900.00 6,354.75 No Yes
2020 2023.12.31
Chongqing Hikvision Technology April 17th 2021 March 23rd Joint guarantee 2020.03.23-
82,250.00 2,955.08 No Yes
Co., Ltd. 2020 2022.3.22
Hangzhou Hikvision Electronics April 17th 2021 Joint guarantee 2021.03.06-
25,000.00 March 6th 2021 2,019.09 No Yes
Co., Ltd. 2022.3.05
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Hikvision 2021 Half Year Report
2018.05.10-
Hikvision International Co., Ltd. April 17th 2021 33,000.00 May 10th 2018 1,957.13 Joint guarantee No Yes
2022.5.31
Wuhan Hikvision Technology Co., April 17th 2021 Not happened during the reporting period
20,000.00
Ltd.
Shijiazhuang Hikvision Technology April 17th 2021 Not happened during the reporting period
20,000.00
Co., Ltd.
Xi’an Hikvision Digital Technology April 17th 2021 Not happened during the reporting period
20,000.00
Co., Ltd.
Chengdu Hikvision Digital April 17th 2021 Not happened during the reporting period
20,000.00
Technology Co., Ltd.
Shanghe Smart City Technology Co., April 17th 2021 Not happened during the reporting period
20,000.00
Ltd.
Zhenping Haikang Juxin Digital April 17th 2021 Not happened during the reporting period
18,000.00
Technology Co., Ltd.
Hefei Hikvision Digital Technology April 17th 2021 Not happened during the reporting period
10,000.00
Co., Ltd.
Nanchang Hikvision Digital April 17th 2021 Not happened during the reporting period
10,000.00
Technology Co., Ltd.
Zhengzhou Hikvision Digital April 17th 2021 Not happened during the reporting period
10,000.00
Technology Co., Ltd.
Nanjing Hikvision Digital April 17th 2021 Not happened during the reporting period
10,000.00
Technology Co., Ltd.
Chongqing Hikvision System April 17th 2021 Not happened during the reporting period
10,000.00
Technology Co., Ltd.
Prama Hikvision India Private April 17th 2021 Not happened during the reporting period
6,000.00
Limited
44
Hikvision 2021 Half Year Report
Hikvision USA Inc. April 17th 2021 2,100.00 Not happened during the reporting period
Hikvision Europe B.V. April 17th 2021 2,000.00 Not happened during the reporting period
PT. Hikvision Technology Indonesia April 17th 2021 1,400.00 Not happened during the reporting period
Hikvision Turkey Technology And April 17th 2021 Not happened during the reporting period
350.00
Security Systems Commerce JSC
Total guarantee cap for subsidiaries approved during the reporting Total actual guarantee amount for
1,610,000.00 subsidiaries during the reporting 781,997.72
period(B1)
period(B2)
Total actual guarantee balance for
Total approved guarantee cap for subsidiaries at the end of the reporting
1,610,000.00 subsidiaries at the end of the 541,408.87
period(B3)
reporting period(B4)
Guarantees provided by the Company’s subsidiary to another subsidiary
Actual Actual Guarantee for a
Disclosure date of announcement of Guarantee Term of Fulfilled or
Guaranteed party occurrence guaranteed Type of guarantee related party or
the guarantee cap Cap guarantee not
date amount not
Hangzhou Haikang Intelligent April 17th 2021 Not happened during the reporting period
50,000.00
Technology Co., Ltd.
Hangzhou Hikmicro Intelligent April 17th 2021 Not happened during the reporting period
30,000.00
Technology Co., Ltd.
Hangzhou Hikstorage Technology April 17th 2021 Not happened during the reporting period
10,000.00
Co., Ltd.
Total actual guarantee amount for
Total guarantee cap for subsidiaries approved during the reporting period
90,000.00 subsidiaries during the reporting -
(C1)
period (C2)
Total actual guarantee balance for
Total approved guarantee cap for subsidiaries at the end of the reporting
90,000.00 subsidiaries at the end of the -
period（C3）
reporting period(C4)
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Hikvision 2021 Half Year Report
The total amount of Company’s guarantees (that is, the total of the first three items)
Total actual guarantee amount
Total guarantee cap approved during the reporting period（A1+B1+C1） 1,700,000.00 during the reporting period 781,997.72
（A2+B2+C2）
Total actual guarantee balance at
Total approved guarantee cap at the end of reporting period（A3+B3+C3） 1,700,000.00 the end of the reporting period 541,408.87
（A4+B4+C4）
Portion of the total actual guarantee (A4+B4+C4) amount in net assets of
10.23%
the Company
Of which:
The balance of guarantee for shareholders, actual controllers and their
0
affiliates. (D)
Amount of debt guarantees provided directly or indirectly for entities with a
508,916.69
liability-to-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
508,916.69
(D+E+F)
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.
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Hikvision 2021 Half Year Report
3. Entrusted financial management
□ Applicable √ Inapplicable
No such case during the reporting period
4. Significant contracts for daily operations
□ Applicable √ Inapplicable
5. Other significant contracts
□ Applicable √ Inapplicable
XIII. Other significant events
√ Applicable □ Inapplicable
On January 8th 2021, the Proposal on Adjustment of Domestic Listing Board for the Spin-off of the Company’s
Subsidiary Hangzhou EZVIZ Network Co., Ltd., the Proposal on the Spin-off of the Subsidiary Hangzhou EZVIZ
Network Co., Ltd. to be Listed on the Science and Technology Innovation Board and other related proposals were
deliberated and adopted by the 21st Meeting of the fourth session of the Board of Directors and the 18th Meeting of
the fourth session of the Board of Supervisors of the Company, agreeing the initial public offering of ordinary shares
(A shares) in RMB of EZVIZ Network after the shareholding reform and listing of EZVIZ Network on the science
and technology innovation board of Shanghai Stock Exchange. For details, please refer to the Proposal of Hangzhou
Hikvision Digital Technology Co., Ltd. on the Spin-off of its Subsidiary Hangzhou EZVIZ Network Co., Ltd. to be
Listed on the Science and Technology Innovation Board issued by the Company on January 9th 2021.
XIV. Significant events of the Company’s subsidiaries
√ Applicable □Inapplicable
During the reporting period, the Company steadily promoted the spin-off of EZVIZ Network to be listed on
the Science and Technology Innovation Board of Shanghai Stock Exchange. On January 8th 2021, the Proposal on
47
Hikvision 2021 Half Year Report
the Spin-off of the Company’s Subsidiary Hangzhou EZVIZ Network Co., Ltd. to be Listed on the Science and
Technology Innovation Board was deliberated and adopted by the 21st Meeting of the fourth session of the Board of
Directors and the 18th Meeting of the fourth session of the Board of Supervisors of the Company. On June 23rd 2021,
the Proposal on the Overall Restructuring of the the Company’s Holding Subsidiary Hangzhou EZVIZ Network Co.,
Ltd. as Limited Liability Company by Shares was deliberated and adopted by the 3rd Meeting of the Strategy
Committee in 2021 of the fifth session of the Board of Directors of the Company. On June 24th 2021, EZVIZ
Network as a whole was restructured and changed to a limited liability company by shares. On July 2nd 2021,
Zhejiang Securities Regulatory Bureau of China Securities Regulatory Commission accepted the application filed
by EZVIZ Network for initial public offering of A shares and pre-listing counseling for listing on the Science and
Technology Innovation Board.
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Hikvision 2021 Half Year Report
Section VII 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 New Shares Issued transferred Others Sub-total Shares Ratio
share
from capital reserve
1. Shares subject to conditional restriction(s) 1,248,025,260 13.36% -55,138,469 -55,138,469 1,192,886,791 12.78%
1)State holdings
2)Shares held by State-owned corporate
3) Other domestic shares 306,488,295 3.28% -76,220,858 -76,220,858 230,267,437 2.47%
Including: held by domestic corporates
held by domestic natural person 306,488,295 3.28% -76,220,858 -76,220,858 230,267,437 2.47%
4) Foreign shares 941,536,965 10.08% 21,082,389 21,082,389 962,619,354 10.31%
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Hikvision 2021 Half Year Report
Before the change Changes in the period (+, -) After the change
Share
Bonus
Shares Ratio New Shares Issued transferred Others Sub-total Shares Ratio
share
from capital reserve
Including:held by overseas corporates
held by overseas natural person 941,536,965 10.08% 21,082,389 21,082,389 962,619,354 10.31%
2. Shares without restriction 8,095,391,930 86.64% 47,527,393 47,527,393 8,142,919,323 87.22%
1) RMB ordinary shares 8,095,391,930 86.64% 47,527,393 47,527,393 8,142,919,323 87.22%
2) Domestically listed foreign shares
3) Foreign shares listed overseas
4) Others
3. Total 9,343,417,190 100.00% -7,611,076 -7,611,076 9,335,806,114 100.00%
Reason for the changes in share capital
√Applicable □Inapplicable
Partial Repurchase and Cancellation of the Restricted Share Plan
On December 25th 2020, the Proposal on the Third Repurchase and Cancellation of the Granted but Unvested Restricted Shares under the Restricted Share
Incentive Scheme of 2016 and the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under the Restricted Share
50
Hikvision 2021 Half Year Report
Incentive Scheme of 2018 were deliberated and adopted by the 20th Meeting of the fourth session of the Board of Directors and the 17th Meeting of the fourth session
of the Board of Supervisors of the Company. According to the authorization of the 2nd Extraordinary General Meeting of 2016 and the 2nd Extraordinary General
Meeting of 2018 of the Company, the Board of Directors agreed to repurchase and cancel some of the granted but unvested restricted share that did not meet the
conditions for share incentive. On March 5th 2021, the Proposal on the Third Repurchase and Cancellation of Granted but Unvested Restricted Shares under the
Restricted Share Incentive Scheme of 2016 and the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under the
Restricted Share Incentvie Scheme of 2018 were deliberated and adopted by the 1st Extraordinary General Meeting in 2021. On June 30th 2021, the Company has
completed the repurchase and cancellation procedures for the above 7,611,076 restricted shares. The total share capital of the Company was reduced by 7,611,076
shares from 9,343,417,190 shares to 9,335,806,114 shares.
Approval for changes in share capital
√Applicable □Inapplicable
On December 25th 2020, the Proposal on the Third Repurchase and Cancellation of Granted but Unvested Restricted Shares under the Restricted Share
Incentive Scheme of 2016 and the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under the Restricted Share
Incentive Scheme of 2018 were deliberated and adopted by the 20th Meeting of the fourth session of the Board of Directors and the 17th Meeting of the fourth session
of the Board of Supervisors of the Company. According to the authorization of the 2nd Extraordinary General Meeting of 2016 and the 2nd Extraordinary General
Meeting of 2018 of the Company, the Board of Directors agreed to repurchase and cancel 7,611,076 shares of the granted but unvested restricted shares that did not
meet the conditions for share incentive. On March 5th 2021, the Proposal on the Third Repurchase and Cancellation of Granted but Unvested Restricted Shares under
the Restricted Share Incentive Scheme of 2016 and the Proposal on the First Repurchase and Cancellation of Granted but Unvested Restricted Shares under the
Restricted Share Incentive Scheme of 2018 were deliberated and adopted by the 1st Extraordinary General Meeting in 2021.
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Hikvision 2021 Half Year Report
Transfer for changes in share capital
√Applicable □Inapplicable
On June 30th 2021, the third repurchase and cancellation under the Restricted Share Incentive Scheme of 2016 and the first repurchase and cancellation under the
Restricted Share Incentive Scheme of 2018 were completed, and the total share capital of the Company was reduced by 7,611,076 shares from 9,343,417,190 shares to
9,335,806,114 shares.
Information about the implementation of share repurchase
□Applicable √Inapplicable
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
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Hikvision 2021 Half Year Report
Unit: Share
Opening restricted Increased in Vested in current Closing Date of
Name of shareholder Note for restricted shares
shares current period period restricted shares unlocking
Gong Hongjia 762,461,110 200,043,704 962,504,814 Restricted shares for senior executives According to the
relevant
Restricted shares for senior executives + partial of the provisions of
Hu Yangzhong 136,591,708 48,150 136,639,858 unlocked restricted shares turning into restricted shares for shares
senior executives management for
senior executives
Grantees of restricted share January 20th
143,170,198 0 66,796,439 68,762,683 Equity Incentive Restricted Shares
incentive plan (consolidated) 2021
Restricted shares for senior executives + partial of the
Jiang Haiqing 7,718,761 36,900 7,755,661 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Wu Weiqi 8,483,992 44,550 8,528,542 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Jia Yonghua 3,303,858 32,850 3,336,708 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Li Pan 3,184,688 32,850 3,217,538 unlocked restricted shares turning into restricted shares for
senior executives According to the
relevant
Restricted shares for senior executives + partial of the
provisions of
Huang Fanghong 191,875 44,000 235,875 unlocked restricted shares turning into restricted shares for
shares
senior executives
management for
Restricted shares for senior executives + partial of the
Fu Baijun 266,250 165,750 432,000 senior executives
unlocked restricted shares turning into restricted shares for
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Hikvision 2021 Half Year Report
Opening restricted Increased in Vested in current Closing Date of
Name of shareholder Note for restricted shares
shares current period period restricted shares unlocking
senior executives
Restricted shares for senior executives + partial of the
Jiang Yufeng 207,225 118,275 325,500 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Xu Lirong 194,400 32,850 227,250 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
He Hongli 207,225 41,400 248,625 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Pu Shiliang 77,105 84,820 161,925 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Jin Yan 50,800 96,200 147,000 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Bi Huijuan 36,750 94,200 130,950 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Jin Duo 49,275 32,850 82,125 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives + partial of the
Cai Changyang 49,275 32,850 82,125
unlocked restricted shares turning into restricted shares for
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Hikvision 2021 Half Year Report
Opening restricted Increased in Vested in current Closing Date of
Name of shareholder Note for restricted shares
shares current period period restricted shares unlocking
senior executives
Restricted shares for senior executives + partial of the
Xu Ximing 0 29,550 29,550 unlocked restricted shares turning into restricted shares for
senior executives
Restricted shares for senior executives
Wang Qiuchao 26,250 0 26,250
Restricted shares for senior executives
Qu Liyang 11,812 0 11,812
Total 1,066,282,557 201,011,749 66,796,439 1,192,886,791 -- --
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 difference of 7,611,076 shares between ending balance of restricted shares of total incentive restricted shares (consolidated) for grantees and the calculated
balance (opening balance + increased restricted shares - unlocked shares) was due to repurchasing and cancelling of 7,611,076 shares on June 30th 2021.
3. The three executives Jiang Haiqing, Jia Yonghua and Li Pan have left office on October 25th 2019. The original term of office expires on March 20th 2021, and the
shares held by them are kept restricted in in accordance with the relevant regulations.
4. Gong Hongjia left the position as a director of the Company on March 5th 2021 as his term of office expires, and Fu Baijun and Jiang Yufeng left the position as
senior executives of the Company on March 12th 2021 as their terms of office expires. The shares held by them were locked up in accordance with relevant regulations.
II. Issuance and listing of securities
□Applicable √Inapplicable
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Hikvision 2021 Half Year Report
III. Total number of shareholders and their shareholdings
Unit: Share
Total number of common shareholders at Total number of preferred shareholders with voting rights restored at the end of
219,924 0
the end of the reporting period the current reporting period (if any)
Particulars about shares held by common shareholders with a shareholding percentage over 5% or the Top 10 of them
Increase/ The number of Pledged or frozen
Share- Total common shares The number of
Nature of decrease during common shares
Name of shareholder holding held at the end of the shares held without
shareholder the reporting held with trading Status Amount
percentage (%) reporting period trading restrictions
period restrictions
China Electronics
State-owned
Technology HIK 38.91% 3,632,897,256 0 0 3,632,897,256 Pledged 50,000,000
corporation
Group Co., Ltd.
Overseas
Gong Hongjia 10.31% 962,504,814 -54,110,000 962,504,814 0 Pledged 202,100,000
individual
Xinjiang Weixun Domestic
Investment non-state-
4.83% 450,795,176 0 0 450,795,176 Pledged 17,810,000
Management owned
Limited Partnership corporation
Shanghai Gaoyi
Asset Management
Partnership (Limited
Other 2.30% 215,000,000 -35,000,000 0 215,000,000 - -
Partnership) - Gaoyi
Adjacent Mountain
1 Yuanwang Fund
Xinjiang Pukang Domestic
Investment Limited non-state-owned 1.95% 182,510,174 0 0 182,510,174 Pledged 35,630,000
Partnership corporation
The 52nd Research State-owned 1.94% 180,775,044 0 0 180,775,044 - -
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Hikvision 2021 Half Year Report
Institute at China corporation
Electronics
Technology
Group Corporation
Domestic
Hu Yangzhong 1.66% 155,246,477 -26,940,000 136,639,858 18,606,619 - -
Individual
Hong Kong
Securities Clearing Overseas
1.08% 100,546,982 -235,883,008 0 100,546,982 - -
Company corporation
Ltd.(HKSCC)
Bank of China Co.,
Ltd. - Efunds Blue
Chip Select Hybrid Other 0.96% 90,000,160 20,000,135 0 90,000,160 - -
Securities
Investment Fund
Domestic
Guo Minfang 0.72% 66,936,698 45,954,340 0 66,936,698 - -
Individual
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 Limited
Explanation on associated relationship or
Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding
concerted actions among the above-
shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership.
mentioned 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)
Number of common shares without Type of shares
Name of shareholder trading restrictions held at the period-
Type Number
end
China Electronics Technology HIK Group Co., Ltd. 3,632,897,256 RMB common shares 3,632,897,256
Xinjiang Weixun Investment Management Limited Partnership 450,795,176 RMB common shares 450,795,176
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Hikvision 2021 Half Year Report
Shanghai Gaoyi Asset Management Partnership (Limited Partnership) - Gaoyi
215,000,000 RMB common shares 215,000,000
Adjacent Mountain 1 Yuanwang Fund
Xinjiang Pukang Investment Limited Partnership 182,510,174 RMB common shares 182,510,174
The 52nd Research Institute at China Electronics Technology Group Co. Ltd. 180,775,044 RMB common shares 180,775,044
Hong Kong Securities Clearing Company Ltd.(HKSCC) 100,546,982 RMB common shares 100,546,982
Bank of China Co., Ltd. - Efunds Blue Chip Select Hybrid Securities Investment
90,000,160 RMB common shares 90,000,160
Fund
Guo Minfang 66,936,698 RMB common shares 66,936,698
Central Huijin Investment Co., Ltd. 65,818,800 RMB common shares 65,818,800
CITIC Securities Company Limited 58,796,352 RMB common shares 58,796,352
Explanation on associated relationship
China Electronics Technology HIK Group Co., Ltd. and The 52nd Research Institute at China Electronics Technology Group Co., Ltd. are all
and concerted actions among top ten
subject to control of China Electronics Technology Group Co. Ltd. Ms. Chen Chunmei, limited partner of Xinjiang Pukang Investment Limited
common shareholders holding shares
Partnership, is the spouse of Mr. Gong Hongjia, foreign individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding
without trading restrictions, and among
shares in both Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership.
top ten common shareholders and top ten
Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-concert parties in
common shareholders holding shares
accordance with the Measures for Management of the Disclosure of the Shareholding Changes of Shareholders of the Listed Company.
without trading restrictions
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.Shareholding changes of directors, supervisors, senior management personnel
√ Applicable □ Inapplicable
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Hikvision 2021 Half Year Report
Shares
Shares Number of Number of Number of
Shares held at increased
decreased Shares held at restricted stocks restricted stocks restricted stocks
the beginning of during the
Tenure during the the end of the held at the granted in the held at the end
Name Title the current current
status current current reporting beginning of the current of the current
reporting period reporting
reporting period period (Shares) current reporting reporting period reporting period
(shares) period
(shares) period (shares) (shares) (shares)
(shares)
Chen Zongnian Chairman Incumbent 0 0 0 0 0 0 0
Qu Liyang Director Incumbent 15,750 0 0 15,750 0 0 0
Wang Qiuchao Director Incumbent 35,000 0 0 35,000 0 0 0
Director,
Hu Yangzhong General Incumbent 182,186,477 0 26,940,000 155,246,477 48,150 0 0
Manager (CEO)
Director,
Standing
Wu Weiqi Deputy Incumbent 11,371,389 0 2,740,300 8,631,089 44,550 0 0
General
Manager
Independent
Wu Xiaobo Incumbent 0 0 0 0 0 0 0
Director
Independent
Hu Ruimin Incumbent 0 0 0 0 0 0 0
Director
Independent
Li Shuhua Incumbent 0 0 0 0 0 0 0
Director
Independent
Guan Qingyou Incumbent 0 0 0 0 0 0 0
Director
Supervisor
Hong Tianfeng Incumbent 0 0 0 0 0 0 0
Chairman
Lu Jianzhong Supervisor Incumbent 0 0 0 0 0 0 0
Xu Lirong Supervisor Incumbent 303,000 0 0 303,000 32,850 0 0
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Hikvision 2021 Half Year Report
Shares
Shares Number of Number of Number of
Shares held at increased
decreased Shares held at restricted stocks restricted stocks restricted stocks
the beginning of during the
Tenure during the the end of the held at the granted in the held at the end
Name Title the current current
status current current reporting beginning of the current of the current
reporting period reporting
reporting period period (Shares) current reporting reporting period reporting period
(shares) period
(shares) period (shares) (shares) (shares)
(shares)
Senior Deputy
He Hongli General Incumbent 331,500 0 0 331,500 41,400 0 0
Manager
Senior Deputy
Cai Changyang General Incumbent 109,500 0 0 109,500 32,850 0 0
Manager
Senior Deputy
Xu Ximing General Incumbent 197,000 0 0 197,000 197,000 0 118,200
Manager
Senior Deputy
Bi Huijuan General Incumbent 273,000 0 0 273,000 168,000 0 73,800
Manager
Senior Deputy
Pu Shiliang General Incumbent 295,900 0 0 295,900 144,820 0 60,000
Manager
Senior Deputy
Jin Duo General Incumbent 109,500 0 0 109,500 32,850 0 0
Manager
Senior Deputy
General
Jin Yan Manager, Incumbent 284,000 0 0 284,000 162,200 0 66,000
Person in charge
of finance
60
Hikvision 2021 Half Year Report
Shares
Shares Number of Number of Number of
Shares held at increased
decreased Shares held at restricted stocks restricted stocks restricted stocks
the beginning of during the
Tenure during the the end of the held at the granted in the held at the end
Name Title the current current
status current current reporting beginning of the current of the current
reporting period reporting
reporting period period (Shares) current reporting reporting period reporting period
(shares) period
(shares) period (shares) (shares) (shares)
(shares)
Senior Deputy
Huang General
Incumbent 402,500 0 0 402,500 110,000 0 66,000
Fanghong Manager,
Board Secretary
Senior Deputy
Chen Junke General Incumbent 0 0 0 0 0 0 0
Manager
Senior Deputy
Xu Peng General Incumbent 128,740 0 51,496 77,244 128,740 0 77,244
Manager
Senior Deputy
Guo Xudong General Incumbent 73,800 0 29,520 44,280 73,800 0 44,280
Manager
Left the
Gong Hongjia Vice Chairman 1,016,614,814 0 54,110,000 962,504,814 0 0 0
position
Cheng Independent Left the
0 0 0 0 0 0 0
Tianzhong Director position
Independent Left the
Wang Zhidong 0 0 0 0 0 0 0
Director position
Supervisor Left the
Cheng Huifang 0 0 0 0 0 0 0
Chairman position
61
Hikvision 2021 Half Year Report
Shares
Shares Number of Number of Number of
Shares held at increased
decreased Shares held at restricted stocks restricted stocks restricted stocks
the beginning of during the
Tenure during the the end of the held at the granted in the held at the end
Name Title the current current
status current current reporting beginning of the current of the current
reporting period reporting
reporting period period (Shares) current reporting reporting period reporting period
(shares) period
(shares) period (shares) (shares) (shares)
(shares)
Senior Deputy Left the
Fu Baijun General position 495,000 0 0 495,000 163,950 0 63,000
Manager
Senior Deputy Left the
Jiang Yufeng General position 325,500 0 0 325,500 36,900 0 0
Manager
Total -- -- 1,213,552,370 0 83,871,316 1,129,681,054 1,418,060 0 568,524
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.
V. Changes in controlling shareholders or actual controllers
Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
The Company's controlling shareholder has not changed during the reporting period.
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
No such change during the reporting period.
62
Hikvision 2021 Half Year Report
Section VIII Information of Preferred Shares
□ Applicable √ Inapplicable
There is no preferred share existed for the Company during the current reporting period.
63
Hikvision 2021 Half Year Report
Section IX Bonds
□ Applicable √ Inapplicable
64
Hikvision 2021 Half Year Report
Section X Financial Report
I. Audit report
Whether audit has been performed on the half year report
□ Yes √ No
The Company’s 2021 Half Year Report has not been audited
65
Hikvision 2021 Half Year Report
Consolidated Balance Sheet
Unit: RMB
Item Notes On June 30th 2021 On December 31st 2020
Current Assets:
Cash and bank balances (V)1 27,732,252,975.47 35,459,729,108.27
Held-for-trading financial
(V)2 32,620,061.54 22,679,846.77
assets
Notes receivable (V)3 1,125,257,592.27 1,303,252,705.19
Accounts receivable (V)4 23,802,312,768.61 21,979,380,716.86
Receivables for financing (V)5 1,120,170,492.09 1,959,601,195.25
Prepayments (V)6 388,106,182.29 296,334,689.86
Other receivables (V)7 802,820,545.50 519,143,350.82
Inventories (V)8 15,094,505,445.05 11,477,906,040.70
Contract assets (V)9 184,239,074.35 245,754,510.98
Non-current assets due within
(V)10 1,150,804,899.71 1,001,208,813.83
one year
Other current assets (V)11 856,896,820.26 497,914,506.64
Total Current Assets 72,289,986,857.14 74,762,905,485.17
Non-current Assets:
Long-term receivables (V)12 1,914,155,006.05 2,105,570,004.53
Long-term equity investment (V)13 861,206,603.12 864,026,710.23
Other non-current financial
(V)14 468,661,747.43 491,939,067.27
assets
Fixed assets (V)15 6,258,625,760.95 5,876,007,536.60
Construction in progress (V)16 1,705,622,399.38 1,425,235,193.72
Right-of-use assets (V)17 379,766,223.73
Intangible assets (V)18 1,231,275,229.76 1,251,317,923.69
Goodwill (V)19 258,727,796.75 274,203,665.20
Long-term deferred expenses (V)20 99,951,903.09 108,584,686.85
Deferred tax assets (V)21 885,071,819.69 820,380,954.86
Other non-current assets (V)22 765,777,717.03 721,511,156.08
Total Non-current Assets 14,828,842,206.98 13,938,776,899.03
Total Assets 87,118,829,064.12 88,701,682,384.20
66
Hikvision 2021 Half Year Report
Consolidated Balance Sheet-continued
Unit: RMB
th
Item Notes On June 30 2021 On December 31st 2020
Current Liabilities:
Short-term borrowings (V)23 3,142,918,040.93 3,999,246,634.59
Held-for-trading financial
(V)24 3,651,541.77 7,405,771.15
liabilities
Notes payable (V)25 1,209,714,255.88 1,036,920,229.85
Accounts payable (V)26 12,448,273,747.80 13,593,884,790.19
Contract liabilities (V)27 2,490,674,992.63 2,161,166,671.26
Payroll payable (V)28 2,825,271,298.77 2,877,786,430.71
Taxes payable (V)29 1,630,608,808.16 1,770,057,908.62
Other payables (V)30 2,047,386,116.59
1,525,053,355.95
Non-current liabilities due
(V)31 3,520,220,816.79 3,507,680,339.78
within one year
Other current liabilities (V)32 747,671,171.39 745,711,579.57
Total Current Liabilities 30,066,390,790.71 31,224,913,711.67
Non-current Liabilities:
Long-term borrowings (V)33 1,911,015,151.08 1,961,167,761.30
Lease liabilities (V)34 199,494,520.78
Long-term payables (V)35 8,389,432.79 39,595,459.35
Provisions (V)36 159,098,659.69 151,443,871.02
Deferred income (V)37 190,729,918.28 190,878,987.69
Deferred tax liabilities (V)21 90,172,303.25 92,979,823.89
Other non-current liabilitie (V)38 511,594,361.52 560,959,368.74
Total non-current liabilities 3,070,494,347.39 2,997,025,271.99
Total liabilities 33,136,885,138.10 34,221,938,983.66
Owners’ Equity
Share capital (V)39 9,335,806,114.00 9,343,417,190.00
Capital reserves (V)40 5,183,088,784.77 5,178,777,462.09
Less: Treasury shares (V)41 1,023,188,723.04 1,121,918,737.47
Other comprehensive income (V)42 (92,227,117.80) (84,993,926.94)
Surplus reserves (V)43 4,672,505,348.00 4,672,505,348.00
Retained earnings (V)44 34,829,891,072.86 35,806,523,826.37
Total owners' equity attributable 52,905,875,478.79 53,794,311,162.05
to owner of the Company
Minority equity 1,076,068,447.23 685,432,238.49
Total owners' equity 53,981,943,926.02 54,479,743,400.54
Total liabilities and owners'
87,118,829,064.12 88,701,682,384.20
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
67
Hikvision 2021 Half Year Report
Balance sheet of the parent company
Unit: RMB
th st
Item Notes On June 30 2021 On December 31 2020
Current Assets:
Cash and bank balances 22,705,834,693.65 23,476,606,330.08
Notes receivable 370,004,721.44 107,411,912.35
Accounts receivable (XV)1 23,907,902,986.24 24,193,392,179.36
Receivables for financing 21,579,977.87 12,216,215.65
Prepayments 72,051,251.61 62,946,087.75
Other receivables (XV)2 1,198,721,134.79 726,703,133.65
Inventories 325,074,405.29 204,216,250.73
Contract assets 3,563,131.57 3,311,250.08
Non-current assets due within
70,471,164.31 71,208,685.76
one year
Other current assets 24,586,583.85 10,110,869.86
Total Current Assets 48,699,790,050.62 48,868,122,915.27
Non-current Assets:
Long-term accounts receivable 35,746,795.12 47,762,348.01
Long-term equity investment (XV)3 6,920,188,651.76 6,727,373,453.97
Other non-current financial
465,777,527.43 489,054,847.27
assets
Fixed assets 2,742,544,667.09 2,762,700,997.83
Construction in progress 401,652,840.56 388,903,828.81
Right-of-use assets 75,012,711.54
Intangible assets 150,740,259.56 158,917,438.86
Long-term deferred expenses 36,014,031.88 43,264,691.73
Deferred tax assets 127,239,937.72 110,066,596.99
Other non-current assets 14,073,185.02 2,740,576.47
Total Non-current Assets 10,968,990,607.68 10,730,784,779.94
Total Assets 59,668,780,658.30 59,598,907,695.21
68
Hikvision 2021 Half Year Report
Balance sheet of the parent company - continued
Unit: RMB
th st
Item Notes On June 30 2021 On December 31 2020
Current Liabilities:
Short-term borrowings - 1,431,233,375.00
Accounts payable 373,452,615.01 540,664,512.60
Contract liabilities 305,078,391.27 240,629,015.92
Payroll payable 1,804,466,802.62 1,618,357,135.99
Taxes payable 1,458,059,455.50 1,539,095,196.97
Other payables 3,475,728,776.12 659,214,959.62
Non-current liabilities due
3,121,270,737.26 3,219,794,958.37
within one year
Other current liabilities 554,919,670.37 589,167,743.26
Total Current Liabilities 11,092,976,448.15 9,838,156,897.73
Non-current Liabilities:
Long-term borrowings - -
Lease liabilities 35,664,046.98
Provisions 74,510,513.83 85,230,299.84
Deferred Income 103,943,615.85 122,455,935.44
Other non-current liabilities 511,594,361.52 560,959,368.74
Total non-current liabilities 725,712,538.18 768,645,604.02
Total liabilities 11,818,688,986.33 10,606,802,501.75
Owners’ Equity
Share capital 9,335,806,114.00 9,343,417,190.00
Capital reserves 4,762,676,910.92 4,770,210,334.16
Less: Treasury shares 1,023,188,723.04 1,121,918,737.47
Surplus reserves 4,672,505,348.00 4,672,505,348.00
Retained earnings 30,102,292,022.09 31,327,891,058.77
Total owners' equity 47,850,091,671.97 48,992,105,193.46
Total liabilities and owners'
59,668,780,658.30 59,598,907,695.21
equity
69
Hikvision 2021 Half Year Report
Consolidated Income Statement
Unit: RMB
Amount for the Amount for the prior
Item Notes
current period period
I. Total operating income (V)45 33,902,098,368.10 24,271,159,243.76
Less：Total operating costs (V)45 18,205,195,764.46 12,193,719,945.38
Business taxes and surcharges (V)46 280,470,004.15 168,072,165.25
Selling expenses 4,190,678,349.80 3,420,291,518.42
Administrative expenses 880,577,747.56 864,959,489.94
Research and Development (R&D)
3,877,769,884.09 3,063,423,679.69
expenses
Financial expenses (V)47 (122,524,438.07) (227,972,206.73)
Including：Interest expenses 110,613,426.61 94,137,084.05
Interest income 411,998,029.35 306,973,066.18
Add: Other Income (V)48 1,076,047,292.02 994,778,394.15
Investment income (V)49 169,311,455.72 150,219,709.56
Including: Investment losses in
associated enterprise and joint-venture (1,821,107.11) (8,942,717.69)
enterprise
Losses from changes in fair values (V)50 (9,549,529.40) (20,436,436.96)
Credit impairment losses (V)51 (311,905,460.79) (152,772,469.77)
Impairment losses of assets (V)52 (258,336,972.38) (165,394,158.33)
Asset disposal income 3,760,896.87 21,554.99
II. Operating profit 7,259,258,738.15 5,595,081,245.45
Add: Non-operating income (V)53 42,002,720.90 31,721,207.08
Less: Non-operating expenses (V)54 18,855,336.72 7,378,765.56
III. Total profit 7,282,406,122.33 5,619,423,686.97
Less: Income tax expenses (V)55 427,530,365.26 952,552,145.97
IV. Net profit 6,854,875,757.07 4,666,871,541.00
4.1 Classification by continuous operation
(a) Net profit on continuous operation 6,854,875,757.07 4,666,871,541.00
(b) Net loss on terminated operation -
4.2 Classification by attribution of
ownership
(a) Profit or loss attributable to minority
373,451,103.68 42,898,710.13
shareholders
(b) Net profit attributable to owners of
6,481,424,653.39 4,623,972,830.87
parent company
V. Other comprehensive income, net of income
(V)42 (8,260,441.80) (26,796,178.37)
tax
Other comprehensive income attributable to owners
(7,233,190.86) (24,482,915.47)
of the Company, net of tax
(I) Items that will not be reclassified subsequently
- -
to profit or loss
(II) Other comprehensive income to be
(7,233,190.86) (24,482,915.47)
reclassified to profit or loss in subsequent periods
70
Hikvision 2021 Half Year Report
Amount for the Amount for the prior
Item Notes
current period period
1. Exchange differences arising on conversion of
financial statements denominated in foreign (7,233,190.86) (24,482,915.47)
currencies
Other comprehensive income attributable to
(1,027,250.94) (2,313,262.90)
minority interests, net of tax
VI. Total comprehensive income 6,846,615,315.27 4,640,075,362.63
Total comprehensive income attributable to owners
6,474,191,462.53 4,599,489,915.40
of the parent company
Total comprehensive income attributable to
372,423,852.74 40,585,447.23
minority shareholders
VII. Earnings per share
(I) Basic earnings per share (XVI)2 0.695 0.493
(II) Diluted earnings per share (XVI)2 0.695 0.493
71
Hikvision 2021 Half Year Report
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 12,917,726,385.73 11,584,268,085.23
Less: Total operating Cost (XV)4 2,509,299,575.74 2,922,006,997.48
Business taxes and surcharges 150,551,978.92 127,523,350.50
Selling expenses 1,783,224,294.68 1,378,570,165.20
Administrative expenses 314,616,473.56 382,045,872.60
Research and Development (R&D) expenses 2,720,506,560.34 2,190,386,100.23
Financial expenses (343,124,665.61) (200,603,140.91)
Including : Interest expenses 10,397,669.93 13,789,744.18
Interest income 308,600,906.50 215,501,593.83
Add: Other income 814,486,093.98 797,244,362.60
Investment income (XV)5 111,957,469.10 192,706,003.20
Including: Investment losses in
associated enterprise and joint-venture (3,799,685.50) (3,628,950.89)
enterprise
Losses from changes in fair values (23,277,319.84) (13,017,332.26)
Credit impairment losses (40,842,757.19) (15,105,661.89)
Gains (losses) on asset impairment (78,025.86) 1,095,084.66
Asset disposal income 3,833,547.49 2,863.84
II. Operating profit 6,648,731,175.78 5,747,264,060.28
Add: Non-operating income 3,802,072.88 8,749,908.65
Less: Non-operating expenses 9,890,999.61 1,267,522.90
III. Total profit 6,642,642,249.05 5,754,746,446.03
Less: Income tax expenses 410,183,878.83 812,649,281.30
IV. Net profit 6,232,458,370.22 4,942,097,164.73
V. Other comprehensive income, net of income tax - -
VI. Total comprehensive income 6,232,458,370.22 4,942,097,164.73
72
Hikvision 2021 Half Year Report
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 36,645,553,356.23 27,244,048,844.95
Receipts of tax refunds 1,948,391,576.36 1,718,589,299.56
Other cash receipts relating to operating activities (V)56(1) 1,110,525,511.10 707,923,092.38
Sub-total of cash inflows from operating activities 39,704,470,443.69 29,670,561,236.89
Cash payments for goods purchased and services received 25,383,102,780.25 19,503,212,062.93
Cash paid to and on behalf of employees 6,909,644,086.23 5,587,456,744.73
Payments of various types of taxes 2,538,596,422.62 2,463,618,915.37
Other cash payments relating to operating activities (V)56(2) 2,910,273,382.44 2,046,307,173.29
Sub-total of cash outflows from operating activities 37,741,616,671.54 29,600,594,896.32
Net Cash flows from Operating Activities (V)57(1) 1,962,853,772.15 69,966,340.57
II. Cash flows from Investing Activities:
Cash receipts from recovery of investments 3,831,776,958.90 967,045,868.90
Cash receipts from investment income 116,643,801.97 150,000,000.00
Net cash receipts from disposals of fixed assets, intangible assets and
6,017,061.25 2,855,619.32
other long-term assets
Other cash receipts relating to investing activities (V)56(3) 6,182,818.55 14,990,732.87
Sub-total of cash inflows from investing activities 3,960,620,640.67 1,134,892,221.09
Cash payments to acquire or construct fixed assets, intangible assets
1,285,789,284.17 1,397,220,231.04
and other long-term assets
Cash paid to acquire investments 3,761,350,647.76 1,232,156,803.46
Net cash paid for disposal of subsidiaries and other business units (VI)1(1) 7,355,969.42 -
Sub-total of cash outflows from investing activities 5,054,495,901.35 2,629,377,034.50
Net cash flows from Investing Activities (1,093,875,260.68) (1,494,484,813.41)
III. Cash flows from financing activities:
Cash receipts from capital contributions 5,750,000.00 154,264,987.03
Including: cash receipts from capital contributions from minority
5,750,000.00 154,264,987.03
owners of subsidiaries
Cash receipts from borrowings 1,439,276,251.61 3,445,980,000.00
Cash receipts from issuance of bonds and SCP - 999,500,000.00
Sub-total of cash inflows from financing activities 1,445,026,251.61 4,599,744,987.03
Cash repayments of borrowings 2,352,226,510.55 1,459,216,468.29
Cash payments for distribution of dividends or profits or settlement of
7,064,746,308.01 6,554,304,815.58
interest expenses
Including : Dividends and profits paid by subsidiaries to minority
1,500,000.00 -
shareholders
Other cash payments relating to financing activities (V)56(4) 207,606,972.78 64,290,000.00
Sub-total of cash outflows from financing activities 9,624,579,791.34 8,077,811,283.87
Net cash flows from Financing Activities (8,179,553,539.73) (3,478,066,296.84)
IV. Effect of foreign exchange rate changes on Cash and Cash
(74,298,730.20) 10,423,718.77
Equivalents
V. Net Decrease in Cash and Cash Equivalents (V)57(1) (7,384,873,758.46) (4,892,161,050.91)
Add: Opening balance of Cash and Cash Equivalents (V)57(1) 35,024,837,878.31 26,515,668,008.40
VI. Closing Balance of Cash and Cash Equivalents (V)57(2) 27,639,964,119.85 21,623,506,957.49
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Hikvision 2021 Half Year Report
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
14,695,266,847.20 10,102,563,972.01
Receipts of tax refunds 737,640,128.60 751,843,296.77
Other cash receipts relating to operating activities 810,301,539.46 375,348,009.24
Sub-total of cash inflows from operating activities 16,243,208,515.26 11,229,755,278.02
Cash payments for goods acquired and services received 3,146,599,060.27 3,428,323,188.51
Cash payments to and on behalf of employees 3,533,262,244.48 3,021,694,357.17
Payments of various types of taxes 1,854,362,234.39 1,820,418,512.27
Other cash payments relating to operating activities 1,193,441,671.96 1,332,281,567.50
Sub-total of cash outflows from operating activities 9,727,665,211.10 9,602,717,625.45
Net Cash flows from Operating Activities 6,515,543,304.16 1,627,037,652.57
II. Cash flows from Investing Activities:
Cash receipts from recovery of investments - 2,800,000.00
Cash receipts from investment income 120,143,801.97 150,000,000.00
Net cash receipts from disposals of fixed assets, intangible assets and
6,720,944.51 1,142,724.61
other long-term assets
Other cash receipts relating to investing activities 7,834,524,088.17 1,698,134,887.49
Sub-total of cash inflows from investing activities 7,961,388,834.65 1,852,077,612.10
Cash payments to acquire or construct fixed assets, intangible assets and
189,587,482.90 294,745,004.28
other long-term assets
Cash payments to acquire investments 205,000,000.00 725,748,730.00
Other cash payments relating to investing activities 8,126,886,684.35 -
Sub-total of cash outflows from investing activities 8,521,474,167.25 1,020,493,734.28
Net Cash flows from Investing Activities (560,085,332.60) 831,583,877.82
III. Cash flows from Financing Activities
Cash receipts from borrowings - 2,480,000,000.00
Cash receipts from issuance of bonds and SCP - 999,500,000.00
Other cash receipts relating to financing activities 9,731,292,792.85 -
Sub-total of cash inflows from financing activities 9,731,292,792.85 3,479,500,000.00
Cash repayments of borrowings 1,430,000,000.00 1,000,000,000.00
Cash payments for distribution of dividends or profits or settlement of
6,966,343,191.95 6,455,560,277.48
interest expenses
Other cash payments relating to financing activities 7,859,321,152.86 -
Sub-total of cash outflows from financing activities 16,255,664,344.81 7,455,560,277.48
Net Cash flows from Financing Activities (6,524,371,551.96) (3,976,060,277.48)
IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents (7,549,854.62) 32,767,298.25
V. Net decrease in cash and cash equivalents (576,463,435.02) (1,484,671,448.84)
Add: Opening balance of cash and cash equivalents 23,264,693,578.70 16,656,028,410.72
VI. Closing Balance of Cash and Cash Equivalents 22,688,230,143.68 15,171,356,961.88
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Hikvision 2021 Half Year Report
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
Amount for the first half of 2021
Owner’s equity attributable to the parent company
Items Other Minority Total owners'
Less: Treasury
Share capital Capital reserves comprehensive Surplus reserve Retained profits interests equity
share
income
I. Closing balance of the prior year 9,343,417,190.00 5,178,777,462.09 1,121,918,737.47 (84,993,926.94) 4,672,505,348.00 35,806,523,826.37 685,432,238.49 54,479,743,400.54
II. Increase or decrease in the
(7,611,076.00) 4,311,322.68 (98,730,014.43) (7,233,190.86) - (976,632,753.51) (497,799,474.52)
current period 390,636,208.74
(I) Total comprehensive income - - - (7,233,190.86) - 6,481,424,653.39 6,846,615,315.27
372,423,852.74
(II) Owners’ contributions and
(7,611,076.00) 4,311,322.68 (37,631,007.23) - - - 19,712,356.00 54,043,609.91
reduction in capital
1. Capital contribution from
- - - - - - 5,750,000.00 5,750,000.00
shareholders
2. Share-based payment
- 119,354,237.28 - - - - 14,754,392.73 134,108,630.01
recognized in owners’ equity
3. Others (7,611,076.00) (115,042,914.60) (37,631,007.23) - - - (792,036.73) (85,815,020.10)
(III) Profit distribution - - (61,099,007.20) - - (7,458,057,406.90) (1,500,000.00) (7,398,458,399.70)
1. Transfer to surplus reserves - - - - - - - -
2. Distributions to
- - (61,099,007.20) - - (7,458,057,406.90) (1,500,000.00) (7,398,458,399.70)
shareholders
3. Others - - - - - - - -
III. Closing balance of the current
9,335,806,114.00 5,183,088,784.77 1,023,188,723.04 (92,227,117.80) 4,672,505,348.00 34,829,891,072.86 1,076,068,447.23 53,981,943,926.02
period
75
Hikvision 2021 Half Year Report
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
Amount for the first half of 2020
Owner’s equity attributable to the parent company
Items Other Total owners'
Less: Treasury Minority interests
Share capital Capital reserves comprehensive Surplus reserve Retained profits equity
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
II. Increase or decrease in the current
- 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)
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
- 460,632,426.68 - - - - 20,536,489.07 481,168,915.75
recognized in owners’ equity
3.The amount formed by the
acquisition of minority - (33,016,354.85) - - - - (31,273,645.15) (64,290,000.00)
shareholders' equity
4.The amount formed by
transferring the shares of the - 2,380,508.81 - - - - (2,380,508.81) -
subsidiary
5.The amount formed by the
- 19,553,981.64 - - - - (19,553,981.64) -
disposal of asset 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
At June 30th 2021
76
Hikvision 2021 Half Year Report
Statement of Changes in Owners' Equity of the parent company
Unit: RMB
Amount for the first half of 2021
Item
Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits Total owners' equity
I. Closing balance of the prior year 9,343,417,190.00 4,770,210,334.16 1,121,918,737.47 4,672,505,348.00 31,327,891,058.77 48,992,105,193.46
II. Increase or decrease in the current period (7,611,076.00) (7,533,423.24) (98,730,014.43) - (1,225,599,036.68) (1,142,013,521.49)
(I) Total comprehensive income - - - - 6,232,458,370.22 6,232,458,370.22
(II) Owners’ contributions and reduction - -
(7,611,076.00) (7,533,423.24) (37,631,007.23) 22,486,507.99
in capital
1. Capital contribution from - -
- - - -
shareholders
2. Share-based payment - -
- 107,499,558.04 - 107,499,558.04
recognized in owners’ equity
3. Others (7,611,076.00) (115,032,981.28) (37,631,007.23) - - (85,013,050.05)
(III) Profit distribution - - (61,099,007.20) - (7,458,057,406.90) (7,396,958,399.70)
1.Transfer to surplus reserve - - - - - -
2.Distributions to shareholders - - (61,099,007.20) - (7,458,057,406.90) (7,396,958,399.70)
3. Others - - - - - -
III. Closing balance of the current period 9,335,806,114.00 4,762,676,910.92 1,023,188,723.04 4,672,505,348.00 30,102,292,022.09 47,850,091,671.97
77
Hikvision 2021 Half Year Report
Statement of Changes in Owners' Equity of the parent company-continued
Unit: RMB
Amount for the first half of 2020
Item
Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits Total owners' equity
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
II. 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
- 481,168,915.75 - - - 481,168,915.75
reduction in 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
78
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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 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.
On December 17th 2020, authorized by the Company’s second Extraordinary General Meeting in 2016, the Company
completed procedures of repurchase and cancellation of some of the 1,593,506 restricted stocks that did not meet the
incentive conditions, and the total share capital of the Company was adjusted to 9,343,417,190 shares.
On June 30th 2021, authorized by the Company’s second Extraordinary General Meeting in 2016 and the second
Extraordinary General Meeting in 2018, the Company completed procedures of repurchase and cancellation of some of
the 7,611,076 restricted stocks that did not meet the incentive conditions, and the total share capital of the Company was
adjusted to 9,335,806,114 shares. For details of the share capital, please refer to Note (V), 39.
As of June 30th 2021, the Company’s total registered capital is RMB 9,335,806,114, with total capital shares of
9,335,806,114 shares (face value RMB 1 per share), of which restricted A-shares were 1,192,886,791 shares, A-shares
without restriction are 8,142,919,323 shares.
The Company is involved in the sector of other electronic equipment manufacturing of the electronic industry. The
main business activities of the Company are licensed business items as follows: Class II and Class III ray device production;
Class II and Class III ray device sales; Radioisotope production (except for short-half-life radiopharmaceuticals for
medical use); Class II, Class III, Class IV and Class V radioactive sources sales; all kinds of engineering and construction
activities; goods import and export, and technology import and export( as for the items subject to the approval of laws,
business activities can be carried out only after being approved by the relevant departments, and the specific operation
items shall be in accordance with the approved norms.) General items: digital video surveillance system manufacturing;
digital video surveillance system sales; security equipment manufacturing; security equipment sales; manufacturing of IoT
equipment; sales of IoT equipment; manufacturing of intelligent unmanned aerial vehicles; sales of intelligent unmanned
aerial vehicles; manufacturing of service consumption robots; manufacturing of industrial robots; manufacturing of robots
for special operations; sales of intelligent robots; manufacturing of computer software and hardware and peripherals;
wholesale of computer software and hardware and auxiliary equipment; manufacturing of communication equipment;
sales of communication equipment; manufacturing of network equipment; sales of network equipment; manufacturing of
display devices; sales of display devices; manufacturing of intelligent on-board equipment; sales of intelligent on-board
equipment; manufacturing of auto parts and accessories; wholesale of auto parts and accessories; manufacturing of electric
signal appliance and device; sales of electric signal appliance and device; manufacturing of mechanical and electrical
equipment; sales of mechanical and electrical equipment; manufacturing of special labor protective supplies; sales of
special labor protective supplies; sales of electronic products; sales of digital cultural and creative technology equipment;
79
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
technical services, technical development, technical consultation, technical exchange, technical transfer and technical
promotion; software development; information system integration services; computer system services; research and
development of IoT technologies; IoT technology services; IoT application services; big data services; data processing
and storage support services; security system monitoring services; security technology defense system design and
construction services; electronic and mechanical equipment maintenance (excluding special equipment); parking lot
services; digital cultural and creative content application services; environmental protection monitoring; for-profit private
training institution engaged in science and technology training (excluding discipline and language cultural education and
training for primary and secondary school students). 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 3rd meeting of the 5th session
Board of Directors of the Company on July 23rd 2021.
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 2021, 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.
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.
80
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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 2021; 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 of 2021.
2. Accounting Period
The Group has adopted the calendar year as its accounting year from January 1st to December 31st each year.
3. Business Cycle
The business cycle refers to the period from purchase of assets used for processing to realization of cash or cash equivalents.
The Group business cycle is usually 12 months.
4. Functional currency
Renminbi (“RMB”) is the currency in the primary economic environments in which the Company and its domestic
subsidiaries are operated. The Company and its domestic subsidiaries take RMB as their functional currency. Overseas
subsidiaries of the Company determine their functional currency on the basis of the primary economic environment in
which it operates. For functional currency of overseas subsidiaries of the Company, see Note (V) 59. 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
81
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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.
82
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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.
83
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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.
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) "15.3.2 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
84
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
A foreign currency transaction is recorded, on initial recognition, by applying an exchange rate that approximates the
actual spot exchange rate on the date of transaction; The exchange rate that approximates the actual spot exchange rate on
the date of transaction is calculated according to the middle price of market exchange rate at the beginning of the month
in which the transaction happened.
At the balance sheet date, foreign currency monetary items are translated into [RMB] using the spot exchange rates at the
balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the
balance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss for
the period, except for exchange differences related to a specific-purpose borrowing denominated in foreign currency that
qualify for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period.
When the consolidated financial statements include foreign operation(s), if there is foreign currency monetary item
constituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates are
recognized as "exchange differences arising on conversion of financial statements denominated in foreign currencies " in
other comprehensive income, and in profit and loss for the period upon disposal of the foreign operation.
Foreign currency non-monetary items measured at historical cost are converted to the amounts in functional currency at
the spot exchange rates on the dates of the transactions. Foreign currency non-monetary items measured at fair value are
re-converted at the spot exchange rate on the date the fair value is determined. Difference between the re-converted
functional currency amount and the original functional currency amount is treated as changes in fair value (including
changes of exchange rate) and is recognized in profit and loss or as other comprehensive income.
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 closing balances of the prior year and the actual amount of the prior year are presented at the converted amounts of
the prior 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
85
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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.
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, Confirmation 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.
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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, other receivables (except for tax refund
receivable) 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:
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.
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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
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, contract assets, lease receivables, and financial guarantee contracts that do not meet the
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conditions for termination of recognition due to the transfer of financial assets or continue to be involved in financial
liabilities formed by the transferred financial assets, the Group will handle impairment on the basis of expected credit loss
and recognize loss provision.
The Group’s consideration of contract assets, notes receivable and accounts receivable that are generated by transactions
regulated by revenue standards and do not contain significant financing components or that do not consider financing
components in contracts that are not more than one year old, as well as those operating lease receivables formed from
transactions that are defined by the Accounting Standards for Business Enterprises No. 21-Leasing, the loss reserve shall
be measured based on the amount of the expected credit loss during the entire duration.
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.
(7) Whether significant changes have occurred in the value of security pledged for the debt or the quality of guarantee
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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, if any contractual payment for any
financial instrument that overdue 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 overdue 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’s accounts receivable, other receivables (except for tax refund receivables), contract assets, lease receivables
and long-term receivables, that are individually significant and the debtor has serious financial difficulties, are determined
on the basis of individual for its credit loss. For the remaining accounts receivable, other receivables (except for tax refund
receivables), contract assets, lease receivables and long-term receivables, an impairment matrix is used to determine the
credit losses of relevant financial instruments on a portfolio basis.The Group determines credit losses by assessing the
probability of breach and loss given default based on the credit ratings 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
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For the reporting period from January 1st 2021 to June 30th 2021
flow that the group should receive and the cash flow that it expects to receive.
In respect of lease receivables, the credit loss is the present value of the difference between the contractual cash
flow that the group should receive and the cash flow that it expects to receive.
In respect of a financial guarantee contract (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.
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.
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For the reporting period from January 1st 2021 to June 30th 2021
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.
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, confirmation 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, confirmation 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.
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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
continuous involvement in transferred financial assets, as well as the financial guarantee contracts, 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
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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 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.
(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.
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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 inventory mainly includes finished products, products in process and raw materials held in daily activities.
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
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.
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For the reporting period from January 1st 2021 to June 30th 2021
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. Assets held for sale
Non-current assets and disposal groups are classified as held for sale category when the Group recovers the book value
through a sale (including an exchange of non-monetary assets that has commercial substance) rather than continuing use.
Non-current assets or disposal groups classified as held for sale are required to satisfy the following conditions at the same
time: (1) the asset or disposal group is available for immediate sale in its present condition subject to terms that are usual
and customary for sales of such asset or disposal group; (2) the sale is highly probable, i.e. the Group has made a resolution
about a selling plan and obtained a confirmed purchase commitment and the sale is expected to be completed within one
year.
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Non-current assets or disposal groups classified as held for sale are measured at the lower of the book value and the net
amount of the fair value less the cost of disposal. Where the carrying amount is higher than the net amount of fair value
less the cost of disposal, the carrying amount should be reduced to the net amount of fair value less the cost of disposal,
and such reduction is recognized as impairment loss of assets and included in profit or loss for the period. In the meantime,
provision for impairment of held-for-sale assets is made. When there is an increase in the net amount of fair value of non-
current assets held for sale less the cost of disposal at the subsequent balance sheet date, the original deduction should be
reversed from impairment loss of assets recognized after the classification as held for sale, and the reversed amount is
included in profit or loss for the period. The impairment loss of assets recognized before the classification as held for sale
is not reversed.
Non-current assets or non-current assets within disposal groups classified as held for sale are not depreciated or amortized,
and the interests and other costs of liabilities of disposal group classified as held for sale continue to be recognized.
All or part of equity investments in an associate or joint venture are classified as held-for-sale assets. For the part that is
classified as held for sale, it is no longer accounted through equity method since the date of the classification.
15. Long-term Equity Investment
15.1 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.
15.2 Determination of initial investment cost
For a long-term equity, investment acquired through a business combination involving enterprises under common control,
the shares of merged party's book value of owners' equity in the final controlling party consolidated financial statements
obtained on the merger date shall be considered as the initial investment cost of long-term equity investment. The
differences between the initial investment cost of long-term equity investment and the paid cash, the transferred non-cash
assets and the book value of the assumed debts are adjusted against the capital surplus; if the capital surplus is not sufficient
to be offset, the remaining balance is adjusted against retained earnings. In the case of issued equity securities treated as
consolidation consideration, share of book value of owner's equity of merged party in the final controlling party
consolidated financial statements is regarded as initial investment cost of long-term equity investments on the date of
consolidation; capital reserve shall be adjusted in accordance with taking total nominal value of issued share as capital
share, the difference between the initial investment cost of long-term equity investments and total book value of issued
shares; In case the capital reserve is not enough for writing down, the retained earnings shall be adjusted.
For a long-term equity investment acquired through business combination not involving enterprises under common control,
and the merging cost confirmed on the purchased date are regarded as the initial investment cost.
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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.
Long-term equity investment obtained by other means other than long-term equity investment formed by business
combination shall be initially measured at cost.
15.3 Subsequent measurement and recognition of profit or loss
15.3.1 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.
15.3.2 Long-term equity investment accounted for using the equity method
Except for investments in associates and joint ventures that are wholly or partly classified as holding assets for sale, the
Group accounts for investment in associates and joint ventures using the equity method. An associate is an entity over
which the Group has significant influence and a joint venture is an entity over which the Group can only exercise joint
control along with other investors on the investee’s net assets.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group’s share of
the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment is made to the initial
investment cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’s
identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost of
the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income of the
investee for the period as investment income or loss and comprehensive income for the period, meanwhile, the book value
of the long-term equity investment shall be adjusted; The 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
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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.
15.4 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.
16. Fixed Assets
16.1 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.
16.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one in
which it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate of each
category of fixed assets are as follows:
Class Depreciation period (years) Residual value rate (%) Annual depreciation rate (%)
Buildings and Constructions 20 years 10 4.5
General-purpose equipment 3-5 years 10 18.0-30.0
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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.
16.3 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.
17. 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.
18. 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.
19. Intangible Assets
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19.1 Intangible Assets Valuation Method and Service Life
Intangible assets include land use right, intellectual property (IP), application software, and franchise, 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 Franchised operating period -
After the construction of the relevant infrastructure, the Group has the right to collect fees from the service recipients
within a certain period of operation, but if the amount of the fees is uncertain, the Group will use the fair value of the
consideration receivable for construction services as the initial intangible assets confirmed. The amortization of the
franchise is accrued on an average basis in installments using the straight-line method during its operating period.
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), 20. Long-term asset impairment.
19.2 Internal Research and Development Expenditure
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is recognized as
intangible asset. Expenditure during development phase that does not meet the following conditions is recognized in profit
or loss for the period.
(1) It is technically feasible to complete the intangible asset so that it will be available for use or sale;
(2) The Group has the intention to complete the intangible asset and use or sell it;
(3) The Group can demonstrate the ways in which the intangible asset will generate economic benefits, including the
evidence of the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset;
(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.
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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.
20. 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, right-of-use assets 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.
21. Long-term deferred expenses
Long-term deferred 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, mainly for the expenses on betterment of leased fixed
assets. Long-term deferred expenses are evenly amortized in installments in three years during the expected benefit period.
22. Contract liabilities
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Contract liabilities refer to the obligation of the Group to transfer goods or services to customers for consideration received
or receivable from customers. Contract assets and contract liabilities under the same contract are presented in net terms.
23. Employee compensation
23.1 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.
23.2 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.
23.3 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.
24. 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.
25. 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.
25.1 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.
25.2. 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-
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vesting condition but the condition is not met during the vesting period, the Group treats it as a cancellation of the equity
instruments granted.
26. Revenue
26.1Accounting 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 products
Product sales revenue is the revenue from sales of video surveillance products, smart home products, robotics products
and other products of the Group.
(2) Project construction revenue
Project construction revenue is the revenue from constructions related to intelligent security solution projects provided
by the Group.
(3) Cloud service and other service revenue
Revenue from cloud services and other services refers to cloud services such as storage services, video services, and
telephone services provided by the Group, maintenance services related to security projects, and other services, etc.
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 output method to determine the progress of performance, that is, the progress of contract
performance is determined according to the value of the goods or services that have been transferred to the customer in
the view of the customer. 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
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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.
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 additional purchase option of customers includes customer reward incentives. With respect to the additional purchase
option with material rights provided to customers, the Group regards it as a single performance obligation, and recognizes
relevant revenue upon obtaining the control over relevant goods or services by the customers who exercise the purchase
option in future or upon lapse of such option. If a stand-alone selling price of the additional purchase option of customers
is not directly observable, the Group shall consider all relevant information including the difference in discount obtained
with and without the exercise of such option by customers and the possibility of exercising such option by customers
during estimation.
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.
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.
When the Group collects amounts of sold goods or services in advance from the customer, the Group will firstly recognize
the amounts as a liability and then transfer to revenue until satisfying relevant performance obligations. When the advances
from customers is non-refundable and the customer may give up all or part of contract right, and the Group is expected to
be entitled to obtain amounts associated with contract rights given up by the customer, the above amounts shall be
proportionally recognized as revenue in accordance with the model of exercising contract rights by the customer; otherwise,
the Group will transfer the relevant balance of the above liability to revenue only when the probability is extremely low
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for the customer to satisfy remaining performance obligations.
27. Cost of contract
27.1 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.
27.2 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.
The Group’s asset in relation to contract costs are mainly contract performance costs, and they are included in inventories
based on their current nature.
27.3 Impairment of contract costs
In determining impairment losses on assets related to contract costs, impairment losses are first determined for other assets
recognized in accordance with other relevant ASBEs and related to the contract; then, for assets related to contract costs
whose carrying value is higher than the difference between the following two items, the Group makes provision for
impairment for the excess to be recognized as asset impairment losses: (1) the remaining amount of consideration that the
Group expects to receive as a results of transfer of goods or services to which the asset relates; (2) the estimated costs to
be incurred in connection with the transfer of relevant goods or services.
After the provision for impairment for the asset related to contract costs is made, if the difference between the above two
items is higher than the carrying amount of the asset due to changes in the factors of impairment in previous periods, the
original provision for impairment of the asset is reversed and included in the current profit or loss, but the carrying amount
of the asset after the reversal shall not exceed the carrying amount of the asset on the reversal date assuming no provision
for impairment is made.
28. Types of governmental subsidies and accounting treatment methods
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.
28.1 Judgment basis and Accountant treatment of government subsidy related to assets
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Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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.
28.2 Judgment basis and accountant treatment of government subsidy related to income
The Group receives government subsidies including subsidies for Value-Added-Tax rebate (VAT rebate), subsidies for
special projects, tax refunds, and Value-Added-Tax deductions, etc. which are used to compensate the group-related costs
or losses, and therefore are categorized as government subsidy related to income.
For a government grant related to income, if 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.
29. Deferred Tax Assets / Deferred Tax Liabilities
The income tax expenses include current income tax and deferred income tax.
29.1. 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.
29.2 Deferred Tax Assets and Deferred 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.
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For the reporting period from January 1st 2021 to June 30th 2021
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
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.
29.3 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.
30. Lease
Lease refers to a contract that conveys the right to use an asset for a period of time in exchange for consideration.
The Group assesses whether a contract is, or contains, a lease at the inception date. The Group does not re-assess whether
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
a contract contains a lease unless the terms and conditions of the contract are changed.
30.1 The Group as the lessee
30.1.1 Separating components of lease
In case the contract contains one or more lease and non-lease components, the Group separates each lease component and
non-lease component, and allocates the consideration to the lease and non-lease components based on the proportion of
relative stand-alone prices of the components.
30.1.2 Right-of-use assets
The Group recognizes the right-of-use assets for leases on the commencement date of the lease term, except for short-term
lease and lease of low-value assets. The commencement date of the lease term refers to the date from which the lessor
makes the leased assets available for use by the Group. Right-of-use assets are initially measured at cost. The cost includes:
Initial measurement amount of lease liabilities;
Amount of lease payment made at or before the commencement date of the lease, less any lease incentives received;
Initial direct costs incurred by the Group;
An estimate of any costs to be incurred by the Group in dismantling and removing the underlying asset, or restoring
the site on which it is located, or restoring the leased assets to the conditions as agreed under the terms of the lease,
excluding costs incurred to produce inventories.
The Group calculates depreciation of the right-of-use assets in accordance with the relevant depreciation provisions of
Accounting Standards for Business Enterprises No. 4 - Fixed Assets. The right-of-use asset is depreciated over the shorter
of the lease term and the useful life of the right-of-use asset, unless there is a transfer of ownership or purchase option
which is reasonably certain to be exercised at the end of the lease term.
The Group determines whether the right-of-use assets are impaired and accounts for the identified impairment loss in
accordance with the provisions of Accounting Standards for Business Enterprises No. 8 - Impairment of Assets.
30.1.3 Lease liabilities
The Group initially measures the lease liability on the commencement date at an amount equal to the present value of the
lease payments during the lease term that are not paid at that date, except short-term lease and lease of low-value assets.
In calculating the present value of the lease payments, the Group adopts the interest rate implicit in the lease as the discount
rate. The Group uses its incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined.
Lease payments refer to the payments made by the Group to the lessor in connection with the right to use the leased asset
during the lease term, including:
Fixed payments, including in-substance fixed payments, less any lease incentives receivable;
Variable lease payments that depend on an index or rate;
The exercise price of a purchase option, if the Group is reasonably certain to exercise that option;
Payments for terminating the lease, if the lease term reflects the lessee exercising the option to terminate the lease;
Amounts expected to be payable by the Group under residual value guarantees.
Variable lease payments based on an index or a rate are initially measured using the index or the rate at the commencement
date. Variable lease payments that are not included in the measurement of lease liabilities are recognized in the current
loss and profit or related asset costs when actually incurred.
After the commencement date of the lease term, the Group calculates interest expense of lease liabilities in each period of
lease term at fixed periodic rate and recognizes in the current loss and profit or relevant asset costs.
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Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
After the commencement date of the lease term, the Group remeasures the lease liability and adjusts the corresponding
right-of-use assets under the following circumstances. If the carrying value of the right-of-use assets has been reduced to
zero while the lease liability needs to be further reduced, the Group will recognize the difference into the current loss and
profit:
In case of any change of the lease term or any change in the valuation of the purchase option, the Group remeasures
the lease liability at the present value calculated based on the modified lease payments and the revised discount rate;
In the event of any change in the amount expected to be payable based on the residual value guaranteeS or any change
of the index or proportion adopted to determine the lease payments, the Group remeasures the lease liability at the
present value calculated based on the changed lease payments and the original discount rate. In the event of any
modification in lease payments resulting from the change in floating interest rate, the present value is calculated using
the revised discount rate.
30.1.4 Short-term lease and lease of low-value assets
The Group has elected not to recognize the right-of-use assets and lease liabilities for short-term leases and leases of low-
value assets in connection with building and construction, machinery equipment, transportation facilities, office equipment
and other equipment. Short-term lease refers to lease with a term no more than 12 months from the commencement date
of lease term and without purchase option. Lease of low-value assets refers to lease for single lease asset with low value
when it is new. The Group recognizes lease payments under short-term leases and leases of low-value assets as the current
loss and profit or the relevant asset costs on a straight-line basis over each period during the lease term.
30.1.5 Lease modification
In case of lease modification, the Group makes accounting treatment of such lease change as a separate lease if all of the
following conditions are met:
such lease modification increases the scope of the lease by adding the right to use one or more lease assets;
the increased consideration is commensurate with the stand-alone price for the increase in scope and any appropriate
adjustments to reflect the circumstances of the particular contract.
Where accounting treatment is not made for lease modification as a separate lease, at the effective date of lease
modification, the Group reallocates the contract consideration after the modification, redetermines the lease term, and
remeasures the lease liability based on the present value calculated according to the modified lease payments and the
revised discount rate.
In the event that the lease scope is decreased or the lease term is shortened as a result of the lease modification, the Group
reduces the carrying amount of the right-of-use assets, and recognizes the relevant gains or losses relating to the partial or
full termination of the lease in the income statement; for the lease liabilities remeasured due to other lease modifications,
the Group adjusts the carrying amount of the right-of-use assets accordingly.
30.2 The Group as the lessor
30.2.1 Separating components of lease
In case the contract contains both lease and non-lease components, the Group allocates the contract consideration in
accordance with the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue on portion of
transaction prices, based on the respective stand-alone prices of the lease component and the non-lease component.
30.2.2 Classification of lease
Finance lease is a lease that substantially transfers all the risks and rewards of incidental to ownership of an underlying
asset. Operating lease refers to the leases other than finance lease.
30.2.2.1 The Group records the operating lease business as the lessor
The Group recognizes the lease payments from operating leases as rental income on a straight-line basis for all periods
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
over the lease term. The Group's initial direct costs incurred in connection with operating leases is capitalized as incurred,
recognized in the income statement over the lease term on the same basis as the lease income.
Variable lease payments acquired by the Group in connection with operating leases that are not included in the lease
payments are recognized in the current loss and profit when they are actually incurred.
30.2.2.2 The Group records the finance lease business as the lessor
On the commencement date of the lease term, the Group uses the net lease investment as the carrying value of the finance
lease receivables and derecognizes the finance lease assets. Net lease investment is the sum of present value of
unguaranteed residual value and lease payments receivable discounted at the interest rate implicit in lease on the
commencement date of the lease term.
Lease payments receivable, which refer to amounts receivable by the Group from the lessee for conveying the right to use
the leased assets during the lease term, include:
Fixed payment including in-substance fixed payments by the lessee, less any lease incentives payable;
Variable lease payments that depend on an index or rate;
The exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
Payments for terminating the lease (if the lease term reflects the lessee exercising the option to terminate the lease;
Residual value guarantees provided to the Group by the lessee, a party related to the lessee, or a third party unrelated
to the lessor that is capable of discharging the obligations under the guarantee.
The variable lease payments that are not included in the measurement of the net lease investment are included in the current
loss and profit when actually incurred.
The Group calculates and recognizes the interest income in each period of the lease term according to the fixed periodic
interest rate.
30.2.3 Lease modification
In case of a medication of the operating lease, the Group accounts for it as a new lease as of the effective date of the
modification, any prepaid or accrued lease payments relating to the original lease are considered as payments for the new
lease .
In case of modification of finance lease, the Group accounts for the modification of a finance lease as a separate lease if
all of the following conditions are met:
The modification increases the scope of the lease by adding the right to use one or more lease assets;
The consideration for the lease increases by an amount that is commensurate with the stand-alone price for the
increase in scope, and any appropriate adjustments to that price to reflect the circumstances of the particular contract.
If a modification of finance lease is not accounted for as a separate lease, the Group accounts for the changed lease under
the following circumstances:
If the modification becomes effective on the commencement date of the lease and the lease is classified as an
operating lease, the Group accounts for it as a new lease from the effective date of the lease modification and measures
as the net lease investment prior to the effective date of the lease modification as the carrying value of the leased
asset.
If the modification becomes effective on the commencement date of the lease and the lease is classified as a finance
lease, the Group accounts for it in accordance with the provisions of Accounting Standards for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments regarding the modification or renegotiation of
contracts.
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
30.3 Sale and leaseback transaction
30.3.1 The Group as the seller-lessee
The Group assesses and determines whether the transfer of the asset in sale and leaseback transaction qualifies as a sale in
accordance with the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue. If the transfer does
not qualify as a sale, the Group continues to recognize the transferred asset and at the same time recognize a financial
liability equal to the transfer proceeds and account for the financial liability in accordance with the provisions of
Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments. If the
transfer of the asset qualifies as a sale, the Group measures the right-of-use asset arising from the leaseback as the
proportion of the previous carrying amount of the asset that relates to the right of use retained. The gain or loss recognised
is limited to the proportion of the total gain or loss that relates to the rights transferred to the buyer-lessor.
30.3.2 The Group as the buyer-lessor
If the transfer of the asset in a sale and leaseback transaction does not qualify as a sale, the Group does not recognize the
transferred asset, but recognizes a financial asset equal to the transfer proceeds and account for the financial asset in
accordance with the provisions of Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement
of Financial Instruments. If the transfer of the asset qualifies as a sale, the Group accounts for the purchase of the asset in
accordance with other applicable Accounting Standards for Business Enterprises and account for the lease of the asset.
31. 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.
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
Except for contract performance costs, inventories are measured at the lower of cost or net realizable value. For raw
materials, the latest or future actual purchase price is used as the basis for determining the net realizable value; For products
in progress, the actual selling price of the latest or future finished product minus the estimated costs and costs that will be
incurred when similar products are completed in the current period, the estimated selling expenses and related taxes to be
incurred, is used as the basis for determining the net realizable value; For finished products, the actual selling price of the
latest or future finished product minus the estimated selling expenses and related taxes will be incurred, is used as the basis
for determining the net realizable value. The Group will regularly conduct a comprehensive stocktaking to review the
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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 receivable
Except for accounts receivable whose credit losses are determined on the basis of individual basis, the Group adopts an
impairment matrix to determine its expected credit loss provision. Based on the historical loss rate, the Group determines
the proportion of corresponding loss reserves for various types of accounts receivable with similar risk characteristics. The
impairment matrix is determined based on the historical overdue ratio and default of the Group, taking into account
reasonable and well-founded industry forward-looking information. As of June 30th 2021, the Group has reassessed the
historically observable overdue ratio and considered changes in forward-looking 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 costs and expenses incurred to meet the established standards of
product quality assurance obligations to customers in accordance with the product contract; the Group made such an
estimation 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 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 tax assets and deferred tax liabilities
Deferred income tax assets and deferred income tax liabilities are measured at the applicable income tax rate during the
period when the relevant asset is expected to be recovered or the relevant debt is expected to be 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.
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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 might 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).
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
32. Significant alternation in accounting policy and accounting estimations
32.1 Significant changes in accounting policies
Approval
Changes in accounting policies and reasons Notes
Procedures
New Lease Standards
From January 1st, 2021, the Group implements the Accounting Standard for Business Enterprises
No. 21 - Leases revised by the Ministry of Finance in 2018 (hereinafter referred to as the "New
Lease Standards" and the lease standards before the revision as the "Original Lease Standards").
The New Lease Standards have improved the definition of leases and added the identification,
separation, combination and other contents of leases. The New Lease Standards have cancelled
the classification of lessee’s operating leases and finance leases and required the recognition of
right-of-use assets and lease liabilities and separate recognition of depreciation and interest
expense for all leases (except short-term leases and leases of low-value assets) on the
commencement date of the lease term; The subsequent measurement of lease by the lessee has
been improved, the accounting treatment in the case of option re-assessment and lease
modification has been added, and relevant disclosure requirements have been added. In addition,
it also enriches the disclosure by the lessor. Please refer to Note (III) 30 for details of the revised
accounting policies of the Group for recognition and measurement of leases as lessee and lessor.
For contracts existing before the date of initial application, the Group chose not to reassess
whether it is a lease or contains a lease on the date of initial execution.
Such
The Group as the lessee alternations
in
The Group adjusts the amount of retained earnings and the amount of relevant items in the accounting
financial statements on the initial application date according to the cumulative impact of the policy were
initial application of the New Lease Standards, in which the information of the comparable is approved
None
not be adjusted. by the
Group at
For operating lease other than low-value lease prior to the date of initial adoption, the Group board of
electes to apply one or more of the following simplified approach depending on each lease: director
general
Any lease that will be completed within 12 months of the date of initial execution
meeting.
shall be treated as short-term lease;
The same discount rate shall be used for leases with similar characteristics when
measuring the lease liability;
The measurement of right-of-use assets does not include initial direct costs;
In case of any extension option or termination option, the Group may determine the
lease term according to the actual exercise of the option before the first adoption
date and other latest conditions;
If a lease is modified occurs before the date of initial adoption, the Group will
account for it according to the final arrangement of the lease modification.
On the date of initial adoption, the Group makes the following adjustments as a result of the
implementation of the New Lease Standards:
For finance lease prior to the date of initial adoption, the Group will respectively
measure the right-of-use asset and lease liability based on the original carrying
values of the finance lease assets and finance lease payables on the date of initial
adoption.
For operating lease prior to the date of initial adoption, the Group shall measure the
lease liability on the date of initial adoption based on the current value of the
remaining lease payments discounted according to the lessee's incremental
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
borrowing rate on the date of initial adoption, and measure the right-of-use asset at
an amount equal to the lease liability, with necessary adjustments to prepaid rent.
The Group recognizes lease liabilities (including those due within one year) of RMB
386,475,961.59 and right-of-use assets of RMB 392,997,553.30 as of January 1st, 2021. For
operating leases before the date of initial adoption, the Group shall use the present value
discounted by the incremental borrowing rate on the first adoption day to measure the lease
liabilities. The range of incremental borrowing rate is from 1.14% to 9.50%.
Information on the difference between the Group's lease liability recognized as of January 1st,
2021 and the significant operating lease commitments disclosed in the financial statements of
the fiscal year of 2020 is as follows:
Unit: RMB
Item January 1st 2021
I. Operating lease commitments as of December 31st 2020
408,812,072.84
Lease liabilities discounted at the incremental borrowing rate
377,897,839.67
on the date of initial adoption
Less: Recognition of exemptions - short-term leases and
33,777,484.74
leases of low-value assets
Lease liabilities recognized in connection with the original
operating lease upon implementation of the new lease 344,120,354.93
standards
Add: Finance lease payables as of December 31st 2020 42,355,606.66
Including: Non-current liabilities due within one year 19,302,613.39
II. Lease liabilities as of January 1st 2021 386,475,961.59
Including: Non-current liabilities due within one year 156,420,687.89
Lease liabilities 230,055,273.70
The components of the carrying value of right-of-use assets as of January 1st 2021 are as follows:
Unit: RMB
Item January 1st 2021
Right-of-use assets:
Right-of-use assets recognized under operating leases prior to
344,120,354.93
the date of initial adoption
Reclassified prepaid rent 3,546,860.62
Finance leased assets recognized as fixed assets under the
45,330,337.75
Original Lease Standards
Total 392,997,553.30
On January 1st 2021, right-of-use assets are disclosed by category as follows:
Unit: RMB
Item January 1st 2021
Building and construction 333,243,923.96
Special-purpose equipment 45,330,337.75
Transportation vehicles 14,423,291.59
Total 392,997,553.30
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
The impact of the Group's adoption of the New Lease Standards as of January 1st 2021 is detailed
in Note (III), 32.2.
The Group as the lesssor
The Group does not adjust leases as lessor in accordance with the convergence provisions and
accounts for those leases in accordance with the New Lease Standards from the date of initial
adoption.
32.2 The impact of the implementation of the New Lease Standards on the relevant items in the consolidated balance sheet
at the beginning of the period is shown below:
Unit: RMB
Item Original Lease Standard Reclassified (Note) New Lease Standard
Current Assets:
Prepayments 296,334,689.86 (2,952,118.77) 293,382,571.09
Other receivables 519,143,350.82 (117,288.00) 519,026,062.82
Other current assets 497,914,506.64 (477,453.85) 497,437,052.79
Non-current Assets:
Fixed assets 5,876,007,536.60 (45,330,337.75) 5,830,677,198.85
Right-of-use assets 392,997,553.30 392,997,553.30
Current Liabilities:
Non-current liabilities due
3,507,680,339.78 137,118,074.50 3,644,798,414.28
within one year
Non-current Liabilities:
Long-term payables 39,595,459.35 (23,052,993.27) 16,542,466.08
Lease Liabilities 230,055,273.70 230,055,273.70
Note: Due to the implementation of the New Lease Standards, the Group reclassifies financial lease assets of RMB
45,330,337.75 previously included in fixed assets to right-of-use assets; Finance lease payments of RMB 42,355,606.66
originally included in long-term payables (including those due within one year) is reclassified into lease liabilities
(including those due within one year); The Group reclassifies prepaid rents totaling RMB 3,546,860.62, which were
previously included in prepayments, other receivables and other current assets to right-of-use assets; The Group recognizes
right-of-use assets of RMB 344,120,354.93 and lease liabilities (including those due within one year) of RMB
344,120,354.93.
The impact of the implementation of the new lease standards on the relevant items of the parent company's balance
sheet at the beginning of the period is set out below:
Unit: RMB
Item Original Lease Standard Reclassified (Note) New Lease Standard
Current Assets:
Right-of-use assets 66,446,154.01 66,446,154.01
Current Liabilities:
Non-current liabilities due
3,219,794,958.37 29,999,165.05 3,249,794,123.42
within one year
Non-current Liabilities:
Lease Liabilities 36,446,988.96 36,446,988.96
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Note: Due to the implementation of the new lease standards, the Company recognizes right-of-use assets of RMB
66,446,154.01 and lease liabilities (including those due within one year) of RMB 66,446,154.01.
119
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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)
For the taxable product sales revenue or taxable labor revenue, the Company 6%, 9%, 13% 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 3)
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 Identified High-tech Enterprises of Zhejiang Province
in 2020 (Guo Ke Huo Zi [2020] No. 251) issued by the Leading Group Office of National High-tech Enterprise
Identification Management on December 29th 2020, the Company was identified as the high-tech enterprise with a
valid term of 3 years, from 2020 to 2022. Therefore, the Company’s enterprise income tax rate is at a reduced rate of
15% for the current reporting period. (2020:15%)
In accordance with the Notice on Printing and Distributing the List of Key Software Enterprises and IC Design
Enterprises in the National Planning Layout for 2013-2014 (Fa Gai Gao Ke [2013] No. 2458), the Company was
recognized as a national key software enterprise in 2013. According to the Notice on Issues Related to Enterprise
Income Tax Preferential Policies for Software and Integrated Circuit Industry (Cai Shui [2016] No. 49), the Company
was approved by the tax authorities in May 2021 to pay the 2020 annual corporate income tax at the rate of 10%.
(2) 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
Technology Co., Ltd. and Chongqing Hikvision System Technology Co., Ltd., are qualified to enjoy the west
development preferential tax policy from 2011 to 2020. According to the Announcement No. 23 (2020) of the Ministry
of Finance, the State Administration of Taxation, and the National Development and Reform Commission,
Announcement on Continuation of the Corporate Income Tax Policy for the Western Developmen, the preferential
policies for the Western Development will be postponed to the end of 2030. Therefore, the current corporate income
tax shall be calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period. (2020:15%)
(3) 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. As of the approval date of this report, it is still in the 2021 high-tech enterprise
qualification review and declaration stage. According to the Announcement of the State Administration of Taxation on
Issues Concerning the Implementation of the High-tech Enterprise Income Tax Preferential Policy, the high-tech
enterprise qualification will be re-identified within the year after the expiration of the qualification period. Before
passing the recertification, the corporate income tax can be prepaid at the 15% tax rate temporarily, so the corporate
income tax shall be calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period.
(2020:15%)
120
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
(4) 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) and the Company’s joint venture subsidiary Hangzhou Kuangxin
Technology Co., Ltd. (Hangzhou Kuangxin) , 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. (2020:15%)
(5) In accordance with the Notice on Publishing the List of Third Batch of Proposed Identified High-tech Enterprises of
Shanghai in 2020 issued by Shanghai High-tech Enterprise Identification Office on November 20th 2020, the
Company’s wholly-owned subsidiary, Shanghai Goldway Intelligent Transportation System Co., Ltd. (“Shanghai
Goldway”) was identified as the high-tech enterprise with a valid term of 3 years, from 2020 to 2022. Therefore, its
corporate income tax is at a reduced rate of 15% in the current reporting period. (2020:15%)
(6) In accordance with the Letter of Reply on Publishing the List of Identified High-tech Enterprises of Zhejiang Province
in 2020 (Guo Ke Huo Zi [2020] No. 251) issued by the Leading Group Office of National High-tech Enterprise
Identification Management on December 29th 2020, 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 2020 to 2022. Therefore, the enterprise income tax in the current reporting period is at a reduced rate
of 15%. (2020:15%)
(7) In accordance with the Letter of Reply on Publishing the List of Identified High-tech Enterprises of Zhejiang Province
in 2020 (Guo Ke Huo Zi [2020] No. 32) issued by the Leading Group Office of National High-tech Enterprise
Identification Management on January 20th 2020, the Company’s joint-venture subsidiary, Hangzhou Hikmicro
Sensing Technology Co., Ltd. (“Hangzhou Hikmicro”) were identified as the high-tech enterprises with a valid term
of 3 years, from 2019 to 2021.
According to the Ministry of Finance, the State Administration of Taxation, the National Development and Reform
Commission, and the Ministry of Industry and Information Technology Announcement No. 45 of 2020 Announcement
on the Corporate Income Tax Policy for Promoting the High-quality Development of the Integrated Circuit Industry
and Software Industry, the state encourages integrated circuit design, equipment, materials, packaging, testing
companies and software companies will be exempted from corporate income tax for the first year to the second year
from the profitable year, and levied half of the corporate income tax at a statutory tax rate of 25% from the third year
to the fifth year. Hangzhou Hikmicro is a qualified integrated circuit design company and is expected to enter into a
profitable year this year.
(8) In accordance with the Announcement on Promoting the Income Tax Policies of High-quality Developed Enterprises
in the Integrated Circuit Industry and the Software Industry (Announcement [2020] No. 45 jointly by the MOF, SAT,
NDRC and MIIT), enterprises engaging in integrated circuit design, equipment, materials, packaging, testing and
software encouraged by the state are entitled to exemption from enterprise income tax in the first and second years
after start of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the third to fifth years.
The Company’s joint venture subsidiaries, Hangzhou EZVIZ Software Co., Ltd. (“EZVIZ Software”) and Hangzhou
Microimage Software Co., Ltd. (“Microimage Software”), are qualified software companies and are entitled to
exemption from enterprise income tax in the current reporting period (2020: tax-exempted).
Note 2: In accordance with the requirements of the Notice on Software Product Value-added Tax Policy (Cai Shui [2011]
No. 100) promulgated by the Ministry of Finance and the State Administration of Taxation, as for self-developed software
products sales of the Company, Hangzhou System, the Company’s joint-venture subsidiaries such as Hangzhou
HikRobotic Technology, Hangzhou HikAuto Software Co., Ltd. (“HikAuto”), Hangzhou EZVIZ Software, Wuhan Hik
Storage Technology Co., Ltd., Hangzhou HikStorage Technology Ltd. (“HikStorage”), Hangzhou Hikimaging Technology
Co., Ltd., Hangzhou Hikfire Technology C o., Ltd. (“Hikfire”), Hangzhou Rayin Technology Co., Ltd. (“Rayin”),
Microimage Software and Hangzhou Kuangxin, 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 reviews.
121
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Note 3: In accordance with the Announcement on Relevant Policies for Deepening the Value-Added Tax Reform (Joint
Announcement [2019] No. 39) jointly issued by the Ministry of Finance, the State Administration of Taxation and the
General Administration of Customs, from April 1st 2019 to December 31st 2021, taxpayers in the production and living
services industry are allowed to deduct an additional 10% of the current deductible input tax to deduct the tax payable
(“Additional Deduction Policy”), the Company’s joint venture subsidiaries, Henan Hua’An Bao Quan Intelligent
Development Co., Ltd. (“Hua’an Baoquan Intelligent”), Henan Hua’an Security Services Co., Ltd. (“Hua’an Security
Services”), and Henan Haikang Hua’An BaoQuan Electronics Co., Ltd. (“Hua’An BaoQuan Electronics”), engaging in
information technology service industry, and their sales of information technology services accounted for more than 50%
of its total sales, are complying with the provisions of the Additional Deduction Policy and were entitled to additional
deduction preferential tax policy of input tax since April 1st 2019.
Based on the Joint Announcement [2019] No. 39, since April 1st 2019, taxpayers are subject to VAT taxable sales or
imported goods, the VAT rates had been adjusted from 16% and 10% to 13% and 9% respectively.
The VAT rate for the services provided by the Company’s taxpayers is 6%, and part of taxable service income is applicable
to the simple collection rate of 5% and 3%.
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Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
V. Notes to items in the consolidated financial statements
1. Cash and bank balances
Closing Balance Opening Balance
Item Foreign Exchange
Exchange rate
Foreign currency amount RMB amount currency rate for RMB amount
for conversion
amount conversion
Cash：
RMB - - 17,711.11 - - 17,959.62
EUR 28,897.50 7.6862 222,111.95 71,638.34 8.0250 574,897.70
INR 2,226,484.70 0.0869 193,481.52 2,504,019.19 0.0891 223,108.11
USD 37,184.53 6.4601 240,215.80 32,776.72 6.5249 213,864.82
GBP 6,338.38 8.9410 56,671.46 6,341.78 8.8903 56,380.33
Other - - 19,819.64 - - 18,836.93
currencies
Bank
balance：
RMB - - 24,516,667,961.16 - - 27,789,108,210.05
USD 200,480,296.15 6.4601 1,295,122,761.15 941,351,972.89 6.5249 6,142,227,487.92
EUR 144,296,760.60 7.6862 1,109,093,761.32 52,026,066.91 8.0250 417,509,186.97
GBP 19,928,672.85 8.9410 178,182,263.98 11,204,897.40 8.8903 99,614,899.38
INR 1,120,810,944.76 0.0869 97,398,471.10 1,203,270,539.96 0.0891 107,211,405.11
RUB 621,594,434.80 0.0888 55,197,585.81 1,742,132,380.50 0.0877 152,785,009.77
BRL 61,024,191.76 1.3028 79,502,317.02 54,535,451.03 1.2551 68,447,444.59
CAD 7,868,875.11 5.2097 40,994,478.65 5,383,485.44 5.1161 27,542,449.88
JPY 594,440,839.55 0.0584 34,715,345.03 336,505,067.09 0.0632 21,267,120.24
AED 18,367,690.42 1.7580 32,290,399.76 36,263,518.29 1.7761 64,407,634.83
THB 124,548,137.22 0.2015 25,096,449.65 14,687,508.85 0.2328 3,419,252.06
HKD 28,052,675.20 0.8321 23,342,631.03 13,632,862.61 0.8416 11,473,417.17
AUD 3,576,171.25 4.8528 17,354,443.86 2,279,274.45 5.0163 11,433,524.41
ZAR 34,576,247.06 0.4501 15,562,768.80 14,765,683.20 0.4458 6,582,541.57
PLN 7,282,882.13 1.7009 12,387,454.21 12,359,893.85 1.7520 21,654,534.02
KRW 1,799,856,117.54 0.0057 10,259,179.87 855,655,685.00 0.0060 5,133,934.11
Other - - 37,517,328.32 - - 18,195,337.35
currencies
Other
currency
funds:
RMB - - 92,736,731.47 - - 463,887,119.07
USD 6,915,610.24 6.4601 44,675,533.72 3,101,420.39 6.5249 20,236,457.90
EUR 774,356.27 7.6862 5,951,857.16 465,821.33 8.0250 3,738,216.17
Other - - 7,453,240.92 - - 2,748,878.19
currencies
Total 27,732,252,975.47 35,459,729,108.27
Including:
deposited 766,732,314.21 782,389,029.81
in overseas
banks
123
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Details of other currency funds:
Closing Balance Opening Balance
Exchange Foreign Exchange
Foreign currency
Item rate for RMB amount currency rate for RMB amount
amount
conversion amount conversion
Capitals with limitations：
Bank acceptance bill - - 443,250.07 - - 8,484.61
Deposits for letter of guarantee - - 50,699,985.96 - - 44,417,713.65
Deposits for letter of Credit in
274,141.18 1.3028 357,151.13 283,313.18 1.2551 355,586.37
BRL
Tax Operation Margin for India 120,305.98 0.0869 10,454.59 120,305.95 0.0891 10,719.26
Deposits for letter of Credit in
- - 21,540,000.00 - - -
RMB
Other security deposit - - 2,253,376.24 60,000.00 4.7050 282,300.00
Other capitals with limitations - - 16,984,637.63 - - 389,816,426.07
Subtotal 92,288,855.62 434,891,229.96
Capitals without limitations:
Deposit in Alipay, Tenpay, etc. 23,865,469.36 - - 25,263,562.38
Other currency funds in USD 5,365,712.34 6.4601 34,663,038.29 4,662,441.59 6.5249 30,421,965.14
Other currency funds in ZAR - - - 23,875.03 0.0877 2,093.84
Other currency funds in EUR - - - 3,965.11 8.0250 31,820.01
Subtotal 58,528,507.65 55,719,441.37
Total 150,817,363.27 490,610,671.33
2. Held-for-trading financial assets
Unit: RMB
Item Closing Balance Opening Balance
Financial assets measured at fair value through
32,620,061.54 22,679,846.77
current gain and loss
Including: derivative financial assets 32,620,061.54 22,679,846.77
Total 32,620,061.54 22,679,846.77
3. Notes receivable
3.1 Categories of notes receivable
Unit：RMB
Category Closing Balance Opening Balance
Bank acceptance bill 893,082,402.65 1,003,388,157.28
Commercial acceptance bill 232,175,189.62 299,864,547.91
Total 1,125,257,592.27 1,303,252,705.19
124
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
3.2 As of June 30th 2021, the pledged notes receivable by the Group is nil.
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
Derecognized amount as of June 30th Amount not derecognized as of June
Category
2021 30th 2021
Bank acceptance bill Note (V)-30.3 - 610,856,089.84
Total - 610,856,089.84
Note: Transfer of financial assets
As of June 30th 2021, the Group gave RMB 610,856,089.84 (2020: RMB 482,454,604.99) 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) 30.3.
3.4 As of June 30th 2021, the Group transferred the defaulted notes receivable into accounts receivable.
Unit：RMB
Category Amounts transferred into accounts receivable as of June 30th 2021
Commercial Acceptance Bill 29,886,894.42
Total 29,886,894.42
3.5 The Group believes, except for bills that are transferred to accounts receivable due to the failure of the drawer to
perform the contract, The bank acceptance bills and commercial acceptance bills held by the Group do not have
significant credit risks and will not cause major losses due to the counterparty’s default. Therefore, no loss provision
is made.
4. Accounts receivable
4.1 Disclosure by aging
Unit: RMB
Closing Balance
Item
Accounts receivable Credit loss provision Proportion (%)
Within credit period 13,908,017,211.24 67,892,012.25 0.49
Within 1 year after exceeding
credit period
8,650,470,382.80 342,217,169.16 3.96
1-2 years after exceeding credit
period
1,423,179,116.77 338,705,918.34 23.80
2-3 years after exceeding credit
period
1,072,722,797.05 574,960,931.68 53.60
3-4 years after exceeding credit
period
326,461,889.47 254,762,597.29 78.04
Over 4 years after exceeding
credit period
227,463,105.31 227,463,105.31 100.00
Subtotal 25,608,314,502.64 1,806,001,734.03 7.05
125
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
4.2 Classified disclosure of credit loss provision by methods
Unit: RMB
Closing Balance
Carrying amount Credit loss provision Book Value
Category
Proportion Proportion
Amount Amount Amount
(%) (%)
Provision for credit loss on a single
- - - - -
basis
Provision for credit loss by portfolios 25,608,314,502.64 100.00 1,806,001,734.03 7.05 23,802,312,768.61
Total 25,608,314,502.64 100.00 1,806,001,734.03 7.05 23,802,312,768.61
Beginning Balance
Carrying amount Credit loss provision Book Value
Category
Proportion Proportion
Amount Amount Amount
(%) (%)
Provision for credit loss on a single
- - - - -
basis
Provision for credit loss by portfolios 23,491,775,903.07 100.00 1,512,395,186.21 6.44 21,979,380,716.86
Total 23,491,775,903.07 100.00 1,512,395,186.21 6.44 21,979,380,716.86
Provision for credit loss by portfolios for accouts receivable
Unit: RMB
Closing balance
Customer
Carrying amount Credit loss provision Proportion (%)
Portfolio A 3,888,424,720.21 113,031,569.59 2.91
Portfolio B 16,073,854,190.90 1,526,870,959.69 9.50
Portfolio C 5,646,035,591.53 166,099,204.75 2.94
Total 25,608,314,502.64 1,806,001,734.03 7.05
Description of credit loss provision by portfolios for accouts receivable
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 portfolios 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.
126
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
As of June 30th 2021 and January 1st 2021, 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
Credit loss
average loss Carrying value Credit loss provision Book value average loss Carrying value Book value
provision
rate (%) rate (%)
Within credit period 0.02 2,920,681,186.29 719,059.43 2,919,962,126.86 0.02 2,971,260,488.09 604,959.50 2,970,655,528.59
Within 1 year after exceeding credit
1.32 803,386,839.63 10,638,186.66 792,748,652.97 2.02 640,220,646.55 12,955,798.75 627,264,847.80
period
1-2 years after exceeding credit period 36.05 79,565,557.66 28,679,492.96 50,886,064.70 51.50 82,533,903.30 42,503,136.38 40,030,766.92
2-3 years after exceeding credit period 83.46 71,304,021.35 59,507,715.26 11,796,306.09 90.10 40,717,280.97 36,686,603.66 4,030,677.31
3-4 years after exceeding credit period 100.00 12,431,662.09 12,431,662.09 - 100.00 5,809,507.07 5,809,507.07 -
Over 4 years after exceeding credit period 100.00 1,055,453.19 1,055,453.19 - 100.00 830,934.85 830,934.85 -
Total 2.91 3,888,424,720.21 113,031,569.59 3,775,393,150.62 2.66 3,741,372,760.83 99,390,940.21 3,641,981,820.62
As of June 30th 2021 and January 1st 2021, 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
Credit loss
average loss Carrying value Credit loss provision Book value average loss Carrying value Book value
provision
rate (%) rate (%)
Within credit period 1.03 6,077,420,279.44 62,861,159.97 6,014,559,119.47 0.76 6,294,425,956.16 48,017,503.05 6,246,408,453.11
Within 1 year after exceeding credit
4.12 7,273,471,475.34 299,403,299.11 6,974,068,176.23 3.77 5,727,639,925.20 216,155,232.48 5,511,484,692.72
period
1-2 years after exceeding credit period 20.16 1,253,426,402.15 252,735,318.10 1,000,691,084.05 20.69 1,426,493,413.08 295,122,043.56 1,131,371,369.52
2-3 years after exceeding credit period 49.33 959,076,761.29 473,111,202.01 485,965,559.28 57.51 665,262,321.85 382,616,768.44 282,645,553.41
3-4 years after exceeding credit period 76.24 301,757,205.55 230,057,913.37 71,699,292.18 83.09 238,233,041.29 197,947,096.87 40,285,944.42
Over 4 years after exceeding credit period 100.00 208,702,067.13 208,702,067.13 - 100.00 146,749,340.78 146,749,340.78 -
Total 9.50 16,073,854,190.90 1,526,870,959.69 14,546,983,231.21 8.87 14,498,803,998.36 1,286,607,985.18 13,212,196,013.18
127
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
As of June 30th 2021 and January 1st 2021, 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
Credit loss
average loss Carrying value Credit loss provision Book value average loss Carrying value Book value
provision
rate (%) rate (%)
Within credit period 0.09 4,909,915,745.51 4,311,792.85 4,905,603,952.66 0.20 4,736,831,208.62 9,676,562.96 4,727,154,645.66
Within 1 year after exceeding credit
5.61 573,612,067.83 32,175,683.39 541,436,384.44 6.84 391,071,518.27 26,753,464.86 364,318,053.41
period
1-2 years after exceeding credit period 63.52 90,187,156.96 57,291,107.28 32,896,049.68 51.18 69,085,009.97 35,354,825.98 33,730,183.99
2-3 years after exceeding credit period 100.00 42,342,014.41 42,342,014.41 - 100.00 28,016,950.72 28,016,950.72 -
3-4 years after exceeding credit period 100.00 12,273,021.83 12,273,021.83 - 100.00 11,470,715.01 11,470,715.01 -
Over 4 years after exceeding credit period 100.00 17,705,584.99 17,705,584.99 - 100.00 15,123,741.29 15,123,741.29 -
Total 2.94 5,646,035,591.53 166,099,204.75 5,479,936,386.78 2.41 5,251,599,143.88 126,396,260.82 5,125,202,883.06
4.3 Credit loss provision
Provision, re-collection, or reverse of the credit loss provision in the current reporting period
Unit: RMB
Credit loss provision Total
Balance on January 1st 2021 1,512,395,186.21
Provision/(reverse) during the current reporting period 302,443,301.79
Derecognition of financial assets (including direct write-downs) and transfer out (7,437,696.81)
Difference arised from foreign currency statement translation (1,399,057.16)
Balance on June 30th 2021 1,806,001,734.03
128
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Actual write-off of accounts receivable during current reporting period:
In the current reporting period, the amount of actual accounts receivable write-off is RMB 8,321,415.61, and RMB
883,718.80 is recollected after writing-off.
4.4 Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
Proportion
(%) of the
total balance
of accounts
Name of the Relationship with the Book value balance of accounts Closing balance for credit loss
receivable at
Party Company receivable provision
the end of
the current
reporting
period
CETC’s
subsidiary
Related Party 385,903,069.21 124,699,227.90 1.51
company A
(Note)
Third Party A Third party 307,412,691.27 3,079,948.14 1.20
Third Party B Third party 246,281,362.97 487,108.46 0.96
Third Party C Third party 144,073,830.98 276,671.42 0.56
Third Party D Third party 96,859,002.40 3,934,633.09 0.38
Total 1,180,529,956.83 132,477,589.01 4.61
Note: A subsidiary of CETC is a subsidiary of China Electronics Technology Group Co., Ltd., the Company's ultimate
controller.
4.5 As of June 30th 2021, there is no termination of accounts receivable booking due to transfer of a financial asset.
4.6 As of June 30th 2021, 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 1,120,170,492.09 1,959,601,195.25
Total- 1,120,170,492.09 1,959,601,195.25
5.2 At the end of the current reporting period, the Group had no pledged financing of receivables.
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 as of June 30th Amount not derecognized as of June 30th
Item
2021 (note) 2021
Bank acceptance bill 1,742,762,080.69 -
Total- 1,742,762,080.69 -
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.
129
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
6. Prepayments
6.1 Prepayments by aging analysis
Unit: RMB
Closing Balance Opening Balance
Aging
Carrying amount Proportion (%) Carrying amount Proportion (%)
Within 1 year 299,556,093.13 77.18 261,740,350.78 89.22
1-2 years 67,210,259.92 17.32 20,302,314.17 6.92
2-3 years 10,779,307.27 2.78 9,021,070.25 3.07
Over 3 years 10,560,521.97 2.72 2,318,835.89 0.79
Total 388,106,182.29 100.00 293,382,571.09 100.00
6.2 Closing balances of top five prepayments parties
As of June 30th 2021, the Group’s top five balances of prepayments amounted to RMB 110,158,922.03, accounting for
28.38% of total closing balance of prepayments.
130
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
7. Other receivables
7.1 Other receivables by aging
Unit: RMB
Closing Balance
Item
Other receivables Bad debt provision Proportion (%)
Within contract period 699,964,008.04 2,551,178.13 0.36
Within 1 year 78,649,546.76 2,361,636.27 3.00
1-2 years 9,467,840.34 1,985,358.99 20.97
2-3 years 27,274,454.15 11,133,432.18 40.82
3-4 years 17,810,085.16 12,356,524.48 69.38
Over 4 years 11,290,239.81 11,247,498.71 99.62
Subtotal 844,456,174.26 41,635,628.76 4.93
7.2 Other receivables by nature of the payment
Unit: RMB
Item Closing Balance Opening Balance
Temporary payments for receivables 628,024,719.34 294,409,377.31
Guarantee deposits 189,605,664.05 173,447,240.76
Investment intention fund 1,000,000.00 1,000,000.00
Tax rebates 310,191.78 67,714,444.77
Others 25,515,599.09 33,758,132.77
Total 844,456,174.26 570,329,195.61
131
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
7.3 Provision for credit loss
Unit: RMB
Amount of changes in the current reporting period Difference resulted from
foreign currency
Category Opening balance statements Closing balance
Provision or reverse Recollect Resell or write off
Conversion
Other receivables 51,303,132.79 (9,417,803.41) - - (249,700.62) 41,635,628.76
Total 51,303,132.79 (9,417,803.41) - - (249,700.62) 41,635,628.76
Changes in credit loss 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 2021 3,092,760.15 9,818,044.78 38,392,327.86 51,303,132.79
The book balance of other receivables on January 1st
2021 in the current reporting period
--Transfer into stage 2 (3,092,760.15) 3,092,760.15 - -
-- Transfer into stage 3 (9,818,044.78) 9,818,044.78 -
--provision/(reverse) in the current reporting period 2,800,878.75 1,254,235.11 (13,472,917.27) (9,417,803.41)
-- Derecognition of financial assets (including direct
- - - -
write-down) and transfer out
Other changes (249,700.62) - - (249,700.62)
Balance on June 30th 2021 2,551,178.13 4,346,995.26 34,737,455.37 41,635,628.76
7.4 The actual write-off of other receivables during the current reporting period is nil.
132
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
7.5 Top five debtors based on corresponding closing balance of other receivables
Unit: RMB
Relationship with the Proportion of total
Closing balance for credit loss
Entities Company Nature Closing balance Aging closing balance for other
provision
receivables (%)
Temporary
Third party E Third party payments for 7,018,264.26 With in the contract period 0.83 76,499.08
receivables
Third party F Third party Guarantee deposits 6,927,179.05 Within 1 year 0.82 288,863.37
Temporary
Third party G Third party payments for 5,513,580.00 With in the contract period 0.65 60,098.02
receivables
Third party H Third party Guarantee deposits 3,738,423.66 With in the contract period 0.44 40,748.82
Third party I Third party Guarantee deposits 3,500,000.00 With in the contract period 0.41 38,150.00
Total 26,697,446.97 3.15 504,359.29
7.6 As of June 30th 2021, the Group does not have other receivables related to government subsidies.
7.7 As of June 30th 2021, there is no termination of other receivables booking due to transfer of a financial asset.
7.8 As of June 30th 2021, the Group has no assets/liabilities booked due to any transferred other receivable that the Group continues to be involved in.
133
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
8. Inventories
8.1 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 6,915,560,569.62 194,526,225.36 6,721,034,344.26 5,307,099,264.63 96,173,520.97 5,210,925,743.66
Work-in-progress 638,385,039.92 - 638,385,039.92 364,831,525.62 - 364,831,525.62
Finished goods 7,629,308,362.10 654,681,758.24 6,974,626,603.86 5,863,464,370.61 516,926,580.56 5,346,537,790.05
Contract performance cost 760,459,457.01 - 760,459,457.01 555,610,981.37 - 555,610,981.37
Total 15,943,713,428.65 849,207,983.60 15,094,505,445.05 12,091,006,142.23 613,100,101.53 11,477,906,040.70
8.2 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 96,173,520.97 98,613,564.09 - 260,859.70 - 194,526,225.36
Finished goods 516,926,580.56 153,987,401.28 - 13,864,740.86 (2,367,482.74) 654,681,758.24
Subtotal 613,100,101.53 252,600,965.37 - 14,125,600.56 (2,367,482.74) 849,207,983.60
The write-offs of provision for inventories in the current reporting period are due to use or sale of inventories.
For contract performance cost recognized as an asset, the Company recognizes it into current profit or loss on the same basis as the revenue from goods relating to such asset, and is
recognized at the point of time when the goods are delivered to and accepted by the counterparty; there was an amount of RMB 237,433,009.27 recognized during the current reporting
period.
134
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
9. Contract assets
9.1 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
Constructions 120,801,235.95 6,843,535.66 113,957,700.29 179,392,556.16 1,363,383.44 178,029,172.72
Maintainence
71,055,883.20 774,509.14 70,281,374.06 68,243,992.61 518,654.35 67,725,338.26
services
Total 191,857,119.15 7,618,044.80 184,239,074.35 247,636,548.77 1,882,037.79 245,754,510.98
9.2 The classification and disclosure of the method of provision for impairment of contract assets during the current
reporting period:
Unit: RMB
Closing Balance
Carrying amount Provisions for impairment Book value
Items
Proportion Provision
Amount Amount Amount
(%) proportion (%)
Provision for impairment on a
- - - - -
single item
Provision for impairment by
191,857,119.15 100.00 7,618,044.80 3.97 184,239,074.35
portfolio
Total 191,857,119.15 100.00 7,618,044.80 3.97 184,239,074.35
Provision, re-collection, or reverse in the current reporting period:
Unit: RMB
Expected credit loss during the Expected credit loss during
Credit loss provision whole duration (No credit the whole duration (Credit Total
impairment occurred) impairment occurred)
Balance on January 1st 2021 1,882,037.79 - 1,882,037.79
Provision during the current reporting
5,736,007.01 - 5,736,007.01
period
Balance on June 30th 2021 7,618,044.80 - 7,618,044.80
Impairment provision for the current reporting period amounted to RMB 5,736,007.01, with no reversal, write-off or
recovery of impairment provision during the current repoting period.
Contract assets arise from the Group’s construction works business as well as maintenance services relating to security
projects. The Group provides construction works and maintenance services based on contracts with customers, and
recognizes revenue based on the performance progress during the term of the contracts. The Group’s customers make
milestone payments for the construction works and maintenance services of the Group as provided in the contracts. For
the portion where the Group has obtained an unconditional right to the payment, it will be recognized as accounts
receivable, while the remaining portion will be recognized as contract assets; where the contract price received or
receivable by the Group exceeds the performance obligation completed to date, the excess portion will be recognized as
contract liabilities. The Group presents contract assets and contract liabilities under the same contract on a net basis.
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) 1,150,804,899.71 1,001,208,813.83
Total 1,150,804,899.71 1,001,208,813.83
135
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
11. Other current assets
Unit: RMB
Item Closing balance Opening balance
Deductible VAT input 705,088,455.51 391,898,131.26
Prepaid corporate income tax 45,361,243.85 41,520,799.46
Prepaid tariff 32,329,062.36 22,446,422.69
Others 74,118,058.54 41,571,699.38
Total 856,896,820.26 497,437,052.79
136
Hikvision 2021 Half Year Report
Notes to Financial Statements ar
For the reporting period from January 1st 2021 to June 30th 2021
12. Long-term receivables
12.1 Details of long-term receivables
Unit: RMB
Closing balance Opening balance
Item Provision for Provision for credit Range of discount rate
Carrying amount Book value Carrying amount Book value
credit loss loss
Financial leases receivables 331,157,010.38 29,130,391.03 302,026,619.35 332,860,621.51 21,387,061.50 311,473,560.01 0.13%-10.52%
Including: Unrealized income from
16,009,607.90 - 16,009,607.90 20,751,939.07 - 20,751,939.07 -
financing
Installments for selling goods 2,869,171,328.65 106,238,042.24 2,762,933,286.41 2,890,406,667.71 95,101,409.36 2,795,305,258.35 3.85%-5.62%
Including: Unrealized income from
689,702,955.21 - 689,702,955.21 738,142,438.88 - 738,142,438.88 -
financing
Less: Non-current assets due within one
1,265,079,116.45 114,274,216.74 1,150,804,899.71 1,092,345,496.98 91,136,683.15 1,001,208,813.83 -
year (Note (V) 10)
Total 1,935,249,222.58 21,094,216.53 1,914,155,006.05 2,130,921,792.24 25,351,787.71 2,105,570,004.53 -
12.2 Credit loss 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.
137
Hikvision 2021 Half Year Report
Notes to Financial Statements ar
For the reporting period from January 1st 2021 to June 30th 2021
As of June 30th 2021, the credit risk and expected credit losses of long-term receivables of these customers are as follows:
Unit: RMB
Closing balance
Age
Amounts Credit loss provision Estimated average loss rate (%)
Within credit period 2,526,073,126.75 27,410,017.06 1.09
Within 1 year after exceeding credit period 404,148,057.87 16,852,965.89 4.17
1-2 years after exceeding credit period 172,046,784.54 33,876,050.25 19.69
2-3 years after exceeding credit period 54,999,223.73 22,450,683.12 40.82
3-4 years after exceeding credit period 27,470,743.58 19,188,314.39 69.85
Over 4 years after exceeding credit period 15,590,402.56 15,590,402.56 100.00
Total 3,200,328,339.03 135,368,433.27 4.23
The changes in the Group's long-term receivables' expected credit loss provision for the current reporting period are as follows:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit losses Expected credit losses
Credit loss provision Expected credit for the entire duration for the entire duration Total
losses in the next 12
months (No credit impairment (Credit impairment has
occurred) occurred)
Balance on January 1st 2021 31,592,759.56 43,368,646.94 41,527,064.36 116,488,470.86
On January 1st 2021, the book balance of long-term accounts receivable in the current reporting period
Transfer into stage 2 (31,592,759.56) 31,592,759.56 - -
Transfer into stage 3 - (15,702,335.71) 15,702,335.71 -
Provision/(reverse) during the current reporting period 27,410,017.06 (8,530,054.65) - 18,879,962.41
Balance on June 30th 2021 27,410,017.06 50,729,016.14 57,229,400.07 135,368,433.27
12.3 As of June 30th 2021, there is no termination of long-term receivables booking due to transfer of a financial asset.
12.4 As of June 30th 2021, the Group has no assets/liabilities booked due to any transferred long-term receivable that the Group continue to be involved in.
138
Hikvision 2021 Half Year Report
Notes to Financial Statements ar
For the reporting period from January 1st 2021 to June 30th 2021
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
612,479,371.62 - - (12,551,789.97) - - - - - 599,927,581.65 -
Equity Investment Fund
Partnership (L.P.)
Daishan Hailai Yunzhi
15,253,091.76 - - 641,313.41 - - (999,000.00) - - 14,895,405.17 -
Technology Co., Ltd.
Zhejiang City Digital
11,864,018.37 - - (159,024.43) - - - - - 11,704,993.94 -
Technology Co., Ltd.
Zhejiang Haishi Huayue
Digital Technology Co., 9,985,577.32 - - 828,972.15 - - - - - 10,814,549.47 -
Ltd.
Shenzhen Hikvision
Urban Service Operation 6,029,569.69 - - (2,392,706.11) - - - - - 3,636,863.58 -
Co., Ltd.
Guangxi Haishi Urban
Operation Management 5,296,695.36 - - (2,055,245.77) - - - - - 3,241,449.59 -
Co., Ltd.
Yunnan Yinghai Parking
4,841,060.76 - - 8,854.38 - - - - - 4,849,915.14 -
Service Co., Ltd.
Xuzhou Kangbo Urban
Operation Management 4,631,286.58 - - (459,987.17) - - - - - 4,171,299.41 -
Service Co., Ltd.
Subtotal 670,380,671.46 - - (16,139,613.51) - - (999,000.00) - - 653,242,057.95 -
139
Hikvision 2021 Half Year Report
Notes to Financial Statements ar
For the reporting period from January 1st 2021 to June 30th 2021
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
2. Associated Companies
Wuhu Sensor
58,491,264.42 - - 5,507,128.76 - - - - - 63,998,393.18 -
Technology Co., Ltd.
Maxio Technology
91,955,638.61 - - 11,326,714.57 - - - - - 103,282,353.18 -
(Hangzhou) Co., Ltd.
Zhiguang Hailian Big
Data Technology Co., 21,253,058.87 - - (540,524.81) - - - - - 20,712,534.06 -
Ltd.
Sanmenxia Xiaoyun
Vision Technology Co., 3,671,496.93 - - (934,201.11) - - - - - 2,737,295.82 -
Ltd.
Jiaxin Haishi JiaAn
Zhicheng Technology 8,479,131.27 - - (1,061,192.51) - - - - - 7,417,938.76 -
Co., Ltd.
Qinghai Qingtang Big
9,795,448.67 - - 20,581.50 - - - - - 9,816,030.17 -
Data Co., Ltd.
Subtotal 193,646,038.77 - - 14,318,506.40 - - - - - 207,964,545.17 -
Total 864,026,710.23 - - (1,821,107.11) - - (999,000.00) - - 861,206,603.12 -
140
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
14. Other non-current financial assets
Unit: RMB
Investment
Additional
recovery Changes in fair
investment
Invested Entity (Note Opening during the value during the
Shareholding % during the Closing balance
1) balance current current
current
reporting reporting period
reporting period
period
CETC Finance Co.,
3.83% 423,435,737.20 - - (14,474,296.26) 408,961,440.94
Ltd. (Note 2)
Hangzhou
Confirmware 9.52% 31,092,032.62 - - (6,623,948.55) 24,468,084.07
Technology Co., Ltd.
Zhejiang Tuxun
Technology Co.,Ltd. 8.13% 32,222,764.45 - - (2,179,075.03) 30,043,689.42
(Zhejiang Tuxun)
Zhengzhou Guokong
Smart City 7.00% 700,000.00 - - - 700,000.00
Technology Co., Ltd.
Guangxi Jilian Haibao
Technical Service Co., 5.10% 2,884,220.00 - - - 2,884,220.00
Ltd.
Shenzhen Wanyu
Security Service 5.00% 1,000,000.00 - - - 1,000,000.00
Technology Co., Ltd.
Nanwang Information
Industry Group Co., 0.25% 604,313.00 - - - 604,313.00
Ltd.
Total 491,939,067.27 - - (23,277,319.84) 468,661,747.43
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. During the current reporting
period, the Company received a cash dividend of RMB 115,644,801.97 from China Electronic Technology Finance Co.,
Ltd. (2020: RMB 150,000,000.00) and recognized it as current profit and loss. Please refer to Note (V), 49 for details.
15. Fixed Assets
15.1 Details of fixed assets
Unit: RMB
General-
Building and Special-purpose Transportation
Items purpose Total
construction equipment vehicles
equipment
I. Total original carrying amount
1. Opening balance 5,100,087,402.39 942,058,072.93 2,045,680,662.52 96,077,396.86 8,183,903,534.70
2. Increase in the current
571,684,990.60 150,526,825.40 74,323,636.44 3,179,247.08 799,714,699.52
reporting period
1) purchase 19,647,303.10 148,863,146.75 56,386,090.80 3,179,247.08 228,075,787.73
2) transferred from
552,037,687.50 1,663,678.65 17,937,545.64 - 571,638,911.79
construction in progress
3.Decrease in the current
4,004,642.66 6,382,897.79 37,144,204.94 2,933,276.26 50,465,021.65
reporting period
1) disposal or write-off 4,004,642.66 6,382,897.79 37,144,204.94 2,933,276.26 50,465,021.65
4. Effect on conversion of
financial statements
(704,992.96) (2,644,292.66) (1,231,524.73) (60,110.60) (4,640,920.95)
denominated in foreign
currencies
5.Closing Balance 5,667,062,757.37 1,083,557,707.88 2,081,628,569.29 96,263,257.08 8,928,512,291.62
141
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
General-
Building and Special-purpose Transportation
Items purpose Total
construction equipment vehicles
equipment
II. Accumulated depreciation
1. Opening balance 992,312,042.71 368,166,922.57 937,726,505.61 55,020,864.96 2,353,226,335.85
2. Increase in the current
118,417,107.80 82,987,945.72 153,088,959.47 5,823,963.60 360,317,976.59
reporting period
(1) accrual 118,417,107.80 82,987,945.72 153,088,959.47 5,823,963.60 360,317,976.59
3.Decrease in the
current reporting 2,221,567.66 5,291,282.67 31,514,132.13 2,567,655.46 41,594,637.92
period
(1) disposal or write-
2,221,567.66 5,291,282.67 31,514,132.13 2,567,655.46 41,594,637.92
off
4. Effect on conversion of
financial statements
(135,423.02) (1,476,565.78) (406,015.55) (45,139.50) (2,063,143.85)
denominated in foreign
currencies
5.Closing balance 1,108,372,159.83 444,387,019.84 1,058,895,317.40 58,232,033.60 2,669,886,530.67
III. 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 - - - - -
IV. Total book value
Closing balance on book value 4,558,690,597.54 639,170,688.04 1,022,733,251.89 38,031,223.48 6,258,625,760.95
Opening balance on book value 4,107,775,359.68 573,891,150.36 1,107,954,156.91 41,056,531.90 5,830,677,198.85
15.2 As of June 30th 2021, the Group did not have any significant idle fixed assets.
15.3 As of June 30th 2021, the Group had not rent out any fixed asset through operating leasing
15.4 Fixed assets of which certificates of title have not been granted as of June 30th 2021.
Unit: RMB
Item Carrying amount Reason for certificates of title not granted
In the process of obtaining the real estate
Office building for branches 16,054,560.00
certificates
In the process of obtaining the real estate
Fuzhou High-tech Zone Innovation Park 104,644,180.00
certificates after transferred to fixed assets
Total 120,698,740.00
142
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
16. Construction in progress
16.1 Details of construction in progress
Unit: RMB
Closing balance Opening balance
Item
Carrying amount Provision Book value Carrying amount Provision Book value
Chengdu Science and Technology Park Project 649,653,461.12 - 649,653,461.12 521,626,793.33 - 521,626,793.33
Hangzhou Innovation Industry Park 362,637,782.43 - 362,637,782.43 337,821,702.49 - 337,821,702.49
Xi’an Science and Technology Park Project 128,568,833.69 - 128,568,833.69 12,679,174.93 - 12,679,174.93
Shijiazhuang Science and Technology Park
48,583,014.75 48,583,014.75 2,060,553.46 2,060,553.46
Project
Chongqing Science and Technology Park Phase
- - - 249,810,250.79 - 249,810,250.79
II Project
Others 516,179,307.39 - 516,179,307.39 301,236,718.72 - 301,236,718.72
Total 1,705,622,399.38 - 1,705,622,399.38 1,425,235,193.72 - 1,425,235,193.72
16.2 Changes in significant construction in progress during the current reporting period
Unit: RMB
Including:
Transferred Effect on capitalized
Amount Accumulated Capitalization
to fixed conversion interest and
Increase in invested as capitalized rate for
Budget assets of financial Other Construction profit/loss
Opening the current Closing proportion interest and interest in the Source of
Item (RMB during the statements Reductions in Progress on exchange
0,000)
balance reporting
current denominated (Note 1)
balance of budget
(%)
profit/loss on
for the
current funds
period amount exchange reporting
reporting in foreign current
(%) (Note 2) period (%)
period currencies reporting
period
Chengdu
Science and Self-
196,900.00 521,626,793.33 128,026,667.79 - - - 649,653,461.12 32.99% 32.99% - - -
Technology financing
Park Project
Hangzhou
Special
Innovation 102,600.00 337,821,702.49 24,816,079.94 - - - 362,637,782.43 35.34% 35.34% 5,113,014.05 (48,573,001.14) 0.85%
loan
Industry Park
143
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Including:
Effect on capitalized
Amount
Transferred to conversion Accumulated interest and Capitalization
invested
Increase in fixed assets of financial Other capitalized profit/loss rate for
Budget as a Construction
Opening the current during the statements Reductions Closing interest and on interest in the Source of
Item (RMB proportion in Progress
0,000)
balance reporting current denominated (Note 1) balance
of budget (%)
profit/loss on exchange current funds
period reporting in foreign exchange for the reporting
amount
period currencies (Note 2) current period (%)
(%)
reporting
period
Xi’an
Science and Self-
227,800.00 12,679,174.93 115,889,658.76 - - - 128,568,833.69 5.64% 5.64% - - -
Technology financing
Park project
Shijiazhuang
Science and 89,800.00 2,060,553.46 46,522,461.29 - - - 48,583,014.75 5.41% 5.41% - - -
Self-
Technology financing
Park Project
EZVIZ
79,800.00 2,332,067.08 41,416,910.43 - - - 43,748,977.51 5.48% 5.48% - - -
Self-
Industry
financing
Park
Zhengzhou
Science and 48,500.00 13,529,409.53 4,800,801.74 - - - 18,330,211.27 3.78% 3.78% - - -
Self-
Technology financing
Park Project
Chongqing
Science and
Self-
Technology 40,000.00 249,810,250.79 144,149,199.63 393,959,450.42 - - - 100.00% 100.00% - - -
financing
Park project-
phase 2
Self-
Others - 285,375,242.11 349,370,657.32 177,679,461.37 (1,080,606.45) 1,885,713.00 454,100,118.61 - - - - -
financing
Total 785,400.00 1,425,235,193.72 854,992,436.90 571,638,911.79 (1,080,606.45) 1,885,713.00 1,705,622,399.38 - - 5,113,014.05 (48,573,001.14)
Note 1: Other reductions during the the current reporting period were the completed decoration project that transferred to the 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 2021, the Group did not have any sign of impairment of projects under construction; therefore, no provision for impairment loss was booked.
144
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
17. Right-of-use assets
Unit:RMB
Houses and Transportation
Items General Equipment Dedicated Equipment Total
Buildings Facility
I. Total original carrying
amount
1. Opening balance 333,243,923.96 - 92,164,518.65 14,423,291.59 439,831,734.20
2. Increased 68,151,993.38 - - 3,282,584.49 71,434,577.87
(1)New Lease 68,151,993.38 - - 3,282,584.49 71,434,577.87
3. Decreased 2,329,019.32 - - - 2,329,019.32
(1) The lease contract
expires or terminates 2,329,019.32 - - - 2,329,019.32
early
4. Effect on conversion of
financial statements
(3,903,177.22) - - (638,394.71) (4,541,571.93)
denominated in foreign
currencies
5. Ending balance 395,163,720.80 - 92,164,518.65 17,067,481.37 504,395,720.82
II. Accumulated depreciation
1. Opening balance - - 46,834,180.90 - 46,834,180.90
2. Increased 64,816,040.75 - 10,761,693.68 3,032,484.93 78,610,219.36
(1) Provisons 64,816,040.75 - 10,761,693.68 3,032,484.93 78,610,219.36
3. Decreased 397,017.82 - - - 397,017.82
(1) The lease contract
expires or terminates 397,017.82 - - - 397,017.82
early
4. Effect on conversion of
financial statements
(354,812.23) - - (63,073.12) (417,885.35)
denominated in foreign
currencies
5. Ending balance 64,064,210.70 - 57,595,874.58 2,969,411.81 124,629,497.09
III. Provision for decline in
value
1. Opening balance - - - - -
2. Increased - - - - -
3. Decreased - - - - -
4. Ending balance - - - - -
IV. Total book value
1. Closing balance on book
331,099,510.10 - 34,568,644.07 14,098,069.56 379,766,223.73
value
2. Opening balance on book
333,243,923.96 - 45,330,337.75 14,423,291.59 392,997,553.30
value
In the current reporting period, the short-term lease and low-value asset lease expenses that the Group included in the
current profit and loss with simplified processing were RMB 57,316,442.89. In the current reporting period, the Group's
total cash outflow related to leases was RMB 142,279,358.39.
145
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
18. Intangible assets
18.1 Details of Intangible assets
Unit: RMB
Intellectual property
Item Land use right Application Software Franchise Total
right
I. Total original carrying
amount
1. Opening balance 1,224,893,932.49 70,044,034.88 298,812,867.42 13,091,615.51 1,606,842,450.30
2. Increased 1,049,256.40 - 13,400,485.18 679,111.39 15,128,852.97
(1) Purchase 1,049,256.40 - 13,400,485.18 679,111.39 15,128,852.97
3. Decreased - - 885,704.45 - 885,704.45
(1)Disposal or write-off - - 885,704.45 - 885,704.45
4. Effect on conversion of
financial statements
- 1,832.65 (1,163,339.57) 1,345.85 (1,160,161.07)
denominated in foreign
currencies
5. Closing balance 1,225,943,188.89 70,045,867.53 310,164,308.58 13,772,072.75 1,619,925,437.75
II. Total accumulated
amortization
1.Opening balance 76,612,562.29 60,718,480.10 217,067,323.75 1,126,160.47 355,524,526.61
2. Increased 13,374,944.47 2,212,337.53 18,566,322.13 906,062.01 35,059,666.14
(1)Accrual 13,374,944.47 2,212,337.53 18,566,322.13 906,062.01 35,059,666.14
3. Decreased - - 788,876.70 - 788,876.70
(1)Disposal or write-off - - 788,876.70 - 788,876.70
4. Effect on conversion of
financial statements
- (3,733.05) (1,141,518.77) 143.76 (1,145,108.06)
denominated in foreign
currencies
5. Closing balance 89,987,506.76 62,927,084.58 233,703,250.41 2,032,366.24 388,650,207.99
III. Provision for decline in
value
1. Opening balance - - - - -
2. Increased - - - - -
3. Decreased - - - - -
4. Closing balance - - - - -
IV. Total book value
1. Closing balance on book
1,135,955,682.13 7,118,782.95 76,461,058.17 11,739,706.51 1,231,275,229.76
value
2. Opening balance on book
1,148,281,370.20 9,325,554.78 81,745,543.67 11,965,455.04 1,251,317,923.69
value
18.2 At the end of the current reporting period, the intangible assets of the Group that have not completed the
title certificate are as follows：
Unit: RMB
Item Carrying value Reasons for not getting the title certificate
Land use right of Nanchang Science and Technology
103,874,856.90 The land certificate is still in process
Park
Total 103,874,856.90
146
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
19. Goodwill
19.1 Goodwill book value
Unit: RMB
Increased Decreased Effect on
conversion of
Business combination financial
The name of the investee or the matter Opening
not involving Liquidation & statements Closing balance
that forming a goodwill balance
enterprises under cancellation denominated in
common control foreign
currencies
Secure Holdings Limited (SHL) 130,320,174.19 - - (1,294,233.98) 129,025,940.21
HuaAn Baoquan Intelligence 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.
BK EESTI AKTSIASELTS 4,826,266.94 - - (203,755.67) 4,622,511.27
SIA “BK Latvia” 4,819,569.44 - - (203,472.92) 4,616,096.52
ZAO Hikvision 67,349.64 - - - 67,349.64
Hangzhou Haikang Zhicheng
Investment and Development Co., 12,573.42 - - - 12,573.42
Ltd.
Total 274,203,665.20 - 13,774,405.88 (1,701,462.57) 258,727,796.75
20. Long-term deferred expenses
Unit: RMB
Difference of
Invested unit Opening Balance Increased Amortized foreign currency Closing balance
translation
Improvement expenditure for
108,584,686.85 18,066,543.34 26,104,715.70 (594,611.40) 99,951,903.09
leased fixed asset
Total 108,584,686.85 18,066,543.34 26,104,715.70 (594,611.40) 99,951,903.09
21. Deferred tax assets/deferred tax liabilities
21.1 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
619,743,698.69 165,036,649.43 439,119,363.43 118,145,320.66
losses of assets
Provision for credit loss 1,826,388,333.68 375,744,721.05 1,539,163,635.55 317,826,951.61
Payroll payables 340,995,206.97 67,364,166.74 340,995,206.97 67,364,166.74
Share-based payment 481,007,150.91 76,607,409.18 395,569,612.03 63,817,274.43
Provisions 116,834,580.56 17,346,673.52 125,721,860.51 20,746,514.91
Expenditure without invoice 165,341,805.58 34,963,772.08 343,485,705.59 79,499,747.08
Unrealized profit from inter-
1,362,398,463.76 204,683,716.45 1,332,036,632.93 203,654,079.47
group transactions
Changes in the fair value of
derivative financial 3,342,073.74 835,518.44 4,862,446.50 1,215,611.63
instruments
Deferred income 142,894,727.35 22,580,305.74 175,339,879.57 28,307,816.27
Total 5,058,946,041.24 965,162,932.63 4,696,294,343.08 900,577,482.80
147
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
21.2 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 accelerated
depreciation/amortization 823,144,399.91 153,669,507.40 794,946,638.24 155,500,598.94
of assets
Changes in the fair value
of derivative financial 28,126,415.53 7,031,603.88 18,487,400.00 4,621,850.00
instruments
Changes in fair value of
other non-current financial 63,748,699.43 9,562,304.91 87,026,019.27 13,053,902.89
assets
Total 915,019,514.87 170,263,416.19 900,460,057.51 173,176,351.83
21.3 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 80,091,112.94 885,071,819.69 80,196,527.94 820,380,954.86
Deferred tax liabilities 80,091,112.94 90,172,303.25 80,196,527.94 92,979,823.89
22. Other non-current assets
Unit: RMB
Item Closing balance Opening balance
Contract assets 522,238,731.65 600,392,481.02
Prepayments for equipment 146,685,635.87 26,838,623.06
Prepayments for acquisition of land 79,938,875.22 79,046,571.00
Prepayments for infrastructure 16,914,474.29 15,233,481.00
Total 765,777,717.03 721,511,156.08
23. Short-term borrowings
23.1 Categories of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Fiduciary loan 3,142,918,040.93 3,999,246,634.59
Total 3,142,918,040.93 3,999,246,634.59
23.2 As of June 30th 2021, the Group did not have any overdue short-term loans that were failed to repay.
24. Held-for-trading financial liabilities
Unit: RMB
Item Closing balance Opening balance
Financial liabilities measured at fair value through
3,651,541.77 7,405,771.15
current profits and losses
Including: derivative financial liabilities 3,651,541.77 7,405,771.15
total 3,651,541.77 7,405,771.15
148
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
25. Notes payable
Unit: RMB
Item Closing balance Opening balance
Bank acceptance Bill 1,209,714,255.88 1,036,920,229.85
Total 1,209,714,255.88 1,036,920,229.85
As of June 30th 2021, the Group did not have any unpaid matured notes payable.
26. Accounts payable
26.1 List of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payments for goods 12,304,461,476.16 13,461,766,461.74
Payables on equipment 143,812,271.64 132,118,328.45
Total 12,448,273,747.80 13,593,884,790.19
26.2 As of June 30th 2021, the Group did not have any significant accounts payable with aging above one year.
27. Contract liabilities
27.1 List of contract liabilities
Unit: RMB
Item Closing balance Opening balance
Advanced receipts from sales of products 1,883,864,456.98 1,605,290,145.88
Advanced receipts for construction settlement payment 356,004,365.61 401,866,195.59
Advanced receipts from services 250,806,170.04 154,010,329.79
Total 2,490,674,992.63 2,161,166,671.26
27.2 Qualitative and Quantitative Analysis on the Above Contract Liabilities:
Advanced receipts for product sales include prepayments for goods by customers and sales rebates provided to distributors.
Product sales revenue of the Group is recognized when the control of such product is transferred to the customers. During
the transaction, prepayments for goods by customers are recognized as a contract liability till the goods are shipped or
delivered to the customers. Sales rebates to distributors of the Group may be accumulated when they purchase products
from the Group, and are deductible for payments for goods to be purchased in the future. Such sales rebates enable
distributors to enjoy discounts in their future purchase of goods, which are not available to the same type of customers.
Therefore, the commitment to offer such discounts to distributors on their future purchase prices is a separate performance
obligation. Such commitment is recognized as a contract liability based on the transaction price allocated on the basis of
the fair value of rebates when the sales transaction takes place, and is recognized as revenue when distributors use the
sales rebates for deduction of purchase prices.
The Group provides construction works and maintenance services based on the construction works and maintenance
service contracts with customers, and recognizes revenue based on the performance progress during the term of the
contracts. The Group’s customers make milestone payments for the construction works and maintenance services of the
Group as provided in the contracts. For the portion where the Group has obtained an unconditional right to the payment,
it will be recognized as accounts receivable, while the remaining portion will be recognized as contract assets; where the
contract price received or receivable by the Group exceeds the performance obligation completed to date, the excess
portion will be recognized as contract liabilities. The Group presents contract assets and contract liabilities under the same
contract on a net basis.
The Group provides cloud services including storage service, video service, and telephone service to its customers. Such
services are performance obligations to be satisfied during a period of time, and revenue is recognized based on the
performance progress over the period in which such services are rendered. As customers have prepaid for cloud services
at the time of purchase, at the time of transaction, the Group recognizes as a contract liability for the payments that would
be received for cloud services, and recognizes revenue based on the performance progress over the period in which such
149
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
services are rendered.
28. Payroll payable
28.1 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 2,858,597,482.49 6,449,497,859.69 6,545,612,764.54 2,762,482,577.64
2. Termination benefits – defined
19,188,948.22 407,631,094.60 364,031,321.69 62,788,721.13
contribution scheme
Total 2,877,786,430.71 6,857,128,954.29 6,909,644,086.23 2,825,271,298.77
28.2 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 2,671,062,392.28 5,813,722,297.06 5,897,873,744.93 2,586,910,944.41
subsidies
2.Staff welfare 14,300.82 90,298,417.48 90,298,251.48 14,466.82
3.Social insurance
11,227,541.93 244,066,969.48 223,057,781.09 32,236,730.32
contributions
Including:
10,852,343.07 233,971,668.95 214,082,443.10 30,741,568.92
Medical insurance
Injury insurance 330,255.63 6,971,949.60 6,246,317.09 1,055,888.14
Maternity insurance 44,943.23 3,123,350.93 2,729,020.90 439,273.26
4.Housing funds 146,194.01 257,834,706.10 257,881,712.21 99,187.90
5.Labor union and
176,147,053.45 43,575,469.57 76,501,274.83 143,221,248.19
education fund
Subtotal 2,858,597,482.49 6,449,497,859.69 6,545,612,764.54 2,762,482,577.64
28.3 Defined Contribution Plan
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
1.Basic pension insurance 18,665,404.09 394,163,208.63 352,020,520.81 60,808,091.91
2.Unemployment insurance 523,544.13 13,467,885.97 12,010,800.88 1,980,629.22
Subtotal 19,188,948.22 407,631,094.60 364,031,321.69 62,788,721.13
The Group participates in pension insurance and unemployment insurance plans established by government agencies in
accordance with regulations. According to these plans, the Group pays monthly fees to these plans in proportion to the
payment base. The Group has no other material obligation for the payment of pension benefits beyond the contributions
described above, and corresponding expenses were booked into current profits and losses or corresponding assets.
29. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 1,001,851,547.52 1,403,744,369.98
Value-added tax 365,711,957.54 294,728,811.39
City construction and maintenance tax 24,629,195.29 17,924,699.09
Education surcharges 17,349,795.66 7,547,297.38
Local education surcharges 11,854,439.47 5,437,435.12
Others 209,211,872.68 40,675,295.66
150
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Item Closing balance Opening balance
Total 1,630,608,808.16 1,770,057,908.62
30. Other payables
30.1 Categories
Unit: RMB
Item Closing balance Opening balance
Dividend payable 651,635,862.26 205,898,523.84
Other payables 1,395,750,254.33 1,319,154,832.11
Total 2,047,386,116.59 1,525,053,355.95
30.2 Dividends payable
Unit: RMB
Item Closing balance Opening balance
Dividends of incentive restricted shares 144,401,634.30 205,898,523.84
Dividends of non-restricted shares 507,234,227.96 -
Total 651,635,862.26 205,898,523.84
30.3 Other payables
(1) List of other payables according to the nature of the payment
Unit: RMB
Item Closing balance Opening balance
Unexpired commercial acceptance bills that were endorsed (Note
610,856,089.84 482,454,604.99
(V)-3)
Guarantee and deposit fees 385,198,228.33 298,869,865.03
Collection and payment on behalf 201,771,898.24 157,485,875.39
Accrued expenses 130,492,655.46 337,678,697.37
Other expense payable 67,431,382.46 42,665,789.33
Total 1,395,750,254.33 1,319,154,832.11
(2) As of June 30th 2021, the Group did not have any significant other payables aging over one year.
31. Non-current liabilities due within one year
Unit：RMB
Item Closing balance Opening balance
Long-term borrowings due within one year (Note (V) 33) 3,342,160,117.94 3,486,243,087.91
Lease liabilities due within one year (Note (V), 34) 174,958,269.90 156,420,687.89
Long-term payables due within one year (Note (V) 35) 3,102,428.95 2,134,638.48
Total 3,520,220,816.79 3,644,798,414.28
32. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Subscription payment of restricted shares 511,594,361.52 560,959,368.73
Output VAT to be transferred 236,076,809.87 184,752,210.84
Total 747,671,171.39 745,711,579.57
151
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
33. Long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged loan (Note 1) 1,498,890,006.05 1,556,927,316.08
Fiduciary loan (Note 2) 3,564,285,262.97 3,700,483,533.13
Other borrowing (Note 3) 190,000,000.00 190,000,000.00
Less：Long-term loans due within one year (Note (V) 31) 3,342,160,117.94 3,486,243,087.91
Total 1,911,015,151.08 1,961,167,761.30
Note 1: As of June 30th 2021, RMB 263,071,428.56 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
4.31%.
RMB 179,800,000.00 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 of the loan is 4.345%
RMB 219,780,000.00 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,
among them, the annual interest rate of RMB 169,600,000.00 of the loan is 4.345%, the annual interest rate of RMB
50,180,000.00 of the loan is 4.245%.
RMB 224,800,000.00 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,
among them, the annual interest rate of RMB 137,600,000.00 of the loan is 4.345%, the annual interest rate of RMB
87,200,000.00 of the loan is 4.245%.
RMB 95,600,000.00 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 4.245%.
RMB 514,000,000.00 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 of the loan is 4.345%.
Note 2: As of June 30th 2021, the credit loan with a book value of RMB 3,074,480,000.00 was 400 million euros in credit
loans, which was mainly used for the investment and construction of the Company's Hangzhou Innovation Industrial Park
project and Xi'an Science and Technology Park project, the maturity date is December 14th 2021, and the interest rate is
0.85%.
The book value of the credit loan is RMB 479,970,000.00, which is mainly used for the acquisition of the thermal imaging
division asset group in the year of 2020 by Hangzhou HikMicro Sensing Technology Co., Ltd., a subsidiary of the Group,
and the maturity dates are September 28th 2022 and September 27th 2023, respectively.and the annual interest rate is 3.20%.
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
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 2021, CDBDF has aggregately invested RMB 190
million (December 31st 2020: RMB 190 million).
152
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
34. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease liabilities 374,452,790.68 386,475,961.59
Less ：Lease liabilities due within one year (Note (V), 31) 174,958,269.90 156,420,687.89
Total 199,494,520.78 230,055,273.70
35. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Purchase goods in installments 11,491,861.74 10,677,104.56
Borrowing - 8,000,000.00
Less: Long-term payables due within one year (Note
3,102,428.95 2,134,638.48
(V), 31)
Total 8,389,432.79 16,542,466.08
36. Provisions
Unit: RMB
Item Closing balance Opening balance
Product quality warranty 159,098,659.69 151,443,871.02
Total 159,098,659.69 151,443,871.02
37. Deferred income
Unit: RMB
Increase in current Decrease in current
Item Opening balance Closing balance Details
reporting period reporting period
Government Subsidies 190,878,987.69 69,654,000.00 69,803,069.41 190,729,918.28 Note
Total 190,878,987.69 69,654,000.00 69,803,069.41 190,729,918.28
As of June 30th 2021, 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 Park 76,835,135.44 - 34,907,015.44 - 41,928,120.00 Related to assets
construction
Other special
32,815,600.80 11,340,500.00 5,455,672.03 - 38,700,428.77 Related to assets
subsidies
Other special
81,228,251.45 58,313,500.00 29,440,381.94 - 110,101,369.51 Related to incomes
subsidies
Subtotal 190,878,987.69 69,654,000.00 69,803,069.41 - 190,729,918.28
Note 1: Refer to government subsidies received by the Group for projects such as Chongqing Manufacture Park
construction and other projects; Actual expenses occurred in the current reporting period for special subsidies related to
incomes were recognized in other income; and relevant assets for Chongqing Manufacture Park construction and other
special subsidies related to assets were amortized averagely in other income within the assets’ useful lives.
153
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
38. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Subscription for restricted stocks 511,594,361.52 560,959,368.74
Total 511,594,361.52 560,959,368.74
39. Share capital
Unit: RMB
Changes for the current reporting period
Opening balance New issue of Transfer from Closing balance
Bonus issue Others (Note) Subtotal
shares Capital Reserve
2021.06.30
Total 9,343,417,190.00 - - -- (7,611,076.00) (7,611,076.00) 9,335,806,114.00
shares
Note: On December17th 2020, in accordance with the authorization of the Company’s 2021 first extraordinary general
meeting and the resolutions of the 20th meeting of the fourth board of directors and the revised articles of association, the
Company repurchased and cancelled the granted 7,611,076.00 restricted RMB treasury shares that have not been unlocked,
reducing the share capital by RMB 7,611,076.00 and the capital reserve by RMB 115,032,981.28. The Company had
completed the repurchase cancellation registration on June 30th 2021.
40. 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)
2021.06.30
Share premium 4,747,808,907.38 - 120,076,361.59 4,627,732,545.79
Other capital reserves 430,968,554.71 124,387,684.27 - 555,356,238.98
Total 5,178,777,462.09 124,387,684.27 120,076,361.59 5,183,088,784.77
Note 1: The increase of RMB 124,387,684.27 in other capital reserves in the current fiscal year was calculated with equity-
settled share-based payments which were included in the capital reserve. Please refer to Note (XI) for details.
Note 2: The decrease of RMB 115,032,981.28 in share capital premium during the current reporting period was due to the
Company’s repurchase of 7,611,076 granted but unlocked RMB treasury shares by cash, please refer to Note (V) 39; The
decrease of RMB 5,033,446.99 in share capital premium during the current reporting period was due to share distributions
by equity settlements to minority shareholders; The decrease of RMB 9,933.32 in share capital premium was due to the
disposal of subsidiary during the current reporting period. For details, please refer to Note (VII) 1(1) Note 4.
41. Treasury shares
Unit: RMB
Increase in the Decrease in the
Item Opening Balance current reporting current reporting Closing balance
period period (Note 1)
2021.06.30
Restricted shares incentive scheme 1,121,918,737.47 - 98,730,014.43 1,023,188,723.04
Total 1,121,918,737.47 - 98,730,014.43 1,023,188,723.04
Note 1: During the current reporting period, the decreased amounts of treasury shares includes a decrease of RMB
37,631,007.23 due to the repurchase and cancellation of restricted shares of 2016 and 2018 Restricted Share Incentive
Scheme; a decrease of RMB 61,099,007.20 in treasury shares was due to provision of cash dividend allocated to restricted
shares.
.
154
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
42. 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
2021.06.30
Other incomes
that may be
reclassified
(84,993,926.94) (8,260,441.80) - - (7,233,190.86) (1,027,250.94) (92,227,117.80)
subsequently
to profit or
loss
Included:
Effect on
conversion of
financial
(84,993,926.94) (8,260,441.80) - - (7,233,190.86) (1,027,250.94) (92,227,117.80)
statements
denominated
in foreign
currencies
Other
comprehensive (84,993,926.94) (8,260,441.80) - - (7,233,190.86) (1,027,250.94) (92,227,117.80)
income
43. Surplus reserves
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
reporting period reporting period
2021.06.30
Statutory surplus reserves (Note) 4,672,505,348.00 - - 4,672,505,348.00
Total 4,672,505,348.00 - - 4,672,505,348.00
44. Retained earnings
Unit: RMB
Item First half year of 2021 First half year of 2020
Retained Earnings at the close of the prior reporting period 35,806,523,826.37 28,961,389,145.22
Add: Net profit attributable to the parent company for the
6,481,424,653.39 4,623,972,830.87
current reporting period
Subtract: Statutory surplus reserves - -
Dividends payable on common shares (Note) 7,458,057,406.90 6,541,507,487.20
Retained earnings at the end of the current reporting period 34,829,891,072.86 27,043,854,488.89
Note：According to the resolution of 2020 Annual General Meeting dated on May 14th 2021, 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 8 (tax inclusive), the rest of retained earnings were all carried forward for future distributions.
45. Operating income/operating cost
45.1 Operating income and operating cost
Unit: RMB
First half year of 2021 First half year of 2020
Item
Revenue Cost Revenue Cost
Operating income 33,662,102,661.75 18,023,388,922.41 24,068,056,071.82 12,100,735,573.06
Other operating income 239,995,706.35 181,806,842.05 203,103,171.94 92,984,372.32
Total 33,902,098,368.10 18,205,195,764.46 24,271,159,243.76 12,193,719,945.38
155
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
45.2 Operating business (by business type)
Unit: RMB
First half year of 2021
Item
Revenue Cost
Product sales 32,693,068,598.93 17,565,104,081.49
Construction contract 411,198,176.84 291,842,825.70
Provide services 557,835,885.98 166,442,015.22
Total 33,662,102,661.75 18,023,388,922.41
45.3 Operating business (by the time of revenue recognition)
Unit: RMB
First half year of 2021
Item
Revenue Cost
Recognized at some point 32,693,068,598.93 17,565,104,081.49
Recognition took place within a
969,034,062.82 458,284,840.92
certain period of time
Total 33,662,102,661.75 18,023,388,922.41
45.4 Operating business (By product or business type)
Unit: RMB
First half year of 2021
Item
Revenue Cost
Products and Services 27,672,536,087.24 14,476,253,747.73
Constructions 411,198,176.84 291,842,825.70
Subtotal 28,083,734,264.08 14,768,096,573.43
Smart home business 1,871,108,774.85 1,172,850,667.99
Robotic business 1,220,189,435.48 642,233,986.43
Other innovative businesses 2,487,070,187.34 1,440,207,694.56
Subtotal 5,578,368,397.67 3,255,292,348.98
Total 33,662,102,661.75 18,023,388,922.41
Descriptions of Performance obligations:
The Group sells video surveillance products, smart home products, robotic products, and other products and related
accessories. For sales of goods to customers, the Group recognizes revenue when the control of the goods is transferred,
i.e. when the goods are delivered to the location designated by other party, or delivered to the carrier designated by other
party, or delivered to the other party for acceptance. Since the delivery of the goods to the customer represents the right to
unconditionally receive the contract consideration, and the maturity of the payment only depends on the passage of time,
the Group recognizes a receivable when the goods are delivered to the customer. When the customer prepays for the goods,
the Group recognizes the transaction amount received as a contract liability, and recognizes revenue until the goods are
delivered to the customer.
For projects constructed for customers, since the customers could control the assets under construction during the
performance of the Group, the Group recognizes revenue according to the performance progress by treating them as the
obligations within certain period, except that the performance progress cannot be reasonably determined. The Group
applies the output method to determine the performance progress, which is based on the value to the customers of the
goods or services that have been transferred to them. Where the performance progress cannot be reasonably determined,
and the costs incurred by the Group are expected to be compensated, the revenue shall be recognized according to the
amount of the costs already incurred until the performance progress can be reasonably determined. The customers of the
Group pay the Group for the construction works by milestone payments in accordance with the contract. For the portion
where the Group has obtained an unconditional right to the payment, it will be recognized as accounts receivable, while
the remaining portion will be recognized as contract assets; where the contract price received or receivable by the Group
156
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
exceeds the performance obligation completed to date, the excess portion will be recognized as contract liabilities. The
Group presents contract assets and contract liabilities under the same contract on a net basis.
The Group provides customers with operation and maintenance services. Since customers obtain and consume the
economic benefits generated by the performance of the Group at the same time when the Group performs its obligations,
the Group recognizes revenue according to the performance progress by treating them as the obligations within certain
period.
The customers of the Group pay the Group for the maintenance services by milestone payments in accordance with the
contract. For the portion where the Group has obtained an unconditional right to the payment, it will be recognized as
accounts receivable, while the remaining portion will be recognized as contract assets; where the contract price received
or receivable by the Group exceeds the performance obligation completed to date, the excess portion will be recognized
as contract liabilities. The Group presents contract assets and contract liabilities under the same contract on a net basis.
The Group provides cloud services including storage service, video service, and telephone service to its customers. Such
services are performance obligations to be satisfied during a period of time, and revenue is recognized based on the
performance progress over the period in which such services are rendered. As customers have prepaid for cloud services
at the time of purchase, the Group recognizes the payments for cloud services received at the time of transaction as a
contract liability, and recognizes revenue based on the performance progress over the period in which such services are
rendered.
Sales rebates to distributors of the Group may be accumulated when they purchase products from the Group, and are
deductible for payments for goods to be purchased in the future. Such sales rebates enable distributors to enjoy discounts
in their future purchase of goods, which are not available to the same type of customers. Therefore, the commitment to
offer such discounts to distributors on their future purchase prices is a separate performance obligation. Such commitment
is recognized as a contract liability based on the transaction price allocated on the basis of the fair value of rebates when
the sales transaction takes place, and is recognized as revenue when distributors use the sales rebates for deduction of
purchase prices.
The Group provides quality assurance for the sold video surveillance products, smart home products, robotic products and
other products and related accessories, as well as the assets constructed. The quality assurance related to the products sold
by the Group cannot be purchased separately, and is a guarantee to customers that the products sold meet the established
standards, therefore, the Group conducts accounting treatment in accordance with the Accounting Standards for Business
Enterprises No. 13 - Contingencies, please refer to Note (III), 24 and Note (V), 36 for details.
For sales to end consumers through the online trading platform, a 7-day or 30-day right of return is provided accordingly.
At the time of revenue recognition, a return payable is recognized for the goods expected to be returned according to the
amount expected to be returned due to the sales return; in addition, a return cost receivable is recognized according to the
balance of the book value of the goods expected to be returned at the time of transfer net of the estimated cost of recovering
the goods, and carrying over costs according to net amount of book value of the transferred goods at the time of transfer
net of the cost of the aforementioned assets. The Group estimates the number of returns at the portfolio level with its
accumulated historical experience and adopting the expected value method. In view of the stable return rate in previous
years, it is most unlikely that there will be a significant reversal for the accumulated recognized revenue.
Descriptions of allocation to the remaining performance obligations:
As of June 30th 2021, all the remaining performance obligations are part of the contracts with original expected contract
term not exceeding one year. The Group expects to recognize all of them as revenue within the next year.
157
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
46. Business Taxes and Surcharges
Unit: RMB
Items First half year of 2021 First half year of 2020
City construction and maintenance tax 134,355,040.58 79,448,007.54
Education surcharges 58,455,669.70 34,694,864.30
Local education surcharges 38,968,756.10 23,124,847.79
Real estate tax 24,311,814.02 8,518,237.11
Stamp duty 21,686,242.96 11,993,613.72
Tax on use of land 2,495,394.98 1,810,901.96
Vehicle and vessel tax 97,409.94 93,490.92
Others 99,675.87 8,388,201.91
Total 280,470,004.15 168,072,165.25
47. Financial Expenses
Unit: RMB
Items First half year of 2021 First half year of 2020
Interest expenses 113,369,214.89 117,407,704.24
Less：Interest income 411,998,029.35 306,973,066.18
Interest expense on lease liabilities 7,517,245.71 -
Foreign exchange losses 99,472,543.57 2,749,318.63
Less﹕Capitalized specific loan interests and foreign
(48,573,001.14) 50,688,176.68
exchange differences on specific loan
Others 20,541,585.97 9,532,013.26
Total (122,524,438.07) (227,972,206.73)
48. Other income
Unit: RMB
Items First half year of 2021 First half year of 2020
VAT Rebates 852,085,468.02 784,320,169.82
Special subsidies 212,725,665.41 180,572,947.23
Tax relief 11,236,158.59 29,885,277.10
Total 1,076,047,292.02 994,778,394.15
49. Investment income
Unit: RMB
Items First half year of 2021 First half year of 2020
Long-term equity investment losses based on equity method (1,821,107.11) (8,942,717.69)
Investment losses from disposal of subsidiaries and other business
(14,952,528.43) -
units
Investment income from other non-current financial assets during the
115,644,801.97 150,000,000.00
holding period
Investment income from disposal of held-for-trading financial assets 70,440,289.29 9,162,427.25
Total 169,311,455.72 150,219,709.56
50. Losses from changes in fair values
Unit: RMB
Sources of losses from changes in fair values First half year of 2021 First half year of 2020
Held-for-trading financial assets 9,989,549.68 849,343.33
Including: gains on the changes in fair value of derivative financial
instruments
9,989,549.68 849,343.33
Losses from changes in fair value of other non-current financial assets (23,277,319.84) (13,017,332.26)
Held-for-trading financial liabilities 3,738,240.76 (8,268,448.03)
Including: gains (losses) on the changes in fair value of derivative
financial instruments
3,738,240.76 (8,268,448.03)
Total (9,549,529.40) (20,436,436.96)
158
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
51. Credit impairment loss
Unit: RMB
Items First half year of 2021 First half year of 2020
Credit impairment losses of accounts receivable (302,443,301.79) (124,133,185.36)
Credit impairment reverses (losses) of other receivables 9,417,803.41 (10,010,654.15)
Credit impairment losses of long-term receivables (18,879,962.41) (18,628,630.26)
Total (311,905,460.79) (152,772,469.77)
52. Impairment losses of assets
Unit: RMB
Items First half year of 2021 First half year of 2020
Losses on inventory devaluation (252,600,965.37) (165,394,158.33)
Contract assets impairment loss (5,736,007.01) -
Total (258,336,972.38) (165,394,158.33)
53. Non-operating income
Unit: RMB
The amount booked into current
Items First half year of 2021 First half year of 2020 period non-recurring profits and
looses
Fines and confiscations 37,237,863.29 21,590,256.57 37,237,863.29
Special subsidies 699,538.62 5,094,743.17 699,538.62
Others 4,065,318.99 5,036,207.34 4,065,318.99
Total 42,002,720.90 31,721,207.08 42,002,720.90
54. Non-operating expenses
Unit: RMB
The amount booked into current period
Items First half year of 2021 First half year of 2020
non-recurring profits and looses
Local water conservancy construction
532,409.04 572,889.30 -
fund
Others 18,322,927.68 6,805,876.26 18,322,927.68
Total 18,855,336.72 7,378,765.56 18,322,927.68
55. Income tax expenses
Unit: RMB
Items First half year of 2021 First half year of 2020
Income tax for the current reporting period 1,069,559,057.65 1,081,938,656.65
Deferred income tax expenses (67,498,385.47) (129,343,124.91)
Differences in filing and payment of income tax in previous
(574,530,306.92) (43,385.77)
reporting years
Total 427,530,365.26 952,552,145.97
159
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
56. Notes to consolidated cash flow statement items
56.1 Other cash receipts relating to operating activities
Unit: RMB
Items First half year of 2021 First half year of 2020
Interest income 411,998,029.35 306,973,066.18
Government subsidies 213,276,134.62 211,985,670.32
Others 485,251,347.13 188,964,355.88
Total 1,110,525,511.10 707,923,092.38
56.2 Other cash payments relating to operating activities
Unit: RMB
Item First half year of 2021 First half year of 2020
Advertising and Selling services 639,292,692.68 557,200,285.44
Office expenses and business expenses 451,237,280.55 370,845,812.71
Shipping and transportation expense 361,571,642.21 322,420,666.54
R&D expense 488,010,595.94 457,282,381.38
Travelling expense 177,869,752.82 141,639,591.57
Rental expense 47,709,562.38 101,520,803.75
Others 744,581,855.86 95,397,631.90
Total 2,910,273,382.44 2,046,307,173.29
56.3 Other cash receipts relating to investing activities
Unit: RMB
Item First half year of 2021 First half year of 2020
Receipts of financing lease payments 6,182,818.55 14,990,732.87
Total 6,182,818.55 14,990,732.87
56.4 Other cash payments relating to financing activities
Unit: RMB
Item First half year of 2021 First half year of 2020
The consideration paid for the acquisition of minority
- 64,290,000.00
shareholders' equity
Repurchase of restricted shares 122,644,057.28 -
Repayment of lease liabilities 84,962,915.50 -
Total 207,606,972.78 64,290,000.00
57. Supplementary information about cash flow statement
57.1 Supplementary information about cash flow statement
Unit: RMB
Supplementary information First half year of 2021 First half year of 2020
1. Reconciliation of net profit to cash flows from operating activities:
Net profit 6,854,875,757.07 4,666,871,541.00
Add: Impairment of assets 258,336,972.38 165,394,158.33
Provision for credit losses 311,905,460.79 152,772,469.77
Fixed assets depreciation 360,317,976.59 367,971,970.82
Amortization of intangible assets 35,059,666.14 77,059,953.77
160
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Supplementary information First half year of 2021 First half year of 2020
Right-of-use assets depreciation 78,610,219.36 -
Long-term deferred expenses amortization 26,104,715.70 19,788,072.87
Gains on disposal of fixed assets, intangible assets and other
(3,760,896.87) (21,554.99)
long-term assets
Obsolescence losses of fixed assets, intangible assets and other
5,565,939.04 1,112,772.90
long-term assets
Losses from changes in fair value 9,549,529.40 20,436,436.96
Financial expenses 144,968,551.48 64,849,445.01
Investment income (169,311,455.72) (150,219,709.56)
Share-based payment based on equity settlement 134,108,630.01 481,168,915.75
Decrease of restricted funds 342,602,374.34 89,281,783.26
Increase in deferred income tax assets (64,690,864.83) (172,723,276.65)
Increase (decrease) in deferred income tax liabilities (2,807,520.64) 43,380,151.74
Increase in inventories (3,866,832,886.98) (107,946,257.22)
Increase in operating receivables (1,752,934,304.33) (355,309,356.48)
Decrease in operating payables (738,665,021.37) (5,320,219,156.63)
Increase (decrease) in deferred income (149,069.41) 26,317,979.92
Net cash flows from operating activities 1,962,853,772.15 69,966,340.57
2. Significant investing and financing activities not involving cash
receipts and payments:
3. Net changes in cash and cash equivalents:
Closing balance of cash 27,639,964,119.85 21,623,506,957.49
Less: Opening balance of cash 35,024,837,878.31 26,515,668,008.40
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net decrease in cash and cash equivalents (7,384,873,758.46) (4,892,161,050.91)
57.2 Constituents of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
Cash 27,639,964,119.85 35,024,837,878.31
Including: Cash on hand 750,011.48 1,105,047.51
Bank deposit for payment at any time 27,580,685,600.72 34,968,013,389.43
Other monetary capital for payment at any time 58,528,507.65 55,719,441.37
Cash equivalents - -
Closing balance of cash and cash equivalents 27,639,964,119.85 35,024,837,878.31
Among the total balance of RMB 150,817,363.27 of the other monetary fund(s) at the end of the reporting period
(December 31st 2020: RMB 490,610,671.33), RMB 92,288,855.62 are various guarantee deposits and other restricted
funds, etc. (December 31st 2020: RMB 434,891,229.96), not cash and cash equivalents.
161
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
58. 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) 92,288,855.62 Various guarantee deposits and other restricted funds
Notes receivable 610,856,089.84 Endorsed to suppliers
Right-of-use assets 34,568,644.07 Sale and leaseback leased right-of-use assets
Long-term receivables 1,812,883,463.06 Pledged for long-term borrowings
Total 2,550,597,052.59
59. Monetary items of foreign currencies
59.1 foreign currencies
Unit: RMB
Balance in foreign currency at Exchange rate for Balance of RMB converted at
Items
the end of the reporting period conversion the end of the reporting period
Monetary funds
Including: USD 195,279,784.69 6.4601 1,261,526,937.09
EUR 134,796,197.72 7.6862 1,036,070,534.91
GBP 12,974,201.91 8.9410 116,002,339.32
JPY 563,961,856.34 0.0584 32,935,372.41
AED 18,367,690.42 1.7580 32,290,399.76
RUB 307,737,703.83 0.0888 27,327,108.10
HKD 27,233,714.97 0.8321 22,661,174.23
AUD 2,343,767.65 4.8528 11,373,835.67
PLN 6,125,795.54 1.7009 10,419,365.63
KRW 1,508,183,198.25 0.0057 8,596,644.23
SGD 1,448,679.42 4.8027 6,957,572.65
NZD 469,170.73 4.5153 2,118,446.58
ZAR 8,571.36 0.4501 3,857.97
TRY 358.98 0.7397 265.54
INR 1,701.73 0.0869 147.88
Accounts receivable
Including: EUR 217,143,356.67 7.6862 1,669,007,268.00
USD 108,385,139.92 6.4601 700,178,842.37
HKD 37,214,645.30 0.8321 30,966,306.35
Short-term borrowings
Including: EUR 8,217,927.84 7.6862 63,164,637.00
GBP 2,009,398.78 8.9410 17,966,034.49
Accounts payable
Including: USD 253,958,760.31 6.4601 1,640,598,987.48
HKD 754,452,712.22 0.8321 627,780,101.84
EUR 2,039,154.77 7.6862 15,673,351.39
Long-term borrowings due within
one year
162
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Balance in foreign currency at Exchange rate for Balance of RMB converted at
Items
the end of the reporting period conversion the end of the reporting period
Including: EUR 402,397,777.78 7.6862 3,092,909,799.57
59.2 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
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 Central America S.A. Panama USD Selection based on local economic environment
163
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Main overseas
Recording
Name of overseas subsidiaries operational Basis of selection
Currency
office
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
Hikvision Technology Israel Ltd Israel ILS Selection based on local economic environment
EZVIZ Europe B.V. Netherlands EUR Selection based on local economic environment
BK Grup UAB Lithuania EUR Selection based on local economic environment
BK EESTI AKTSIASELTS Estonia EUR Selection based on local economic environment
SIA "BK Latvia" Latvia EUR Selection based on local economic environment
60 Government Subsidies
60.1 Categories
Unit: RMB
Amount booked in
Category Amount Financial Report Items
current profit and loss
VAT Rebate 852,085,468.02 Other Income 852,085,468.02
Special subsidies 404,155,122.31
Deferred income / Other income/ Non-
Including: other special subsidies 327,319,986.87 178,518,188.59
operating income
Chongqing Manufacture
Park construction 76,835,135.44 Deferred income / Other income 34,907,015.44
subsidies
Tax Reduction 11,236,158.59 Other income/ Non-operating income 11,236,158.59
Total 1,267,476,748.92 1,076,746,830.64
60.2 There was no refund of government subsidies during the current reporting period.
164
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
VI. Changes in consolidation scope
1. Disposal of a subsidiary
1.1 Loss of control of a subsidiary due to a single disposal of investment in the subsidiary
Unit: RMB
The difference
between the
The fair
disposal price and Percentage Book value The method and
The basis value of
the disposal of of Re-measure the main assumptions
Equity for the
Equity investment remaining remaining gains or losses for determining
Name of the disposal Point of loss determining remaining
disposal corresponding to equity on equity on arising from the the fair value of
subsidiary of control the point of equity on
ratio（%） method the consolidated the date of the date of remaining equity at the remaining
loss of the date of
financial statement loss of loss of fair value equity on the date
control loss of
level of the control control of loss of control
control
subsidiary’s net
asset share
Hangzhou
Releasing
EZVIZ
the
Technology Transfer of
60.00 entrusted 2021/3/27 1,178,122.55 0.00 - - - -
Co., Ltd. control
management
(EZVIZ
agreement
Technology)
In March 2021, Hangzhou EZVIZ Network Co., Ltd. (EZVIZ Network), a subsidiary of the Company, and China Electronics Technology HIK Group Co., Ltd. (CETHIK), and Hangzhou
EZVIZ Technology Co., Ltd. (EZVIZ Technology) signed the Entrusted Management Agreement Termination Agreement, all parties agreed that the Entrusted Management Agreement
will be terminated on March 27th 2021. After the termination of the Entrusted Management Agreement, the Group no longer controls the business of EZVIZ Technology, so the business
of EZVIZ Technology is no longer be included in the consolidation scope of the consolidated financial statements. Please refer to Note (VII), 1, (1) Note 4 for details.
165
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
EZVIZ Network's losses on disposal of EZVIZ Technology:
Unit: RMB
Amount
Consideration received for disposal of the subsidiary (Note 1) 8,000,000.00
Less: net assets disposed 9,963,537.59
Net losses of the disposal (1,963,537.59)
Cash and cash equivalents received from disposal of the subsidiary -
Less: cash and cash equivalents held by the subsidiary 7,355,969.42
Net cash received from disposal of the subsidiary (7,355,969.42)
Note 1: EZVIZ Networks uses debt clearance as the consideration for disposal, and the corresponding book value of long-term payables cleared is RMB 8,000,000.
2. 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
Company Name Time of establishment Registered capital Amount of contribution of the Group
contribution (%)
Shanghe Smart City Technology Co., Ltd. ("Shanghe Smart
April 2021 RMB 44.0571 mn RMB 41.8542 mn 95
City") (Note 1)
Chongqing EZVIZ Electronics Co., Ltd. ("Chongqing
June 2021 RMB 100 mn RMB 60.00 mn 60
EZVIZ) (Note 2)
Note 1: At the end of the current reporting period, Shanghe Smart City’s paid-in capital was RMB 5,000,000.00, of which RMB 4,750,000.00 was paid up by the Group and RMB
250,000.00 was contributed by the minority shareholder, Shanghe Urban-Rural Integration Construction Co., Ltd.
Note 2: At the end of the current period, Chongqing EZVIZ has not yet completed the paid-in capital, so there is no paid-in capital.
The subsidiaries cancelled in the current reporting period and no longer included in the scope of consolidation are as follows:
Company Name Date of equity disposition Proportion of shareholding (%)
Hundure Technology (Shanghai) Co., Ltd. April 2021 100
166
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
VII. Interest in other entities
1. Equity in subsidiaries
(1) Composition of the corporate group
Location of Shareholding ratio (%) Acquisition
Name Place of registration Nature of business
operation Direct Indirect Method
System integration, Technology 100.00 -
Hangzhou Hikvision System Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang Establishment
development
Hangzhou Hikvision Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang manufacture 100.00 - Establishment
Hangzhou Hikvision Security Equipment Leasing Services Co., 100.00 -
Hangzhou Hangzhou, Zhejiang Finance lease Establishment
Ltd.
Chongqing Hikvision System Technology Co., Ltd. Chongqing Chongqing System integration 100.00 - Establishment
Hikvision USA, Inc. USA Los Angeles Sales 100.00 - Establishment
Hong Kong
HDT International Ltd. Hong Kong China Sales 95.00 5.00 Establishment
China
Business combination
Prama Hikvision Indian Private Limited India Mumbai Sales 58.00 - not involving enterprises
under common control
Hikvision Europe B.V. 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., Ltd. Chongqing Chongqing Manufacture 100.00 - Establishment
Hangzhou Fuyang Hik Baotai Security Technology Services Co., 51.00
Hangzhou Hangzhou, Zhejiang Construction - Establishment
Ltd. (Note 1)
Hikvision South Africa (Pty) Co., Ltd. South Africa South Africa Sales 100.00 - Establishment
Hikvision Italy S.R.L. Italy Milan Sales - 100.00 Establishment
Hikvision do Brasil Comercio de Equipamentos de Segurana
Brazil Brazil Sales 95.00 5.00 Establishment
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
Shanghai Goldway Intelligent Transportation System Co., Ltd. Shanghai Shanghai Manufacture 100.00 - Business combination
not involving enterprises
167
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Location of Shareholding ratio (%) Acquisition
Name Place of registration Nature of business
operation Direct Indirect Method
under common control
Business combination
ZAO Hikvision Russia St. Peterburg Sales - 100.00 not involving enterprises
under common control
Business combination
Henan Hua’an Baoquan Intelligent
Zhengzhou Zhengzhou Henan Construction 93.86 - not involving enterprises
Development Co., Ltd.
under common control
Business combination
Henan Hua’an Security Services Co., Ltd. Zhengzhou Zhengzhou Henan Services - 84.47 not involving enterprises
under common control
Business combination
Hundure Technology (Shanghai) Co., Ltd. (Note 2) Shanghai Shanghai Manufacture 100.00 - not involving enterprises
under common control
Hikvision UK Limited UK UK Sales - 100.00 Establishment
Hikvision Poland Spolka Z Ograniczona Odpowiedzialnoscia Poland Poland Sales - 100.00 Establishment
Hangzhou 71.30 -
Hangzhou Hikvision Electronics Co., Ltd.（Note 3） Hangzhou Manufacture Establishment
Zhejiang
Cooperative Hikvision Europe U.A. Netherlands Netherlands Sales 99.00 1.00 Establishment
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 60.00
Hangzhou EZVIZ Network Co., Ltd. (Note 5) Hangzhou Technology development - Establishment
Zhejiang
EZVIZ Inc. USA Los Angeles Sales - 60.00 Establishment
Business combination
Hangzhou -
Hangzhou Haikang Zhicheng Investment Development Ltd Hangzhou System integration 80.00 not involving enterprises
Zhejiang
under common control
Hangzhou
Hangzhou Hikrobot Technology Co., Ltd. Hangzhou Technology development 60.00 - Establishment
Zhejiang
Hangzhou 60.00
Hangzhou HikAuto Technology Co., Ltd. Hangzhou Technology development - Establishment
Zhejiang
Hangzhou 70.00
Hangzhou Hikvision Communication Technology Co., Ltd. Hangzhou Technology development - Establishment
Zhejiang
Hangzhou 60.00
Hangzhou Hikmicro Sensing Technology Co., Ltd. Hangzhou Technology development - Establishment
Zhejiang
Hikvision Turkey Technology And Security Systems Commerce
Turkey Istanbul Sales 100.00 - Establishment
Corporation
168
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Location of Shareholding ratio (%) Acquisition
Name Place of registration Nature of business
operation Direct Indirect Method
Hikvision Colombia SAS Columbia Santa Fe Bogota Sales 100.00 - Establishment
Hikvision Kazakhstan limited liability partnership Kazakhstan Astana Sales 100.00 - Establishment
Business combination
Secure Holding Limited British Sheffield Manufacture - 100.00 not involving enterprises
under common control
Business combination
Pyronix Limited British Sheffield Manufacture - 100.00 not involving enterprises
under common control
Business combination
Microwave Solutions Limited British Sheffield Manufacture - 100.00 not involving enterprises
under common control
Hikvision Hungary Limited Hungary Hungary Sales - 100.00 Establishment
Hikvision New Zealand Limited New Zealand Auckland Sales - 100.00 Establishment
Urumqi HaiShi Xin’An Electronic Technology Co., Ltd. Urumqi Urumqi, Xinjiang Construction - 90.00 Establishment
Business combination
Hangzhou Ximu Intelligent Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang Manufacture - 60.00 involving enterprises under
common control
LLC Hikvision Tashkent Uzbekistan Tashkent Sales 100.00 - Establishment
Hikvision Kenya (Pty) Ltd Kenya Kenya Sales - 100.00 Establishment
Hangzhou HikAuto Software Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology Development - 60.00 Establishment
Hangzhou Hikrobot Intelligent Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology Development - 60.00 Establishment
Wuhan
Wuhan HikStorage Technology Co., Ltd. Wuhan Technology development 60.00 - Establishment
Hubei
Chengdu -
Chengdu Hikvision Digital Technology Co., Ltd. Chengdu Technology development 100.00 Establishment
Sichuan
Hetian 85.00
MoYuHaiShi Electronic Technology Co., Ltd. Hetian Construction - Establishment
Xinjiang
Hangzhou 60.00
Hangzhou EZVIZ Software Co., Ltd. Hangzhou Technology development - Establishment
Zhejiang
Hetian 90.00
PiShan HaiShi YongAn Electronic Technology Co., Ltd. Hetian System integration - Establishment
Xinjiang
169
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Location of Shareholding ratio (%) Acquisition
Name Place of registration Nature of business
operation Direct Indirect Method
Zhengzhou
Henan Haikang Hua’an BaoQuan Electronics Co., Ltd. Zhengzhou Construction 93.86 - Establishment
Henan
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
Hikvision Xi’an Xueliang Construction Project Management Xi’an Xi’an Shanxi Construction - 99.00 Establishment
Co., Ltd.
Hetian
Luo Pu District HaiShi Ding Xin Electronic Technology Co., Ltd. Hetian System integration - 90.00 Establishment
Xinjiang
Hetian
Yu Tian HaiShi Mei Tian Electronic Technology Co., Ltd. Hetian System integration - 98.00 Establishment
Xinjiang
Xi’An Hikvision Digital Technology Co., Ltd. Xi’An Xi’an Shanxi Technology development 100.00 - Establishment
Wuhan Hikvision Technology Co., Ltd. Wuhan Wuhan Hubei Technology development 100.00 - Establishment
Wuhan Hikvision Science and Technology Co., Ltd. Wuhan Wuhan Hubei Sales 100.00 - Establishment
Wuhan Hiksafety Technology Co., Ltd. Wuhan Wuhan Hubei Sales - 60.00 Establishment
Hangzhou Hikimaging Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology development 60.00 - Establishment
Hikvision Mexico S.A.de C.V. Mexico Mexico Sales - 100.00 Establishment
Guizhou Hikvision Transportation Big Data Co., Ltd. Guiyang Guiyang, Guizhou Technology development 55.00 - Establishment
Xinjiang CET Yihai Information Technology Co., Ltd. Urumqi Urumqi, Xinjiang System integration 60.00 - Establishment
Hikvision Panama Commercial S.A Panama Panama Sales - 100.00 Establishment
Hikvision Pakistan (SMC-Private) Limited Pakistan Pakistan Sales - 100.00 Establishment
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 Co., Ltd. Nanjing Nanjing, Jiangsu Sales 100.00 - Establishment
Shijiazhuang
Shijiazhuang Hikvision Technology Co., Ltd. Shijiazhuang Technology development 100.00 - Establishment
Hebei
Zhengzhou
Zhengzhou Hikvision Digital Technology Co., Ltd. Zhengzhou Sales 100.00 - Establishment
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
170
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Location of Shareholding ratio (%) Acquisition
Name Place of registration Nature of business
operation Direct Indirect Method
Hangzhou Business merger under the
Hangzhou EZVIZ Technology Co., Ltd. (Note 4) Hangzhou Sales - 60.00
Zhejiang common control
Business merger not
Hangzhou
Hangzhou Kuangxin Technology Co., Ltd. Hangzhou Technology development 80.00 - involving enterprises under
Zhejiang
the common control
Hikvision Digital Technology (Shanghai) Co., Ltd. Shanghai Shanghai Technology development, sales 100.00 - Establishment
Nanchang Establishment
Nanchang Hikvision Digital Technology Co., Ltd. Nanchang Technology development 100.00 -
Jiangxi
Jiangshan Establishment
Zhejiang Hiksafety Technology Co., Ltd. Jiangshan Technology development - 60.00
Zhejiang
Zhenping Establishment
Zhenping County Haikang Juxin Digital Technology Co., Ltd. Zhenping System integration - 90.00
Henan
Hefei Establishment
Hefei Hikvision Digital Technology Co., Ltd. Hefei Technology development 100.00 -
Anhui
Tianjin Hikvision Information Technology Co., Ltd. Tianjin Tianjin Technology development 100.00 - Establishment
Fuzhou Establishment
Fuzhou Hikvision Digital Technology Co., Ltd. Fuzhou System integration 100.00 -
Fujian
Xuancheng
Anhui Hikvision Urban Operation Service Co., Ltd. Xuancheng System integration - 100.00 Establishment
Anhui
Ningbo Establishment
Ningbo Haikang Parking System Operation Co., Ltd. Ningbo Technology development 70.00 -
Zhejiang
Guangzhou Establishment
Guangzhou Hikvision Technology Co., Ltd. Guangzhou Technology development 100.00 -
Guangdong
Hangzhou Establishment
Hangzhou Hikfire Technology Co., Ltd. Hangzhou Technology development 60.00 -
Zhejiang
PT. Hikvision Technology Indonesia Indonesia Indonesia Sales - 100.00 Establishment
Hongkong
EZVIZ International Limited Hongkong Sales - 60.00 Establishment
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
Hangzhou HikStorage Technology Co., Ltd. Hangzhou Technology development - 60.00 Establishment
Zhejiang
171
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Location of Shareholding ratio (%) Acquisition
Name Place of registration Nature of business
operation Direct Indirect Method
Hangzhou Establishment
Hangzhou Rayin Technology Co., Ltd. Hangzhou Technology development 60.00 -
Zhejiang
Kunming Establishment
Kunming Hikvision Digital Technology Co., Ltd. Kunming Sales 100.00 -
Yunnan
Hangzhou Establishment
Hangzhou Microimage Software Co., Ltd. Hangzhou Technology development - 60.00
Zhejiang
Hangzhou Establishment
Hangzhou Microimage Intelligent Technology Co., Ltd. Hangzhou Technology development - 60.00
Zhejiang
Jinan Establishment
Jinan Hikvision Digital Technology Co., Ltd. Jinan Sales 100.00 -
Shandong
Hikvision Morocco LLC Morocco Morocco Sales - 100.00 Establishment
EZVIZ Europe B.V. Netherland Netherland Sales - 60.00 Establishment
Business merger not
BK Grup UAB Lithuania Lithuania Sales - 100.00 involving enterprises under
the common control
Business merger not
BK EESTI AKTSIASELTS Estonia Estonia Sales - 100.00 involving enterprises under
the common control
Business merger not
SIA “BK Latvia” Latvia Latvia Sales - 100.00 involving enterprises under
the common control
Shanghe Smart City Technology Co., Ltd. Ji’nan Ji’nan System integration - 95.00 Establishment
Chongqing EZVIZ Electronics Co., Ltd. Chongqing Chongqing Manufacture - 60.00 Establishment
Note 1: Fuyang Baotai 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: Hundure Technology (Shanghai) Co., Ltd. has been cancelled by the Industry and Commerce in 2021.
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) 33 for details.
Note 4: In April 2019, EZVIZ Network (a holding subsidiary of the Company) signed a entrusted management agreement with CETHIK and EZVIZ Technology. According to the
agreement, CETHIK entrusted EZVIZ Network to exercise the actual operation and management rights of EZVIZ Technology and be fully responsible for the production, operation and
management of EZVIZ Technology. EZVIZ Network shall not charge CETHIK a fixed fee for the entrusted management but shall be entitled to 100% of the distributable profit generated
by EZVIZ Technology before and after the entrusted management; meanwhile, EZVIZ Network shall pay a capital possession fee to CETHIK based on the paid-in capital amount of
172
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
EZVIZ Technology and at a rate 1% above the interest rate for loans over five years announced by the People's Bank Of China. EZVIZ Network has the right to unilaterally decide to
extend or early terminate the entrusted management relationship. Upon termination of the entrusted management, EZVIZ Network can only handle the matter in one of the following two
ways (EZVIZ Network has the right to decide on the choice of these two ways): (I) EZVIZ Technology shall be liquidated, and CETHIK shall only be entitled to recover the actual capital
contribution and the unpaid capital possession fee payable; (II) The equity of EZVIZ Technology shall be transferred from CETHIK to EZVIZ Network or any third party designated by
EZVIZ Network, and the equity acquisition price shall be equal to the actual capital contribution and the unpaid capital possession fee payable. As a result, EZVIZ Network has achieved
the control of EZVIZ Technology. As CETHIK is the controlling shareholder of both the Company and EZVIZ Technology, therefore, this entrusted management of EZVIZ Technology
constitutes a business combination under the common control.
In 2021, EZVIZ Network intends to terminate the entrusted management of EZVIZ Technology. In March 2021, EZVIZ Network signed the Termination Agreement of the Entrusted
Management Agreement with HIKCET and EZVIZ Technology, agreeing that the Entrusted Management Agreement shall be terminated on March 27th 2021. After the termination of the
Entrusted Management Agreement, EZVIZ Network will no longer exercise the actual operation and management rights over EZVIZ Technology, be responsible for the production,
operation and management of EZVIZ Technology and enjoy other rights over EZVIZ Technology as agreed in the Entrusted Management Agreement. The Group ceased to control EZVIZ
Technology with effect from March 27, 2021 and therefore ceased to include the operations of EZVIZ Technology in the scope of consolidation of the consolidated financial statements.
Note 5: On June 23rd 2021, the Proposal on the Overall Restructuring of the the Company’s Holding Subsidiary Hangzhou EZVIZ Network Co., Ltd. as Limited Liability Company by
Shares was deliberated and adopted by the 3rd Meeting of the Strategy Committee in 2021 of the fifth session of the Board of Directors of the Company. On June 24th 2021, EZVIZ
Network as a whole was restructured and changed to a limited liability company by shares, and its name was changed to Hangzhou EZVIZ Networks Co., Ltd.
2. Equity in joint ventures or associates
(1) Aggregated financial information of insignificant joint-ventures and associates
Unit：RMB
Closing balance / Amount for the first half of 2021 Opening balance / Amount for the first half of 2020
Associates：
The aggregate carrying amount of investments in associates 207,964,545.17 193,646,038.77
The aggregate amount of the following items calculated based on the Company’s equity share percentage
of the associates
- Net income (loss) 14,318,506.40 (11,409,841.26)
- Other comprehensive income - -
--Total comprehensive income (loss) 14,318,506.40 (11,409,841.26)
Joint Ventures:
Total investment book value 653,242,057.95 670,380,671.46
The sum of the following items calculated according to the shareholding ratio
173
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Closing balance / Amount for the first half of 2021 Opening balance / Amount for the first half of 2020
- Net income (16,139,613.51) 2,467,123.57
- Other comprehensive income - -
- Total comprehensive income (loss) (16,139,613.51) 2,467,123.57
The Group uses the equity method to account for the aforementioned associates and joint ventures.
174
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
VIII. Risks associated with financial instrument
The Group's principal financial instruments include cash and bank balances, notes receivable, accounts receivable,
receivables for financing, other receivables (except for tax refund receivable), other non-current financial assets, long-
term receivables, borrowings, notes payable, accounts payable, other payables, part of the other current liabilities, lease
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 2020)
Financial assets：
Measured at fair value through current profit and loss
Held –for-trading financial assets 32,620,061.54 22,679,846.77
Other non-current financial assets 468,661,747.43 491,939,067.27
Measured at fair value through other comprehensive income
Receivables for financing 1,120,170,492.09 1,959,601,195.25
Measured at amortized cost
Cash and bank balances 27,732,252,975.47 35,459,729,108.27
Notes receivable 1,125,257,592.27 1,303,252,705.19
Accounts receivable 23,802,312,768.61 21,979,380,716.86
Other receivables (except for tax refund receivable) 802,510,353.72 451,428,906.05
Long-term receivables 1,914,155,006.05 2,105,570,004.53
Financial liabilities
Measured at fair value through current profit and loss
Held-for-trading financial liabilities 3,651,541.77 7,405,771.15
Measured at amortized cost
Short-term borrowings 3,142,918,040.93 3,999,246,634.59
Notes payable 1,209,714,255.88 1,036,920,229.85
Accounts payable 12,448,273,747.80 13,593,884,790.19
Other payables 2,047,386,116.59 1,525,053,355.95
Non-current liabilities due within one year 3,520,220,816.79 3,507,680,339.78
Other current liabilities 511,594,361.52 560,959,368.73
Long-term borrowings 1,911,015,151.08 1,961,167,761.30
Lease liabilities 199,494,520.78 -
Long-term payables 8,389,432.79 39,595,459.35
Other non-current liabilities 511,594,361.52 560,959,368.74
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.
175
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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, EUR, HKD and etc. The Group’s subsidiaries in the
mainland of China whose procurement, sales and financing are denominated in RMB, USD, EUR, and HKD. 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 2021, except for monetary items of foreign currencies set out in Note (V) 59, 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, EUR and HKD (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 1,961,705,779.46 7,122,984,916.85 1,640,598,987.48 1,886,490,280.88
EUR 2,705,077,802.91 1,480,297,345.67 3,171,747,787.96 3,284,414,031.21
HKD 53,627,480.58 14,808,404.16 627,780,101.84 134,884,213.28
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 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
176
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
First half year of 2021 First half year of 2020
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 16,055,339.60 16,055,339.60 360,638,240.99 360,638,240.99
currency
5% depreciation of USD against functional (16,055,339.60) (16,055,339.60) (360,638,240.99) (360,638,240.99)
currency
5% appreciation of EUR against functional (23,333,499.25) (23,333,499.25) (119,861,226.89) (119,861,226.89)
currency
5% depreciation of EUR against functional 23,333,499.25 23,333,499.25 119,861,226.89 119,861,226.89
currency
5% appreciation of HKD against functional (28,707,631.06) (28,707,631.06) (1,402,595.54) (1,402,595.54)
currency
5% depreciation of HKD against functional 28,707,631.06 28,707,631.06 1,402,595.54 1,402,595.54
currency
2.1.2. Interest rate risk
The risk of changes in cash flow of financial instruments due to changes in interest rates exposed to the Group are primarily
related to bank borrowings bearing floating interest rate and bank deposits bearing floating interest rate.
At the end of the current reporting period, the amount of borrowings of the Group bearing floating interest rate is not
significant, and the risk of changes in cash flow of financial instruments due to changes in interest rates is expected to be
insignificant.
The Group expects that the risk exposure of cash flow generated from bank deposits bearing floating interest rate is
insignificant.
The Group determines the relative proportion of fixed interest rate contracts and floating interest rate contracts based on
the prevailing market environment. The Group’s interest-bearing debts bearing floating interest rates were mainly RMB-
denominated PPP pledged long-term borrowing contracts with an amount of RMB 1,498,890,006.05 (Note (V), 33)
(December 31st 2020: RMB-denominated PPP pledged long-term borrowings with an amount of RMB 1,556,927,316.08
(Note (V), 33)).
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 floating interest rates, and have a significant adverse impact on the financial
performance of the Group. The management team would 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 year of 2021 or 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 2021, 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 (V). 3), accounts receivable (Note (V). 4), receivables for financing
177
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
(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-due 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, contract assets 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
and contract assets, 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 & Note (V)-9). 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 (except for tax refund receivable), 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 (except for tax refund receivable),
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.
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 2021
Within one year 1-5 years More than five years Total
Non-derivative financial
liabilities
Short-term borrowings 3,194,236,819.88 - - 3,194,236,819.88
Notes payable 1,209,714,255.88 - - 1,209,714,255.88
178
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
June 30th 2021
Within one year 1-5 years More than five years Total
Accounts payable 12,448,273,747.80 - - 12,448,273,747.80
Other payables 2,047,386,116.59 - - 2,047,386,116.59
Other current liabilities 511,594,361.52 - - 511,594,361.52
Other non-current liabilities - 511,594,361.52 - 511,594,361.52
Long-term borrowings (including
3,428,730,462.73 1,142,161,021.50 1,191,123,170.53 5,762,014,654.76
those due within one year)
Lease liabilities (including those
187,422,302.07 209,661,103.48 - 397,083,405.55
due within one year)
Long-term payables (including
10,129,742.13 3,178,350.15 - 13,308,092.28
those due within one year)
Derivative financial instruments
Forward foreign exchange
contracts- settled in the gross
amount
- Cash inflow 1,571,859,381.19 - - 1,571,859,381.19
- Cash outflow 1,546,891,010.77 - - 1,546,891,010.77
- Net cash outflow (24,968,370.42) - - (24,968,370.42)
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 - 1,149,139,011.86 468,661,747.43 1,617,800,759.29
(I) Financial assets measured at fair value through profit and loss
1. Held-for-trading Financial Assets - 32,620,061.54 - 32,620,061.54
-- Derivative financial assets - 32,620,061.54 - 32,620,061.54
2. Other non-current financial assets - - 468,661,747.43 468,661,747.43
(II) Receivables for financing - 1,120,170,492.09 - 1,120,170,492.09
Total assets measured continuously at fair value - 1,152,790,553.63 468,661,747.43 1,621,452,301.06
(III) Financial liabilities measured at fair value through profit and loss
1. Held-for-trading Financial Liabilities - 3,651,541.77 - 3,651,541.77
- Derivative financial liabilities - 3,651,541.77 - 3,651,541.77
Total liabilities measured continuously at fair value - 3,651,541.77 - 3,651,541.77
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 2021
Forward exchange rate
Forward Foreign Exchange
32,620,061.54 Discounted cash flow approach Discounted rate that reflects the credit risk of
Contracts (Assets)
counterparty
Forward exchange rate
Forward Foreign Exchange
(3,651,541.77) 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 1,120,170,492.09 Discounted cash flow approach
counterparty
179
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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 2021
Other non-current financial Comparable public companies’ PB (price/book
assets-- Investment in equity Market approach
468,661,747.43 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 2021 491,939,067.27
Increase in the current reporting period -
Decrease in the current reporting period -
Changes in fair value booked into profit and loss during the current reporting
(23,277,319.84)
period
Book value on June 30th 2021 468,661,747.43
The total amount included in profit or loss in the first half of 2021 includes unrealized losses of RMB 23,277,319.84 (June
30th 2020: RMB 13,017,332.26) related to financial assets measured at fair value at the end of the current 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 current reporting period which were included in investment income was RMB
115,644,801.97 (June 30th 2020: RMB 150,000,000.00).
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 team believes that financial assets and financial liabilities measured at amortized cost mainly
include monetary fund, notes receivable, accounts receivable, other receivables (other than tax refund receivables), non-
current assets due within one year, long-term receivables, short-term borrowings, notes payable, accounts payable, other
payables, other current liabilities (other than Output VAT To-be-Transferred), non-current liabilities due within one year,
long-term borrowings, lease liabilities, long-term payables and other non-current liabilities, etc., carrying value of which
approximates to its fair value.
X. Related party relationships and 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 38.91 38.91
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).
180
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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-Tech Intelligent Technology Co., Ltd. (Wuhu SensorTech) and its
Associated company
subsidiaries
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 subsidiaries Associated company
Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. (Haishi JiaAn) Associated company
Qinghai Qingtang Big Data Co., Ltd. (Qingtang Big Data) Associated company
Sanmenxia Xiaoyun Vision Technology Co., Ltd. (Xiaoyun Vision Technology) Associated company
Daishan Hailai Yunzhi Technology Co., Ltd. (Daishan Hailai) Joint venture
Guangxi Haishi City Operation Management Co., Ltd. (hereinafter referred to as
Joint venture
Guangxi Haishi) and its subsidiaries
Shenzhen Hikvision City Service Operation Co., Ltd. (hereinafter referred to as
Joint venture
Shenzhen City Service) and its subsidiaries
Xuzhou Kangbo City Operation Management Service Co., Ltd. (Xuzhou Kangbo) Joint venture
Yunnan Yinghai Parking Service Co., Ltd. (Yunnan Yinghai) Joint venture
Zhejiang City Digital Technology Co., Ltd. (Zhejiang City Digital Technology) Joint venture
Zhejiang Haishi Huayue Digital Technology Co., Ltd. (Haishi Huayue) Joint venture
4. Information on other related parties
Name Relationship
Major shareholder of the company that holds more than 5% of
Gong Hongjia
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)
and its subsidiaries
Shenzhen Wanyu Security Service Technology Co., Ltd. (Shenzhen The Group’s senior management serve(s) as director(s) of this
Wanyu Security Service) and its subsidiaries company
Confirmware Technology(Hangzhou) Co., Ltd. (Hangzhou The Group’s senior management serve(s) as director(s) of this
Confirmware) company (Note 1)
Under common control of the ultimate controlling party of the
Subsidiaries of CETE (Note 2)
Company
Note 1: Due to the departure of the senior management of the Group in 2019, the prior year was one year after he/she left
the position, therefore, Hangzhou Confirmware was still recognized as a related party of the Group in the prior year, and
it was not recognized as a related party of the Group in the current reporting period.
Note 2: 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 2021 of 2020
Purchase of materials and
Subsidiaries of CETE 954,049,928.17 323,746,490.02
receiving of services
Shanghai Fullhan Micro and its Purchase of materials and
435,028,505.73 118,628,840.93
subsidiaries receiving of services
181
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Amount occurred in the first Amount occurred in the first half
Related party Transaction type
half of 2021 of 2020
Purchase of materials and
Maxio Technology and its subsidiaries 92,764,981.98 19,810,600.40
receiving of services
Purchase of materials and
Wuhu SensorTech 53,644,520.05 14,756,006.59
receiving of services
Shenzhen City Service and its Purchase of materials and
31,026.60 -
subsidiaries receiving of services
Purchase of materials and
Zhiguang Hailian and its subsidiaries - 135,782.26
receiving of services
Total 1,535,518,962.53 477,077,720.20
Sales of commodities / rendering of services:
Unit: RMB
Amount occurred in the Amount occurred in the first
Related party Transaction content
first half of 2021 half of 2020
Sales of products and
Subsidiaries of CETE 235,766,661.73 101,516,082.64
rendering of services
Sales of products and
Zhiguang Hailian and its subsidiaries 23,079,409.79 7,162,512.65
rendering of services
Sales of products and
Daishan Hailai 16,858,777.71 10,415,978.76
rendering of services
Sales of products and
Zhejiang City Digital Technology 12,768,503.75 -
rendering of services
Sales of products and
Shenzhen City Service and its subsidiaries 10,977,086.27 -
rendering of services
Sales of products and
Haishi JiaAn 8,098,509.33 7,210,092.95
rendering of services
Sales of products and
Haishi Huayue 7,571,255.78 654,410.58
rendering of services
Sales of products and
Qingtang Big Data 523,744.57 3,008.85
rendering of services
Sales of products and
Wuhu Sensor Tech and its subsidiaries 465,469.78 788,831.51
rendering of services
Sales of products and
Guangxi Haishi and its subsidiaries 347,360.64 -
rendering of services
Sales of products and
Maxio Technology and its subsidiaries 108,371.68 106,463.72
rendering of services
Sales of products and
Xuzhou Kangbo 11,672.59 684,022.41
rendering of services
Sales of products and
Hangzhou Confirmware Not applicable 297,876.12
rendering of services
Sales of products and
Xiaoyun Vision Technology - 518,530.99
rendering of services
Sales of products and
Wanyu Security and its subsidiaries - 198,230.06
rendering of services
Total 316,576,823.62 129,556,041.24
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 2021 current reporting
2020
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
182
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Note: the fixed 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
Financial Leasing
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%.
Entrusted management of the interest expenditure of borrowed funds
On April 19th 2019, CETHIK signed an entrusted management agreement with the holding subsidiary of the Company,
Hangzhou EZVIZ Network Ltd. (“EZVIZ Network”) to entrust EZVIZ Network to exercise the actual operating
management right over Hangzhou EZVIZ Technology Ltd. (“EZVIZ Technology”), and be fully responsible for the
production, operation and management of EZVIZ Technology, and EZVIZ Network shall not charge fixed entrusted
management fees from CETHIK while EZVIZ Network is entitled to the 100% distributable profits generated by EZVIZ
Technology prior to or after the entrusted management. At the same time, EZVIZ Network shall make a payment to
CETHIK as occupying fund fees at the basis of paid-in capital of EZVIZ Technology of RMB 8,000,000.00 and at an
interest rate up by 1% for loans over five years in the Central Bank. In 2021, EZVIZ Network intends to terminate the
entrusted management of EZVIZ Technology. In March 2021, EZVIZ Network signed the Termination Agreement of the
Entrusted Management Agreement with CETHK and EZVIZ Technology, agreeing that the Entrusted Management
Agreement shall be terminated on March 27th 2021. After the termination of the Entrusted Management Agreement, EZVIZ
Network will no longer exercise the actual operation and management rights over EZVIZ Technology, or be responsible
for the production, operation and management of EZVIZ Technology, or enjoy other rights over EZVIZ Technology as
agreed in the Entrusted Management Agreement. The Group ceased to control EZVIZ Technology since March 27th 2021
and therefore ceased to include the operations of EZVIZ Technology in the scope of consolidation of the consolidated
financial statements. The interest expenses on the above-mentioned capital possession incurred in the current reporting
period amounts to RMB 131,659.87.
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 Credit loss provision Carrying balance Credit loss provision
Accounts
Subsidiaries of CETE 807,312,606.88 282,285,697.99 694,163,118.90 108,859,842.53
receivable
Accounts
Haishi JiaAn 38,934,270.11 2,379,088.95 29,762,113.04 975,776.51
receivable
Accounts
Daishan Hailai 26,482,758.72 1,104,331.04 16,387,257.40 194,920.07
receivable
Accounts Zhiguang Hailian and its
19,309,417.97 805,360.02 9,436,662.00 111,434.71
receivable subsidiaries
Accounts Zhejiang City Digital
15,838,908.55 660,482.49 12,427,421.59 561,604.39
receivable Technology
183
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Accounts Xiaoyun Vision
9,437,647.51 2,332,836.52 10,929,211.22 412,855.37
receivable Technology
Accounts
Haishi Huayue 7,892,207.73 329,105.06 2,112,591.44 42,509.22
receivable
Accounts Shenzhen City Service and
3,617,345.50 150,843.31 - -
receivable its subsidiaries
Accounts
Qingtang Big Data 981,086.50 40,911.31 660,000.00 29,832.00
receivable
Accounts Wuhu Sensor Tech and its
821,865.40 9,564.48 823,165.40 37,207.08
receivable subsidiaries
Accounts Maxio Technology and its
25,553.08 1,065.56 45,667.50 538.88
receivable subsidiaries
Accounts
Xuzhou Kangbo - - 786,702.90 35,558.97
receivable
Accounts
Hangzhou Confirmware Not applicable Not applicable 83,150.00 981.17
receivable
Total 930,653,667.95 290,099,286.73 777,617,061.39 111,263,060.90
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Notes Subsidiaries of CETE
59,647,280.05 - 78,876,284.35 -
receivable (Note 1)
Notes Zhiguang Hailian and its
5,300,000.00 - 1,120,000.00 -
receivable subsidiaries (Note 2)
Notes Zhejiang City Digital
3,744,385.00 - - -
receivable Technology
Notes
Haishi JiaAn 700,000.00 - 9,147,466.00 -
receivable
Total 69,391,665.05 - 89,143,750.35 -
Note 1: Among them, the RMB 4,728,475.25 (2020: RMB 4,000,000.00) notes receivable are the acceptance bills of which
the drawer is the related party, and the former endorsers are unrelated third parties.
Note 2: Among them, the RMB 5,300,000.00 (2020: nil) notes receivable are the acceptance bills of which the drawer is
the related party, and the former endorsers are unrelated third parties.
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Other
Subsidiaries of CETE 407,459.00 12,987.04 132,459.00 1,563.02
receivables
Other Shenzhen City Service
140,000.00 1,526.00 140,000.00 1,652.00
receivables and its subsidiaries
Other Wuhu Sensor Tech and
55,150.31 620.02 - -
receivables its subsidiaries
Other
Haishi Huayue - - 279,452.11 3,297.53
receivables
Total 602,609.31 15,133.06 551,911.11 6,512.55
184
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Long-term
receivables Subsidiaries of CETE 72,400,514.95 2,957,165.61 73,512,305.64 2,015,923.07
(including those due
within one year)
Long-term
receivables
Yunnan Yinghai 21,682,324.62 243,674.77 21,444,096.16 253,040.33
(including those due
within one year)
Long-term
Shenzhen City
receivables
Service and its 6,596,792.86 90,764.07 - -
(including those due
subsidiaries
within one year)
Long-term
receivables
Xuzhou Kangbo 1,541,554.20 16,901.90 1,581,135.63 29,277.25
(including those due
within one year)
Long-term Xiaoyun Vision
2,295.00 25.02 2,295.00 103.73
receivables Technology
Total 102,223,481.63 3,308,531.37 96,539,832.43 2,298,344.38
Unit: RMB
Item Related Party Closing balance Opening balance
Carrying balance Credit loss provision Carrying balance Credit loss provision
Prepayments Subsidiaries of CETE 9,445,570.82 - 4,339,675.60 -
Wuhu Sensor Tech and
Prepayments 677,070.05 - - -
its subsidiaries
Total 10,122,640.87 - 4,339,675.60 -
(2) Payables to related parties
Unit: RMB
Item Related Party Closing balance Opening balance
Accounts payable Subsidiaries of CETE 429,754,644.57 360,026,227.41
Shanghai Fullhan Micro and its
Accounts payable 325,836,826.73 117,676,674.67
subsidiaries
Maxio Technology and its
Accounts payable 21,596,194.44 545,124.36
subsidiaries
Accounts payable Wuhu Sensor Tech and its
2,526,478.80 6,286,164.42
subsidiaries
Total 779,714,144.54 484,534,190.86
Unit: RMB
Item Related Party Closing balance Opening balance
Shanghai Fullhan Micro and its
Notes Payable 25,421,749.08 3,648,820.00
subsidiaries
Notes Payable Subsidiaries of CETE 6,421,083.48 17,301,547.82
Total 31,842,832.56 20,950,367.82
Unit: RMB
Item Related Party Closing balance Opening balance
Contract liabilities Subsidiaries of CETE 4,668,876.96 10,507,934.92
Maxio Technology and its
Contract liabilities 872,640.00 -
subsidiaries
Contract liabilities Xuzhou kangbo 438,321.27 201,887.56
Contract liabilities Zhiguang Hailian and its 8,168.00 57,630.00
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Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Item Related Party Closing balance Opening balance
subsidiaries
Contract liabilities Daishan Hailai - 688.00
Total 5,988,006.23 10,768,140.48
Unit: RMB
Item Related Party Closing balance Opening balance
Other payables Subsidiaries of CETE 53,983,406.39 47,056,334.07
Other payables Shanghai Fullhan Micro and its
200,000.00 100,000.00
subsidiaries
Wuhu Sensor Tech and its
Other payables 52,040.00 -
subsidiaries
Other payables Zhejiang City Digital
10,000.00 -
Technology
Zhiguang Hailian and its
Other payables 2,000.00 -
subsidiaries
Total 54,247,446.39 47,156,334.07
Unit: RMB
Item Related Party Closing balance Opening balance
Long-term payables (including
Subsidiaries of CETE - 8,000,000.00
those due within one year)
Total - 8,000,000.00
Unit: RMB
Item Related Party Closing balance Opening balance
Lease liabilities (including those
Subsidiaries of CETE 32,031,556.07 41,213,376.81
due within one year)
Total 32,031,556.07 41,213,376.81
XI. Share-based payments
1. Overview of share-based payments
Restrictive Share Incentive Sheme
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
[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.
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Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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 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
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 2020, all restricted
shares awarded in 2016 have been closed.
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.
The 2018 share incentive performance evaluation indicators were revised at the 2019 annual general meeting convened
on May 15th 2020 by approval of the Proposal on Revision to the Company’s Performance Evaluation Indicators for the
2018 Restricted Share Incentive Scheme. The historical comparison value of the compounded operating income growth
rate and the benchmark companies’ comparison value over the same period will be used as alternative evaluation indicators,
that is, if either of the two indicators were satisfied, the Company’s performance evaluation indicator for the current
unlocking period is considered to be satisfied. The particulars of the revision are set out as follows: the performance
evaluation indicators set out in the Company’s 2018 Restricted Share Incentive Scheme (Revision to the Draft) that “the
compounded operating income growth rate at the year before the time of unlocking is no less than 20% and no less than
75th percentiles level of growth rate of the benchmark companies at the same period as compared to those at the year before
the time of grant” was revised to be that “the compounded operating income growth rate at the year before the time of
unlocking is no less than 20% or no less than 75th percentiles level of growth rate of benchmark companies at the same
period as compared to those at the year before the time of grant”.
Unit: share
2016 Share Incentive Scheme First half year of 2021 2020
Total of equity instruments outstanding at the beginning of the reporting
- 21,974,740
period
Total of equity instruments granted during the current reporting period - -
Total of equity instruments vested during the current reporting period - 21,204,645
Total of equity instruments forfeited during the current reporting period
- 770,095
(Note)
Total of equity instruments outstanding at the end of the reporting period - -
187
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
2016 Share Incentive Scheme First half year of 2021 2020
The exercise price (ex-rights) of the outstanding Share-based payments
of the Company at the end of the reporting period and the remaining - -
period of the contract
Note:
On December 25th 2020, pursuant to the revised Articles of Association and resolution of the 20th geneal meeting of 4th
session of the Board, and approved by the second extraordinary general meeting of 2018, the Company repurchased and
cancelled 770,095 granted and unvested restricted RMB treasury shares in cash. The Company has completed the
registration procedures of equity changes as of June 30th 2021.
Unit: share
2018 Share Incentive Scheme First half year of 2021 2020
Total of equity instruments outstanding at the beginning of the
68,762,683 121,195,458
reporting period
Total of equity instruments granted (share dividend) during the current
- -
reporting period
Total of equity instruments vested during the current reporting period - 45,591,794
Total of equity instruments forfeited during the current reporting
- 6,840,981
period
Total of equity instruments outstanding at the end of the reporting
68,762,683 68,762,683
period
The exercise price (ex-rights) of the outstanding Share-based payments
of the Company at the end of the reporting period and the remaining RMB 16.98/share & 30 months RMB 16.98/share & 36 months
period of the contract
Note: On December 25th 2020, authorized by the Company's second extraordinary shareholders' meeting in 2018 and
according to the resolutions and the revised Articles of Association of the 20th meeting of the fourth board of directors, the
Company repurchased and cancelled the granted and unvested 6,840,981 restricted RMB treasury shares in cash. The
Company has completed the registration procedures of equity changes as of June 30th 2021.
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
On October 22nd 2015, Hikvision considered and approved Management Measures for Core Staff Co-Investment in
Innovative Businesses (Draft) (hereafter referred to as “Management Measures”) at the 2nd extraordinary general meeting.
On March 7th 2016, representative congress of labor union of Hikvision passed Implementation Provisions for
Management Measures for Core Staff Investment in Innovative Businesses (hereafter referred to as “Provisions”), to initiate
and implement the incentive mechanism of staff co-investment (hereafter referred to as “Staff Co-Investment Plan”) in
innovative business subsidiaries. Staff who participate in the Staff Co-Investment Plan (hereafter referred to as “Co-
Investment Staff”) signed an Entrusted Investment Agreement with the labor union committee of Hikvision (hereafter
referred to as “Hikvision Labor Union”), to entrust Hikvision Labor Union to make investments. Hikvision Labor Union,
as a principal, shall cooperate with a trust company, which shall be a limited partner (LP) of a partnership enterprise, to
establish a trust plan, and to invest trust funds into innovative business subsidiaries. (Investment form described above is
referred to as “Co-Investment Platform”).
Staff Investment Plan is classified as plan A and plan B according to applicable grantees. Grantees of plan A are comprised
of medium-and-senior level management personnel and core competent staff from Hikvision, its wholly-owned
subsidiaries, and innovative business subsidiaries, and are able to invest in all innovative businesses. Grantees of plan B
are comprised of core and full-time staff from innovative business subsidiaries, and could participate in investment on
innovative business subsidiaries where they serve. The Co-Investment Platform will increase capitals annually, the
corresponding increased equity of which will be distributed to core staff who meets investment conditions pursuant to
particular rules. The lock-up period shall be five years after equity of Co-Investment Platform is held by the staff, which
will be unlocked in one-off manner when due. Within the lock-up period, if the labor relationship between the grantees
and the Company or its subsidiaries is released or terminated, equity of Co-Investment Platform held by the grantees shall
be refunded and settled by the labor union at an agreed price pursuant to the Provisions.
To adapt to the new changes brought by the proposed spin-off of a subsidiary, EZVIZ Network for its listing, from
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Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Hikvision, Co-Investment Staff and Hikvision Labor Union executed the Supplemental Agreement to the Entrusted
Investment Agreement (hereafter referred to as “Supplemental Agreement”) in December 2020. On December 25th 2020,
Hikvision convened the 20th meeting of the 4th session of the Board to consider and approve the Proposal on Revision to
Management Measures for Core Staff Co-Investment in Innovative Businesses. The new version of Management Measures
for Core Staff Co-Investment in Innovative Businesses (hereafter referred to as “Management Measures (New Version)”)
has added the authentic right for equity shares of co-investment plan held by staff and equity shares of innovative business
subsidiaries indirectly held by them, specified the processing measures of investment equity shares held by staff after they
lose the qualification or are cancelled to be qualified for co-investment, and added the systems of management committee,
and etc.
On December 31st 2020, co-investment plan execution and management committee approved the Implementation
Provisions for Management Measures for Core Staff Co-Investment in Innovative Businesses (hereafter referred to as
“Provisions (New Version)”). Pursuant to the Management Measures (New Version) and Provisions (New Version), the
Lock-up Period in respect of plan A’s equity shares with the authentic right shall last for a period of a full-five years during
which the staff has served for the Company or its subsidiaries; the Lock-up Period in respect of plan B’s equity with the
authentic right shall last for a period of a full-five years during which the staff has served for the corresponding innovative
business subsidiary or its subsidiaries.
The Co-Investment Platform grants Co-Investment Staff additional equity annually. The Group determines whether share-
based payment shall be constituted based on the fair value of equity instruments newly obtained by the Group’s staff in
Co-Investment Platform on each granting date. During the current reporting period, the Group recognized share-based
payment of RMB 34,331,085.41 in aggregate based on the fair value of services obtained by the Group.
2. Information of the share-based payment through equity settlements
Restrictive Share Incentive Sheme
Unit: RMB
2016 Share Incentive Scheme 2018 Share Incentive Scheme
Determined based on stock price at the Determined based on stock price at the
Method of determine the fair value of equity
grant date and the costs of restricted grant date and the costs of restricted
instruments at the grant date shares during Lock-up Period shares during Lock-up Period
Recognition basis of the number of the equity Determined based on the results Determined based on the results
instruments qualified for vesting estimation of each vesting period estimation of each vesting period
Reasons of the significant difference between the
estimates of the current reporting period with that of None None
the prior year
Accumulative amount of share-based payment
through equity settlement and further included in the 345,213,163.42 952,525,929.29
capital reserve
Total amount of the expenses recognized according to
share-based payment through equity settlement in the - 99,777,544.60
current reporting period
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
Unit：RMB
Share Incentive Scheme of Staff Co-Investment in
Innovative Businesses
Evaluated and determined based on income method at the
Method of determining the fair value of equity instruments at the grant date
grant date
Recognition basis of the number of the equity instruments qualified for Estimated and determined based on the performance result
vesting conditions of each vesting period
Accumulative amount of share-based payment through equity settlement and
141,218,467.27
further included in the capital reserve
Total amount of the expenses recognized according to share-based payment
34,331,085.41
through equity settlement in the current reporting period
Among total amount of the expenses recognized according to share-based payment through equity settlement during the
current reporting period, amount of RMB 9,720,945.74 was due to share distributions to minority shareholders; As of June
189
Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
30th 2021, accumulative amount of share-based payment through equity settlement of RMB 45,355,945.94 was included
in the equity of minority shareholders.
3. There is no share-based payment through cash settlements
4. There is no termination of share-based payment or modification or termination of equity incentive plan for co-
investment in innovative businesses during the current reporting period.
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 9,363,845 9,573,577
- Commitment on external investments 42,400 42,400
Total 9,406,245 9,615,977
(2) As of June 30th 2021, 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
As of the date of completion of this report, the Company has no events after the balance sheet date that need to be disclosed.
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 geographical area & non-current assets by geographical location
Unit: RMB
Item First half year of 2021 First half year of 2020
External revenue generated in domestic area 24,434,618,189.74 16,728,998,825.16
External revenue generated in overseas area 9,467,480,178.36 7,542,160,418.60
Total 33,902,098,368.10 24,271,159,243.76
Unit: RMB
Item (Note) On June 30th 2021 On January 1st 2021
Non-current assets in domestic area 10,030,658,958.45 9,366,029,699.84
Non-current assets in overseas area 669,088,072.24 683,828,015.60
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Hikvision 2021Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Total 10,699,747,030.69 10,049,857,715.44
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.
191
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
XV. Notes to major items of financial statements of the parent company
1. Accounts receivable
1.1 Disclosure by age
Unit: RMB
Closing Balance
Aging
Accounts receivable Credit loss provision Proportion (%)
Within credit period 10,044,845,328.59 12,667,712.11 0.13
Within 1 year after exceeding credit period 13,440,134,969.21 80,836,756.57 0.60
1-2 years after exceeding credit period 476,157,367.58 93,789,656.21 19.70
2-3 years after exceeding credit period 193,983,415.33 79,184,030.14 40.82
3-4 years after exceeding credit period 63,882,997.89 44,622,937.33 69.85
Over 4 years after exceeding credit period 98,478,012.10 98,478,012.10 100.00
Subtotal 24,317,482,090.70 409,579,104.46 1.68
1.2 Classification and disclosure of by credit loss provision methods
Unit: RMB
Closing balance Opening balance
Carrying balance Credit loss provision Book value Carrying balance Credit loss provision Book value
Category
Percentage Percentage Percentage Percentage
Amount Amount Amount Amount Amount Amount
(%) (%) (%) (%)
Provision for credit loss on a
- - - - - - - - - -
single basis
Provision for credit loss by
24,317,482,090.70 100.00 409,579,104.46 1.68 23,907,902,986.24 24,550,291,739.99 100.00 356,899,560.63 1.45 24,193,392,179.36
portfolios
Total 24,317,482,090.70 100.00 409,579,104.46 1.68 23,907,902,986.24 24,550,291,739.99 100.00 356,899,560.63 1.45 24,193,392,179.36
192
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Accounts receivable provision for credit loss by portfolios
Unit: RMB
Closing balance
Customer
Carrying balance Credit loss provision Proportion (%)
Subsidiaries’ customers 20,381,978,651.77 - -
Portfolio A 2,853,418.50 269,130.60 9.43
Portfolio B 3,932,446,443.30 409,106,396.73 10.40
Portfolio C 203,577.13 203,577.13 100.00
Total 24,317,482,090.70 409,579,104.46 1.68
Description of accounts receivable for credit loss 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.
1.3 Credit loss provision
The provision for credit loss in the current reporting period is RMB 52,679,543.83.
The actual write-off of accounts receivable for the current reporting period is nil.
193
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
1.4 Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
Proportion (%) of
the total balance of
accounts receivable
Name of the Party Relationship with the Company Book value balance of accounts receivable Closing balance for credit loss provision
at the end of the
current reporting
period
Subsidiary A Subsidiary 20,310,799,871.11 - 83.52
CETC’s subsidiary
Related party 107,188,293.34 12,278,929.18 0.44
company A
Third party J Third party 94,685,424.77 3,616,529.85 0.39
Third party C Third party 81,027,333.17 2,474,020.60 0.33
Third party K Third party 60,110,711.53 2,506,616.67 0.25
Total 20,653,811,633.92 20,876,096.30 84.93
1.5 As of June 30th 2021, there is no termination of accounts receivable booking due to transfer of a financial asset.
1.6 As of June 30th 2021, the Company has no assets/liabilities booked due to transferred accounts receivable that the Company still continue to be involved in.
2. Other receivables
2.1 By categories
Unit：RMB
Category Closing balance Opening Balance
Dividends receivable 22,910,404.14 22,910,404.14
Other receivables 1,175,810,730.65 703,792,729.51
Total 1,198,721,134.79 726,703,133.65
2.2 Dividends receivable
Unit：RMB
Investees Closing balance Opening Balance
Subsidiaries of CETE 22,910,404.14 22,910,404.14
Total 22,910,404.14 22,910,404.14
194
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
2.3 other receivables
(1) Other receivables by aging
Unit: RMB
Closing Balance
Item
Other receivables Credit loss provision Proportion (%)
Within contract period 1,155,646,315.54 1,161,268.09 0.10
Within 1 year 16,083,095.83 670,698.87 4.17
1-2 years 1,179,608.56 228,661.66 19.38
2-3 years 4,459,430.84 1,820,339.67 40.82
3-4 years 7,285,860.94 5,005,353.87 68.70
Over 4 years 3,965,059.03 3,922,317.93 98.92
Subtotal 1,188,619,370.74 12,808,640.09 1.08
(2) Other receivables by nature of the payment
Unit: RMB
Nature Closing balance Opening balance
Payments by related parties within the Group 746,108,383.58 454,474,087.76
Temporary payments for receivables 378,394,848.41 219,103,746.42
Guarantee deposit 58,923,847.65 47,835,041.47
Others 5,192,291.10 3,797,396.93
Total 1,188,619,370.74 725,210,272.58
2.3 Provision for credit losses
The amount of credit loss provision reversed in the current period was RMB 8,608,902.98.
2.4 The actual write-off of other receivables in the current reporting period was nil.
195
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
2.5 Top 5 debtors of other receivables in terms of closing balance
Unit：RMB
Relationship with the Company Percentage to total other Closing balance for credit
The name of entity Nature Closing balance Aging
receivables (%) loss provision
Within contract
Subsidiary B Subsidiary Internal Payment 317,627,502.35 26.72 -
period
Within contract
Subsidiary C Subsidiary Internal Payment 78,815,021.00 6.63 -
period
Within contract
Subsidiary D Subsidiary Internal Payment 50,142,126.67 4.22 -
period
Within contract
Subsidiary E Subsidiary Internal Payment 45,372,931.99 3.82 -
period
Within contract
Subsidiary F Subsidiary Internal Payment 44,491,239.07 3.74 -
period
Total 536,448,821.08 45.13 -
2.6 At the end of the current reporting period, the Company had no other receivables involving government subsidies.
2.7 At the end of the current reporting period, there were no other receivables derecognized due to the transfer of financial assets.
2.8 At the end of the current reporting period, there were no assets or liabilities formed by continuing involvement in transferred other receivables
196
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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 6,110,445,091.30 - 6,110,445,091.30 5,912,831,208.01 - 5,912,831,208.01
Inestments in associated enterprises and
809,743,560.46 - 809,743,560.46 814,542,245.96 - 814,542,245.96
joint ventures
Total 6,920,188,651.76 - 6,920,188,651.76 6,727,373,453.97 - 6,727,373,453.97
3.1 Investment in subsidiaries
Unit：RMB
Write-off of Blance of
Increase during
Decrease during impairment impairment loss
the current
Name of investee Opening balance the current Closing balance provision during the provision at the end
reporting
reporting period current reporting of the current
period
period reporting period
Hangzhou Hikvision System Technology Co., Ltd. 848,272,492.62 8,641,258.60 - 856,913,751.22 - -
Hangzhou Hikvision Security Equipment Leasing Services Co.,
200,000,000.00 - - 200,000,000.00 - -
Ltd.
Shanghai Goldway Intelligent Transportation 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. 61,742,747.98 1,262,275.86 - 63,005,023.84 - -
Hangzhou Haikang Zhicheng Investment and Development Co., 24,000,000.00 - - 24,000,000.00 - -
197
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Write-off of Blance of
Increase during
Decrease during impairment impairment loss
the current
Name of investee Opening balance the current Closing balance provision during the provision at the end
reporting
reporting period current reporting of the current
period
period reporting period
Ltd.
Hangzhou Hikrobot Technology Co., Ltd. 138,957,632.99 2,264,319.14 - 141,221,952.13 - -
Hangzhou HikAuto Technology Co., Ltd. 186,488,555.60 525,422.22 - 187,013,977.82 - -
Hangzhou Hikvision Communication Technology Co., Ltd. 7,000,000.00 - - 7,000,000.00 - -
Hangzhou Hikmicro Sensing Technology Co., Ltd. 182,201,437.54 256,834.42 - 182,458,271.96 - -
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 - -
Hikvision Colombia SAS 1,337,440.00 - - 1,337,440.00 - -
198
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Write-off of Blance of
Increase during
Decrease during impairment impairment loss
the current
Name of investee Opening balance the current Closing balance provision during the provision at the end
reporting
reporting period current reporting of the current
period
period reporting period
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. 102,318,598.74 270,503.22 - 102,589,101.96 - -
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. 98,334,200.00 - - 98,334,200.00 - -
Henan Haikang Hua’An Bao Quan Electronics Co., Ltd. 33,940,800.00 - - 33,940,800.00 - -
Hangzhou Hikvision Technology Co., Ltd. 1,066,917,232.70 4,809,775.59 - 1,071,727,008.29 - -
Hangzhou Hikvision Electronics Co., Ltd. 411,410,425.15 1,463,492.82 - 412,873,917.97 - -
Wuhan HikStorage Technology Co., Ltd. 60,869,464.15 - - 60,869,464.15 - -
Chengdu Hikvision Digital Technology Co., Ltd. 540,086,104.32 96,562.79 - 540,182,667.11 - -
Hangzhou HikAuto Software Co., Ltd. 14,536,174.60 1,364,269.52 - 15,900,444.12 - -
Hangzhou Haikang Intelligent Technology Co., Ltd. 8,689,143.96 1,061,396.50 - 9,750,540.46 - -
Hangzhou EZVIZ Software Co., Ltd. 35,084,155.82 3,326,480.96 - 38,410,636.78 - -
LLC Hikvision Tashkent 833,014.00 - - 833,014.00 - -
Xi’An Hikvision Digital Technology Co., Ltd. 85,000,000.00 115,000,000.00 - 200,000,000.00 - -
199
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Write-off of Blance of
Increase during
Decrease during impairment impairment loss
the current
Name of investee Opening balance the current Closing balance provision during the provision at the end
reporting
reporting period current reporting of the current
period
period reporting period
Wuhan Hikvision Technology Co., Ltd. 12,600,000.00 - - 12,600,000.00 - -
Wuhan Hikvision Science and Technology Co., Ltd. 150,250,000.00 - - 150,250,000.00 - -
Hangzhou Hikimaging Technology Co., Ltd. 50,948,433.82 343,984.00 - 51,292,417.82 - -
Guizhou Haikang Transportation Big Data Co., Ltd. 22,000,000.00 - - 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. 80,000,000.00 - - 80,000,000.00 - -
Hangzhou Kuangxin Technology Co., Ltd. 112,000,000.00 - - 112,000,000.00 - -
Zhengzhou Hikvision Digital Technology Co., Ltd. 65,000,000.00 15,000,000.00 - 80,000,000.00 - -
Nanchang Hikvision Digital Technology Co., Ltd. 80,000,000.00 - - 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. 50,348,846.40 311,770.88 - 50,660,617.28 - -
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. 2,843,875.79 433,223.10 - 3,277,098.89 - -
Shijiazhuang Hikvision Technology Co., Ltd. 45,000,000.00 5,404,525.03 - 50,404,525.03 - -
Zhejiang Haikang Fire Protection and Control Co., Ltd. 84,004.82 36,218.00 - 120,222.82 - -
200
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Write-off of Blance of
Increase during
Decrease during impairment impairment loss
the current
Name of investee Opening balance the current Closing balance provision during the provision at the end
reporting
reporting period current reporting of the current
period
period reporting period
Hikvision Argentina S.R.L 1,793,559.15 - - 1,793,559.15 - -
Fuzhou Hikvision Digital Technology Co., Ltd. 50,814,676.49 242,991.50 - 51,057,667.99 - -
Hangzhou Hikfire Technology Co., Ltd. 61,871,362.21 534,041.46 - 62,405,403.67 - -
Hangzhou Rayin Technology Co., Ltd. 60,702,536.80 212,153.88 - 60,914,690.68 - -
Hangzhou Microimage Software Co., Ltd. 2,090,633.38 930,785.30 - 3,021,418.68 - -
Kunming Hikvision Digital Technology Co., Ltd. 126,666.06 50,107,696.34 - 50,234,362.40 - -
Jinan Hikvision Digital Technology Co., Ltd. - 20,929,479.32 - 20,929,479.32 - -
Hanghou Hikmicro Intelligent Technology Co., Ltd. - 32,213.12 - 32,213.12 - -
Total 5,912,831,208.01 234,861,673.57 37,247,790.28 6,110,445,091.30 - -
201
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
3.2 Investments in associated enterprises and joint ventures
Unit：RMB
Increase/Decrease during the current reporting period Blance of
impairment
loss
Investment Declared
Other provision
Name of Opening income (losses) cash Provision Closing
Additional Reduced comprehensive at the end
investee balance recognized dividends or for Others Balance
Investments Investments income of the
under the profit impairment
adjustment current
equity method distribution
reporting
period
1.Joint Ventures
Haikang
Intelligent 612,479,371.62 - - (12,551,789.97) - - - - 599,927,581.65 -
Fund
Daishan
15,253,091.76 - - 641,313.41 - (999,000.00) - - 14,895,405.17 -
Hailai
Haishi
9,985,577.32 - - 828,972.15 - - - - 10,814,549.47 -
Huayue
Xuzhou
4,631,286.58 - - (459,987.17) - - - - 4,171,299.41 -
Kangbo
Shenzhen
6,029,569.69 - - (2,392,706.11) - - - - 3,636,863.58 -
City Service
Yunnan
4,841,060.76 - - 8,854.38 - - - - 4,849,915.14 -
Yinghai
202
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Increase/Decrease during the current reporting period Blance of
impairment
loss
Investment Declared
Other provision
Name of Opening income (losses) cash Provision Closing
Additional Reduced comprehensive at the end
investee balance recognized dividends or for Others Balance
Investments Investments income of the
under the profit impairment
adjustment current
equity method distribution
reporting
period
Zhejiang City
Digital 11,864,018.37 - - (159,024.43) - - - - 11,704,993.94 -
Technology
Guangxi
5,296,695.36 - - (2,055,245.77) - - - - 3,241,449.59 -
Haishi
Subtotal 670,380,671.46 - - (16,139,613.51) - (999,000.00) - - 653,242,057.95 -
2.Associated Enterprises
Wuhu Sensor
58,491,264.42 - - 5,507,128.76 - - - - 63,998,393.18 -
Tech
Maxio
54,621,802.54 - - 7,352,742.56 - - - - 61,974,545.10 -
Technology
Zhiguang
21,253,058.87 - - (540,524.81) - - - - 20,712,534.06 -
Hailian
Qingtang Big
9,795,448.67 - - 20,581.50 - - - - 9,816,030.17 -
Data
203
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
Increase/Decrease during the current reporting period Blance of
impairment
loss
Investment Declared
Other provision
Name of Opening income (losses) cash Provision Closing
Additional Reduced comprehensive at the end
investee balance recognized dividends or for Others Balance
Investments Investments income of the
under the profit impairment
adjustment current
equity method distribution
reporting
period
Subtotal 144,161,574.50 - - 12,339,928.01 - - - - 156,501,502.51 -
Total 814,542,245.96 - - (3,799,685.50) - (999,000.00) - - 809,743,560.46 -
3.3 As of June 30th 2021, there were no restrictions on the capability of transferring fund to the Company from investees in which the Company held long-term equity
investment.
204
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
4. Operating income and operating cost
Unit：RMB
First half year of 2021 First half year of 2020
Item
Income Cost Income Cost
Operating income 11,407,122,363.03 2,425,620,927.40 10,618,881,901.13 2,861,919,283.95
Other operating
1,510,604,022.70 83,678,648.34 965,386,184.10 60,087,713.53
income
Total 12,917,726,385.73 2,509,299,575.74 11,584,268,085.23 2,922,006,997.48
5. Investment income
Unit：RMB
Item First half year of 2021 First half year of 2020
Long-term equity investment income (losses) calculated by cost
3,500,000.00 (2,550,000.00)
method
Long-term equity investment losses measured by equity method (3,799,685.50) (3,628,950.89)
Investment losses from disposal of asset group (3,387,647.37) -
Investment income of other non-current financial assets during
115,644,801.97 150,000,000.00
the holding period
Proceeds from the disposal of asset groups - 48,884,954.09
Total 111,957,469.10 192,706,003.20
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 (1,805,042.17) /
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 224,341,379.44 /
subsidy based on standard quota or quantitative continuous
enjoyment according to the state industrial policy)
In addition to the Company's normal business related to the
effective hedging business, gains and losses on changes in fair
value arising from holding derivative financial assets, derivative
45,938,231.46 /
financial liabilities, other non-current financial assets, and
investment gains from the disposal of the above-mentioned
financial assets/financial liabilities and receivables financing
Other non-operating income and expense except the items
28,546,193.64 /
mentioned above
Impact of income tax (12,489,507.02) /
The impact of minority equity (24,583,229.94) /
Total 259,948,025.41 /
205
Hikvision 2021 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2021 to June 30th 2021
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 0.695 0.695
11.62%
Company
Net profit excluding non-recurring items of profit or loss
11.15% 0.667 0.667
attributable to ordinary shareholders of the Company
206
Hikvision 2021 Half Year Report
Section XI 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.
207
Hikvision 2021 Half Year Report
Section XII 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
The main content of the
Time of Location of Type of reception Index of basic situation of
Method of reception Reception object discussion and the
reception reception object the research
information provided
CNINF, Investor
December 22nd Headquarters Site Research and 106 investors including The Company's
Institutional Relations Activity Record:
2020 to January meeting room of telephone China Asset Management- operating conditions
investors From December 22rd 2020
11th 2021 the Company communication Zhang Fan, etc. and future prospects
to January 11th 2021
The Company's CNINF, Investor
January 12th Headquarters Site Research and 138 investors including
Institutional operating conditions Relations Activity Record:
2021 to January meeting room of telephone Huachuang Securities-
investors and future prospects From January 12th 2021
29th 2021 the Company communication Meng Can, etc.
to January 29th 2021
CNINF, Investor
February 1st Headquarters Site Research and 56 investors including The Company's
Institutional Relations Activity Record:
2021 to March meeting room of telephone Haitong self-operated - operating conditions
investors From February 1st 2021
2nd 2021 the Company communication Wang Jing, etc. and future prospects
to March 2nd 2021
The Company's CNINF, Investor
March 3rd 2021 Headquarters Site Research and 145 investors including
Institutional operating conditions Relations Activity Record:
to March 17th meeting room of telephone Orient Securities-Kuai
investors and future prospects From March 3rd 2021 to
2021 the Company communication Jian, etc.
March 17th 2021
Institutional The Company's
Headquarters CNINF, Investor
Performance result investors and 928 investors including E operating conditions in
April 17th 2021 meeting room of Relations Activity Record:
conference call individual Fund-Ni Chunyao etc. 2020 and the first
the Company April 17th 2021
investors quarter of 2021
Headquarters Site Research and Institutional The Company's CNINF, Investor
April 18th 2021 220 investors including
meeting room of telephone investors operating conditions Relations Activity Record:
to April 30th Ping An Fund-Zhu
the Company communication and future prospects From April 18th 2021 to
2021 Chunyu etc.
April 30th 2021
May 10th 2021 Headquarters Site Research and Institutional 95 investors including The Company's CNINF, Investor
to May 21st meeting room of telephone investors Boshi Fund-Chen operating conditions Relations Activity Record:
208
Hikvision 2021 Half Year Report
The main content of the
Time of Location of Type of reception Index of basic situation of
Method of reception Reception object discussion and the
reception reception object the research
information provided
2021 the Company communication Pengyang etc. and future prospects From May 10th 2021 to
May 21st 2021
Headquarters Site Research and Institutional 79 investors including The Company's
Investor Relations Activity
th
May 24 2021 meeting room of telephone investors Dongzheng Asset operating conditions
Record: From May 24th
June 11th 2021 the Company communication Management-Zhang and future prospects
2021 June 11th 2021
Mingyu etc.
Headquarters Institutional 39 investors including The Company's
June 15th 2021 Site Research and Investor Relations Activity
meeting room of investors Shen Wan Hongyuan operating conditions
to June 25th telephone Record: From June 15th
the Company Asset Management-Qin and future prospects
2021 communication 2021 to June 25th 2021
Qing etc.
III. Capital exchanges between the listed company and its controlling shareholders and their related parties
□Applicable √Inapplicable
Hangzhou Hikvision Digital Technology Co., Ltd.
Chairman: Chen Zongnian
July 24th 2021
209
