Hangzhou Hikvision Digital Technology Co., Ltd.
2017 Interim Report
January to June 2017
July 22nd 2017
Hikvision 2017 HY 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 Chairman, Jin Yan, the head of accounting
(Accounting Officer) hereby declare and warrant that the financial statements in this
Report are authentic, accurate and complete.
All directors have attended the meeting of the board to review this report.
The Company will not distribute cash dividend, distribute bonus share, or
distribute share from capital reserve during the current reporting period.
Note:
This document is a translated version of the Chinese version 2017 Half Year Financial Report
(“2017 年半年度报告”), and the published announcements in the Chinese version shall prevail. The
complete published Chinese 2017 Half Year Financial Report may be obtained at
http://www.cninfo.com.
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Hikvision 2017 HY Report
Please read the annual report and pay particular attention to the following risk factors:
1) Risk of technology upgrade: With the development of cloud computing, big data, artificial
intelligence, and other technologies, the demand and business models of the industry will
change accordingly. If the Company cannot follow the changes in the cutting-edge technologies,
or fail to realize the business innovation rapidly, the risks of future development uncertainties
will increase.
2) Risk of product information security: Although the Company has dedicated resources to
prevent the cybersecurity risk for our products, there is still a possibility of deliberate third-party
(including viruses, malicious software, hacker and similar disruptions) attempts to damage our
systems or products, causing the security issues for cybersecurity.
3) Risk of foreign exchange: The overseas sales ratio has increased continuously, and the
Company has to carry out operations in different countries with various currencies. Exporting
transactions are mostly settled in United States Dollars ("USD"), meanwhile, parts of the
imported raw materials are also mainly setteled in USD. Therefore, the fluctuation of the foreign
exchange rate has a potential to affect the profits of the Company.
4) Risk of management: the Company continues to expand business scale, innovative product and
business continues to increase, total number of employees also grows rapidly, which pose
challenges and higher requests to the Company's management. The sustainable development of
the company might face certain risk, if the management ability could not match up with the
Company’s business expansion.
The above notices might not be all-inclusive of all other potential risks, please pay attention to the
potential investment risks
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Hikvision 2017 HY Report
Contents
Section I Important Notes, Contents and Definitions 2
Section II Corporate Profile and Key Financial Data 6
Section III Corporate Business Summary 9
Section IV Operation Discussion and Analysis 10
Section V Significant Events 27
Section VI Changes in Shares and Information about Shareholders 43
Section VII Information on Preferred Shares 51
Section VIII Information on Directors, Supervisors, Senior Managements 52
Section IX Coporate Bonds 56
Section X Financial Report 57
Section XI Documents Available for Reference 153
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Hikvision 2017 HY Report
Definitions
Term Definition
Reporting Period From January 1st 2017 to June 30th,2017
Articles of Associations Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd
Hikvision, our Company, Company Hangzhou Hikvision Digital Technology Co., Ltd
CETHIK CETHIK Group Co., Ltd. Controlling Shareholder of the Company
Innovative Co-investment Partnership Hangzhou Hikvision Equity Investment Partnership (Limited Partneership)
Ezviz, Ezviz Network Inc. Hangzhou Ezviz Network Co., Ltd. (According to the context, also refers to the corresponding business)
Hangzhou Hikvision Robtics Technology Co., Ltd. (According to the context, also refers to the corresponding
Hikvision Robotics
business)
Hangzhou Hikvision Automotive Technology Co., Ltd. (According to the context, also refers to the
Hikvision Automotive Technology
corresponding business)
Hangzhou Hikvision Weiying Sensor Technology Co., Ltd. (According to the context, also refers to the
Hikvision Weiying
corresponding business)
Hikvision Storage Wuhan HIK Storage Technology Co., Ltd. (According to the context, also refers to the corresponding business)
Located in Tonglu economic development area, Hangzhou, Zhejiang province, purposes for production
factories, warehousing logistics center. Initially disclosed in Announcement about the Company’s Investment in
Security Industrial Base (Tonglu)
Tonglu to Set up Wholly Owned Subsidiary and New Hikvision Security Industry Base (Tonglu) Project(《关于
在桐庐投资设立全资子公司及新建海康威视安防产业基地（桐庐）项目的公告》) (NO. 2014-044).
Located in Binjiang district, Hangzhou, Zhejiang province, purposes for the office building. Initially disclosed
Internet Security Industry Base in Announcement about the Company’s New Construction of Internet Security Industry Base Project (《关于新
建海康威视互联网安防产业基地项目的公告》)(NO. 2014-035).
A long investment cycle, business prospects uncertain, has the high risk and uncertainty, in need for direct or
indirect investment in exploration, in order for the Company to timely enter into new areas of business. Initially
disclosed in Announcement about Management Measures for Core Staff Investment in Innovative Business (《核
Innovative Business
心员工跟投创新业务管理办法》) (www.cninfo.com)
In this report, innovative business also refers to Ezviz, Hikvision Robtics, Hikvision Automotive Technology,
Hikvision Weiying, and their related business or products.
The Company publicly issued the bond with nominal value amounting to Euro 400 million; and the bond was
settled, listed and traded on the Irish Stock Exchange on February 18th, 2016. For details, please refer to
Euro Bond
Announcement about Issuing Foreign Currency Bond (《关于境外发行外币债券的进展公告》) (NO.
2016-004)
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Hikvision 2017 HY Report
Section II Corporate Profile & Key Financial Data
I. Corporate Information
Stock abbreviation HIKVISION Stock code 002415
Stock exchange where the shares of
Shenzhen Stock Exchange
the Company are listed
Name of the Company in Chinese 杭州海康威视数字技术股份有限公司
Abbr. of the Company name in
海康威视
Chinese (if any)
Name of the Company in English (if
HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD
any)
Abbr. of the Company name in
HIKVISION
English (if any)
Legal representative Chen Zongnian
II. Contacts and contact information
Board Secretary Securities Affairs Representative
Name Huang Fanghong Li Yi
No. 555 Qianmo Road, Binjiang District, No. 555 Qianmo Road, Binjiang District,
Address
Hangzhou Hangzhou
Tel. 0571-89710492 0571-89710492
Fax 0571-89986895 0571-89986895
E-mail hikvision@hikvision.com hikvision@hikvision.com
III. 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 such above mentioned change during the reporting period; please refer to 2016 Annual Report for details.
2. Information disclosure and place of the report
Whether there is alteration in information disclosure and place of the report during the reporting period.
□ Applicable √ Inapplicable
The newspaper designated by the Company for information disclosure, website specified by CSRC for release of the half-year report,
and the place where the half-year report is available for inspection have not changed during the reporting period, Pleaser refer to
2016 Annual Report for details.
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Hikvision 2017 HY Report
IV. Key accounting data and Financial Indicators
Whether the Company performed a retroactive adjustment or restatement of previous accounting data
√ Yes □ No
The reason for retroactive adjustment or restatement of previous accounting data:
Accountant arrangement method for business merger under the common control\
2016 First Half Year YoY Change
2017 First Half Year
Before Adjustments After Adjustments After Adjustments
Operating income (RMB) 16,447,539,736.52 12,548,198,726.12 12,553,476,748.58 31.02%
Net profits attributable to
3,291,546,056.70 2,606,846,455.38 2,607,821,529.43 26.22%
shareholders of the Company (RMB)
Net profits attributable to
shareholders of the Company
3,189,866,218.86 2,574,202,921.09 2,575,186,685.98 23.87%
excluding non-recurring gains and
losses (RMB)
Net cash flows from operating
-1,942,800,802.42 397,807,256.48 397,774,228.28 -588.42%
activities (RMB)
Basic earnings per share (RMB/share) 0.357 0.289 0.289 23.53%
Diluted earnings per share
0.357 0.288 0.288 23.96%
(RMB/share)
Weighted average ROE 12.98% 12.96% 12.96% 0.02%
Change(%)
between December
At December 31st 2016
th
At June 30 2017 31st 2016 and June
30th 2017
Before Adjustments After Adjustments After Adjustments
Total assets (RMB) 41,524,934,461.17 41,339,007,814.83 41,348,428,750.40 0.43%
Net assets attributable to shareholders
24,043,886,222.83 24,288,634,890.08 24,283,755,426.31 -0.99%
of the Company (RMB)
V. Differences in Accounting Data between Domestic and Overseas Accounting Standards
1. Difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of International Financial
Reporting Standards (IFRS) and China Accounting Standards in the reporting period.
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Hikvision 2017 HY Report
2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas Accounting
Standards and China Accounting Standards in the reporting period.
VI. Items and Amounts of Non-recurring Gains and Losse
√ Applicable □ Inapplicable
Unit：RMB
Item Amount
Profit or loss from disposal of non-current assets (including the write-off for the impairment of assets) 2,226,974.55
The government subsidies1 included in the current profits and losses (excluding the government subsidy
closely related to regular course of business of the Company and government subsidy based on standard quota 14,130,234.67
or quantitative continuous application according to the state industrial policy.)
Held-to-maturity financial assets, profits and losses of fair value held-for-trading financial liabilities, and
investment income in disposal of held-for-trading financial assets and liabilities and available-for sale financial 88,204,679.51
assets 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 16,422,848.73
Less: Impact of income tax 18,147,710.62
The impact of the minority interests (after tax) 1,157,189.00
Total 101,679,837.84
Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to the definition in the , or classifies any non-recurring gain/loss item mentioned in the aforementioned note as a recurrent gain/loss item
□ Applicable √ Inapplicable
In the reporting period, the Company did not classify an item as a non-recurring gain/loss according to the definition in the
, or classifies any non-recurring gain/loss item mentioned in the aforementioned note as a recurrent gain/loss item
1
Please refer to Note (V) 46 for details about government subsidy closely related to regular course of business of the Company and
government subsidy based on standard quota or quantitative continuous application according to the state industrial policy.
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Hikvision 2017 HY Report
Section III Corporate Business Summary
I. The principal business of the Company during the reporting period
There is no significant change for the principal business of the Company during the reporting period. Please refer to 2016 Annual
Report for details.
II. Significant changes in main assets
1. Major Changes in Main Assets
√ Applicable □ Inapplicable
Major assets Explanation on Major Changes
Incresead by 268.92%, mainly due to investment to Maxio Technology (Hangzhou) Ltd, totaled in
Equity Assets
RMB 98.00 million.
Fixed Assets No significant changes
Intangible Assets No significant changes
Increased by 141.67%, mainly due to the investment to Phase 2 of Security Industrial Base (Tonglu)
Construction in Progress
project and Internet Security Industry Base.
2. Major Overseas Assets
□ Applicable √ Inapplicable
III. Core Competitiveness
Whether the Company has to comply with the disclosure requirements of any special industry
□Yes √No
There is no significant change for the core competitiveness of the Company during the reporting period. Please refer to 2016 Annual
Report for details.
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Hikvision 2017 HY Report
Section IV Operation Discussion and Analysis
I. Overview
During the reporting period, the domestic market was steady and tended to a good prospect; the overseas
market maintains volatile while affected by various uncertainties. In the first half of 2017, the Company achieved
total operating income of RMB 16.45 billion, increased by 31.02% on a year-over-year basis; and net profit
attributed to shareholders of the listed company of RMB 3.29 billion, increased by 26.22% on a year-over-year
basis. The profitability of the Company improved continuously, resulted in an overall gross profit margin of 42.72%
in the first half of 2017, increased by 1.14% comparing to 2016 overall gross profit margin.
1. Continue to propel the industry layout based on the core video techonology
Relying on the accumulation in video surveillance industry, the Company has been actively exploring and
commercializing AI technology into various product modules and application markets. Through internal Research
and Development (R&D), investments and acquisitions, joint-venture corporation, and other methods, the
Company has performed beneficial exploration in upstream of the industry chain; In order to support the
expansion of the Company’s products and solutions and to further extend application areas, the Company has
strategically layout of uncooled infrared sensor, radar and other sensing technologys to enrich perceptual
dimensions.
Supported by the traditional video surveillance business, the Company continues to explore innovative
businesses such as EZVIZ Smart Home, Hikvision Robotic, Hikvision Automotive Techonology, Hikvision
Storage and etc., seeking to build core competitiveness in new business areas.
2. Continue to increase investments, reserve strength for sustainable development
During the reporting period, the Company continued to increase investments, further speed up the
recruitments of R&D, marketing and other key productive departments. At the same time, the Company continued
to optimize the talent training system, speed up the telant team development, in order to reserve strength for
sustainable and healthy development.
3. Continue to promote management reform, optimize organizational capability
The Company continued to promote the management reform projects, optimize organizational capability,
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Hikvision 2017 HY Report
improve operational efficiency, and improve capability in creating value for customers. The Company has been
actively promoting the construction of business culture, emphasizing value identity and building up incentive
alignment between the developments of the Company and its employees.
II. Core business analysis
Overview
Whether consistent with the overview disclosure under Operation Discussion and Analysis
√ yes □ no
Please refer to details in Section IV Operation Discussion and Analysis-I. Overview
Year-over-Year Changes in Key financial data
Unit：RMB
YoY Change
2017 first half year 2016 first half year Note of Change
(%)
Operating Income increased with the
Operating Income 16,447,539,736.52 12,553,476,748.58 31.02%
steady increase of market demands.
Operating costs 9,420,695,024.84 7,518,216,264.30 25.30% Increase with the operating income growth
Selling expenses increase with the
Company’s continuous increasing
Selling expenses 1,726,924,956.22 1,211,831,544.28 42.51%
investments on domestic and overseas
sales network
The Company continues to increase
Administrative expenses 1,761,709,877.13 1,271,951,990.31 38.50%
investments in R&D
Affected by fluctionation in foreign
Financial expense 65,500,627.65 -97,182,948.36 -167.40% exchange rate, increase in foreign currency
exchange losses
Income Tax Expenses 568,658,390.85 432,531,976.11 31.47% Increase with the profit growth
The Company continues to increase
R&D investments 1,454,783,663.94 968,001,812.80 50.29% investments in R&D，hiring technology
talents
Net Cash Flow from Payments for material procurements, tax
-1,942,800,802.42 397,774,228.28 -588.42%
Operating Activities payables, and 2016 year-end bonus
Net Cash Flow from Collection of matured principal-guaranteed
3,188,919,897.38 704,063,230.28 352.93%
Investment Activities financial products
Net Cash Flow from
-2,109,983,475.35 -1,288,518,254.29 -63.75% Distribution of dividends
Financing Activities
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Hikvision 2017 HY Report
YoY Change
2017 first half year 2016 first half year Note of Change
(%)
Net increase in cash and cash Payments for material procurements, tax
-995,983,078.72 -155,121,106.09 -542.07%
equivalents payables, and 2016 year-end bonus
Whether there is significant change in Company’s profit structure or profit source during the reporting period
□ Applicable √ Inapplicable
There is no such case during the reporting period.
Operating income structure
2017 first half year 2016 first half year
YoY Change
Proportion to Proportion to (%)
Amount Amount
operating income operating income
Total operating income 16,447,539,736.52 100% 12,553,476,748.58 100% 31.02%
Classified by industry
Video products and video
16,447,539,736.52 100.00% 12,553,476,748.58 100.00% 31.02%
content services
Classified by product
Front-end equipment 8,471,727,239.99 51.51% 6,601,052,833.16 52.58% 28.34%
Back-end equipment 2,581,996,973.35 15.70% 2,182,475,391.78 17.39% 18.31%
Central control equipment 1,893,438,540.55 11.51% 1,182,860,160.42 9.42% 60.07%
Construction projects 428,858,036.85 2.61% 408,576,652.08 3.25% 4.96%
Innovative business 613,825,422.23 3.73% 234,586,712.01 1.87% 161.66%
Others 2,457,693,523.55 14.94% 1,943,924,999.13 15.49% 26.43%
Classified by region
Domestic 11,478,885,424.15 69.79% 8,959,841,363.15 71.37% 28.11%
Overseas 4,968,654,312.37 30.21% 3,593,635,385.43 28.63% 38.26%
Note: in the category classified by product, the "innovative business"includes corresponding business products of innovative business
subsidiaries - EZVIZ Network, Hikvision Robotics, and Hikvision Automotive Technology. Hikvision Weiying, and Hikvision
Storage, Similar hereinafter.
Industries, products or regions accounting for more than 10% of the Company’s operating income or
operating profit
√ Applicable □ Inapplicable
Unit: RMB
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Hikvision 2017 HY Report
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
16,447,539,736.52 9,420,695,024.84 42.72% 31.02% 25.30% 2.61%
video content services
Classified by product
Front-end equipment 8,471,727,239.99 4,330,837,875.51 48.88% 28.34% 25.09% 1.33%
Back-end equipment 2,581,996,973.35 1,318,164,201.90 48.95% 18.31% 8.67% 4.53%
Central control
1,893,438,540.55 1,035,848,060.56 45.29% 60.07% 57.66% 0.84%
equipment
Construction projects 428,858,036.85 387,677,860.96 9.60% 4.96% -3.15% 7.57%
Innovative business 613,825,422.23 412,952,376.29 32.72% 161.66% 163.05% -0.36%
Others 2,457,693,523.55 1,935,214,649.62 21.26% 26.43% 18.82% 5.04%
Classified by region
Domestic 11,478,885,424.15 6,918,305,959.45 39.73% 28.11% 22.67% 2.67%
Overseas 4,968,654,312.37 2,502,389,065.39 49.64% 38.26% 33.20% 1.91%
Adjusted statistics of principal business are based on the caliber at the end of the reporting period of last year, if the statistics caliber
of principal business has been changed during the reporting period
□ Applicable √ Inapplicable
Whether the Company has to comply the disclosure requirements of decorating and refurbishing industry.
No
III. Non-Core Business Analysis
□Applicable √Inapplicable
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Hikvision 2017 HY Report
IV. Analysis of assets and liabilities
1. Material changes of asset items
Unit：RMB
June 30th 2017 January 1st 2017
YoY Change
Note of significant change
Percentage of Percentage of (%)
Amount Amount
total assets total assets
Cash and bank balances 13,179,646,367.74 31.74% 13,638,078,139.56 32.98% -1.24% No significant change
Accounts receivable 13,304,046,010.12 32.04% 11,243,843,324.90 27.19% 4.85% Increase follows the increase in sales revenue
Inventory 4,935,820,439.51 11.89% 3,829,947,876.75 9.26% 2.63% Inventory increases as sales increase
Mainly due to investments on Maxio Technology
Long-term equity investment 129,122,297.95 0.31% 35,000,000.00 0.08% 0.23%
(Hangzhou)
Increase of fixed assets procurement for daily
Fixed assets 2,945,144,484.51 7.09% 2,853,908,475.49 6.90% 0.19%
operation
Mainly due to increase of investments in
Construction in process 764,850,814.58 1.84% 316,482,522.36 0.77% 1.07% Security Industrial Base Project (Tonglu) Phase 2
& Internet Security Industry Base
Increase due to temporary capital
Short-term loans 1,965,132,452.76 4.73% 32,291,324.85 0.08% 4.65%
turnover
Long-term loans 1,319,408,175.80 3.18% 1,722,207,584.33 4.17% -0.99% No significant change
Financial assets measured by fair value and their
changes recognized in the gains and losses during 3,004,171.92 0.01% 15,547,537.34 0.04% -0.03% Change in fair value of financial derivatives
the current period
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Hikvision 2017 HY Report
June 30th 2017 January 1st 2017
YoY Change
Note of significant change
Percentage of Percentage of (%)
Amount Amount
total assets total assets
Financial liabilities measured by fair value and
their changes recognized in the gains and losses 18,562,128.16 0.04% 69,789,502.97 0.17% -0.13% Change in fair value of financial derivatives
during the current period
Maturity of principal-guaranteed financial
Other Current Asset 428,103,172.17 1.03% 4,153,992,276.78 10.05% -9.02%
products
Long-term receivables 171,142,345.99 0.41% 251,588,919.15 0.61% -0.20% Payments received for due receivables
Note Payables 536,694,693.25 1.29% 876,804,536.72 2.12% -0.83% Payments of matured note payables
Payrolll payable 595,071,569.87 1.43% 1,084,951,139.10 2.62% -1.19% Payments of year-end bonus
Implementation of 2016 annual profit
Dividends payable 92,407,139.16 0.22% 20,105,831.16 0.05% 0.17% distribution scheme, dividend payable for
restricted incentive shares increased
Prepaid capital for subscription of 2016
Other payable 481,729,216.24 1.16% 1,049,164,707.44 2.54% -1.38% Restricted Incentive Shares scheme transferred to
share capital after capital verification
Increase in portion of long-term loans that are
Non-current liabilities due within one year 714,012,975.36 1.72% 15,340,813.03 0.04% 1.68%
due within one year
Increase of restricted shares after registration of
Other current liabilities 853,507,327.55 2.06% 300,177,750.17 0.73% 1.33%
2016 restricted incentive shares granting
Deferred income increase due to cloud storage
Deferred income 16,817,902.06 0.04% 10,833,745.99 0.03% 0.01%
service
Increase in share capital due to 2016 annual
Share capital 9,228,865,114.00 22.22% 6,102,706,885.00 14.76% 7.46%
profit distribution
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Hikvision 2017 HY Report
June 30th 2017 January 1st 2017
YoY Change
Note of significant change
Percentage of Percentage of (%)
Amount Amount
total assets total assets
Capital reserves 1,722,277,484.29 4.15% 1,050,240,853.66 2.54% 1.61% Increase of capital reserves and treasury shares
after registration of 2016 restricted incentive
Treasury shares 853,507,327.55 2.06% 300,177,750.17 0.73% 1.33% shares granting
Affected by fluctionation in foreign exchange
Other comprehensive income -12,639,845.44 -0.03% -41,230,777.21 -0.10% 0.07% rate, increase in effect of foreign currency
exchange difference
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Hikvision 2017 HY Report
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB
Cumulative fair Effect of
Profit or loss
value change foreign Purchase Sales
Opening from change in Closing
Item charged to currency during the during the
balance fair value during balance
equity exchange period period
the period
difference
Financial assets
1.Financial assets
measured at their fair
values and of which the
changes are recorded
15,547,537.34 -12,543,365.42 -- -- -- -- 3,004,171.92
into the current profits
and losses(exclude
derivative financial
assets)
Subtotal of financial
15,547,537.34 -12,543,365.42 -- -- -- -- 3,004,171.92
assets
Subtotal of above 15,547,537.34 -12,543,365.42 -- -- -- -- 3,004,171.92
Financial Liabilities -69,789,502.97 51,095,855.83 -- 131,518.98 -- -- -18,562,128.16
Whether there were any material changes on the measurement attributes of major assets of the Company during
the Reporting Period:
□ Yes √ No
3. Assets right restrictions as of the end of reporting period
Unit: RMB
Item Closing Book Value Reasons for being restricted
Monetary fund 653,291,749.18 Various cash deposits and deposit pledge for long-term loan
Notes receivable 584,027,766.90 Pledge for issuance of bank acceptance
Accounts receivable 70,036,733.76 Pledge for long-term loan
Total 1,307,356,249.84
V. Analysis of Investments
1. Overview
√Applicable □ Inapplicable
Investment during 2017 first half year Investment during 2016 first half year
Fluctuation (%)
(RMB) (RMB)
809,644,383.18 330,462,791.72 145.00%
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Hikvision 2017 HY Report
2. Significant equity investment during the reporting period
□Applicable√Inapplicable
3. Significant non-equity investment during the reporting period
√ Applicable □ Inapplicable
Unit: RMB
Cumulative amount
Fixed assets Investment Disclosure
Project Invest Project of investment by the Source of Project
investment during the Date (if Disclosure reference（if applicable）
name method industry end of reporting funds schedule
or not reporting period applicable)
period
Security Video
www.cninfo.com. Announcement
Industrial product
Company’s about the Company’s Investment in
Base Self-built YES and 16,223,496.42 651,483,201.85 90.48%
own funds Tonglu to Set up Wholly Owned
(Tonglu) service
Subsidiary and New Hikvision
phase 1 October 16th
Security Industry Base (Tonglu)
Security Video 2014
Project(《关于在桐庐投资设立全
Industrial product
资子公司及新建海康威视安防产
Base Self-built YES and 16,455,373.00 19,168,601.89 Bond 2.59%
业基地（桐庐）项目的公告》 (NO.
(Tonglu) service
2014-044).
phase 2
Video www.cninfo.com. Announcement
Internet product about the Company’s New
Security and September Construction of Internet Security
Self-built YES 345,982,823.01 584,252,250.38 Bond 58.43%
th
Industry service 16 2014 Industry Base Project (《关于新建
Base 海康威视互联网安防产业基地项
目的公告》)(NO. 2014-035).
Total -- -- -- 378,661,692.43 1,254,904,054.12 -- -- -- --
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Hikvision 2017 HY Report
4. Financial assets measured at their fair values
Unit: RMB
Profits or losses
on the Cumulative fair Sales during Cumulative
Initial investment Purchase during the Closing Source of
Category changes in fair value change the reporting investment
cost reporting period balance funds
value in this charged to equity period income
period
Derivative Company's
2,485,985,565.37 38,552,490.41 -- 1,039,730,776.53 -- 22,296,650.52 792,453,647.02
instruments own funds
Total 2,485,985,565.37 38,552,490.41 -- 1,039,730,776.53 -- 22,296,650.52 792,453,647.02 --
5. Securities Investments
□ Applicable √ Inapplicable
No such case in the reporting period.
6. Derivatives Investments
√Applicable □ Inapplicable
Unit：0,000 RMB
Proportion
Acutual
Initial of the
Operation Opening closing gain or
Type of investment provisions Company’s
party of Whether Whether related Initial Termination balance of balance of loss
derivative amount of （if net assets at
derivative Related party transaction date date investment investment during the
investment dirivatives apply） the end of
investment amount amount reporting
the reporting
perio
period
Foreign
January December
Bank No No currency 248,598.56 248,598.56 -- 79,245.36 3.27% 2,229.67
1st 2017 31st 2017
hedging
Total 248,598.56 -- -- 248,598.56 -- 79,245.36 3.27% 2,229.67
Source of capital Company’s own fund
Announcement date for approvals of derivative investment from the board
April 14th 2017
of directors (if applicable)
The Company’s derivative investments were all foreign currency hedging
Risk analysis and control measures (including but not limited to, market
transactions,for details about risk analysis and control measures, pease refer to
risk, liquidity risk, credit risk, operational risk, legal risk, etc.) of holding
Anouncement of 2017 Foreign Currency Hedging Transactions(《关于 2017 年开
derivative investment
展外汇套期保值交易的公告》) disclosed on April 14th 2017（NO.2017-013）.
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Hikvision 2017 HY Report
The Company’s accounting of derivatives’ fair value was mainly about the
Change of market price or fair value of invested derivatives during the outstanding foreign currency forwards signed with various banks; Tradable
reporting period; specific methods, related assumptions and parameter financial assets/liabilities were determined with difference between the strike rate
setting of the derivative fair value analysis should be disclosed. offered in contracts and future forward exchange rate (by terms) of outstanding
foreign currency forwards at the end of the reporting period.
During the current reporting period, whether there was significant changes
of accounting policies and bookkeeping procedures of the Company’s No significant change
derivativescomparing to the prior reporting period.
Specific opinions on risk control of the Company’s derivative investments
Not applicable
from independent directors.
7. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund
8. Significant non-fundraising investment during the reporting period
□ Applicable √ Inapplicable
During the reporting period, there was no such case as significant non-fundraising investment.
VI. Disposal of significant assets and equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable
During the reporting period, there was no disposal of significant assets
2. Sale of significant equity:
□ Applicable √ Inapplicable
VII. Analysis of major subsidiaries and investees
√ Applicable □ Inapplicable
Information about major subsidiaries, and investees that contribute above 10% of the Company’s Net Profit
Unit：RMB
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Hikvision 2017 HY Report
Company Company Registered Revenue from
Principal business Total assets Net assets Operating profit Net profit
name type capital operation
Technology development
and service: computer
system integration,
electronic product,
communication product;
Hangzhou service: the installation of
Hikvision electric security
System Subsidiary engineering, the design, 150 million 2,238,553,063.55 685,271,562.56 1,031,924,624.51 23,706,735.08 33,626,316.15
Technology. construction and
Co., Ltd. maintenance of intelligent
system; manufacturing:
video surveillance system,
selling its own products,
import and export its own
products and technology.
Manufacturing: security
electronic product,
intelligent hardware
Hangzhou products, explosion-proof
Hikvision electric products., IC card
1000
Science and Subsidiary and IC card RW device, 22,452,628,980.42 1,727,048,680.71 16,097,879,917.83 173,456,062.47 204,969,378.55
million
Technologies mobile phone, cordless
Co. Ltd. phone, handheld wireless
terminal, hand held mobile
police terminal; import
and export business
Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable
Company name Equity acquisition and disposal mode Impact on overall production results
Hangzhou Hik Ximu Intelligent Technology Co.,
Merger under common control Business development
Ltd.
Hikvision New Zealand Limited Cash contribution Expand overseas sales channels
Wuhan HIK Storage Technology Co., Ltd. Cash contribution Business development
Urumchi Hai Shi Xin An Electronics Technology
Cash contribution Business development
Co., Ltd.
Chengdu Hikvision Digital Technology Co., Ltd. Cash contribution Business development
Hikvision Kenya (Pty) Ltd. Cash contribution Expand overseas sales channels
Hikvision Tashkent LLC. Cash contribution Expand overseas sales channels
Hikvision Hungary Kft Cash contribution Expand overseas sales channels
Wuhan Hikvision System Technology Co., Ltd. Liquidation Adjustments of organizational framwork
VIII. Structural entities controlled by the Company
□ Applicable √ Inapplicable
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Hikvision 2017 HY Report
IX. Guidance on the Company’s operational result from January 1st 2017 to September 30th
2017
Guidance on the Company’s operational performance during January 1 st, 2017 to September 30th, 2017: Net profits attributable to
shareholders of the Company are positive, and situation of turning losses into gains is not applicable.
Estimated YoY change (%) of net profits attributable to shareholders of the
15% to 35%
Company from January 1st , 2017 to September 30th, 2017
Estimated variation interval of net profits attributable to shareholders of the
557,952.68 To 654,987.92
Company from January 1St , 2017 to September 30th, 2017 (0,000 RMB)
Net profits attributable to shareholders of the Company from January 1 st ,
485,176.24
2016 to September 30th, 2016 (0,000 RMB) (Note)
Note of change in operational results The Company’s operating performance continues to have a steady growth.
Note: Net profits attributable to shareholders of the Company from January 1 st , 2016 to September 30th, 2016 after making
retroactive adjustments for business merger under common control.
X. Risks of the Company and risk response solutions
During the reporting period, there was no major change in risk factors of the Company, please refer to Section
I-Important Notes. The Company has been trying hard to identify various risk exposures, actively adaptating risk
response solutions to avoid and reduce risks:
(1) Risk of technology upgrade: Through continuous R&D investments, the Company closely tracks the frontier
technologies and keeps the competitiveness in core technology. Through steady and reliable R&D
managements, the Company has developed efficient R&D that fit into the markets, maintained rapid response
to market demand on products and techonologies, and realized sustainable development.
2) Risk of product information security: the Company has always been dedicating to enhance the product safty
through actively applying various measures. Through building up professional cybersecurity team, establishing
specific cybersecurity department, and establishing a complete set of product safety gurantee system, the
Company has built various cybersecurity assurance efforts such as safety demand, safety design, safety
development, and safety testing into the development lifecyle of products, in order to ensure the continuous
improvements on product and system safety, and provide more secure product and solutions to customers.
3) Risk of foreign exchange: the Company pays high attention on risk management of foreign currency
exchange risk, and manages foreign exchange risk through hedging products. For exchange rate risk exposure, the
Company actively uses financial hedging tools, not for the purpose of speculation, to realize resonable risk
management.
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Hikvision 2017 HY Report
4) Risk of management: the Company continued to promote management reform and consistently improve
organizational capabilities. During the reporting period, the Company continued to learn from the best practice in
the industry, enhance orgainizational capability, and improve management level, in order to response to various
potential market uncertainties through rules and procedures.
XI. Reception of activities including research, communication and interviews during the
report period
√ Applicable □ Inapplicable
(1) Reception of research activities.
Type of reception
Time of reception Method of reception Basic situation of the research
object
From January 3rd, 2017 to Site Research and Institutional and
CNINF, Investor Relations Activity Record: From January 3rd, 2017 to January 20th,
telephone individual
January 20th, 2017 2017
communication investors
From February 6th, 2017 to Site Research and CNINF, Investor Relations Activity Record: From February 6th, 2017 to February 10th,
Institutional
telephone
February 10th, 2017 investors 2017
communication
From February 13th, 2017 to Site Research and CNINF, Investor Relations Activity Record: From February 13th, 2017 to February
Institutional
telephone
February 24th, 2017 investors 24th, 2017
communication
From February 27th, 2017 to Site Research and CNINF, Investor Relations Activity Record: From February 27th, 2017 to March 10th,
Institutional
telephone
March 10th, 2017 investors 2017
communication
Annual
Institutional and
th
April 14 , 2017 performance result individual CNINF, Investor Relations Activity Record: April 14th, 2017
Conference Call investors
Site Research and CNINF, Investor Relations Activity Record: From April 17th, 2017 to April 28th, 2017
From April 17th, 2017 to April Institutional
telephone
28th, 2017 investors
communication
Institutional and
Investor Reception
th
May 4 , 2017 individual CNINF, Investor Relations Activity Record: May 4th, 2017
Day
investors
Site Research and
From May 8th, 2017 to May Institutional
telephone CNINF, Investor Relations Activity Record: From May 8th, 2017 to May 19th, 2017
th
19 , 2017 investors
communication
Site Research and
From May 22nd, 2017 to May Institutional
telephone CNINF, Investor Relations Activity Record: From May 22nd, 2017 to May 27th, 2017
27th, 2017 investors
communication
23
Hikvision 2017 HY Report
Type of reception
Time of reception Method of reception Basic situation of the research
object
Site Research and
From June 5th, 2017 to June 9th, Institutional
telephone CNINF, Investor Relations Activity Record: From June 5th, 2017 to June 9th, 2017
2017 investors
communication
Site Research and
From June 12th, 2017 to June Institutional
telephone CNINF, Investor Relations Activity Record: From June 12th, 2017 to June 23rd, 2017
rd
23 , 2017 investors
communication
(2) Participation of conferences for investor relationship activities
Time of
Location Conference Name Type of reception object Method of reception
conference
Morgan Stanley China Technology, Media & Institutional and individual One-on-One, One-on-multi, small group
January 2017 Beijing
Telecoms Conference investors Meetings, and etc.
One-on-One, One-on-multi, small group
Institutional and individual
January 2017 Shanghai UBS Greater China Conference 2017 Meetings, and etc.
investors
One-on-One, One-on-multi, small group
Institutional and individual
January 2017 Beijing Deutsche Bank Access China Conference 2017 Meetings, and etc.
investors
ZhongTai Securities 2017 Capital Market Institutional and individual One-on-One, One-on-multi, small group
February 2017 Hangzhou
Summit investors Meetings, and etc.
GuangFa Securities Innovation and Recovery Institutional and individual One-on-One, One-on-multi, small group
March 2017 Shanghai
Summit investors Meetings, and etc.
BoA Merrill Lynch 2017 Asia Pacific Institutional and individual One-on-One, One-on-multi, small group
March 2017 Taibei
Telecom, Media & Technology Conference investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
April 2017 Hongkong Jefferies GetSmart Experts Summit on AI
investors Meetings, and etc.
Guosen Securities 2017 Spring Leading Listed Institutional and individual One-on-One, One-on-multi, small group
April 2017 Hangzhou
Company Forum investors Meetings, and etc.
CITI One-on-One, One-on-multi, small group
Institutional and individual
April 2017 Hongkong HK/China Corporate day – AI and Emerging Meetings, and etc.
investors
Technologies
Haitong Securities 2017 Spring A-share Institutional and individual One-on-One, One-on-multi, small group
April 2017 Hangzhou
Corporation Forum investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
April 2017 Hongkong Macquarie 2017 Greater China Conference
investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
April 2017 Hongkong HongKong NDR – via Macquarie
investors Meetings, and etc.
24
Hikvision 2017 HY Report
Time of
Location Conference Name Type of reception object Method of reception
conference
GF Securities Spring Listed Company Institutional and individual One-on-One, One-on-multi, small group
April 2017 Hangzhou
Non-disclosure Investment Forum investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
May 2017 New York UBS 2nd China A-Share Conference
investors Meetings, and etc.
Credit Suisse SZ-HK Connection Investment Institutional and individual One-on-One, One-on-multi, small group
May 2017 Shenzhen
Summit investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
May 2017 Shenzhen HSBC Annual China Investment Summit
investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
May 2017 Tianjin CLSA 2017 China Forum
investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
May 2017 Hongkong BNP Paribas 8th Asia Pacific TMT Conference
investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
May 2017 Hongkong CICC TMT Summit-AI Forum
investors Meetings, and etc.
Goldman Sachs TechNet Conference Asia Institutional and individual One-on-One, One-on-multi, small group
May 2017 Hongkong
Pacific 2017 investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
May 2017 Beijing Morgan Stanley’s Third Annual China Summit
investors Meetings, and etc.
Bank of America Merrill Lynch 2017 Institutional and individual One-on-One, One-on-multi, small group
June 2017 Shenzhen
Innovative China Forum investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
June 2017 Beijing J.P. Morgan Global China Summit 2017
investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
June 2017 Singapore Nomura Investment Forum Asia (NIFA) 2017
investors Meetings, and etc.
Haitong Securities 2017 Mid-year A-share Institutional and individual One-on-One, One-on-multi, small group
June 2017 Qingdao
Corporation Conference investors Meetings, and etc.
Merchants Securities 2017 Mid-year Institutional and individual One-on-One, One-on-multi, small group
June 2017 Guangzhou
Conference and Investment Summit investors Meetings, and etc.
Institutional and individual One-on-One, One-on-multi, small group
June 2017 NYC-Chicago USA NDR-via CITI
investors Meetings, and etc.
Huatai Securities 2017 Summer Investment Institutional and individual One-on-One, One-on-multi, small group
June 2017 Hangzhou
Conference investors Meetings, and etc.
CICC 2017 2nd Half Year Investment Institutional and individual One-on-One, One-on-multi, small group
June 2017 Shanghai
Conferenc investors Meetings, and etc.
Industrial Securities 2017 Greater China Institutional and individual One-on-One, One-on-multi, small group
June 2017 Shanghai
Mid-year Investment Conference investors Meetings, and etc.
June 2017 Hongkong DB Access China Industrials Corporate Day Institutional and individual One-on-One, One-on-multi, small group
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Hikvision 2017 HY Report
Time of
Location Conference Name Type of reception object Method of reception
conference
investors Meetings, and etc.
(3) Investor relations activity statistics during the reporting period
Number of daily research received (Site and telephone
211
conference)
Number of institutional investors received (times) 1248
Number of individual investors received (ppl) 47
Number of investor relations conference participated 31
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Hikvision 2017 HY Report
Section V Significant Events
I. Annual General Meeting and Extraordinary General Meetings convened during the
reporting period
1. Annual General Meeting convened during the current reporting period
Proportion
of
Meeting Nature Convened Date Disclosure Date Disclosure Index
participating
investors
Annual General No. 2017-022；
2016 Annual General Meeting 70.01% May 4th, 2017 May 5th, 2017
Meeting www.cninfo.com.cn
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ Inapplicable
II. Profit distribution and Capitalizing of Capital Reserves Plan or Proposal for the reporting
period
□ Applicable √ Inapplicable
The Company will not distribute cash dividend, bonus shares or capitalize capital reserves during for 2017 first half year.
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Hikvision 2017 HY Report
III. Complete and incomplete commitments of the Company, Shareholders, Actual Controller, Acquirer, Directors, Supervisor, Senior
Executives or other related parties
√ Applicable □ Inapplicable
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
1. Commitments in non-competition within the industry: In the period as
controlling shareholders of the Hikvision, CETHIK and its controlling
subsidiaries (excluding Hikvision and its subsidiaries, the same below) will
not be engaged in such business that is competitive to Hikvision and its
subsidiaries directly or indirectly.
2. Commitments in decrease and regulation of transactions with related
party: Zhejiang Haikang Group Co., Ltd (hereinafter referred to as Haikang
Group or actual controller) as the controlling shareholders of Hangzhou
Hikvision Digital Technology Co., Ltd (hereinafter referred to as "Hikvision"
or "Listed Company") are commited as below for the transactions with
Hikvsion:
(1) Haikang Group will not make use of the controlling power to offer more
Commitments in
favorable conditions to Hikvision than those to any independent third party
offering documents 29 October, Strict
CETHIK Group Co., Ltd. in any fair market transactions in the cooperation with Hikvision. Long-term
or shareholding 2013 performance
(2) Haikang Group will not make use of the controlling power to obtain the
alterations
prior right to complete the transaction with Hikvision.
(3) Haikang Group will not deal with Hikvsion in not fair terms comparing
to the market prices to prejudice the Company’s interests.
For unavoidable related transactions, the Company will observe the
principles of justice and fairness to deterimine prices according to the market
on the basis of equality, voluntarily. The Company will obey the Articles of
Association and other regulatory documents related to the avoiding of issues
about related transactions. The related transactions will go through approval
procedures in accordance with related rules and complete legal procedures,
fulfilling the information disclosure obligations in respect to the related
transactions
3. Commitment to the maintenance of the independence of the listed
28
Hikvision 2017 HY Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
Company
3.1 Commitment to Personnel Independence of the listed Company
(1) Commitment that our general manager, deputy general manager, chief
financial officer, secretary of the board and other members of senior
management shall not assume any positions other than directors and
supervisors or get any remuneration in CETHIK and/or any of its controlled
entities; (2) Commitment in keeping the management of labor, human
resources and issues related to remuneration of the listed Company
independent from that of CETHIK;
3.2 Commitment to the independence of the asset of the listed Company
(1) Commitment to independent and complete asset of the listed Company
(2) Commitment free of unlawful use of cash and asset of the listed
Company by the controlling shareholders
3.3 Commitment to financial independence of the listed Company
(1) Commitment to an independent finance department with a team and
accounting system;
(2) Commitment to a regulated, independent accounting system and financial
management system of the branches and subsidiaries
(3) Commitment to maintaining accounts with banks independently of and
not sharing any bank account with our controlling shareholders
(4) Commitment that the financial staff shall not assume any positions in
CETHIK
(5) Commitment to paying taxes independently according to the law;
(6) Commitment to implementing financial decisions independently
3.4 The Company has set up an independent organizational structure which
maintains its independent operations which is independent from that of
CETHIK.
3.5 Commitment to business Independence of the listed Company
(1) The Company has the asset, personnel, aptitude and management
capability for independent and complete business operation. The Company
has the ability to operate independently in the market.
(2) Commitment in independence in both business and operations
29
Hikvision 2017 HY Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
4. Regarding plans for the development and relevant commitment for the
listed Company, Haikang Group has committed as below for the subsequent
development of Hikvsion according to the Securities Acts and relevant laws
and rules,
4.1 Currently the Company has no plan to change or make significant
adjustments for principal business in the next 12 months;
4.2 Currently the Company has no plan to sell, merge or operate with another
Company for the assets and business of the listed Company or its
subsidiaries in the next 12 months.
4.3 Currently the Company has no plan to alter the Board of the Directors
and senior management and no agreement with other shareholders about the
appointment and removal of the directors or senior management. The team of
Board of Directors and senior management will remain unchanged for the
foreseeable future.
4.4 Currently the Company has no plan to make significant changes to the
Articles of Association for the listed Company.
4.5 Currently the Company has no plan to make significant changes to the
existing employee recruitment for the listed Company.
4.6 Currently the Company has no plan to make significant changes for the
dividend distribution plan for the listed Company.
4.7 Currently the Company has no plan to make significant changes for
business and organizational structure for the listed Company.
Hangzhou Weixun Investment Management During Hu Yangzhong, Wu Weiqi, JiangHaiqing, Zhou Zhiping, Xu Lirong,
Commitments in
Initial Public Limited Partnership（later renamed as Xinjiang Cai Dingguo, He Hongli, Zheng Yibo, Hu Dan,、Jiang Yufeng, Liu Xiang, Strict
17 May, 2010 Long term
Offering or Weixun Investment Management Limited Wang Ruihong, Chen Junke’s tenure of the Company’s board of directors, performance
re-financing
Partnership） supervisors and senior management personnel, the annual transfer of
30
Hikvision 2017 HY Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
Hikvision’s total shares should not exceed 25% of total number of shares
held under Weixun; within 6 months after abovementioned personnel’s
dimission, should not transfer hikvision’s shares held under Weixun.
During Hu Yangzhong, Wu Weiqi, Gong Hongjia’s tenure of the Company’s
board of directors, supervisors and senior management personne, the annual
Hangzhou Pukang Investment Limited
transfer of Hikvision’s total shares should not exceed 25% of total number of Strict
Partnership（later renamed as Xinjiang Pukang 17 May, 2010 Long term
shares held under Pukang; whithin 6 months after abovementioned performance
Investment Limited Partnership）
personnel’s dimission, should not transfer hikvision’s shares held under
Pukang.
The Company's directors, supervisors and
executive: HuYangzhong,Wu Weiqi, Jiang During their tenure of the Company’s board of directors, supervisors and
Haiqing, Zhou Zhiping，Xu Lirong, Cai senior management personnel, the annual shares transfer should not exceed Strict
17 May, 2010 Long term
Dingguo, He Hongli, Zheng Yibo, Hu Dan, 25% of total number of shares held under Weixun; whthin 6 months after performance
Jiang Yufeng, Liu Xiang, Wang Ruihong, Chen their dimission, they should not transfer their shares held under Weixun.
Junke
During their tenure of the Company’s board of directors, supervisors and
Directors, executive officers of the Company: senior management personnel, the annual shares transfer should not exceed Strict
17 May, 2010 Long term
Hu Yangzhong, Wu Weiqi 25% of total number of shares held under Pukang; whthin 6 months after performance
their dimission, they should not transfer their shares held under Pukang.
During Gong Hongjia’s tenure of the Company’s board of directors,
supervisors and senior management personnel, Chen’s annual shares transfer
The Company’s director Gong Hongjia’s Strict
should not exceed 25% of total number of shares held under Pukang; whthin 17 May, 2010 Long-term
spouse, Chen Chunmei performance
6 months after the dimission of Gong Hongjia,Chen should not transfer her
shares held under Pukang.
China Electronics Technology Group To avoid any loss of the Company and other shareholders arising from any 18 Strict
Long term
Corporation competing business, China Electronics Technology Group Corporation, the September, performance
31
Hikvision 2017 HY Report
Date of Term of
Commitments Giver of commitments Details of commitments Performance
commitments commitments
actual controller of the Company, issued Letters of non-competition on 18 2008
September, 2008.
Gong Hongjia； To avoid any loss of the Company and other shareholders arising from any
XinJiang WeiXun Investment Management competing business, Gong Hongjia, Hangzhou WeiXun Investment
Limited Partnership； Management Limited Partnership, ZheJiang Orient Holdings Co., Ltd and
Strict
Hangzhou KangPu Investment Management Limited Partnership, the Long term
XinJiang KangPu Investment Management
promoters of the Company, issued Letters of non-competition on 10 July, 10 July, 2008 performance
Limited Partnership；ZheJiang Orient Holdings 2008.
Co., Ltd.
Whether the
undertaking is Yes
fulfilled in time
IV. Engagement and disengagement of the CPA firm
The Company’s half year report was not audited.
V. Explanation given by the board of directors and supervisory committee regarding the “non-standard auditor’s report” issued by the CPA
firm for the current reporting period
□ Applicable √ Inapplicable
VI. Explanation given by the board of directors regarding the “non-standard auditor’s report” issued by the CPA firm for the prior year
□ Applicable √ Inapplicable
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Hikvision 2017 HY Report
VII. Bankruptcy and restructuring
□ Applicable √ Inapplicable
No such case in the reporting period.
VIII. Litigations
Material litigation and arbitration
□ Applicable √ Inapplicable
No such case in the reporting period.
Other litigations
□ Applicable √ Inapplicable
IX. Media queries
□ Applicable √ Inapplicable
No such case in the reporting period.
X. Punishments and rectifications
□ Applicable √ Inapplicable
No such case in the reporting period.
XI. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Inapplicable
XII. The implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or other
incentive plan
√Applicable □Inapplicable
1. During the reporting period, the Company completed the first time unlocking, repurchasing and
cancelling shares for 2014 Restricted Share Incentive Scheme.
On December 6th 2016, Resolution for the fulfillment of the unlocking conditions of the first unlock period for
the the 2014 Restricted Share Incentive Schemes and the Resolution for the first repurchase and cancelation of a
portion of locked shares that already granted to personnel not fulfilling the incentive conditions for 2014
Restricted Share Incentive Schemes were approved by the 19th meeting of the third Board. Authorized by the first
extraordinary general meeting for 2014，a total of 30,687,650 restricted shares of 1087 grantees was vested and
circulated on January 9th 2017. Meanwhile, 2,457,000 restricted shares held by a portion of grantees not fulfilling
33
Hikvision 2017 HY Report
the incentive conditions were repurchased and cancelled. On April 27th 2017, repurchase and cancelation of
restricted shares was complete, thereafter, there are 1094 grantees left for 2014 Restricted Share Incentive
Schemes, granted and locked shares left are 46,220,473 shares
For details, please refer to in the “Indicative notice of the unlocking conditions of the third unlock period for
the first batch of 2014 Restricted Share Incentive Schemes” (No. 2017-001) and the “Notice of the completion of
repurchase and cancelation of a portion of locked shares that already granted to personnel not fulfilling the
incentive conditions for 2014 Restricted Share Incentive Schemes” (No. 2017-021) issued on January 5th 2017 and
April 28th 2017 respectively.
2. During the reporting period, the Company has completed the grants of 2016 Restricted Share Incentive
Scheme
On December 23rd 2016, Resolution for granting restricted shares to planned grantees for 2016 Restricted
Shares Incentive Scheme was approved by the 20th Meeting of the third board. According to the Listed Company
Equity Incentive Measures and other administration or relevant laws, regulations and departmental rules and
regulated documents, as well as 2016 Restricted Shares Incentive Scheme (edited draft) and authorizations
approved by the 2016 2nd extraordinary general meeting, the Company has completed granting and registration of
2016 Restriced Shares Incentive Sheme, with 2936 granted personnel, and 52,326,858 granted shares which were
listed on January 20th 2017.
For details, please refer to in the “Indicative notice of completion of granting of 2016 Restricted Share
Incentive Schemes” (No. 2017-005) issued on January 19th 2017.
3. During the reporting period, unlocked restricted shares amount were adjusted according to the
implement of 2016 Equity Distribution.
On May 16th 2017, the Company implemented the profit distribution proposal of s bonus issue of 5 shares for
each 10 ordinary shares and distribute cash dividend of RMB 6 per each 10 shares. Therefore, the granted and
locked shares of 2014 Restricted Shares Incentive Scheme were adjusted to 69,330,709 shares accordingly, and
2016 Restricted Shares Incentive Scheme were adjusted to 78,490,287 shares accordingly
By the end of the reporting period, the Company has 147,820,996 granted and locked shares in total, 1.60%
of the Company’s total capital shares.
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Hikvision 2017 HY Report
4. Share incentives for directors and senior executives in the Reporting Period
Unit: share
Restricted Shares held at the
Shares unlocked in the Shares granted in the current Restricted Shares held at the
Name Title beginning of the reporting
current period period end of the reporting period
period
Hu Yangzhong Director, General Manager 292,500 117,000 160,500 336,000
Director, Executive Deputy General
Wu Weiqi 261,000 104,400 148,500 305,100
Manager
Jiang Haiqing Deputy General Manager 225,000 90,000 123,000 258,000
Zheng Yibo Deputy General Manager 202,500 81,000 0 121,500
Cai Dingguo Deputy General Manager 202,500 81,000 109,500 231,000
He Hongli Deputy General Manager 193,500 77,400 138,000 254,100
Fu Baijun Deputy General Manager 193,500 77,400 196,500 312,600
Xu Lirong Deputy General Manager 193,500 77,400 109,500 225,600
Zhou Zhiping Deputy General Manager 193,500 77,400 109,500 225,600
Jiang Yufen Deputy General Manager 202,500 81,000 123,000 244,500
Jin Duo Deputy General Manager 0 0 109,500 109,500
Jin Yan Deputy General Manager 0 0 174,000 174,000
Jia Yonghua Deputy General Manager 0 0 109,500 109,500
Li Pan Deputy General Manager 0 0 109,500 109,500
Cai Changyang Deputy General Manager 0 0 109,500 109,500
Bi Huijuan Deputy General Manager 0 0 150,000 150,000
Total -- 2,160,000 864,000 1,980,000 3,276,000
Note：(1) This personnels listed above are executives who were included in 2014 restricted shares incentive plan and 2016 restricted shares incentive plan.
(2) The granted date of 2016 restricted incentive shares scheme was December 23 rd, 2016; and the listing date of the restricted shares was January 20th 2017
(3) During the reporting period, in respect of changes in the number of shares due to the implementation of equity distribution for 2016, the number of shares at the beginning, the number
of shares unlocked, and the number of shares granted have been adjusted accordingly.
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Hikvision 2017 HY Report
5、Impact on operating results of the Company from the accounting treatments of the Company’s share incentive and costs of share incentive
The Accounting Treatment in Relation to the Restricted Share Incentive Schemes is based on the Accounting Standard for Business Enterprises No. 11 –
Share-based Payment (企业会计准则第11号-股份支付）and other accounting standards. Costs in relation to the shares granted under 2014 and 2016 Restricted Share
Incentive Schemes are amortized over the waiting period for vesting.
During the reporting period, costs amortized in relation to 2014 and 2016 Restricted Share Incentive Schemes of the Company have no material impact on the
financial position and operating results of the Company. For details please refer to Note (XI)-Share-based payment.
XIII. Significant related-party transaction
1. Related-party transactions arising from routine operation
√ Applicable □ Inapplicable
Proportion to the Whether
Content of Amount Approved Market price
Type of related Tranding amount of similar above Disclosure
Related party Relationship related Valuation （0’000 trading quota Settlement of similar Disclosure reference
transaction price transactions. approved date
transaction RMB） (0’000 RMB） transaction
quota
Under the common Purchase Agreed on
Research institute or control of the materials, price, Payment on
Procurement -- 9,444.74 0.92% 40,000 No --
subsidiaries of CETC Company’s actual receiving reference delivery
controller. services market price
Annoucement on
The Company’s Purchase Agreed on
Shanghai Fullhan projections on 2017
director or his/her materials, price, Payment on April 14th
Microelectronics Procurement -- 7,206.93 0.70% 30,000 No -- related transactions
relative is the director receiving reference delivery 2017
Co., Ltd. (No：2017-
of the related party services market price
012）
Under the common Agreed on
Research institute or control of the price, Payment on
Sales Sellig Products -- 19,058.82 1.16% 80,000 No --
subsidiaries of CETC Company’s actual reference delivery
controller. market price
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Hikvision 2017 HY Report
Proportion to the Whether
Content of Amount Approved Market price
Type of related Tranding amount of similar above Disclosure
Related party Relationship related Valuation （0’000 trading quota Settlement of similar Disclosure reference
transaction price transactions. approved date
transaction RMB） (0’000 RMB） transaction
quota
Total -- -- 35,710.49 -- 150,000 -- -- -- -- --
Details on significant sales return None
Total amount of related transactions projected based on different categories， Daily related transaction amount between the Company and the related parties did not exceed the total limited amount of related transactions projected
actual performance during the current reporting period (if any) based on different categories.
Reasons on significant difference between trading price and market
Not applicable
referencing price(if applicable)
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 with external parties
□Applicable √Inapplicable
No such case in the reporting period.
4. Related-parties’ creditor's rights and debts
□ Applicable √Inapplicable
No such case in the reporting period.
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Hikvision 2017 HY Report
5. Other significant related party transactions
√ Applicable □ Inapplicable
Pursuant to the Proposal about the Company’s subsidiary Hangzhou Hikvision Automotive Technology Co., Ltd.’s
acquisition of assets and equity and related transactions with CETC 《关于控股子公司杭州海康汽车技术有限
公司购买资产、收购股权暨与中电海康集团有限公司关联交易的议案》 approved by the 21st meeting of the
3rd session of the Board of Directors held on January 8th 2017, the Company’s subsidiary Hangzhou Hikvision
Automotive Technology Co., Ltd. is approved to acquire and integrate the Company’s controlling shareholder
CETHIK’s automotive electronic related business subsidiary: 1) the Company’s subsidiary Hangzhou Hikvision
Automotive Technology Co., Ltd. acquired the asset group of CETHIK’s Intelligent Automotive Department with
acquisition target price of RMB 68.02 million. During the transitional period, the acquisition price was auditied
and adjusted up with RMB 11.39 million, and the final settlement price was RMB 79.41 million; 2) Hangzhou Hik
Ximu Intelligent Technology Co., Ltd.(hereinafter refer to “Hik Ximu”), CETHIK’s holding subsidiary, was
acquired with RMB 16.30 million, 100% equity; of which RMB 9.78 million was for acquiring 60% shares of
HIK Ximu held by CETHIK, and RMB 6.52 million was for acquiring 40% shares of HIK Ximu held by 7
individual shareholders including Yang Feng. As of the end of the reporting period, Hikvision Automotive
Technology has completed the acquisition and integration of the asset group of CETHIK’s Intelligent Automotive
Department, and the changes in registration related to acquisition of Hik Ximu. For details, please refer to Note
(VI) 1-business merger under common control.
Pursuant to the Proposal of investment and establishment of Wuhan Hik Storage Technology Co., Ltd. (temporary
name) approved by the 22ned meeting of the 3rd seesion of the Board of Directors held on April 12th 2017,
Hikvision and Co-investment Partnership enterprise will jointly invest RMB 100 million to establish Wuhan Hik
Storage Technology Co., Ltd.; Hikvison will contribute cash capital of RMB 60 million, holding 60% of the
equity of Hik Storage; Co-investment Partnership enterprise will contribute cash capital of RMB 40 million,
holding 40% of the equity of Hik Storage. On April 17th 2017, Hik Storage’s industrial and commercial
establishment registration was completed.
Disclosure website for provisional reports on significant related transactions:
Title of provisional reports Disclosure date Disclosure websidte
Proposal about Acquisition of assets and equity, and
January 19th 2017 www.cninfo.com.cn
related transactions
Proposal about investment and establishement of
innovative business subsidiary and related April 14th 2017 www.cninfo.com.cn
transactions
XIV. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such case in the reporting period.
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Hikvision 2017 HY Report
(2) Contracting
□ Applicable √ Inapplicable
No such case in the reporting period.
(3) Leasing
□ Applicable √ Inapplicable
No such case in the reporting period.
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Hikvision 2017 HY Report
2. Significant guarantees
√Applicable □ Inapplicable
(1) Details of gurantees
Unit: RMB’0000
Guarantees provided by the Company for subsidiaries
Disclosrue date of
Actual occurrence date Guarantee for a
Guarantee Actual guaranteed
Guaranteed party announcement of the (date of agreement Type of guarantee Term of guarantee Due or not related party or
Cap amount
guarantee cap signing) not
Hangzhou Hikvision Science and Technologies
April 14th 2017 750,000 December 25th 2015 373,141.38 Joint guarantee 2015.12.15-2019.2.16 No Yes
Co. Ltd.
Hangzhou Hikvision Zhicheng Investment and
April 14th 2017 10,000 June 13th 2017 1,200 Joint guarantee 2017.6.13-2018.6.13 No Yes
Development Co. Ltd.
Hangzhou Hikvision System Technology Co., Ltd April 14th 2017 80,000 March 3rd 2016 1,244.05 Joint guarantee 2016.3.3-2019.11.24 No Yes
HIKVISION INTERNATIONAL CO., LTD. April 14th 2017 300,000 September 8th 2016 25,163.92 Joint guarantee 2016.9.8-2017.9.8 No Yes
Hangzhou Hikvision Electronics Co. Ltd. April 14th 2017 100,000 March 10th 2017 5,452.1 Joint guarantee 2017.3.10-2017.7.30 No Yes
Chongqing Hikvision Science and Technologies Co.,
April 14th 2017 70,000 No such case during the reporting period
Ltd.
Chongqing Hikvision System Technology Co., Ltd. April 14th 2017 30,000 No such case during the reporting period
Hangzhou Hikvision Communication Technology
April 14th 2017 10,000 No such case during the reporting period
Co., Ltd.
Urumchi Hai Shi Xin An Electronics Technology
April 14th 2017 55,000 No such case during the reporting period
Co., Ltd.
Total actual guarantee amount for subsidiaries
Total guarantee cap for subsidiaries approved during the reporting period(B1) 194,200 471,201.45
during the reporting period(B2)
Total approved guarantee cap for subsidiaries at the end of the reporting
1,405,000 Total actual guarantee balance for subsidiaries at 406,201.45
period(B3)
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Hikvision 2017 HY Report
Guarantees provided by the Company for subsidiaries
Disclosrue date of
Actual occurrence date Guarantee for a
Guarantee Actual guaranteed
Guaranteed party announcement of the (date of agreement Type of guarantee Term of guarantee Due or not related party or
Cap amount
guarantee cap signing) not
the end of the reporting period(B4)
Total guarantee amount provided by the Company (total of the above-mentioned kinds of guarantees) (During the reporting period, there was no such case as gurantee provided for external parties, or gurantees between subsidiaries,
therefore, there is only item B, item A or C is nil)
Total guarantee cap approved during the reporting Total actual guarantee amount during the reporting
194,200 471,201.45
period (A1+B1+C1) period (A2+B2+C2)
Total approved guarantee cap at the end of reporting Total actual guarantee balance at the end of the
1,405,000 406,201.45
period (A3+B3+C3) reporting period (A4+B4+C4)
Portion of the total actual guarantee amount (A4+B4+C4) in net assets of the Company 16.89%
Of which
Amount of guarantees provided for shareholders, the actual controller and their related parties (D) 0
Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset ratio over 70% (E) 398,305.30
Portion of the total guarantee amount in excess of 50% of net assets (F) 0
Total guarantee amount of the above-mentioned 3 kinds of guarantees (D+E+F) 398,305.30
Illustration of compound method guarantee
As required by the project owner, China Electronics Technology Group Corporation has provided a joint guarantee to responsibility and duties of 41
construction projects of “Safe Chongqing, Emergency Control System Digital Construction Project,” signed by Chongqing Hikvision System Technology Co., Ltd.
Meanwhile, the Company provides a counter guarantee to China Electronics Technology Group Corporation.
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Hikvision 2017 HY Report
(2) Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
No such case in the reporting period.
(3) Other significant contracts
□ Applicable √ Inapplicable
No such case in the reporting period.
XV. Social responsibility
1．Fulfillment of the social responsibility of targeted poverty alleviation
The Company did not conduct any targeted poverty alleviation during the reporting period and had no future
arrangement for targeted poverty alleviation.
2. Significant environmental problems
Whether the listed Company and its subsidiaries are critical pollutant enterprises regulated by national environmental protection
department
Not applicable
XVI. Other significant events
□ Applicable √ Inapplicable
No such case in the reporting period.
XVII. Significant events of subsidiaries
□ Applicable √ Inapplicable
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Hikvision 2017 HY Report
Section VI Changes in Shares and Information about Shareholders
I. Changes in Share Capital
1. Table of changes in share capital
Unit: Share
Before the change Changes in the period (+, -) After the change
New Shares Share
Issued
Bonus transferred
Shares Ratio Others Sub-total Shares Ratio
share from capital
reserve
1. Shares subject to conditional
1,417,926,033 23.23% 52,326,858 657,071,365 -- -156,110,156 553,288,067 1,971,214,100 21.36%
restriction(s)
3) Other domestic shares 580,944,783 9.50% 52,281,658 284,111,265 -- -65,003,906 271,389,017 852,333,800 9.24%
Including: held by
420,578,437 6.89% 0 194,164,218 -- -32,250,000 161,914,218 582,492,655 6.31%
domestic enterprises
Including: held by
160,366,346 2.61% 52,281,658 89,947,047 -- -32,753,906 109,474,799 269,841,145 2.92%
domestic natural person
4) Foreign shares 836,981,250 13.71% 45,200 372,960,100 -- -91,106,250 281,899,050 1,118,880,300 12.12%
Including: held by overseas
0 0.00% 0 0 -- 0 0 0 0.00%
enterpirses
Including: held by overseas
836,981,250 13.71% 45,200 372,960,100 -- -91,106,250 281,899,050 1,118,880,300 12.12%
natural person
2. Shares without restriction 4,684,780,852 76.77% 0 2,419,217,006 -- 153,653,156 2,572,870,162 7,257,651,014 78.64%
1) RMB ordinary shares 4,684,780,852 76.77% 0 2,419,217,006 -- 153,653,156 2,572,870,162 7,257,651,014 78.64%
3. Total 6,102,706,885 100.00% 52,326,858 3,076,288,371 -- -2,457,000 3,126,158,229 9,228,865,114 100.00%
Reason for the changes in share capital
√ Applicable □ Inapplicable
（1）Grants of 2016 Restricted Share Incentive Scheme
On December 23rd 2016, Resolution for granting restricted shares to planned grantees for 2016 Restricted
Shares Incentive Scheme was approved by the 20th Meeting of the third board. According to the Listed Company
Equity Incentive Measures and other administration or relevant laws, regulations and departmental rules and
regulated documents, as well as 2016 Restricted Shares Incentive Scheme (edited draft) and authorizations
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Hikvision 2017 HY Report
approved by the 2016 2nd extraordinary general meeting, the Company has completed granting and registration of
2016 Restriced Shares Incentive Sheme, with 2936 granted personnel, and 52,326,858 granted shares which were
listed on January 20th 2017. The Company’s total capital shares were increased by 52,326,858 shares to
6,155,033,743 shares from 6,102,706,885 shares.
（2）First Repurchasing and Cancelling shares for 2014 Restricted Share Incentive Scheme.
On December 6th 2016, Resolution for the fulfillment of the unlocking conditions of the first unlock period
for the the 2014 Restricted Share Incentive Schemes and the Resolution for the first repurchase and cancelation of
a portion of locked shares that already granted to personnel not fulfilling the incentive conditions for 2014
Restricted Share Incentive Schemes were approved by the 19th meeting of the third Board. Authorized by the first
extraordinary general meeting for 2014，the Board agreed to repurchase and cancel 2,457,000 restricted shares
held by a portion of grantees not fulfilling the incentive conditions. On April 27th 2017, the Company completed
the above-mentioned repurchase and cancelling procedures, the Company’s total capital shares were decreased by
2,457,000 shares from 6,155,033,743 shares to 6,152,576,743 shares.
（3）Implementation of 2016 Equity Distribution
According to the “2016 Profit Distribution Scheme” approve on 2016 Annual General Meeting, based on total
capital shares of 6,152,576,743 shares, all shareholders will receive a cash dividend of RMB 6 (tax inclusive) per
each 10 shares; and the Company proposed to bonus issue of 5 shares (tax inclusive) for each 10 ordinary shares;
share distribution from capital reserve is nil. The ex-dividend date of this equity distribution is May 16th 2017, the
total Company’s capital shares were increased by 3,076,288,371 shares from 6,152,576,743 shares to
9,228,865,114 shares.
Approval for changes in share capital
√ Applicable □ Inapplicable
（1）Grants of 2016 Restricted Share Incentive Scheme
On December 23rd 2016, Resolution for granting restricted shares to planned grantees for 2016 Restricted
Shares Incentive Scheme was approved by the 20th Meeting of the third session of the Board. According to the
authorizations approved by the 2016 2nd extraordinary general meeting, the board agreed to grant 2989 personnels
with 53,557,028 shares. The granting day was December 23rd 2016. In the payment process of capital, part of the
grantees partially or completely renounce the subscription of the incentive shares, resulted in an actual granted
2936 personnels, with 52,326,858 granted shares.
（2）First Repurchasing and Cancelling shares for 2014 Restricted Share Incentive Scheme.
On December 6th 2016, Resolution for the first repurchase and cancelation of a portion of locked shares that
already granted to personnel not fulfilling the incentive conditions for 2014 Restricted Share Incentive Schemes
were approved by the 19th meeting of the third session of the Board. Authorized by the first extraordinary general
meeting for 2014，the Board agreed to repurchase and cancel 2,457,000 restricted shares held by a portion of
grantees not fulfilling the incentive conditions.
（3）Implementation of 2016 Equity Distribution
On April 12th 2017, 2016 Profit Distribution Scheme was approved by the 22nd meeting of the 3rd board; on
May 4th 2017, 2016 Profit Distribution Scheme was approved by 2016 Annual General Meeting.
Transfer for changes in share capital
√ Applicable □ Inapplicable
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Hikvision 2017 HY Report
（1）Grants of 2016 Restricted Share Incentive Scheme
2016 granted restricted incentive shares were listed on January 20th 2017. The Company’s total capital
shares were increased by 52,326,858 shares to 6,155,033,743 shares from 6,102,706,885 shares.
（2）First Repurchasing and Cancelling shares for 2014 Restricted Share Incentive Scheme.
On April 27th 2017, the Company completed the procedures of first Repurchasing and Cancelling shares for
2014 Restricted Share Incentive Scheme, the Company’s total capital shares were decreased by 2,457,000 shares
from 6,155,033,743 shares to 6,152,576,743 shares.
（3）Implementation of 2016 Equity Distribution
The ex-dividend date of 2016 annual equity distribution is May 16th 2017, the total Company’s capital
shares were increased by 3,076,288,371 shares from 6,152,576,743 shares to 9,228,865,114 shares.
Effects of changes in share capital on the basic earning per share ("EPS"), diluted EPS, net assets per share attributable to common
shareholders of the Company, and other financial indexes over the last year and last period
√ Applicable □ Inapplicable
2017 Half Year 2017 Quarter 1 2016
Before After Before After Before After
Item
changes in changes in changes in changes in changes in changes in
share capital share capital share capital share capital share capital share capital
Basic Earnings per
0.537 0.357 0.245 0.163 1.227 0.815
Share(RMB/share)
Diluted Earnings per
0.533 0.357 0.242 0.162 1.202 0.814
Share (RMB/share)
June 30th 2017 March 31st 2017 December 31st 2016
Before After Before After Before After
Item
changes in changes in changes in changes in changes in changes in
share capital share capital share capital share capital share capital share capital
Net assets per share
attributable to common
3.940 2.605 4.192 2.796 3.980 2.632
shareholders of the
Company (RMB/Share)
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 2017 HY Report
Unit: Share
Opening restricted Unlocked in current Increased in Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares period current period shares
According to the relevant provisions of
Gong Hongjia 1,255,246,875 136,434,375 0 1,118,812,500 Executives locked shares
executives shares management
Xinjiang Weixun Investment
486,607,500 48,375,000 0 438,232,500 Institution restricted share before IPO Feburary 13th 2017
Management Limited Partnership
Xinjiang Pukang Investment Limited
144,260,155 0 0 144,260,155 Institution restricted share before IPO Not applicable
Partnership
Targets of restricted share incentive Restricted incentive shares that were listed and became
119,047,684 46,031,475 78,490,287 147,820,996 January 9th 2017
plan (summary statistic) restricted incentive equity shares
Executives locked shares+ partial of the unlocked restricted
Hu Yangzhong 91,750,112 73,130 117,000 91,793,982
shares turning into executives locked shares
Executives locked shares+ partial of the unlocked restricted
Wu Weiqi 8,221,418 65,252 104,400 8,260,566
shares turning into executives locked shares
Executives locked shares+ partial of the unlocked restricted
Jiang Haiqing 8,222,163 56,252 90,000 8,255,911
shares turning into executives locked shares
According to the relevant provisions of
Executives locked shares+ partial of the unlocked restricted executives shares management
Zhou Zhiping 5,326,407 48,375 77,400 5,355,432
shares turning into executives locked shares
Jia Yonghua 4,118,809 2 0 4,118,807 Executives locked shares
Li Pan 4,042,926 0 0 4,042,926 Executives locked shares
partial of the unlocked restricted shares turning into
Huang Fanghong 45,000 45,000 70,875 70,875
executives locked shares
Zheng Yibo 0 0 30,375 30,375 Partial of the unlocked restricted shares turning into
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Hikvision 2017 HY Report
Opening restricted Unlocked in current Increased in Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares period current period shares
executives locked shares
Partial of the unlocked restricted shares turning into
Jiang Yufeng 0 0 30,375 30,375
executives locked shares
Partial of the unlocked restricted shares turning into
Cai Dingguo 0 0 30,375 30,375
executives locked shares
Partial of the unlocked restricted shares turning into
Fu Baijun 0 0 29,025 29,025
executives locked shares
Partial of the unlocked restricted shares turning into
He Hongli 0 0 29,025 29,025
executives locked shares
Partial of the unlocked restricted shares turning into
Xu Lirong 0 0 29,025 29,025
executives locked shares
Wang Qiuchao 0 0 11,250 11,250 Increased share holdings turning into executive locked shares
Total 2,126,889,049 231,128,861 79,139,412 1,971,214,100 -- --
Note:
1. In respect of changes in shares due to the implementation of equity distribution for 2016, the number of shares at beginning balance before equity distribution, number of shares unlocked
during the current period, and number of restriced shares increased during the current period have been adjusted accordingly.
2. Executives who are grantees under incentive restricted shares scheme, his/her holding incentive restricted shares are counted within the total incentive restricted shares (consolidated statistics)
3. The difference of 3,685,500 shares in total incentive restricted shares (consolidated statistics) for grantees under incentive restricted shares shceme was due to repurchasing and cancelling of
2,457,000 shares (adjusted to 3,685,500 shares in consideration of dividend distribution).
Issuance and listing of securities
On December 23rd 2016, Resolution for granting restricted shares to planned grantees for 2016 Restricted Shares Incentive Scheme was approved by the 20th Meeting of the third board.
According to the Listed Company Equity Incentive Measures and other administration or relevant laws, regulations and departmental rules and regulated documents, as well as 2016 Restricted
Shares Incentive Scheme (edited draft) and authorizations approved by the 2016 2nd extraordinary general meeting, the Company has completed granting and registration of 2016 Restriced
Shares Incentive Sheme, with 2936 granted personnel, and 52,326,858 granted shares which were listed on January 20th 2017. For details, please refer to in the “Indicative notice of completion
of granting of 2016 Restricted Share Incentive Schemes” (No. 2017-005) issued on January 19th 2017.
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Hikvision 2017 HY Report
II. Total number of shareholders and their shareholdings
Unit: Share
Total number of common shareholders at the end of the reporting period 151,799
Particulars about shares held by shareholders with a shareholding percentage over 5% or the Top 10 of them
Increase/
Share- Number of
Total shares held at decrease during Number of tradable
Name of shareholder Nature of shareholder holding non-tradable
the period-end the reporting shares held
percentage (%) shares held
period
State-owned
China Electronics Technology HIK Group Co., Ltd. 39.59% 3,653,674,956 0 0 3,653,674,956
corporation
Gong Hongjia Overseas individual 16.16% 1,491,750,000 0 1,118,812,500 372,937,500
Hong Kong Securities Clearing Company Ltd.(HKSCC) Overseas corporation 7.46% 688,171,856 +648,596,333 0 688,171,856
Domestic
Xinjiang Weixun Investment Management Limited non-state-
5.96% 549,720,876 -34,589,124 438,232,500 111,488,376
Partnership owned
corporation
Domestic
non-state-
Xinjiang Pukang Investment Limited Partnership 2.08% 192,346,874 0 144,260,155 48,086,719
owned
corporation
The 52nd Research Institute at China Electronics Technology State-owned
1.96% 180,775,044 0 0 180,775,044
Group Corporation corporation
UBS AG Overseas corporation 1.35% 124,682,879 -60,290,627 0 124,682,879
Hu Yangzhong Domestic Individual 1.33% 122,786,477 +160,500 92,129,982 30,656,495
State-owned
Central Huijin Investment Ltd. 0.71% 65,818,800 0 0 65,818,800
corporation
Zhejiang Orient Holdings Co., Ltd. Domestic 0.55% 50,475,000 -17,380,200 0 50,475,000 3,653,674,956
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Hikvision 2017 HY Report
non-state-
owned
corporation
China Electronics Technology HIK Group Co., Ltd. and The 52nd Research Institute at China Electronics Technology Group
Corporation are all subject to control of China Electronics Technology Group Corporation. Ms. Chen Chunmei, controlling
shareholder of Xinjiang Pukang Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign individual
Explanation on associated relationship or/and persons acting shareholder of the Company. Hu Yangzhong, domestic individual, is holding shares in both Xinjiang Weixun Investment
in concert among Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership.
the above-mentioned shareholders: Except for these, the Company does not know whether the other shareholders are related parties and whether they are
acting-in-concert parties in accordance with the Measures for Management of the Disclosure (《上市公司股东持股变动信息披
露管理办法》) of the Shareholding changes of shareholders of the listed Company.
Particulars about shares held by the Top 10 shareholders holding shares not subject to trading restriction(s)
Type of shares
Name of shareholder Number of tradable shares held at the period-end
Type Number
China Electronics Technology HIK Group Co., Ltd. 3,653,674,956 RMB ordinary shares 3,653,674,956
Hong Kong Securities Clearing Company Ltd.(HKSCC) 688,171,856 RMB ordinary shares 688,171,856
Gong Hongjia 372,937,500 RMB ordinary shares 372,937,500
The 52nd Research Institute at China Electronics Technology RMB ordinary shares
180,775,044 180,775,044
Group Corporation
UBS AG 124,682,879 RMB ordinary shares 124,682,879
Xinjiang Weixun Investment Management Limited RMB ordinary shares
111,488,376 111,488,376
Partnership
Central Huijin Investment Ltd. 65,818,800 RMB ordinary shares 65,818,800
Zhejiang Orient Holdings Co., Ltd. 50,475,000 RMB ordinary shares 50,475,000
Xinjiang Pukang Investment Limited Partnership 48,086,719 RMB ordinary shares 48,086,719
New China Life Insurance Company Ltd. – individual share RMB ordinary shares
40,170,243 40,170,243
dividend payout - Shenzhen No. 018L-FH002
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Hikvision 2017 HY Report
China Electronics Technology HIK Group Co., Ltd. and The 52nd Research Institute at China Electronics Technology Group
Explanation on associated relationship or/and persons acting
Corporation are all subject to control of China Electronics Technology Group Corporation.
in concert among the top ten tradable shareholders and
Except for these, the Company does not know whether the other shareholders are related parties and whether they are
between the top ten tradable shareholders and the top ten
acting-in-concert parties in according to the Measures for Management of the Disclosure (《上市公司股东持股变动信息披露管
shareholders
理办法》) of the Shareholding changes of shareholders of the listed Company.
Any of the Company’s top 10 common shareholders or top 10 non-restricted common shareholders conducted any agreed buy-back in the reporting period?
□ Applicable √ Inapplicable
No such case during the current reporting period
III. Particulars about change in controlling shareholder or actual controller
Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
No such cases in the reporting period.
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
No such cases in the reporting period.
50
Hikvision 2017 HY Report
Section VII Information of Preferred Shares
□ Applicable √ Inapplicable
No such cases in the Reporting Period.
51
Hikvision 2017 HY Report
Section VIII Information about Directors, Supervisors, Senior Management
I. Shareholding changes of directors, supervisors, senior management personnel
√Applicable □ Inapplicable
Granted restricted Granted restricted Granted restricted
Shares increased Shares decreased
Shares held at the Shares held at the end shares at the beginning shares during the shares at the end of the
Name Title Tenure status beginning of the Period during the Period during the Period
of the Period (Shares) of the reporting period reporting period reporting period
(Shares) (shares) (Shares)
(shares) (shares) (shares)
Chen Zongnian Chairman Incumbent 0 0 0 0 0 0 0
Gong Hongjia Vice Chairman Incumbent 1,491,750,000 0 0 1,491,750,000 0 0 0
Liu Xiang Director Incumbent 0 0 0 0 0 0 0
Director, General
Hu Yangzhong Incumbent 122,625,977 160,500 0 122,786,477 292,500 160,500 336,000
Manager
Director,
Wu Weiqi Standing Deputy Incumbent 11,222,889 148,500 0 11,371,389 261,000 148,500 305,100
General Manager
Independent
Cheng Tianzong Incumbent 0 0 0 0 0 0 0
Director
Independent
Lu Jianzhong Incumbent 0 0 0 0 0 0 0
Director
52
Hikvision 2017 HY Report
Granted restricted Granted restricted Granted restricted
Shares increased Shares decreased
Shares held at the Shares held at the end shares at the beginning shares during the shares at the end of the
Name Title Tenure status beginning of the Period during the Period during the Period
of the Period (Shares) of the reporting period reporting period reporting period
(Shares) (shares) (Shares)
(shares) (shares) (shares)
Independent
Wang Zhidong Incumbent 0 0 0 0 0 0 0
Director
Independent
Hong Tianfeng Incumbent 0 0 0 0 0 0 0
Director
Cheng Huifang Supervisor Chairman Incumbent 0 0 0 0 0 0 0
Wang Qiuchao Supervisor Incumbent 0 15,000 0 15,000 0 0 0
Chen Junke Supervisor Incumbent 0 0 0 0 0 0 0
Deputy General
Jiang Haiqing Incumbent 11,187,882 123,000 0 11,310,882 225,000 123,000 258,000
Manager
Deputy General
Zheng Yibo Manager Incumbent 202,500 0 -33,600 168,900 202,500 0 121,500
Deputy General
Cai Dingguo Incumbent 202,500 109,500 0 312,000 202,500 109,500 231,000
Manager
Deputy General
He Hongli Incumbent 193,500 138,000 0 331,500 193,500 138,000 254,100
Manager
Deputy General
Fu Baijun Incumbent 193,500 196,500 0 390,000 193,500 196,500 312,600
Manager
53
Hikvision 2017 HY Report
Granted restricted Granted restricted Granted restricted
Shares increased Shares decreased
Shares held at the Shares held at the end shares at the beginning shares during the shares at the end of the
Name Title Tenure status beginning of the Period during the Period during the Period
of the Period (Shares) of the reporting period reporting period reporting period
(Shares) (shares) (Shares)
(shares) (shares) (shares)
Deputy General
Xu Lirong Incumbent 193,500 109,500 0 303,000 193,500 109,500 225,600
Manager
Deputy General
Zhou Zhiping Incumbent 7,295,376 109,500 0 7,404,876 193,500 109,500 225,600
Manager
Deputy General
Jiang Yufeng Incumbent 202,500 123,000 0 325,500 202,500 123,000 244,500
Manager
Deputy General
Jin Duo Incumbent 0 109,500 0 109,500 0 109,500 109,500
Manager
Deputy General
Jin Yan Manager, Incumbent 0 174,000 0 174,000 0 174,000 174,000
Chief Finance
Deputy General
Jia Yonghua Incumbent 5,491,744 109,500 0 5,601,244 0 109,500 109,500
Manager
Deputy General
Li Pan Incumbent 5,390,568 109,500 0 5,500,068 0 109,500 109,500
Manager
Deputy General
Cai Changyang Incumbent 0 109,500 0 109,500 0 109,500 109,500
Manager
Deputy General
Manager
Huang Fanghong Incumbent 292,500 0 0 292,500 247,500 0 247,500
Board Secretary
Internal audit director
54
Hikvision 2017 HY Report
Granted restricted Granted restricted Granted restricted
Shares increased Shares decreased
Shares held at the Shares held at the end shares at the beginning shares during the shares at the end of the
Name Title Tenure status beginning of the Period during the Period during the Period
of the Period (Shares) of the reporting period reporting period reporting period
(Shares) (shares) (Shares)
(shares) (shares) (shares)
Deputy General
Xu Ximing Incumbent 0 0 0 0 0 0 0
Manager
Deputy General
Bi Huijuan Incumbent 0 150,000 0 150,000 0 150,000 150,000
Manager
Total -- -- 1,656,444,936 1,995,000 -33,600 1,658,406,336 2,407,500 1,980,000 3,523,500
Note:
(1) Number of shares held by directors, supervisors, and seniormanagement personnel above are all shares directly held by them accordingly.
(2) During the reporting period, in respect of changes in the number of shares due to the implementation of equity distribution for 2016, the number of shares at the beginning before equity
distribution, increased, reduced, and granted have been adjusted accordingly.
II. Changes of directors, supervisors and senior management personnel
□Applicable √Inapplicable
There is no such changes during the reporting period, please refer to 2016 annual report for details.
55
Hikvision 2017 HY Report
Section IX Coporate Bonds
Whether the Company has publicly issued corporate bonds on stock exchange place, which has not terminated or terminated but fail
to collect the full payment before the half-year report authorized disclosure date.
□ Applicable √ Inapplicable
56
Hikvision 2017 HY Report
Section X Financial Report
I. Audit report
Whether audit has been performed on this interim financial report
□ Yes √ No
The Company’s 2017 Half year report has not been audited
57
Hikvision 2017 HY Report
June 30th 2017
Consolidated Balance Sheet
Unit: RMB
Item Notes Closing balance Opening balance
Current Assets:
Cash and bank balances (V)1 13,179,646,367.74 13,638,078,139.56
Financial assets at fair value through
(V)2 3,004,171.92 15,547,537.34
profit or loss
Notes receivable (V)3 3,281,639,420.27 2,843,404,415.52
Accounts receivable (V)4 13,304,046,010.12 11,243,843,324.90
Prepayments (V)5 263,755,789.85 279,023,207.91
Other receivables (V)6 709,661,672.52 528,644,227.42
Inventories (V)7 4,935,820,439.51 3,829,947,876.75
Other current assets (V)8 428,103,172.17 4,153,992,276.78
Total Current Assets 36,105,677,044.10 36,532,481,006.18
Non-current Assets:
Available-for-sale financial assets (V)9 283,836,013.00 283,836,013.00
Long-term receivables (V)10 171,142,345.99 251,588,919.15
Long-term equity investment (V)11 129,122,297.95 35,000,000.00
Fixed assets (V)12 2,945,144,484.51 2,853,908,475.49
Construction in progress (V)13 764,850,814.58 316,482,522.36
Intangible assets (V)14 412,552,471.29 410,456,789.63
Goodwill (V)15 248,364,401.47 248,364,401.47
Deferred tax assets (V)16 434,325,165.58 375,310,938.70
Other non-current assets (V)17 29,919,422.70 40,999,684.42
Total Non-current Assets 5,419,257,417.07 4,815,947,744.22
Total Assets 41,524,934,461.17 41,348,428,750.40
58
Hikvision 2017 HY Report
June 30th 2017
Consolidated Balance Sheet - continued
Unit: RMB
Item Notes Closing balance Opening balance
Current Liabilities:
Short-term borrowings (V)18 1,965,132,452.76 32,291,324.85
Financial liabilities at fair value
(V)19 18,562,128.16 69,789,502.97
through profit or loss
Notes payable (V)20 536,694,693.25 876,804,536.72
Accounts payable (V)21 6,155,893,782.95 7,009,322,028.13
Receipts in advance (V)22 444,375,209.14 469,804,837.45
Payroll payable (V)23 595,071,569.87 1,084,951,139.10
Taxes payable (V)24 941,095,379.60 1,205,710,722.22
Dividends payable (V)25 92,407,139.16 20,105,831.16
Other payables (V)26 481,729,216.24 1,049,164,707.44
Non-current liabilities due within
(V)27 714,012,975.36 15,340,813.03
one year
Other current liabilities (V)28 853,507,327.55 300,177,750.17
Total Current Liabilities 12,798,481,874.04 12,133,463,193.24
Non-current Liabilities:
Long-term borrowings (V)29 1,319,408,175.80 1,722,207,584.33
Bonds payable (V)30 3,099,840,000.00 2,954,449,528.77
Long-term payables 7,000,000.00 7,000,000.00
Provisions (V)31 46,550,937.15 41,933,212.54
Deferred income (V)32 16,817,902.06 10,833,745.99
Total non-current liabilities 4,489,617,015.01 4,736,424,071.63
Total liabilities 17,288,098,889.05 16,869,887,264.87
Owner’s Equity
Share capital (V)33 9,228,865,114.00 6,102,706,885.00
Capital reserves (V)34 1,722,277,484.29 1,050,240,853.66
Less: Treasury stock (V)35 853,507,327.55 300,177,750.17
Other comprehensive income (V)36 (12,639,845.44) (41,230,777.21)
Surplus reserve (V)37 2,615,437,822.15 2,615,437,822.15
Retained profits (V)38 11,343,452,975.38 14,856,778,392.88
Total owners' equity attributable to owner
24,043,886,222.83 24,283,755,426.31
of the Company
Minority interests 192,949,349.29 194,786,059.22
Total owners' equity 24,236,835,572.12 24,478,541,485.53
Total liabilities and owners' equity 41,524,934,461.17 41,348,428,750.40
Notes are parts of the financial statements.
Legal Representative: Chen Zongnian；Person in Charge of the Accounting Organization: Jin Yan； Chief Accountant: Jin Yan
59
Hikvision 2017 HY Report
June 30th, 2017
Balance sheet of the company
Unit: RMB
Item Notes Closing balance Opening balance
Current Assets:
Cash and bank balances 10,621,335,282.56 10,249,118,159.19
Financial assets at fair value through
2,297,956.17 5,284,890.86
profit or loss
Notes receivable 127,954,179.12 221,542,747.41
Accounts receivable (XV)1 12,373,590,336.16 10,128,753,520.42
Prepayments 2,360,072.95 8,256,040.04
Other receivables (XV)2 1,273,724,398.33 417,963,245.46
Inventories 633,416,690.67 566,168,466.17
Other current assets 185,120,553.13 3,889,519,711.57
Total Current Assets 25,219,799,469.09 25,486,606,781.12
Non-current Assets:
Available-for-sale financial assets 283,221,700.00 283,221,700.00
Long-term receivables 47,241,962.91 72,153,363.60
Long-term equity investment (XV)3 2,702,920,830.76 1,714,688,703.42
Fixed assets 1,728,406,982.40 1,720,579,461.05
Construction in progress 595,814,508.02 248,447,641.34
Intangible assets 130,425,639.57 131,566,733.76
Deferred tax assets 194,230,198.07 177,568,964.27
Other non-current assets 10,932,858.00 10,782,858.00
Total Non-current Assets 5,693,194,679.73 4,359,009,425.44
Total Assets 30,912,994,148.82 29,845,616,206.56
60
Hikvision 2017 HY Report
June 30th 2017
Balance sheet of the company - continued
Unit: RMB
Item Notes Closing balance Opening balance
Current Liabilities:
Short-term borrowings - -
Financial liabilities at fair value
2,131,355.16 58,858,697.43
through profit or loss
Accounts payable 1,326,559,996.42 138,851,152.86
Receipts in advance 205,805,219.85 233,831,105.17
Payroll payable 472,467,008.29 811,701,475.85
Taxes payable 848,899,641.38 998,754,860.91
Dividends payable 92,407,139.16 20,105,831.16
Other payables 888,362,070.06 787,861,780.95
Non-current liabilities due within
14,012,975.36 -
one year
Other current liabilities 853,507,327.55 300,177,750.17
Total Current Liabilities 4,704,152,733.23 3,350,142,654.50
Non-current Liabilities:
Bonds payable 3,099,840,000.00 2,954,449,528.77
Provisions 34,240,710.46 28,799,848.84
Total non-current liabilities 3,134,080,710.46 2,983,249,377.61
Total liabilities 7,838,233,443.69 6,333,392,032.11
Owners’ Equity
Share capital 9,228,865,114.00 6,102,706,885.00
Capital reserves 1,649,408,815.34 955,687,875.52
Less: Treasury stock 853,507,327.55 300,177,750.17
Other comprehensive income - -
Surplus reserve 2,615,437,822.15 2,615,437,822.15
Retained profits 10,434,556,281.19 14,138,569,341.95
Total shareholders’ equity attributable to
23,074,760,705.13 23,512,224,174.45
shareholder of the Company
Minority interests - -
Total owners' equity 23,074,760,705.13 23,512,224,174.45
Total liabilities and owners' equity 30,912,994,148.82 29,845,616,206.56
61
Hikvision 2017 HY Report
For the reporting period from January 1st 2017 to June 30th 2017
Consolidated Income Statement
Unit: RMB
Amount for the current Amount for the prior
Item Notes
period period
I. Total operating income (V)39 16,447,539,736.52 12,553,476,748.58
Less：Total operating costs (V)39 9,420,695,024.84 7,518,216,264.30
Business taxes and surcharges (V)40 174,232,595.70 97,421,659.98
Selling expenses 1,726,924,956.22 1,211,831,544.28
Administrative expenses 1,761,709,877.13 1,271,951,990.31
Financial expense (V)41 65,500,627.65 (97,182,948.36)
Impairment losses of assets (V)42 251,738,374.96 158,985,960.70
Add: Gains from changes in fair values (Losses are indicated
(V)43 38,552,490.41 (8,281,896.32)
by "－")
Investment income (Loss is indicated by "－") (V)44 49,652,189.10 26,451,500.90
Other Income (V)45 677,411,292.41 -
II. Operating profit (Loss is indicated by "－") 3,812,354,251.94 2,410,421,881.95
Add: Non-operating income (V)46 34,516,279.58 651,985,521.64
Including: Gains from disposal of non-current assets 2,798,685.80 1,320,478.05
Less: Non-operating expenses (V)47 2,280,488.42 18,048,370.81
Including: Losses from disposal of non-current assets 571,711.25 1,619,629.70
III. Total profit (total losses expressed with "-") 3,844,590,043.10 3,044,359,032.78
Less: Income tax expenses (V)48 568,658,390.85 432,531,976.11
IV. Net profit (net loss expressed with "-") 3,275,931,652.25 2,611,827,056.67
Net profit attributable to owners of parent company 3,291,546,056.70 2,607,821,529.43
Profit or loss attributable to minority shareholders (15,614,404.45) 4,005,527.24
V. Other comprehensive income, net of income tax 29,434,317.10 (11,281,600.95)
Other comprehensive income attributable to owners of
28,590,931.77 (17,541,563.35)
the Company, net of tax
(I) Items that will not be reclassified subsequently
- -
to profit or loss
(II) Other comprehensive income to be
28,590,931.77 (17,541,563.35)
reclassified to profit or loss in subsequent periods
1. Exchange differences arising on conversion of
financial statements denominated in foreign 28,590,931.77 (17,541,563.35)
currencies
Other comprehensive income attributable to minority
843,385.33 6,259,962.40
interests, net of tax
VI. Total comprehensive income 3,305,365,969.35 2,600,545,455.72
Total comprehensive income attributable to owners of
3,320,136,988.47 2,590,279,966.08
the parent company
Total comprehensive income attributable to minority
(14,771,019.12) 10,265,489.64
shareholders
VII. Earnings per share
(I) Basic earnings per share (XVI)2 0.357 0.289
(II) Diluted earnings per share (XVI)2 0.357 0.288
There is business merger under the common control during the current reporting period, the merged party realized net profit of (209,736.97)
RMB before the merge, and 1,625,123.41RMB net profit for the previous reporting period.
62
Hikvision 2017 HY Report
For the reporting period from January 1st 2016 to June 30th 2016
Income statement of the Company
Unit: RMB
Amount for the Amount for the prior
Item Notes
current period period
I. Total operating income (XV)4 7,509,542,127.38 6,979,393,516.54
Less: Operating Cost (XV)4 2,351,188,963.05 2,429,639,054.86
Business taxes and surcharges 104,526,475.97 88,273,983.62
Selling expenses 806,289,156.71 837,531,580.25
Administrative expenses 1,317,996,842.01 1,004,835,342.66
Financial expense (104,308,868.68) (32,972,204.31)
Impairment losses of assets 156,626,616.68 139,666,067.60
Add: Gains from changes in fair values (Losses are indicated by 53,740,407.58 -
"－")
Investment income (Loss is indicated by "－") (XV)5 33,096,969.42 30,136,515.97
Other income 645,332,167.80 -
II. Operating profit (Loss is indicated by "－") 3,609,392,486.44 2,542,556,207.83
Add: Non-operating income 20,288,238.99 614,892,213.56
Including: Gains from disposal of non-current assets 2,538,368.87 1,278,323.84
Less: Non-operating expenses 1,213,455.27 5,791,387.39
Including: Losses from disposal of non-current assets 213,415.55 1,284,454.85
III. Total profit (Total loss is indicated by "－") 3,628,467,270.16 3,151,657,034.00
Less: Income tax expenses 527,608,856.72 452,167,980.72
IV. Net profit (Net loss is indicated by "－") 3,100,858,413.44 2,699,489,053.28
V. Other comprehensive income, net of income tax - -
VI. Total comprehensive income 3,100,858,413.44 2,699,489,053.28
63
Hikvision 2017 HY Report
For fiscal year period from January 1st 2017 to June 30th 2017
Consolidated Cash Flow Statement
Unit: RMB
Amount for the current Amount for the prior
Item Notes
period period
I. Cash flows from operating activities:
Cash received from sale of goods or rendering of services 16,056,237,726.30 12,837,986,350.20
Refund of tax and levies 1,334,775,928.53 1,354,180,574.36
Other cash received relating to operating activities (V)49(1) 191,162,610.48 138,927,067.34
Sub-total of cash inflows from operating activities 17,582,176,265.31 14,331,093,991.90
Cash payments for goods purchased and services received 13,831,392,836.70 9,555,880,812.11
Cash paid to and on behalf of employees 2,562,794,533.81 1,713,828,221.06
Payments of various types of taxes 1,899,822,855.27 1,521,888,850.69
Other cash paid relating to operating activities (V)49(2) 1,230,966,841.95 1,141,721,879.76
Sub-total of cash outflows from operating activities 19,524,977,067.73 13,933,319,763.62
Net Cash Flow from Operating Activities (V)50(1) (1,942,800,802.42) 397,774,228.28
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of investments 5,173,000,000.00 1,200,212,000.00
Cash receipts from investment income 53,398,372.17 26,870,969.07
Net cash receipts from disposals of fixed assets, intangible
11,061,674.71 368,676.75
assets and other long-term assets
Other cash received relating to investing activities (V)49(3) 13,100,745.41 1,595,000.00
Sub-total of cash inflows from investing activities 5,250,560,792.29 1,229,046,645.82
Cash payments to acquire or construct fixed assets, intangible
510,640,894.91 352,509,627.05
assets and other long-term assets
Cash paid to acquire investments 1,453,000,000.00 -
Net cash payments for acquisitions of subsidiaries and other
98,000,000.00 172,473,788.49
business units
Other cash paid relating to investing activities - -
Sub-total of cash outflows from investing activities 2,061,640,894.91 524,983,415.54
Net Cash Flow from Investment Activities 3,188,919,897.38 704,063,230.28
III. Cash flows from financing activities:
Cash receipts from capital contributions - -
Including: cash receipts from capital contributions from
- -
minority owners of subsidiaries
Cash receipts from borrowings 4,938,568,095.06 2,645,807,093.47
Cash receipts from bond issue - 2,950,000,000.00
Other cash receiptsd relating to financing activities (V)49(4) 1,061,515,931.39 1,258,376,312.14
Sub-total of cash inflows from financing activities 6,000,084,026.45 6,854,183,405.61
Cash repayments of amounts borrowed 2,723,867,188.71 3,744,679,765.37
Cash payments for distribution of dividends or profits or
3,755,681,574.80 2,873,234,849.22
settlement of interest expenses
Including: payments for distribution of dividends or profits to
- -
minority owners of subsidiaries
Other cash payments relating to financing activities (V)49(5) 1,630,518,738.29 1,524,787,045.31
Sub-total of cash outflows from financing activities 8,110,067,501.80 8,142,701,659.90
Net Cash Flow from Financing Activities (2,109,983,475.35) (1,288,518,254.29)
IV. Net foreign exchange differences (132,118,698.33) 31,559,689.64
V. Net Increase (Decrease) in Cash and Cash Equivalents (V)50(1) (995,983,078.72) (155,121,106.09 )
Add: Opening balance of Cash and Cash Equivalents (V)50(1) 13,522,337,697.28 10,033,468,750.19
VI. Closing Balance of Cash and Cash Equivalents (V)50(3) 12,526,354,618.56 9,878,347,644.10
64
Hikvision 2017 HY Report
For fiscal year period from January 1st 2017 to June 30th 2017
Cash Flow Statements of the Company
Unit: RMB
Amount for the Amount for the prior
Item Notes
current period period
I. Cash Flows from Operating Activities::
Cash receipts from the sale of goods and the rendering of services 6,476,622,168.11 6,081,171,650.64
Refund of tax and levies 645,332,167.80 706,510,355.04
Other cash receipts relating to operating activities 163,967,938.23 121,281,683.17
Sub-total of cash inflows from operating activities 7,285,922,274.14 6,908,963,688.85
Cash payments for goods acquired and services received 1,741,766,982.54 2,041,784,256.82
Cash payments to and on behalf of employees 1,390,775,272.77 1,124,611,467.48
Payments of all types of taxes 1,541,060,047.84 1,164,787,793.46
Other cash payments relating to operating activities 914,241,265.56 900,643,747.02
Sub-total of cash outflows from operating activities 5,587,843,568.71 5,231,827,264.78
Net Cash Flow from Operating Activities 1,698,078,705.43 1,677,136,424.07
II. Cash Flows from Investing Activities:
Cash receipts from disposals and recovery of investments 5,170,000,000.00 878,000,000.00
Cash receipts from investment income 44,435,846.99 30,136,515.97
Net cash receipts from disposals of fixed assets, intangible assets and
7,443,183.85 120,976.77
other long-term assets
Net cash receipts from disposals of subsidiaries and other business units 70,271.21 -
Other cash receipts relating to investing activities 732,237,447.02 364,602,027.84
Sub-total of cash inflows from investing activities 5,954,186,749.07 1,272,859,520.58
Cash payments to acquire or construct fixed assets, intangible assets
228,633,880.72 105,259,398.62
and other long-term assets
Cash payments to acquire investments 1,450,000,000.00 -
Net cash payments for acquisitions of subsidiaries and other business
973,000,000.00 258,468,902.52
units
Other cash payments relating to investing activities 862,202,465.11 521,684,074.48
Sub-total of cash outflows from investing activities 3,513,836,345.83 885,412,375.62
Net Cash Flow from Investment Activities 2,440,350,403.24 387,447,144.96
III. Cash Flows from Financing Activities
Cash receipts from borrowings 300,000,000.00 -
Cash receipts from issue of bonds - 2,950,000,000.00
Other cash receipts relating to financing activities 41,000.00 585,123,067.48
Sub-total of cash inflows from financing activities 300,041,000.00 3,535,123,067.48
Cash repayments of amounts borrowed 300,000,000.00 594,840,194.74
Cash payments for distribution of dividends or profits or settlement of
3,708,086,118.95 2,857,482,627.17
interest expenses
Other cash payments relating to financing activities 15,151,512.29 578,874,356.00
Sub-total of cash outflows from financing activities 4,023,237,631.24 4,031,197,177.91
Net Cash Flow from Financing Activities (3,723,196,631.24) (496,074,110.43)
IV. Net foreign exchange differences (42,974,366.35) (23,219,537.14 )
V. Net increase in cash and cash equivalents 372,258,111.08 1,545,289,921.46
Add: Beginning balance of cash and cash equivalents 10,245,969,003.13 6,548,073,680.91
VI. Closing Balance of Cash and Cash Equivalents 10,618,227,114.21 8,093,363,602.37
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Hikvision 2017 HY Report
For fiscal year period from January 1st 2017 to June 30th 2017
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
Amount for 2017 first half year
Owner’s Equity Attributable to owners of the Company
Item Other Minority Total owners'
Less:Treasury
Share capital Capital reserves comprehensive Surplus reserve Retained profits interests equity
share
income
I. Closing balance of the preceding period 6,102,706,885.00 1,045,440,853.66 300,177,750.17 (41,230,777.21) 2,615,437,822.15 14,866,457,856.65 198,039,035.07 24,486,673,925.15
Add: Business merger under common control - 4,800,000.00 - - - (9,679,463.77) (3,252,975.85) (8,132,439.62)
II. Opening balance of the current period 6,102,706,885.00 1,050,240,853.66 300,177,750.17 (41,230,777.21) 2,615,437,822.15 14,856,778,392.88 194,786,059.22 24,478,541,485.53
III. Increase or decrease in the current period 3,126,158,229.00 672,036,630.63 553,329,577.38 28,590,931.77 - (3,513,325,417.50) (1,836,709.93) (241,705,913.41)
(I) Total comprehensive income - - - 28,590,931.77 - 3,291,546,056.70 (14,771,019.12) 3,305,365,969.35
(II) Owners’ contributions and reduction in capital 49,869,858.00 677,420,939.82 645,736,716.54 - - - 10,000,000.00 91,554,081.28
1. Capital contribution from shareholders 52,326,858.00 608,561,358.54 660,888,216.54 - - - 10,000,000.00 10,000,000.00
2. Share-based payment recognised in owners’
- 97,854,081.28 - - - - - 97,854,081.28
equity
3. Others (Note(V)33) (2,457,000.00) (28,994,500.00) (15,151,500.00) - - - - (16,300,000.00)
(III) Profit distribution 3,076,288,371.00 - (92,407,139.16) - - (2,450,000.00)
(6,804,871,474.20) (3,638,625,964.04)
1. Transfer to surplus reserve - - - - - - - -
2. Distributions to shareholders - - (92,407,139.16) - - (3,728,583,103.20) (2,450,000.00) (3,638,625,964.04)
3. Others 3,076,288,371.00 - - - - (3,076,288,371.00) - -
(IV) Transfers within owners’ equity - - - - - - - -
1. Capitalisation of capital reserve - - - - - - - -
2.Others - - - - - - - -
(V) Others - (5,384,309.19) - - - - 5,384,309.19 -
III. Closing balance of the current period 9,228,865,114.00 1,722,277,484.29 853,507,327.55 (12,639,845.44) 2,615,437,822.15 11,343,452,975.38 192,949,349.29 24,236,835,572.12
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Hikvision 2017 HY Report
For fiscal year period from January 1st 2017 to June 30th 2017
Consolidated Statement of Changes in Owners' Equity-continued
Unit: RMB
Amount for 2016 first half year
Owner’s Equity Attributable to owners of the Company
Item Other Minority
Less:Treasury Total owners' equity
Share capital Capital reserves comprehensive Surplus reserve Retained profits interests
share
income
I. Closing balance of the preceding
4,068,772,253.00 1,639,607,652.22 518,074,596.90 (27,660,017.70) 1,895,061,004.09 12,196,097,444.07 43,647,140.92 19,297,450,879.70
period
Add: Business merger under common
- 4,800,000.00 - - - (12,049,426.69) (4,832,951.13) (12,082,377.82)
control
II. Opening balance of the current
4,068,772,253.00 1,644,407,652.22 518,074,596.90 (27,660,017.70) 1,895,061,004.09 12,184,048,017.38 38,814,189.79 19,285,368,501.88
period
III. Increase or decrease in the
current period (decrease indicated 2,034,386,126.00 (742,135,842.76) - (17,541,563.35) - (1,420,146,635.87) 10,265,489.64 (135,172,426.34)
with “-”)
(I) Total comprehensive income - - - (17,541,563.35) - 2,607,821,529.43 10,265,489.64 2,600,545,455.72
(II) Owners’ contributions and
- 71,618,607.24 - - - - - 71,618,607.24
reduction in capital
1. Capital contribution from
- - - - - - - -
shareholders
2. Share-based payment
- 71,618,607.24 - - - - - 71,618,607.24
recognised in owners’ equity
3. Others - - - - - - - -
(III) Profit distribution 1,220,631,676.00 - - - - (4,027,968,165.30) - (2,807,336,489.30)
1. Transfer to surplus reserve - - - - - - - -
2. Distributions to shareholders - - - - - (2,807,336,489.30) - (2,807,336,489.30)
3. Others 1,220,631,676.00 - - - - (1,220,631,676.00) - -
(IV) Transfers within owners’ equity 813,754,450.00 (813,754,450.00) - - - - - -
1. Capitalisation of capital reserve 813,754,450.00 (813,754,450.00) - - - - - -
2.Others - - - - - - - -
(V) Others - - - - - - - -
III. Closing balance of the current
6,103,158,379.00 902,271,809.46 518,074,596.90 (45,201,581.05) 1,895,061,004.09 10,763,901,381.51 49,079,679.43 19,150,196,075.54
period
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Hikvision 2017 HY Report
For fiscal year period from January 1st 2017 to June 30th 2017
Statement of Changes in Owners' Equity of the Company
Unit: RMB
Amount for 2017 first half year
Item
Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits Total owners' equity
I. Closing balance of the preceding year 6,102,706,885.00 955,687,875.52 300,177,750.17 2,615,437,822.15 14,138,569,341.95 23,512,224,174.45
II. Increase or decrease in the current year (decrease indicated with “-”) 3,126,158,229.00 693,720,939.82 553,329,577.38 - (3,704,013,060.76) (437,463,469.32)
(I) Total comprehensive income - - - - 3,100,858,413.44 3,100,858,413.44
(II) Owners’ contributions and reduction in capital 49,869,858.00 693,720,939.82 645,736,716.54 - - 97,854,081.28
1. Capital contribution from owners 52,326,858.00 608,561,358.54 660,888,216.54 - - -
2. Share-based payment recognised in owners’ equity - 97,854,081.28 - - - 97,854,081.28
3. Others (2,457,000.00) (12,694,500.00) (15,151,500.00) - - -
(III) Profit distribution 3,076,288,371.00 - (92,407,139.16) - (3,636,175,964.04)
(6,804,871,474.20)
1.Transfer to surplus reserve - - - - - -
2. Distributions to owners (or shareholders) - - (92,407,139.16) - (3,728,583,103.20) (3,636,175,964.04)
3. Others 3,076,288,371.00 - - - (3,076,288,371.00) -
(IV) Transfers within owners’ equity - - - - - -
1. Capitalisation of capital reserve - - - - - -
2. others - - - - - -
III. Closing balance of the current year 9,228,865,114.00 1,649,408,815.34 853,507,327.55 2,615,437,822.15 10,434,556,281.19 23,074,760,705.13
Amount for 2016 first half year
Item
Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits Total owners' equity
I. Closing balance of the preceding year 4,068,772,253.00 1,647,623,212.04 518,074,596.90 1,895,061,004.09 11,686,702,731.96 18,780,084,604.19
II. Increase or decrease in the current year (decrease indicated with “-”) 2,034,386,126.00 (742,135,842.76) - - (1,328,479,112.02) (36,228,828.78 )
(I) Total comprehensive income - - - - 2,699,489,053.28 2,699,489,053.28
(II) Owners’ contributions and reduction in capital - 71,618,607.24 - - - 71,618,607.24
1.Share-based payment recognised in owners’ equity - 71,618,607.24 - - - 71,618,607.24
2. Others - - - - - -
(III) Profit distribution 1,220,631,676.00 - (4,027,968,165.30) (2,807,336,489.30)
1.Transfer to surplus reserve - - - - - -
2. Distributions to shareholders - - - - (2,807,336,489.30 ) (2,807,336,489.30 )
3. Others 1,220,631,676.00 - - - (1,220,631,676.00) -
(IV) Transfers within owners’ equity 813,754,450.00 (813,754,450.00) - - - -
1. Capitalisation of capital reserve 813,754,450.00 (813,754,450.00) - - - -
III. Closing balance of the current year 6,103,158,379.00 905,487,369.28 518,074,596.90 1,895,061,004.09 10,358,223,619.94 18,743,855,775.41
68
Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
I. Basic Information about the Company
Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as "the Company" or "Company"), is a
Sino-foreign Equity Joint Venture Company, formerly known as "Hangzhou Hikvision Digital Technology Ltd",
established on December 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
Shang Zi No. 598[2008] issued by the MOFCOM, 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.
The registration procedures for 2016 restricted shares incentive scheme was completed on Feburary 9th 2017.
Pursuant to the Articles of Association of the Company revised by the resolution of 20th Meeting of the 3rd session
Board of Directors authorized by the 2nd extraordinary general meeting in 2016, the Company granted 2936 personnels,
including Hu Yangzhong, with 52,326,858 granted shares (A-share), adjusted the Company’s total capital share to
6,155,033,743shares.
As of April 20th 2017, authorized by the first Extraordinary General Meeting in 2014, the Company repurchased
and cancelled 2,457,000.00 granted but restricted treasury shares by cash, and the total share capital of the Company was
adjusted to 6,152,576,743 shares.
On May 4th 2017, “2016 Profit Distribution Scheme” was approved on 2016 Annual General Meeting, Based on
total capital shares of 6,152,576,743 shares, the Company proposed to bonus issue of 5 shares for each 10 ordinary
shares; the total Company’s capital shares were increased by 3,076,288,371 and adjusted to 9,228,865,114 shares.
As of June 30th 2017, the Company’s total registered capital is RMB 9,228,865,114，with total capital shares of
9,228,865,114 shares(face value RMB 1per share), of which restricted A-shares were 1,971,214,100 shares, A-shares
without restrictions are 7,257,651,014 shares.
The Company is engaged in electronic equipment manufacturing business mainly including development,
production and sales of electronic products (including explosion-proof electrical products, communications equipment
and its ancillary equipment, multimedia equipment). Business scope of the Company includes distribution of
self-manufactured products, technical service, electronic equipment installation, electronic engineering and design of
intelligent systems, construction, and maintenance. For details about business scope of the Company and its subsidiaries,
please refer to Note (VII) 1.
This financial report was approved for issue by the 23rd meeting of the third session Board of Directors of the
Company on July 21st 2017.
For consolidation scopt of the financial statements, please refer to Note (VII) “Interest in other entities”. For
changes in consolidation scope of the financial statements, please refer to “changes in the consolidation scope” in Note
(VI).
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Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
II. Basis for preparation of financial statements
1. Basis of preparation
The Company and its subsidiaries (hereinafter referred to as "the Group") implement Accounting
Standards for Business Enterprises issued by Ministry of Finance and relevant provisions. In addition, the
Group also discloses relevant financial information in accordance with No. 15 Preparation Regulations
regarding Information Disclosure of Company Public Issuing Securities - General Provisions of Financial
Statement (revised in 2014).
Bookkeeping base and valuation principles
The Group measures the accounting elements in accordance with the accrual accounting basis. Except
certain financial instruments are measured by fair value, these financial statements are prepared in
accordance with the measurements basis of historical costs. If the asset decreases in value, the provision
for impairment of assets should be made according to relevant regulations.
According to the historical cost measurement, the assets shall be measured as per the amount of cash or
cash equivalent paid at the time of purchase, or the fair value of consideration paid for the purchase of
such assets. The liabilities shall be measured in accordance with the amount of funds or assets actually
received when undertaking current obligations, or the contract amount when undertaking the current
obligations, or the amount of cash or cash equivalents required for paying back the debts in daily
activities.
The fair value is a price received by the market participants from selling asset or transferring liability
during orderly transaction at the measurement date. No matter the fair value is observable or estimated by
using valuation technique, the measured and disclosed fair value in the financial statement shall be
determined on this basis.
Based on the observable extent of the input value of the fair value, and the importance of such input value
to the fair value measurement, the fair value measurement is divided into three levels:
Level 1: The input value is the 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 assets or liabilities.
2. Sustainability concern
The Group has evaluated the sustainable operation ability within 12 months from June 30th 2017, and
there is no matter or condition that has significant doubt on the sustainable operation ability. Therefore,
the financial statements are prepared on the basis of going-concern assumption.
70
Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
III.Important accounting policies and accounting estimates
1. Statement for Compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company comply with requirements of the Accounting
Standards for Business Enterprises, truly and completely reflect situations of the Company and
consolidated financial on June 30th 2017, the Company and consolidated operating results as well as the
Company and consolidated cash flow during first half year of 2017.
2. Accounting Period
The fiscal year of the Group is January 1 to December 31 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. Recording Currency
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 the recording
currency. Overseas subsidiaries of the Company determine their recording currency based on the main
economic environment in the place of operation. For recording currency of overseas subsidiaries of the
Company, see Note (V) 53. The currency adopted by the Company for preparing the financial statements
is RMB.
5. Accountant arrangement method for business merger under the common control and under the
different control
Business merges are classified into the business merger under the common control and the business
merger under the different control.
5.1 Business Merger under the Common Control
Business merger under the common control refers to the enterprise participating in the merger, which is
subject to the final control of the same party or the same parties before and after the merger, and such
control is not temporary.
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Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
The assets and liabilities obtained during business merger shall be measured on the basis of their carrying
amount of the combined party on the merger date. Adjust capital share premium of the capital reserve
based on the differences between book value of net assets and that of the paid combination consideration
(or total face value of issued shares); if the capital share premium is insufficient to be written down, the
retained earnings shall be adjusted.
Costs incurred directly attributable to the business combination are recorded in the profits and losses of
the current period.
5.2 Business Merger and Goodwill under the Different Control
It suggests that business involved in the combination is free from the final control of one and the same
party or more than one same parties before and after the combination.
Combination cost refers to asset paid by the purchaser to buy the control power from the purchased party,
liabilities incurred or assumed and fair value of equity instrument issued. The expenses made by the
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.
The identifiable assets, liabilities and contingent liabilities that are achieved by the purchaser in merger
and confirmed by the purchased party shall be measured with the fair value on the purchase day.
When combination cost is higher than fair value of the identifiable net assets acquired from the purchased
party due to combination, the difference will be confirmed as goodwill and measured initially at cost.
When combination cost is lower than air value of the identifiable net assets acquired from the purchased
party due to combination, reexamination shall be made to the measurement of fair value of all identifiable
net assets acquired from the purchased party and combination cost. If combination cost is still lower than
the said air value, the difference shall be included into current profit or loss.
Goodwill arising on a business combination is stated separately in the consolidated financial statement,
and the measurement is made its costs minus the accumulative impairment provisions.
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.
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Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
As for subsidiaries disposed by the Group, operating results and cash flow prior to the disposal date (date
of losing control right) have been properly included in the consolidated profit statement and consolidated
cash flow statement.
For the subsidiary achieved through business merger under different control, the business performance
and cash flow since the purchase day (date from obtaining the control power) have been properly
included in the consolidated profit statement and consolidated cash flow statement.
For a subsidiary acquired through business combination under the same control, regardless of the time of
business combination in the reporting period, which is regarded to which included in the Group since the
date of finally controlled by the controller, its operating results and cash flows since the beginning of the
reporting period have been included in the Consolidated Income Statement and the Consolidated Cash
Flow Statement.
The principal accounting policies adopted by the subsidiary and the accounting policies will be specified
by the Company, and determination of the accounting period.
The impact of internal transaction of the Company and subsidiary, and between the subsidiaries on the
consolidated financial statement shall be offset during mergers.
Share in owner’s equity of subsidiaries that is not accounted for as equity of parent Company shall be
recorded as the minority shareholder's interest and shall be stated as "Minority Shareholder's Interest"
under shareholder's equity in the consolidated Liability Statement. Amount in subsidiaries' current profit
and loss accounted for as equity of minority shareholder shall be stated as “Minority Shareholder Interest”
under the net profits in the consolidated Liability Statement.
Where subsidiaries' loss shared by minority shareholders exceeds the amount of owner’s interests shared
by minority shareholders at the beginning of a year, the balance shall be written down to minority
shareholder's equity.
For the transaction of the control power of the subsidiary not lost due to purchase of minority equity of
the subsidiary or disposal of partial equity investment in the subsidiary, it shall be accounted as equity
transaction, and the book value attributable to the parent Company's owners' equity and minority
shareholders' equity shall be adjusted to reflect the changes of related equity in the subsidiary. The capital
reserve shall be adjusted by difference between the adjustment amount of the minority shareholders'
equity and the fair value of payment /receipt of consideration. Retained earnings can be adjusted for the
enough offset of the capital reserve.
7. Determination Standards of Cash and Cash Equivalents
The term “cash” refers to cash on hand and deposits that are available for payment at any time. The term
“cash equivalents” refers to short-term and highly liquid investments that could be readily convertible to
known amounts of cash and which are subject to an in significant risk of change in value.
73
Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
8. Foreign Currency Transaction and Conversion of Foreign Currency Statements
8.1 Foreign Currency Transaction
Foreign currency transaction adopts the exchange rate conversion similar to the spot rate of transaction
date during the initial recognition; the exchange rate similar to the spot rate of transaction date is
calculated according to the market rate middle price of the transaction at the beginning of the month.
On the balance sheet date, foreign currency monetary items are converted to recording currency by spot
rate. The exchange balance between the spot rate on that day and initial spot rate or spot rate on former
balance sheet date is included into current profits and losses besides the exchange balance of foreign
currency borrowings meeting capitalization conditions is included into the capital cost upon capitalization
during capitalization period.
Where the preparation of consolidated financial statements is involved in overseas operation, in case of
any foreign currency monetary items of net investment in an overseas operation substantially, then the
exchange balance occurred due to exchange rate movement shall be listed in "Foreign Currency
Statement Conversion Balance" of shareholders' equity. When disposing overseas operation, it is included
into the profits and losses of the current period.
For foreign currency non-monetary items measured by historic cost, spot rate on date of transaction
occurrence shall be used for conversion and its recording currency amount. For foreign currency
non-monetary items measured by fair value, spot rate on the fair value determination day will be used for
conversion. The difference between the converted recording currency amount and original recording
currency amount shall be taken as the fair value fluctuation (including exchange rate fluctuation) and
included into current profits and losses or other comprehensive income.
8.2 Conversion of Foreign Currency Financial Statement
In order to prepare the consolidated financial statements, the foreign currency financial statement of
overseas operation shall be converted as RMB statement according to the following methods: All assets
and liabilities items in the balance sheet shall be converted according to the spot rate of the balance sheet
date; The shareholders' equity item shall be converted according to spot rate at the time of occurrence; All
items in profit statement and all items of reflecting the income distribution amount shall be converted
according to the exchange rate similar to spot rate of transaction date; The difference between the
converted assets items and total number of liabilities items and shareholders' equity items is determined
as other comprehensive incomes and is included in the shareholder's equity.
The foreign currency cash flow and cash flow of overseas subsidiaries adopt the exchange rate similar to
the spot rate at the date of cash flow for conversion. The affected amount of cash and cash equivalents
due to the change of exchange rate, as an adjustment item, shall be separately listed as "the impact of cash
and cash equivalents due to the change of exchange rate" in the cash flow statement.
74
Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
Opening amount of the year and actual amount last year are presented according to the amount after
conversion of financial statement last year.
In case of loss of control power of foreign operation due to disposal of the Group's entire owners' equity
in foreign operation, or the disposal of part of the equity investment or other reasons, the translation
reserve listed in the shareholders' equities items in the balance sheet, related to the foreign operation and
attributable to foreign currency conversion balance of the owners' equity of the parent company shall be
totally converted into the current disposal profit and loss.
In case of the decrease of the ratio of overseas business, but no loss of control power due to disposal of
part of the equity investment or other reasons, the conversion balance related to the disposal of part of
related currency in the overseas business shall be attributable to the minority shareholders' equities, and
not converted into the current profit and loss. In case of disposal of part of equity of the associated
enterprises or joint enterprise in the overseas business, the conversion balance related to the overseas
business shall be converted into the current profit and loss based on the ratio to dispose overseas
business.
9. Financial Instruments
A financial asset or financial liability shall be recognized when the Group becomes a party of financial
instrument contract. Financial asset or financial liability shall be measured at the fair value when initially
recognized. For financial assets and financial liabilities measured at fair value, the change of which is
included into current profits and losses, relevant transaction expenses shall be directly included into the
profits and losses; for other categories of financial assets and liabilities, the relevant transaction expenses
shall be included into the initial recognition amount.
9.1 Effective Interest Method
The actual interest rate method refers to the method by which the post-amortization costs and the interest
incomes of different installments or interest expenses are calculated in light of the actual interest rates of
the financial assets or financial liabilities (including a set of financial assets or financial liabilities). The
actual interest rate refers to the interest rate adopted to cash the future cash flow of a financial asset or
financial liability within the predicted term of existence or within a shorter applicable term into the
current carrying amount of the financial asset or financial liability.
For calculation of actual interest, the Group shall predict the future cash flow on the basis of taking into
account all the contractual provisions concerning the financial asset or financial liability (the future credit
losses shall not be taken into account), and take into account various fee charges, trading expenses,
premiums or reduced values, etc., which are paid or collected by the parties to a financial asset or
financial liability contract and which form a part of the actual interest rate.
9.2 Classification, Confirmation and Measurement of the Financial Assets
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Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
Financial asset shall be classified into the following four categories when they are initially recognized:
the financial assets which are measured at their fair values and the variation of which is recorded into the
profits and losses of the current period, the investments which will be held to their maturity, loans and the
account receivables and financial assets available for sale. Financial asset bought and sold by regular
means shall be recognized and derecognized in accordance with accounting at the transaction date.
9.2.1 Financial Assets Measured at the Fair Value with Their Changes Included into Current Profit and
Loss
The financial liabilities which are measured at their fair values and of which the variation is included in
the current profits and losses, include transactional financial liabilities and the designated financial
liabilities which are measured at their fair values and of which the variation is included in the current
profits and losses.
The financial assets or liabilities meeting any of the following requirements shall be classified as
transactional financial assets or financial liabilities: (1) The purpose to acquire the said financial assets or
undertake the financial liabilities is mainly for selling or repurchase of them in the near future; (2)
Forming a part of the identifiable combination of financial instruments which are managed in a
centralized way and for which there are objective evidences proving that the enterprise may manage the
combination by way of short-term profit making in the near future; (3) Being a derivative instrument,
excluding the designated derivative instruments which are effective hedging instruments, or derivative
instruments to financial guarantee contracts, and the derivative instruments which are connected with the
equity instrument investments for which there is no quoted price in the active market, whose fair value
cannot be reliably measured, and which shall be settled by delivering the said equity instruments.
Financial assets which are measured at fair value and of which the variation is included in the current
profits and losses shall be measured at the fair value subsequently. Profits and losses generated from
variation of fair value and earnings from dividend and interest related to the financial assets shall be
included into profits and losses of the current period.
9.2.2 Investments Held To Maturity
The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of
maturity, a fixed or determinable amount of repo price and which the Group holds for a definite purpose
or the enterprise is able to hold until its maturity.
For held-to-maturity investments measured at the post-amortization costs by using actual interest method,
the profits and losses that arise when such financial assets are terminated from recognition, or are
impaired or amortized, shall be recorded into the profits and losses of the current period.
9.2.3 Loans and Receivables
"Loans and accounts receivables" refers to the non-derivative financial assets for which there is no quoted
price in the active market and of which the repo amount is fixed or determinable. The Group's financial
76
Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
assets that are divided into the loan and receivables include notes receivables, accounts receivables, other
receivables, other current assets and long-term receivables, etc.
The loan and receivables adopt the effective interest method, and shall conduct subsequent measurement
according to amortized costs. The gains or losses arising from derecognition, impairment or amortization
should all be included into the current profits and losses.
9.2.4 Available-for-sale Financial Assets
The "sellable financial assets" include the non-derivative financial assets which are designated as sellable
when they are initially recognized as well as the financial assets other than financial assets measured at
their fair values and of which the variation is recorded into the profits and losses of the current period,
loans and accounts receivables and investments held until their maturity.
The subsequent measurement may be conducted for the available-for-sale financial assets by the fair
value; the gains or losses formed from the changes of fair value, except that the impairment losses as well
as the relevant exchange balance between foreign currency monetary financial assets and amortized cost
are included into current profits and losses, are determined as other comprehensive incomes which shall
be transferred out during the derecognition of such financial assets and included into current profits and
losses.
Interest acquired from salable financial asset during the holding time and cash dividend that has been the
investee announces to distribute shall be recorded into investment income.
The equity instrument investments for which there is no quotation in the active market and whose fair
value cannot be measured reliably, and the derivative financial assets which are connected with the said
equity instrument and must be settled by delivering the said equity instrument shall be measured on the
basis of their costs.
9.3 Financial Asset Impairment
On the balance sheet date, the Group will inspect the book value of all financial assets except the
financial assets which are measured at their fair values and the variation of which is recorded into the
profits and losses of the current period. Where there is any objective evidence proving that such financial
asset has been impaired, an impairment provision shall be made. The objective evidences showing the
impairment of financial assets refer to the matters that happen after the initial recognition of financial
assets and influence the expected future cash flows of financial assets, and the influence can be reliably
measured by the Company.
The objective evidences that can prove the impairment of financial asset shall include
(1) A serious financial difficulty occurs to the Issuer or debtor;
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(2) The debtor breaches any of the contractual stipulations, for example, failing to pay the interests or the
principal or delay, etc.;
(3) The Group makes a concession to the debtor considering the economic or legal factors;
(4) The debtor will probably become bankrupt or carry out other financial restructuring;
(5) The financial asset can no longer continue to be traded in the active market due to serious financial
difficulties of the issuer;
(6) The cash flow decrease of some property in a group of financial assets is indefinable, but after the
general assessment with the public data, the predicted future cash flow of this group of financial assets
has definitely decreased from the initial recognition, and the decreased amount is calculable, including:
-The payment capacity of Debtor in this group of financial assets gets worse gradually;
- The country or region's economy of the Debtor may lead to the financial assets unable to pay;
(7) Any seriously disadvantageous change has occurred to technical, market, economic or legal
environment, etc. operated by the issuers of the equity instruments, which makes the investor of an equity
instrument unable to take back its cost of investment;
(8) The fair value of the equity instrument investments drops significantly or non-contemporarily;
(9) Other objective evidences showing the impairment of the financial asset.
- The financial assets impairment measured by the amortized costs
When impairment occurs, the financial assets counted as amortized cost will write-down its book value to
predict present value of future cash flow confirmed as the primary actual rate of this financial assets
(except for the future credit losses that not happened yet), the write-down cash will be confirmed as the
impairment loss, and will be counted into the current gains and loss. Where any financial asset is
recognized as having suffered from any impairment loss, if there is any objective evidence proving that
the value of the said financial asset has been restored, and it is objectively related to the events that occur
after such loss is recognized, the impairment-related loss as originally recognized shall be reversed and
be recorded into the profiles and losses of the current period. However, the reversed carrying amounts
shall not be paid more than the post-amortization costs of the said financial asset on the day of reverse
under the assumption that no provision is made for the impairment.
An independent impairment test shall be made by the Group on the financial assets with significant single
amounts. Regarding the financial assets with insignificant single amounts, an independent impairment
test shall be carried out, or they shall be included in a combination of financial assets with similar credit
risk features so as to carry out an impairment-related test. Where, upon independent test, the financial
asset (including those financial assets with significant amounts and those with insignificant amounts) has
not been impaired, it shall be included in a combination of financial assets with similar risk features so as
to conduct another impairment test. The financial assets which have suffered from an impairment loss in
any single amount shall not be included in any combination of financial assets with similar risk features
for any impairment test.
- Available-for-sale financial assets impairment
In case of impairment in available-for-sale financial assets, transfer out the accumulated losses originally
included into other comprehensive incomes and formed due to fair value depreciation and include into
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current profits and losses. The transferred-out accumulated losses are the balance of initial asset
acquisition cost, deducting recovered principal, amortized amount, current fair value and impairment loss
originally included into profits and losses.
After the confirmation of impairment loss, if the objective evidence shows that the value of the financial
assets is recovered after the period and it is objectively related with events happening after the
confirmation of the loss, the originally confirmed impairment loss will be switched back; the impairment
loss for the available-for-sale equity instrument investment is switched back and confirmed as other
comprehensive incomes and the impairment loss for available-for-sale debt instrument is switched back
and included into current profits and losses.
- The financial assets impairment measured by the costs
When equity instrument investment which is not quoted in an active market and whose fair value cannot
be measured reliably, or derivative financial assets which is linked with the equity instrument and has to
make settlement by delivering the equity instrument has asset depreciation, the book value shall be
reduced to the present value determined by discounted cash flow based on market return of similar
financial asset at that time which is recognized as impairment loss and shall be included into the current
profits and losses. The impairment loss of such financial asset shall not be reversed once confirmed.
9.4 Transfer of Financial Assets
Where a financial asset satisfies any of the following requirements, the recognition of is shall be
terminated: (1) where the contractual rights for collecting the cash flow of the said financial asset are
terminated; (2) where the said financial asset has been transferred and all of the risks and rewards related
to the ownership of the said asset has been transferred to the transferee; or (3) where the financial asset
has been transferred and the Group has waives its control over the financial asset though it retained nearly
all of the risks and rewards related to the ownership of the said asset.
If the Group does not transfer or retain nearly all of the risks and rewards related to the ownership of the
financial asset, and does not waive its control over the financial asset, it shall, according to the extent of
its continuous involvement in the transferred financial asset, recognize the related financial asset and
recognize the relevant liability accordingly. The term "continuous involvement in the transferred financial
asset" shall refer to the risk level that the enterprise faces resulting from the change of the value of the
financial assets.
If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference between
the amounts of the following 2 items shall be recorded in the profits and losses of the current period: (1)
the book value of the transferred financial asset, and (2) The sum of consideration received from the
transfer, and the accumulative amount of the changes of the fair value originally recorded in the owner's
equities.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the entire book
value of the transferred financial asset shall, between the portion whose recognition has been stopped and
the portion whose recognition has not been stopped, be apportioned according to their respective relative
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fair value, and the difference between the amounts of the following 2 items shall be included into the
profits and losses of the current period: (1) the sum of consideration received from the transfer, and the
accumulative amount of the changes of the fair value originally recorded in the owner's equities, and (2)
the said apportioned book value.
9.5 Classification, Confirmation and Measurement of the Financial Liabilities
The group shall classify financial instruments or its components into financial liabilities or equity
instruments during the initial recognition in accordance with contract terms of the issued financial
instruments and reflected economic essence in legal forms and others, in combination with definitions of
financial liabilities and equity instruments.
Financial liability is classified into the financial liability measured at their fair values and of which the
variation is included in the current profits and losses and other financial liabilities.
9.5.1 Financial Liabilities Measured at the Fair Value with Their Changes Included into Current Profit
and Loss
The financial liabilities which are measured at their fair values and of which the change is included in the
current profit and loss, including transactional financial liabilities and the designated financial liabilities
which are measured at their fair values and of which the change is included in the current profit and loss.
The financial liability meeting one of the following conditions will be classified as trading financial
liabilities: (1) The purpose for bearing the financial liability is mainly to buy back in the near future; (2)
Forming a part of the identifiable combination of financial instruments, initial recognition is managed in
a centralized way and has objective evidences proving that the Group may manage the combination by
way of short-term profit making in the near future; (3) Belong to derivative instruments excluding
derivative instruments that are designated as the effective hedging instruments, derivative instruments
belonging to financial guarantee contracts, and derivative instruments which are connected with the
equity instrument investment, for which there is no quotation in the active market, whose the fair value
cannot be measured reliably, and which shall be settled by delivering the said equity instruments.
In case of meeting one of the following conditions, the financial liabilities can be measured by fair value
during initial recognition and the changes can be included in the financial liabilities of current profits and
losses: (1) The appointment can eliminate or obviously decrease the inconformity of gains or losses in
confirmation or measurement caused by inconformity in the measurement basis of financial liabilities; (2)
The official written documents on risk management or investment strategies of the Group concerned have
recorded that the portfolio of said financial liabilities, or the portfolio of said financial assets and
liabilities will be managed and evaluated on the basis of their fair values and be reported to the key
management personnel; (3) Eligible mixed instruments, including embedded derivatives;
The current profits and losses and expenses of dividends and interests, arising from the change in the fair
value of the financial liabilities which is follow-up measured at its fair value and of which the change is
included in the current profit and loss, shall be included in the current profit and loss.
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9.5.2 Other Financial Liability
The derivative financial liabilities which are connected to the equity instrument for which there is no
quotation in the active market and whose fair value cannot be reliably measured, and which must be
settled by delivering the equity instrument, shall be measured subsequently on the basis of the cost. These
kinds of financial liabilities should be calculated subsequently with the effective rate method and in
accordance with the amortized cost. The profits and losses result from the derecognition or amortization
should be put in the current profit and loss.
9.5.3. Financial Guarantee Contracts
The financial guarantee contract means an agreement pursuant to which a surety and a creditor agree that
the surety shall perform the obligation or bear the liability according to the agreement, when the debtor
fails to perform his obligation. Financial guarantee contract that doesn’t belong to financial liabilities that
are specified to be measured according to fair value and the changes of which are included in the current
profit and loss is initially confirmed according to fair value; after the initial confirmation, conduct
subsequent measurement with the higher remaining balance after deducting the accumulated amortization
amount in accordance with principles provided in Accounting Standards for Business Enterprises No. 14
- Income by the amount confirmed according to Accounting Standards for Business Enterprises No. 13 -
Contingency and the initial confirmation amount.
9.6 Derecognition of Financial Liabilities
For financial asset whose present obligation has been fully or partially relieved, all or part of the financial
asset is derecognized. The Group (the Obligor) and the Obligee sign the agreement to substitute the new
financial liability mode for the existing financial liability. The essences of the contract provisions for the
new financial liability and existing financial liability are different, so the recognition of existing financial
liability can be terminated and the new financial recognition be recognized at the same time.
Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned
shall include into the profits and losses of the current period the gap between the carrying amount which
has been terminated from recognition and the considerations it has paid (including the non-cash assets it
has transferred out and the new financial liabilities it has assumed.
9.7 Derivative Instruments and Embedded Derivative Instruments
Derivative financial instruments include forward foreign exchange contract, monetary exchange rate
swap contract, interest rate swap contract and foreign exchange option contract. Conduct initial
measurement and subsequent measurement for the derivative instruments on the related contract signing
date based on fair value. The changes in the fair value of derivatives shall be included into the current
profits and losses.
If mixed instruments that include embedded derivative instruments are not designated as financial assets
or liabilities measured based on fair value with the changes being included into the current profits and
losses, the embedded derivative instruments are not closely related to the main contract concerning
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economic characters and risks and the independent instruments conforming to the definition of derivative
instruments that have the same conditions with the embedded derivative instruments are broken out from
the embedded derivative instruments to be disposed as independent derivative financial instruments.
Where it is unable to separately measure the embedded derivative instrument at acquisition or subsequent
balance sheet date, the hybrid instruments shall be designated in whole as the financial assets or liabilities
measured at fair value with changes included in current profits and losses.
9.8 Offset of Financial Assets and Financial Liabilities
When the group has the legal right to offset the confirmed financial assets and financial liabilities and is
entitled to perform the aforesaid legal right at the present, and meanwhile when the group intends to settle
or sell off the financial assets and pay off the financial liabilities by the net amount, the financial assets
and financial liabilities shall be presented in the balance sheet with the amount after the mutual offset. In
all other situations, they are presented separately in the balance sheet and are not offset.
9.9 Equity instrument
Equity instrument refers to a contract specifying the instrument holder’s share in the remaining equity of
the Group’s asset less all its liabilities. Consideration received from issuing equity instrument less
transaction cost is recorded in owners’ equity. That the group issues (including refinancing), repurchases,
sells or cancels equity instruments is taken as the change treatment of rights and interests. The group does
not confirm the changes of fair value of equity instruments. Transaction fees relevant to the equity
transaction shall be deducted from the equity.
The Group considers the allocation of the equity holder as the allocation of profits; issued share dividends
do not influence the total equity of the shareholders.
10. Receivables
10.1 Receivables accounts of single significant amount and individual provision for bad debts:
The Group deems that the fund with amount of more than
Judgment basis or amount standard for
RMB 4 million (inclusive) and accounting for more than 10%
financial assets with single significant
of the receivables book balance is the receivables with single
amount
significant amount.
The Group separately conducts the impairment test on the
accounts receivables with single significant amount and other
receivables, the accounts receivables and other receivables
without impairment after the separate test include the
Withdrawing method of single
impairment test in the financial asset portfolio with similar
withdrawing of bad-debt provision with
credit risk characteristics. The accounts receivables and other
significant amount
receivables with the confirmed impairment loss after the
separate test on longer include the impairment test in the
financial asset portfolio with similar credit risk
characteristics.
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10.2 Accounts receivables of withdrawing bad-debt provision as per credit risks feature combination:
Method of combined bed-debt provision based on credit exposure characteristics
Accounts receivables with insignificant
single amount and significant single The method of aging accounting receivables
amount but no single test impairment
Withdrawing bad-debt provision by aging analysis method in combination
Calculation and withdrawal Withdrawing percentage of
Aging (more than credit period)
proportion of receivables (%) other receivables (%)
Within 1 year (inclusive, the same below) 5 5
1-2 years 10 10
2-3 years 30 30
3-4 years 50 50
4-5 years 80 80
More than 5 years 100 100
10.3 Receivables accounts of single non-significant amount except individual provision for bad debts:
Reasons for single withdrawing of There are significant differences between the present value of
bad-debt provision future cash flow of the receivables and the present value of
future cash flow of the receivables as credit risk feature by
ageing.
Withdrawing method for bad-debt By respective impairment test, it carries out the bad debts
provision preparation according to the difference of the present value of
future cash flows lower than book value
11. Inventories
11.1 Classification of Inventories
The Group's inventory mainly includes finished goods or commodities held for sale in the daily activities,
completed outstanding assets formed in the construction contract, products in the production process,
materials and supplies used in the production process or in the process of proving labor service. Initial
measurement is conducted for inventory according to cost. The inventory costs include procurement cost,
processing cost and other expenditures for inventory to be in current place and state.
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11.2 Valuation Methods of the Inventory Issuing
When the shares are issued, the actual costs of the issued shares are determined using the moving
weighted average method.
11.3 Determination basis of the net realizable value of inventory:
The inventory is according to cost and net realizable value low metering on the date of balance sheet.
When the net realizable value is lower than cost, withdraw inventory falling price reserves. The net
realizable value refers to the amount derived by deducting the potential cost, estimated selling expense
and relative taxes to the completion date from the estimated sales price of inventory in daily activities.
When determining net realizable value of inventories, take the obtained conclusive evidence as basis and
consider the purposes of holding inventories and influence of events after the balance sheet date.
Provision for inventories is generally made as the excess of the cost of single inventory item over its 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.
11.4 Inventory System for Inventory
The inventory system is a perpetual inventory system.
11.5 Amortization Method for Low-value Consumables and Packaging
Packing materials and low-price easily-worn materials are amortized by the one-time writing-off process.
12. Long-term Equity Investment
12.1 Judgment Standard of Joint Control and Significant Impact
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. 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 approval of participants sharing the control right. The significant influence
refers to having the power to participate in the formulation of financial and operating policies of the
invested entity, but no power to control or jointly control the formulation of these policies together with
other parties. When it is confirmed whether or not the invested unit can be controlled or significantly
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influenced, the following potential vote power factors have been considered: transferable bond and
warrants executable in the current period by the investing enterprise and other invested units held by it,
etc.
12.2 Confirmation of Initial Investment Costs
For the long-term equity investment acquired through the enterprise merger under the 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 act 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 a combined financial statement of
the final controlling party 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.
The long-term equity investments obtained by the combination of controlling interests under different
control and the merger cost confirmed on the purchased date are regarded as the initial investment cost.
The expenses made by the combining party or purchaser for audit, legal service, assessment and other
management related expenses during the business merger should be included into the current profit and
loss as it happens.
Conduct initial measurement according the cost for other equity investment other than the long-term
equity investment formed in business merger. In case that the investor may post a significant impact on
the investee or execute joint control but not constitute the control right, long-term equity investment cost
is the sum of fair value of original and determined held equity investment and newly-increased
investment cost in accordance with No. 22 Accounting Standards for Business Enterprises----Recognition
and Measure of the Financial Instruments.
12.3 Subsequent Measurement and Profit and Loss Confirmation Method
12.3.1 Long-term Equity Investments of Cost Method Accounting
Financial statement shall be calculated through the cost method, in relation to the long-term equity
investments of subsidiaries. Subsidiary corporation means the investee body which can be 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.
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12.3.2 Long-term Equity Investments of Equity Method Accounting
Investment in consortium and joint venture is accounted for using the equity method. Consortium refers
to investee on which the Group has significant influence; joint venture refers to investee over which the
Group is able to jointly exercise control together with other investors. Associated enterprise means that
the investee which can be greatly influenced by the group; joint enterprise means a kind of joint
arrangement and the group only has control rights of such net assets.
When the equity method is adopted, where exceeding the Company’s share of the fair value of the
invested party’s identifiable net assets at investment date, the initial investment cost of the long-term
equity investment is kept unadjusted; where the initial investment cost of the long-term equity investment
is less than the Company’s share of the fair value of the invested party’s identifiable net assets at the
investment date, the differences are recorded as profit & loss for the current period and the costs of
long-term equity investment are adjusted simultaneously.
When the equity method is used for the accounting, in accordance with the shares in the net profits and
losses, and other comprehensive incomes of the invested unit which the Company is entitled to share or
bear, the investment income and other comprehensive incomes are determined separately, and meanwhile
the book value of the long-term equity investment shall be adjusted; The Company shall accordingly
reduce the book value of the long-term equity investment in terms of the part that shall be enjoyed
according to the profit or cash dividends declared by the invested unit to be distributed; For other changes
in the owners' equity of the invested unit other than net profits and losses, other comprehensive incomes
and the profit distribution, the book value of long-term equity investment shall be adjusted and be
included into the capital reserves. The Company shall, on the ground of the fair value of all identifiable
assets of the invested entity when it obtains the investment, recognize the attributable share of the net
profits and losses of the invested entity after it adjusts the net profits of the invested entity. If the
accounting policies and accounting periods adopted by the invested unit are different from those adopted
by the Company, the adjustment shall be made for the financial statements of the invested unit in
accordance with the accounting policies and accounting periods of the Company to recognize the
investment income and other comprehensive incomes. For the transaction incurred between the group and
associated enterprises and joint ventures, invested or sold assets don't constitute a business, the part that
doesn't achieve internal transaction profit or loss or belongs to the group calculated according to the
enjoyed ratio will be offset, and the profit or loss on investment will be confirmed on this basis. But for
the unrealized loss arising from the internal transaction between the group and the invested unit, if such
transaction loss is defined as the impairment loss of the transferred asset, they cannot be offset.
When the Company determines the net loss of the invested unit which shall be shared, it is necessary to
write-down the book value of the long-term equity investment and other long-term equities substantially
constituting the net investment of the invested unit to zero as a limit. Besides, if the group is obliged to
bear extra loss for the investment unit, it shall be necessary to determine provisionsf 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 to recognize its attributable share of profits.
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12.4 Disposing of Long-term Equity Investment
When disposing of a long-term equity investment, the difference between its book value and the actual
purchase price shall be recorded into the current profits and losses.
13. Fixed Assets
13.1 The Conditions of Recognition
The fixed assets refer to tangible assets held for commodity production, rendering of labor service,
renting or operation management, having a service life of more than one accounting year. The fixed asset
can be confirmed only when the economic interest related to a fixed asset is likely to flow into the group,
and the cost of such fixed asset can be reliably measured. Fixed assets are measured initially in
accordance with costs.
Subsequent expenditures related to fixed assets are included in costs of fixed assets when the associated
economic benefits are likely to flow to the Group and the costs can be measured reliably, and the book
value of the replaced part is derecognized; all other subsequent expenditures are included in profits and
losses in the current period when incurred. Other subsequent expenditures except for the above said
subsequent expenditure shall be included into the current profit and loss once occurred.
13.2 Depreciation Method
From the following month when fixed assets reach the estimated applicable status on, the counting and
withdrawing depreciation shall be conducted in its service life using age limit average method. The
service lives, expected rates of net residual value and annual depreciation rates of the fixed assets are as
follows:
Depreciation life Salvage value rate Annual depreciation rate
Class
(year) (%) (%)
Houses and buildings 20 years 10 4.5
Common facilities 3-5 years 10 18.0-30.0
Special-purpose
3-5 years 10 18.0-30.0
equipment
Transport equipment 5 years 10 18.0
The predicted net residual value refers to the expected amount that the group may obtain from the current
disposal of a fixed asset after deducting the expected disposal expenses at the expiration of its predicted
service life.
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13.3 Identification Basis, Valuation and Depreciation Method of Fixed Assets of Financial Lease
On the commencement date of the lease term, record the fair value of the leasing asset or the present
value of the minimum lease payments on the lease commencement date, whichever is lower, as the entry
value of the leased asset, make the amount of the minimum lease payments as the entry value of
long-term account payable, and recognize the balance between the entry value of the leased asset and that
of the long-term account payables as unrecognized financing charges. In addition, the initial direct costs
directly attributable to the leased item incurred during the process of lease negotiating and signing the
leasing agreement shall be included into the asset value of the rent.
The Group applies depreciation policy consistent with its own fixed assets to depreciate the rented fixed
assets under financing lease. If it is reasonable to be certain that the Company will obtain the ownership
of the leased asset when the lease term expires, the leased asset may be fully depreciated over its useful
life. If it is not reasonable to be certain that the Company will obtain the ownership of the leased asset at
the expiry of the lease term, the leased asset may be fully depreciated over the shorter one of the lease
term or its useful life. If the ownership of the leased asset can be reasonably confirmed on the lease term
expiry, the accrual depreciation shall be conducted within the service life of the lease asset; if not, the
accrual depreciation shall be conducted within the shorter of two periods, namely the lease term and the
service life of lease asset.
13.4 Other Instructions
The fixed assets are derecognized when the fixed assets are in disposed state or no future economic
benefits are expected from their use or disposal. The amount of proceeds on sale and transfer of a fixed
asset as well as disposal of a scrapped or damaged fixed asset less its book value and related taxes, are
recognized in profits and losses of the current period.
The Group performs review on service life, predicted net residual value and depreciation method of fixed
assets at the end of the year, any changes will be treated as changes in accounting estimates.
14. Construction in Process
The cost of construction in process shall be measured as per actual costs, including various engineering
expenditures in the construction process, capitalized borrowing expenses for making the engineering
reach the expected serviceable condition, other relevant costs, etc. No depreciation calculated and
withdrawn arises from construction in process. The construction in process shall be transferred to the
fixed assets when it reaches the expected serviceable condition. For those that could reach to the expected
serviceable condition, but haven't gone through the procedures for the final accounts of the completed
projects, they will be converted to fixed assets according to the estimated value. When they have gone
through the final accounts of the completed projects, the provisional estimate value of the original fixed
assets will be adjusted according to the actual costs.
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15. Borrowing Expenses
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.
After actual interest expense generated from the specific loan for current period, minus interest income
from the yet unused borrowed money kept in the bank or investment income made from temporary
investment, these amounts are capitalized; The capitalizing amount is determined after the weighted
average of excess part of accumulative asset expenditures compared to the asset expenditure of special
borrowing multiplied by the capitalization rate of the general borrowing. The capitalization rate shall be
calculated and determined in light of the weighted average interest rate of the general borrowing. In the
capitalization period, all exchange balance of special foreign currency borrowing shall be capitalized;
Exchange balance of general foreign currency borrowing shall be included in the current profit and loss.
16. Intangible Assets
16.1 Intangible Assets
Intangible assets include land use right, intellectual property and application software, etc.
The initial measurement of intangible assets shall be made at its cost. The intangible assets with the
limited service life can be amortized evenly for the original value by installment through the straight-line
method within its predicted service life since the time available for using. The service life and predicted
net residual value of various intangible assets are shown as follows:
Class Service life (year) Salvage value rate (%)
Land utilization right 50 years -
IP Rights 10 Years -
Application Software 5-10 years -
At the end of the period, the service life and amortization method of intangible assets whose service life
is limited shall be reviewed and adjusted when necessary.
16.2 Internal Research and Development Expenditure
Expenditures at research stage are included in current profit and loss when incurred.
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Expenditures at development stage that meet all the following conditions are recognized as intangible
assets, otherwise included in current profit and loss:
(1) Complete the intangible asset so that it can be used or sold and has feasibility in technology;
(2) Have the intents to complete, use or sell the intangible assets;
(3) The usefulness of methods for intangible assets to generate economic benefits can be proved,
including being able to prove that there is a potential market for the products manufactured by applying
the intangible assets or there is a potential market for the intangible assets itself or the intangible assets
will be used internally;
(4) There are sufficient technical, financial and other resources to complete the development of the
intangible assets, and there is ability to use or sell the intangible assets;
(5) The expenditures of the intangible assets in the development stage can be reliably measured.
The expenditures in the research stage and development stage, if failing to be classified, shall be totally
included into the current profit and loss.
17. Long-term Assets Impairment
The Group checks whether the intangible assets determined by a long-term equity investment, fixed
assets, construction in process and service life have any signs of possible impairment at each balance
sheet date. For the assets with signs of impairment, their recoverable amount will be estimated. The
intangible assets with uncertain service life and the intangible assets which have not yet reached
serviceable condition shall be give impairment test every year no matter whether there are signs of
impairment.
The recoverable amount of estimated assets shall be based on single assets; if it is difficult to estimate the
recoverable amount of single assets, the recoverable amount of the asset group shall be determined based
on its belonging asset group. The recoverable amount shall be determined in light of the higher one
between the net amount of the fair value of the assets or asset group deducted by the disposal expenses
and the present value of the expected future cash flow.
If the recoverable amount of assets is lower than its book value, assets impairment preparation shall be
counted and drawn based on its balance and be included in the current profits and losses.
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 confirmed. 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.
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Once above asset impairment losses are confirmed, they are not reversed in subsequent accounting
periods.
18. Employee compensation
18.1 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 which are included in current profit and loss or relevant asset cost.
For the employee services and benefits of the Group, they are included into current profit and loss or
relevant asset cost according to actual amount during the actual period. If the staff welfare is
non-monetary welfare, it shall be measured according to its fair value.
During the period when the employees service the Group, the Group pays social insurance premiums
such as medical insurance premium, industrial injury insurance premium, birth insurance premium and
housing accumulation fund for its employees, as well as labor union expenditure and employee education
expenses calculated and withdrawn according 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 which are included into the current profit and loss or
relevant asset cost.
18.2 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.
18.3 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: When the Group cannot unilaterally withdraw the termination benefits
provided due to labor relation cancellation plan or employee lay-off suggestion; When the Group
determines costs or expenses in relation with the restructuring of the paid termination benefits. 19
19. Provisions
When the contingency obligation related to product quality guarantee and others is the present obligation
of the Group, and the obligation performance may cause the outflow of economic profits, of which the
amount can be measured reliably, the amount shall be confirmed as provisions.
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The estimated liabilities are measured at balance sheet date in accordance with the best estimate of the
necessary expenses for the performance of the current obligation and factors pertinent to contingencies
such as the risks, uncertainties and the time value of money are taken into account as a whole. If the time
value of money generates a great influence, the best estimate shall be determined in accordance with
discounted amount of the expected future cash outflow.
20. 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.
20.1 Equity-settled Share-based Payment
Equity-settled share-based payment granted to employees
For the equity-settled share-based payment in exchange of services provided by employees, the fair value
shall be measured with the equity instrument granted to the employees on the grant date. The fair value's
amount is based on the optimal estimation of the number of vesting equity instruments within the waiting
period, and shall be included in relevant cost or expense at the time of the granted immediate vesting
according to the straight-line method, the fair value's amount is included in relevant cost or expense with
a corresponding increase of capital reserve at the grant date.
As for each balance sheet date in the waiting period, the Group can make best estimate according to the
variations in the number of vesting staff and other subsequent information, in order to amend the amount
of equity instrument of the predicated vesting right. The stated effects of evaluation shall be included into
the current relevant cost or fees, and the capital reserves shall be adjusted correspondingly.
When receiving the restricted share subscription fund paid the incentive object that the equity incentive
plan granted, then the Group shall confirm the equity and capital reserve (capital share premium)
according to the obtained subscription fund, meanwhile, fully confirm a liability and confirm treasury
stock in terms of repurchase obligations incurred because the Company's incentive object fails to meet
unlocking condition specified in relevant equity incentive plan.
20.2. Related Accounting Treatment of Implementation, Modification and Termination of The
Share-Based Payment Plan
When the Group modifies the share-based payment plan, if the modification increases the fair value of
equity instrument granted, the increase of service shall be recognized according to the increase of fair
value of equity instrument accordingly; If the number of equity instrument granted is modified to increase,
the Group shall confirm the fair value of equity instrument increased as the increase of service obtained.
The increment of fair value for equity instrument refers to the difference in fair value of the equity
instrument before and after the modification on the modification date. If the modification decreases the
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total amount of share-based payment fair value or adopts other ways which are adverse to the employees
to modify terms and conditions of share-based payment plan, unless the Group cancels the part or all of
the granted equity instruments, it shall conduct the further accounting treatment of the services acquired,
and it shall be deemed that such change never happens.
If the conferred equity instruments are cancelled during the waiting period, the Group shall accelerate
exercising the rights of the equity instruments. The amount recognized during the remaining waiting
period shall be included into current profit and loss immediately and the capital reserve shall be
determined simultaneously. If the employees may meet non-exercisable conditions, but fail to not meet
within the waiting period, the Group may cancel them as conferred equity instruments.
21. Income
21.1 Income from Commodity Sales
The Group has transferred the main risk and remuneration from the commodity ownership to the buyer;
the Group retains neither the management rights usually associated with ownership, nor the effective
control of the sale of goods; the amount of incomes can be measured reliably; the related economic
benefits may flow to the enterprise; when the related cost has occurred or will be occur can be measured
reliably, the realization on income from commodity sales shall be confirmed.
21.2 Income From Provision of Labor Service
The realization of incomes for providing labor service shall be confirmed when the amount of incomes
for providing labor service can be reliably measured, relevant economic interests can probably flow into
the enterprise, completion degree of transaction can be reliably determined, costs that have occurred and
will occur in the transaction can be reliably measured. The Group shall confirm the labor service income
provided at the balance sheet date according to the completion percentage method. The completion
process of labor service transaction is determined by the ratio of the already accrued labor service cost to
the total costs.
In the event that result of labor service cannot be estimated reliably, revenue from such labor service is
recognized in accordance with the incurred labor cost which is estimated to be compensated, and such
labor cost is recognized as expenses for current period; where the incurred labor cost is estimated not to
be compensated, revenue from such labor service shall not be recognized. If the labor service cost already
accrued is estimated not to be compensated as predicted, its income shall not be confirmed.
21.3 Construction Contract
If the results of the construction contracts can be reliably estimated, the enterprise can confirm the
contract income and expenses as achieved by the completion percentage method on the balance sheet
date.
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Progress of contract completion will be determined based on the proportion of finished contractual
amount of work covering estimated total amount of work.
If the results of the construction contract cannot be estimated reliably: where the contract costs can be
recovered, the contract revenue shall be recognized according to the actual contract costs that can be
recovered and the contract costs shall be recognized as the expenses incurred in the current period; when
the contract costs cannot be recovered, the contract costs shall be recognized as the expenses once they
are incurred and the revenue shall not be recognized. Where the uncertain factors affecting the reliable
estimation of the results of the construction contract have no longer been in existence, contract revenue
and expenses shall be recognized based on the percentage-of-completion method. If the uncertain factors
in that results of construction contracts cannot be reliably estimated disappear, the relevant incomes and
expenses to construction contract shall be confirmed according to the completion percentage method.
If the expected total contract costs exceed the total contract revenue, the expected loss is recognized as
current expenses.
The accumulative cost accrued and accumulative gross profits (losses) confirmed and already settled
payments in the construction contract shall be presented as net amount after offsetting in the balance
sheet. If the sum of accumulative cost accrued and accumulative gross profits (losses) confirmed is
surplus settled part of payments in the construction contract, this part is listed as inventory; If the settled
part of payment is surplus the sum of accumulative cost accrued and accumulative gross profits (losses)
confirmed in the construction contract, this part is listed as prepayment.
As for the construction business of public infrastructures in BOT, the Group will recognize the relevant
income and expenses of the construction services according to Accounting Standards for Business
Enterprises No. 15- Construction Contract in the project construction period; After the completion of
infrastructure, the income and expenses related to the follow-up operation services will be recognized
according to Accounting Standards for Business Enterprises No. 14 - Income.
22. Governmental Subsidy
Governmental subsidies are the monetary and non-monetary assets obtained by the Group from the
government for free. According to the subsidy object regulated in government documents, the
government subsidy will be divided into government subsidy related to assets and income.
The government subsidy shall be recognized when the attached conditions of government subsidies can
be met and obtained. The government subsidy which is monetary assets shall be calculated by the
actually receivable or received amount. Government subsidy fund that with conclusive evidence to fulfill
relevant conditions prescribed by the government financial support policy and expected to be received,
should be recognized under receivables; otherwise, recognized with actual received amount. For
government subsidy which is non-monetary assets shall be calculated by fair value; if no realiable fair
value available, calculated with nominal value of RMB 1.
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22.1 Judgment Basis and Accountant Arrangement Method of Government Subsidy Related to the Assets
Asset-related government subsidy refers to government subsidies that the Group obtained and used in the
acquisition or construction, or formed the long-term assets by other means. Except for above situations,
government subsidies shall be defined as income-related. Asset-related government subsidy shall offset
the book value of related assets, or shall be booked as deferred income. Asset-related government subsidy
recognized as deferred income, shall be evenly booked into profit or loss by terms, according to the
service life of the related-assets. Government subsidies calculated based on nominal value shall be
recognized in the current period profit or loss directly. Related assets that are sold, transferred, obsoleted,
or damaged before the end of service life, the undistributed deferred income balance shall be transferred
into current profit/loss from disposal of assets.
22.2 Judgment Basis and Accountant Arrangement Method of Government Subsidy Related to the
Income
Government subsidies that are not related to assets shall be defined as government subsidies related to
income. The income-related government subsidies that used for compensating the related expenses and
losses incurred shall be included into the current profit and loss directly; those used to compensate the
relevant expenses and losses in the later period shall be booked as deferred income first and included into
the current profit and loss in the period of confirming the related expenses/losses.
For government subsidies related to both assets and income, distinguish between different parts for
accounting process respectivel; for situations that are hard to disdiguish different parts, shall be
categorized as government subsidy related to income as a whole.
Government subsidies related to daily operations shall be booked into other income or offset related
expenses; for those not related to daily operations, shall be booked into non-operating income/expense.
23. Deferred Income Tax Assets / Deferred Income Tax Liabilities
The current income tax expenses include income tax and deferred income tax.
23.1. Current Income Tax
On the balance sheet date, the current income tax liabilities (or assets) incurred in the current period or
prior periods shall be measured on the basis of the expected payable (or refundable) amount of income
tax, which is calculated according to the tax law.
23.2 Deferred Income Tax Assets and Deferred Income Tax Liabilities
In case of temporary differences including the difference between the book value of assets and liabilities
and the tax base and difference between the book value and the tax base of the items which are not
recognized as assets and liabilities, however, the tax base of which can be determined in accordance with
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tax law, the deferred income tax assets and liabilities shall be recognized by adopting the balance sheet
liability method.
In general, all temporary differences shall be recognized as relevant deferred income taxes. For
deductible temporary differences, the Group shall confirm the related deferred income tax assets when
the taxable income amount of deductible temporary differences that is likely to be deducted in future is
regarded as the limit. In addition, related to the initial recognition of goodwill, and the taxable temporary
differences related to the initial recognition of assets or liabilities occurred in the transaction which will
not influence the accounting profit and taxable income (or deduction loss), and not the business merger,
shall not confirm the deferred income tax assets or liabilities.
As for any deductible loss or tax deduction that can be carried forward to the subsequent years, the
corresponding deferred income tax assets shall be determined to the extent that the amount of future
taxable income to be offset by the deductible loss and tax deduction to be likely obtained.
The Group can confirm deferred income tax liabilities arisen by the taxable temporary differences related
to investment invested with its subsidiary, except that it can control the timing of reversal of temporary
differences, and the temporary differences in the foreseeable future is unlikely to be reversed. For
deductible temporary differences related to the investment of the subsidiary, if it's possible that the
temporary difference shall be switched back in the foreseeable future and obtain sufficient taxable income
for deducting the deductible temporary difference in the future, the Group will confirm it as the deferred
income tax assets.
23.2 Deferred Income Tax Assets and Deferred Income Tax Liabilities - continued
On the balance sheet date, the deferred income tax assets and deferred income tax liabilities shall, under
the tax law, be measured at the tax rate applicable to the period during which the assets are expected to be
recovered or the liabilities are expected to be settled.
Except that the current income tax and deferred income tax which are confirmed as other comprehensive
incomes or those related to transactions and events directly included into the shareholders' equities shall
be included into other comprehensive incomes or shareholders' equities, as well as the book value of
deferred income tax for goodwill adjustment arising from business merger, the remaining current income
tax and deferred income tax expenses or revenues shall be included into current profit and loss.
At balance sheet date, it shall recheck the book value of deferred income tax assets. If taxable income is
likely to fail to cover the profits generated from the deferred income tax assets, then it is necessary to
write down the book value of deferred income tax assets. When adequate taxable income is likely to
obtain, recover the deducted amount. When adequate taxable income is likely to obtain, the deducted
amount shall be recovered.
23.3 Offset of Income Tax
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For reporting period from January 1st 2017 to June 30th 2017
When having the legal rights settled at a net amount are owned and it is intended to make settlement at a
net amount, obtain assets or repay liabilities simultaneously, the Group's current income tax assets and
current income tax liabilities shall be presented at a net amount after offsetting.
The deferred income tax assets and liabilities of the Group shall be presented at the net amount after
deducting when having the legal right of settling income tax assets and liabilities in current period at net
amount and the deferred income tax assets and liabilities are pertinent to income tax of the same taxation
subject or different subjects collected by the same tax collection and administration department, however
during each period of significance when the deferred income tax assets and liabilities are reversed, the
taxation subjects involved intend to settle the income tax assets and liabilities in current period at net
amount or obtain assets and settle liabilities simultaneously.
24. Lease
Transfer the financing lease of all risks and remunerations related to the ownership of assets in essence.
Operating leases refer to the leases other than finance leases.
24.1 Accountant Arrangement Method of The Operating Lease
24.1.1 The Group will record operating leasing business as the lessee.
Any rental payment from operating leases shall be recognized in relevant asset costs or current profit and
loss in accordance with the straight-line method in each period within the lease term. Initial direct
expenses shall be included in current profit and loss while the contingent rents shall be included in
current profit and loss when they actually occur. The initial direct costs shall be included into the current
profit and loss. The contingent rental shall be included into the current profit and loss when it is actually
incurred.
24.1.2 The Group will record operating leasing business as the lesser.
The rental income of operating lease during each period within the lease term will be recognized as the
current profit and loss according to the straight-line method. A large amount of initial direct costs shall be
capitalized when occurring and be included into current profit and loss according to the same installment
of rental income in the entire lease term; the other initial direct costs of smaller amount will be included
into the current profit and loss when it occurs. The contingent rental shall be included into the current
profit and loss when it is actually incurred.
24.2. Accountant Arrangement Method of the Financing Lease
24.2.1 The Group will record financing lease business as the lessee.
For relevant accountant arrangement method, see Note (III) "15.3 Identification basis, valuation and
depreciation method of fixed assets of financing lease".
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Where the unrecognized financing costs are within the lease term, the current financing costs shall be
recognized in accordance with the effective interest method. Contingent rents shall be included in current
profit and loss when they actually occur. The minimum rental payment shall be presently respectively as
long-term liabilities and long-term liabilities due within one year after deducting the unrecognized
financing costs. The contingent rental shall be included into the current profit and loss when it is actually
incurred. The remaining balance of the minimum leasing payment deducting unrecognized financing
charges is respectively presented as long-term liability and long-term liability due in one year.
24.2.2 The Group will record financing lease business as the lesser.
At the beginning date of the lease term, a lessor shall recognize the sum of the minimum lease receipts on
the lease beginning date and the initial direct costs as the entry value in an account of the financing lease
values receivables, and record the un-guaranteed residual value at the same time; The balance between
the sums of the minimum lease receipts, the initial direct costs and the unguaranteed residual value, and
the sum of their present values shall be recognized as unrealized financing income.
The unrealized financing incomes adopt the effective interest method during each lease term to calculate
and recognize the current financing incomes. The contingent rental shall be included into the current
profit and loss when it is actually incurred.
The balance of the receivables financing lease amount deducting unrealized financing revenue is
respectively presented as long-term creditor's rights and long-term creditor's rights due in one year.
25. Repurchase the company’s own shares
When repurchasing this Company shares, the treatment of treasury stock shall be implemented according
to actually-paid amount and the future reference shall be registered at the same time. If the repurchased
shares are cancelled, then the difference between the total amount of cancelled share face value and share
face value of cancelled number of shares and the consideration amount paid by the actual repurchase
shall offset the capital reserve, if the capital reserve is insufficient, then the retained earnings shall be
offset.
If the transaction expense paid in the process of repurchasing this Company shares reduces the
shareholders' equity, then gains or losses shall not be determined.
26. Important judgments used during accounting policy process and key assumptions and
uncertainty factors used in 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 which may not be metered
accurately. These judgments, estimates and assumptions are based on the historical experience of the
Group's management level and other key factors. Differences may exist in the actual results and the group
estimate.
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For reporting period from January 1st 2017 to June 30th 2017
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
number will be affirmed during the changing period; if it influences the current period and future period,
the influence number 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 in book value of assets and liabilities in future
period caused by the accounting estimate mainly are
Impairment of the fixed assets
At the balance sheet date, the Group will check whether fixed assets have signs that depreciation is likely
to occur. When the signs indicate that the carrying amount cannot be repurchased, then the impairment
test shall be implemented. The impairment occurred when the book value of assets or asset group is
higher than the recoverable amount, namely the net amount of fair value minus the disposal expenses or
the present value of expected future cash flow (which is higher). The net amount of fair value minimum
disposal expenses is determined by deducting the incremental cost which directly belongs to the assets
disposal referring to the price of sales agreement of similar assets in fair transaction or the observable
market price. When predicting present value of future cash flows, management level must estimate the
predicted future cash flows of the said asset or asset portfolio, and shall select proper discount rate to
confirm the present value of future cash flows. Based on the above procedure, the Group's management
level deems that fixed assets shall not need to calculate and withdraw the impairment reserve.
Service life and predicted net residual value of fixed asset
The Group's estimation of fixed assets serviceable 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 that fixed assets' predicted service life expires
and fixed assets are at the end of service life. The Group shall conduct the review on the predicted service
life and predicted net residual value of fixed assets at least at the end of each year, this year the Group's
management level fails to find the conditions to make the Group's fixed asset service life shortened or
extended and need to change predicted net residual value.
Impairment of accounts receivables
When there is a clear evidence to make the accounts receivables recovery in doubt, then the Group will
calculate and withdraw the impairment preparation to the accounts receivables. Because the Group's
management level needs to decide the historic payment collection, aging, debtor's financial condition and
overall economic environment when considering the impairment reserve, so the calculation of
impairment reserve has the uncertainty. Although there is no reason to believe that the based estimation
will have a major change in the future when calculating the impairment of accounts receivables, the book
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For reporting period from January 1st 2017 to June 30th 2017
value and impairment loss of accounts receivables will change when the future actual result is different
from the anticipated and original estimation.
Accrued liabilities of product quality assurance
Accrued liabilities of product quality assurance are an estimation made by the Group according to the
repair and replacement cost of predicted relevant products. The estimation is involved in the product
claim rate trend, history defect rate, industry practice and other major estimations. The management level
deems that the current estimation on accrued liabilities of product quality assurance is reasonable, but the
Group will continue to review the product after-sales service, the Group will conduct adjustment during
the period of sign occurrence once there are indications that the accounting assumptions need to be
adjusted
Provision for impairment of inventories
Inventories are stated at the lower of cost and net realizable value. The Group will regularly conduct a
comprehensive inventory to determine whether there are outmoded and dull inventory and to review the
impairment circumstances, in addition, the Group's management level will regularly review the
impairment circumstance of inventory with long storage time according to the inventory storage time list.
The review procedure includes the comparison between book value of outmoded, dull inventory and
inventory with long storage time and its corresponding net realizable value in order to determine whether
the outmoded, dull inventory and inventory with long storage time need to calculate and withdraw
reserve in the financial statements. Based on the above procedure, the Group's management level deems
that the full falling price reserves have been calculated and withdrawn for the outmoded, dull inventory
and inventory with long storage time
Assets from deferred income tax
The realization of deferred income tax assets mainly depends on the future actual profit and the effective
tax rate of temporary difference in the future use year. 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 turned back and be confirmed in the income statement during the period of return-back. If the
actual profit in the future is more than the estimation, or actual tax rate is higher than the estimation, then
the corresponding deferred income tax assets will be adjusted and be confirmed in the income statement
during the condition occurrence.
Goodwill impairment
When the goodwill conducts the impairment test, this needs to calculate the predicted present value of
future cash flow of relevant asset group or asset group combination included in the goodwill, and needs
to predict the future cash flow of relevant asset group or asset group combination, and needs to determine
a proper pretax rate that reflects the current market time value of money and specific asset risk. When the
future actual result is different from the original estimation, then the goodwill impairment loss will
change.
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For reporting period from January 1st 2017 to June 30th 2017
27. Significant alternation in accounting policy and accounting estimations
Pursuant to edied regulations of Accounting Standards for Enterprises No. 16 - Government Subsidies
（Accounting (2017) No.15，since January 1st 2017, government subsidies related to the enterprise’s
daily operation shall be recognized other “Other Income” or offset related cost/expense; for those not
related to daily operations, shall be booked into non-operating income. During the current reporting
period, the Company booked RMB 677,411,292.4 of VAT Rebate under Other Income.
IV. Taxes
1. Major tax categories and rates
Tax category Taxation basis Tax rate
Enterprise income
Taxable income 25% (Note 1)
tax
For the taxable product sales revenue or taxable labor
6%, 11%, 17% and
revenue, the Company and its domestic subsidiaries are an
VAT simple collection
ordinary VAT payer; the VAT payable is the balance after
rate of 3% (Note 2)
the substituted money on VAT minus deductible input tax.
Business tax Assessable Income 5%, 3% (Note 3)
Urban maintenance
and construction Actual payable turnover tax 7%
tax
Education
Actual payable turnover tax 3%
surcharges
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 local tax rate.
2. Tax Preference
(1) In accordance with the Notice on Publishing the List of First Batch of 722 identified High-tech
Enterprises of Zhejiang Province in 2014 (ZGQR [2014] No. 03) issued by Zhejiang high-tech
enterprise identification management work leading group on September 19, 2014, the Company was
identified as the high-tech enterprise with a valid term of 3 years from 2014 to 2016. According to
the Announcement of implementation of high-tech enterprise income tax preferential policy issued by
state administration of taxation, within one year after the hign-tech qualification expires, before
re-recognition, the enterprise income tax could be temporarily paid in advance with a tax rate of
15%.
(2) In accordance with the Letter of Reply on Publishing the Registration of First Batch of High-tech
Enterprises of Zhejiang Province in 2016 (GKH ZI [2016] No. 149) issued by Zhejiang high-tech
enterprise identification management work leading group on December 9, 2016, this Company was
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identified as the high-tech enterprise with a valid term of 3 years from 2016 to 2018. Therefore, the
enterprise income tax this year shall be calculated and paid according to tax rate of 15%.
(3) In accordance with CS [2011] No. 58 Document of Ministry of Finance, SAT and General
Administration of Customs, the wholly-owned subsidiaries - Chongqing Hikvision Science and
Technology Co., Ltd. and Chongqing Hikvision System Technology Co., Ltd. Can enjoy the west
development preferential tax policy from 2011 to 2020, this year the enterprise income rate shall be
calculated and paid on the basis of 15%.
Note 2: In accordance with the Notice on Software Product Value-added Tax Policy (CS [2011] No. 100)
of Ministry of Finance and SAT, as for the sales of software products developed by this Company and its
all wholly-owned subsidiaries, such as Shanghai Gaodewei, Hangzhou System, Shanghai Hundure,
Beijing Brainaire Storage Technology Co., Ltd., Hangzhou EZVIZ Network Co., Ltd. and Hangzhou HIK
Robot Technology Co., Ltd., The VAT shall be calculated and paid by tax rate of 17%, the part with actual
tax bearing more than 3% shall be refunded after the approval of the SAT.
Note 3: In accordance with the Notice on Fully Implementing the Change from Business Tax to
Value-Added Tax (CS [2016] No. 36) the Group's business tax has been changed as VAT since May 1,
2016, of which the engineering integration income is applicable to the 11% of VAT rate, engineering
project management income is applicable to the VAT rate with a simple collection rate of 3%.
102
Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
V. Notes to items in the consolidated financial statements
1. Cash and bank balances
Unit: RMB
Closing Balance Opening Balance
Foreign currency Exchange rate for Foreign currency Exchange rate for
Item RMB amount RMB amount
amount conversion amount conversion
Cash：
RMB - - 181,497.38 - - 72,198.75
USD 258,537.93 6.7744 1,751,439.35 54,518.00 6.9370 378,191.37
EUR 38,612.98 7.7496 299,235.15 9,914.76 7.3665 73,036.78
GBP 42,477.63 8.8144 374,414.82 3,194.57 8.5094 27,183.87
ZAR 20,000.00 0.5208 10,416.00 20,000.00 0.5083 10,165.18
INR - - - 648,250.61 0.1023 66,308.91
RUB - - - 700,327.10 0.1151 80,584.44
AED 1,437.81 1.8445 2,652.04 22,038.00 1.8876 41,599.39
Bank balance：
RMB - - 6,754,002,999.78 - - 9,012,033,851.31
USD 772,342,355.90 6.7744 5,232,156,055.84 557,895,047.74 6.9370 3,870,112,669.33
EUR 29,602,740.91 7.7496 229,409,400.98 63,105,958.57 7.3086 461,213,364.03
GBP 1,247,825.21 8.8144 10,998,830.49 1,162,906.87 8.5162 9,903,554.55
JPY 408.04 0.0605 24.68 408.00 0.0596 24.31
CHF 4,350.90 7.0888 30,842.66 4,350.83 6.7989 29,580.86
ZAR 15,779,608.31 0.5208 8,218,020.01 479,939.35 0.5083 243,938.69
INR 608,165,494.36 0.1049 63,816,629.82 741,278,806.84 0.1023 75,824,667.94
RUB 890,058,303.33 0.1142 101,644,658.24 376,048,117.90 0.1149 43,219,734.70
HKD 51,493,186.84 0.8679 44,690,936.86 113,182.52 0.8945 101,242.90
AUD 686,452.93 5.2099 3,576,351.12 358,996.02 5.0157 1,800,616.34
AED 12,658,350.68 1.8445 23,348,327.83 8,811,007.21 1.8876 16,631,825.02
BRL 8,281,430.57 2.0536 17,006,745.82 8,453,226.09 2.1336 18,035,803.19
SGD 532,848.44 4.9135 2,618,150.81 34,035.93 4.7995 163,355.45
PLN 2,195,578.21 1.8271 4,011,434.07 1,403,342.82 1.6569 2,325,147.58
KRW - - - 120,990,676.00 0.0058 696,509.57
CAD 800,551.39 5.2144 4,174,395.17 42,307.32 5.1406 217,485.01
KZT 20,606,680.35 0.0210 433,691.09 27,890,915.57 0.0207 577,341.95
COP 20,290,312.14 0.0222 450,447.69 261,841,960.55 0.0023 604,226.04
TRY 1,191,712.76 1.9217 2,290,114.42 21,242.60 1.9702 41,851.47
SEK 317,290,452.24 0.0059 1,880,263.22 - - -
NZD 293,093.09 4.9569 1,452,833.16 - - -
HUF 3,761,879.86 0.3997 1,503,740.00 - - -
Other currency funds:
RMB - - 306,041,493.26 - - 102,586,217.99
USD 53,500,000.00 6.7744 362,430,400.00 3,019,477.89 6.6811 20,173,564.54
EUR 108,383.14 7.7496 839,925.98 108,432.98 7.3068 792,298.10
Total 13,179,646,367.74 13,638,078,139.56
including: deposited in
557,929,832.30 565,682,133.09
overseas banks
As of June 30th 2017, other currency funds book value of the Group in RMB totalled RMB 669,311,819.24, including a
RMB closing balance of RMB 306,041,493.26 (opening balance: RMB 102,586,217.99). The balance of other currency
funds mainly includes cash deposit guaranteed for letter of guarantee of RMB 7,800,907.01 (opening blance: RMB
103
Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
4,659,173.02), cash deposit guaranteed for forward foreign exchange transaction of RMB 3,100,000.00 (opening balance
RMB 3,100,000.00), cash deposit guaranteed for bank acceptance bill of RMB 243,520,516.19 (opening balance RMB
57,015,406.62), Cash deposit guaranteed for letter of credit of RMB 600,000.00 (opening balance：USD 3,019,477.89，
equivalent to RMB 20,173,564.54), bank deposit of RMB 35,000,000.00 (opening blance: RMB 30,000,000.00) pledged
for long-term borrowing. Other currency funds book value in US Dollar totaled USD 53,500,000.00 (equivalent to RMB
362,430,400.00) (Opening balance: nil), pledged for short-term borrowing.
2. Financial assets as fair value through profit and loss
Unit: RMB
Item Closing Balance Opening Balance
Held-for-trading financial assets 3,004,171.92 15,547,537.34
including: derivative financial assets 3,004,171.92 15,547,537.34
Total 3,004,171.92 15,547,537.34
Derivative financial assets includes forwards and interest rate swap contracts, not designated as a hedging instrument,
gains or losses due to changes in fair value is directly included in the current period profits and losses.
3. Notes receivable
（1）Categories of notes receivable
Unit：RMB
Category Closing Balance Opening Balance
Bank acceptance bill 3,185,981,920.01 2,762,741,337.04
Commercial acceptance bill 95,657,500.26 80,663,078.48
Total 3,281,639,420.27 2,843,404,415.52
(2) Notes receivable pledged at the closing of the reporting period
Unit：RMB
th
Category Pledged amount by June 30 2017
Bank acceptance bill 584,027,766.90
Commercial acceptance bill -
Total 584,027,766.90
(3) Notes receivable discounted or endorsed at the closing of the reporting period
Unit：RMB
Category Derecognised amount (Note) Not Derecognised amount
Bank acceptance bill 115,108,297.43 -
Commercial acceptance bill - -
Total 115,108,297.43 -
Note：After the notes receivable discounted was discounted or endorsed, the main risk such as interest rate has been
transferred to bank or others, therefore, all discounted and endorsed bank acceptance bills have been derecognised by the
Group.
(4) As of June 30th, 2017, there is no such case the Group has to transfer the defaulted note receivable into account
receivable.
104
Hikvision 2017 HY Report
Notes on Financial Statements
For reporting period from January 1st 2017 to June 30th 2017
4. Account Receivable
(1) Disclosure of accounts receivable by categories
Unit: RMB
Closing Balance Beginning Balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category
Proportion Proportion Carrying Value Proportion Proportion Carrying Value
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts receivable that are individually
significant and for which bad debt provision - - - - - - - - - -
has been assessed individually
Accounts receivable with provision accrued
14,351,244,174.53 100 1,047,198,164.41 7.30 13,304,046,010.12 12,105,157,539.88 100 861,314,214.98 7.12 11,243,843,324.90
collectively on a portfolio basis for credit risk
Accounts receivable that are not individually
significant but for which bad debt provision - - - - -
has been assessed individually
12,105,157,539.8 861,314,214.9 11,243,843,324.9
Total 14,351,244,174.53 100 1,047,198,164.41 7.30 13,304,046,010.12 100 7.12
8 8 0
Note: The group categorizes account receivable above RMB 4 million or account for more than 10% of the total account receivable closing balance as accounts receivable that are
individually significant.
The aging analysis of bad debt provision of account receivable in portfolio basis
Unit: RMB
Closing Balance
Aging
Carrying amount Bad debt provision Proportion (%)
Within 1 year 12,707,954,069.05 635,397,703.45 5.00
More than 1 year but not exceeding 2 years 932,922,441.86 93,292,244.19 10.00
More than 2 year but not exceeding 3 years 405,799,534.20 121,739,860.26 30.00
More than 3 year but not exceeding 4 years 167,015,619.45 83,507,809.72 50.00
More than 4 year but not exceeding 5 years 121,459,815.88 97,167,852.70 80.00
More than 5 years 16,092,694.09 16,092,694.09 100.00
Subtotal 14,351,244,174.53 1,047,198,164.41 7.30
105
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
(2) Provision, re-collection, or reverse of the bad debt allowance in current reporting period
In the current reporting period, the Company recorded a bad debt allowance of RMB 191,073,904.14; recovered
bad debts of 192,000.00 RMB.
(3) Actual write-off of accunt receivable during current reporting period
In the current reporting period, the amount of accounts receivable write-off is RMB 5,381,954.71.
(4) Top five debtors based on corresponding closing balance of account recievable
Unit: RMB
Name of the Relationship with the Book balance of account Closing balance for bed debt Proportion
Party Company receivable provision (%)
rd
Company A 3 party 433,808,155.64 21,690,407.78 3.02
Related party A Related Party 247,324,689.92 5,029,000.00 1.72
rd
Company B 3 party 170,013,497.62 100,778,387.06 1.18
rd
Company C 3 party 85,675,854.30 4,283,792.72 0.60
Related party B Related Party 85,557,593.00 4,277,879.65 0.60
Total 1,022,379,790.48 136,059,467.21 7.12
(5) As of June 30, 2017, there is no termination of account receivable booking due to transfer of a financial asset.
(6) As of June 30, 2017, the Group has no assets/liabilities booked due to transferred account receivable that the Group
still keep recourse or retain part of the corresponding rights or interests.
5. Prepayments
(1) Aging analysis of prepayments is as follows
Unit: RMB
Closing Balance Opening Balance
Aging
Carrying amount Proportion (%) Carrying amount Proportion (%)
Within 1 year 226,606,771.94 85.92 259,870,967.78 93.14
More than 1 year but not exceeding 2 years 36,515,492.31 13.84 16,963,621.71 6.08
More than 2 year but not exceeding 3 years 257,148.00 0.10 137,873.42 0.05
More than 3 years 376,377.60 0.14 2,050,745.00 0.73
Total 263,755,789.85 100.00 279,023,207.91 100.00
(2) Closing balances of top five prepayments parties
As of June 30th 2017, the Group’s top five balances of prepayments amounted to RMB 186,157,547.85, accounting for
70.58% of total closing balance of prepayments.
106
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
6. Other receivables
(1) Disclosure of other receivables by categories
Unit: RMB
Closing Balance Opening Balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Carrying
Proportion Proportion Carrying Value Proportion Proportion
Amount Amount Amount Amount Value
(%) (%) (%) (%)
Other receivables that are individually significant and for
- - - - - - - - - -
which bad debt provision has been assessed individually
Other receivables with provision accrued collectively on a
774,367,945.00 100.00 64,706,272.48 8.36 709,661,672.52 572,247,211.16 100.00 43,602,983.74 7.62 528,644,227.42
portfolio basis for credit risk
Other receivables that are not individually significant but for
- - - - - - - - - -
which bad debt provision has been assessed individually
572,247,211.1 43,602,983.7 528,644,227.4
Total 774,367,945.00 100.00 64,706,272.48 8.36 709,661,672.52 100.00 7.62
6 4 2
Note: The group categorizes other receivables above RMB 4 million or accounts for more than 10% of the total other receivables closing balance as other receivables that are
individually significant.
The aging analysis of bad debt provision of other receivables in portfolio basis
Unit: RMB
Closing Balance
Aging
Carrying amount Bad debt provision Proportion (%)
Within 1 year 591,451,980.82 29,572,599.04 5
More than 1 year but not exceeding 2 years 121,980,205.93 12,198,020.59 10
More than 2 year but not exceeding 3 years 41,792,138.85 12,537,641.66 30
More than 3 year but not exceeding 4 years 16,585,633.75 8,292,816.87 50
More than 4 year but not exceeding 5 years 2,263,956.65 1,811,165.32 80
More than 5 years 294,029.00 294,029.00 100
Total 774,367,945.00 64,706,272.48 8.36
(2) Provision, re-collection, or reverse of the bad debt allowance in current reporting period
During the reporting period, the Company recorded a bad debt allowance of RMB 21,104,888.74, there is no such case as reversed bad debt allowance or recovered bad debts.
(3) Actual write-off of other receivables during current reporting period
In current reporting period, the actual write-off of other receivables is RMB 1,600.00.
107
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
(4) Nature of other receivables
Unit: RMB
Nature of other receivables Closing balance Beginning balance
Other receivables for interim payments 482,014,732.57 397,044,897.11
Guarantee deposits 141,025,042.33 120,485,983.73
Tax rebate 131,327,417.62 17,096,975.74
Others 20,000,752.48 2,619,354.58
Investment intention fund - 35,000,000.00
Total 774,367,945.00 572,247,211.16
(5) Top five debtors based on corresponding closing balance of other receivables
Unit: RMB
Entities Nature Carrying amount Aging Proportion of total (%) Bad debt Provision
The government tax Within 1 year
Tax refund 131,327,417.62 16.96 6,566,370.88
authorities
Company D Guarantee deposits 20,873,680.00 Within 2 years 2.70 2,075,128.00
Other receivables for
Company E 20,699,153.07 Within 1 year 2.67 1,034,957.65
interim payments
Other receivables for Within 1 year
Company F 18,986,564.70 2.45 949,328.24
interim payments
Other receivables for Within 3 years
Company G 16,054,560.00 2.07 4,816,368.00
interim payments
Total 207,941,375.39 26.85 15,442,152.77
(6) As of June 30th 2017, the Group does not have other receivables related to government subsidies.
(7) As of June 30th 2017, there is no termination of other receivables booking due to transfer of a financial asset.
(8) As of June 30th 2017, the Group has no assets/liabilities booked due to any transferred other receivable that the
Group still keep recourse or retain part of the corresponding rights or interests.
7. Inventories
(1) Categories of inventories
Unit: RMB
Closing Balance Opening Balance
Provision for Provision for
Category
Carrying amount decline in value of Carrying value Carrying amount decline in value Carrying value
inventories of inventories
Raw materials 1,212,317,055.77 2,353,324.00 1,209,963,731.77 874,786,611.19 1,516,317.17 873,270,294.02
Work-in-progress 534,939,035.22 - 534,939,035.22 159,844,928.42 - 159,844,928.42
Finished goods 3,059,979,848.55 103,432,184.68 2,956,547,663.87 2,680,562,932.70 86,718,096.08 2,593,844,836.62
Completed but
unsettled assets
234,370,008.65 - 234,370,008.65 202,987,817.69 - 202,987,817.69
formed by
construction contracts
Total 5,041,605,948.19 105,785,508.68 4,935,820,439.51 3,918,182,290.00 88,234,413.25 3,829,947,876.75
(2) Provision for decline in value of inventories
Unit: RMB
Decrease in the current period Effect of foreign
Increase in the currency
Category Opening balance Closing Balance
current period Reversals write-offs exchange
difference
Raw materials 1,516,317.17 1,339,124.71 - 502,117.87 - 2,353,324.01
Finished goods 86,718,096.08 38,220,457.37 - 21,200,265.93 (306,102.85) 103,432,184.67
Subtotal 88,234,413.25 39,559,582.08 - 21,702,383.80 (306,102.85) 105,785,508.68
108
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
At the closing of the reporting period, the Company determined provision for inventory on a divididual basis, with net realizable value calculated based on estimated selling price for
finished goods, and estimated selling price less all estimated cost of completion and costs necessary to make the sale for inventories.
For the reporting period, the reversals or write-of of provision for inventories is due to those inventories being used or sold.
(3) Completed but unsettled assets formed by construction contracts at the end of June 30th, 2017
Unit: RMB
Item Amount
Accumulated occurred costs of construction 544,342,448.43
Accumulated booked gross profit margin 18,083,801.89
Less: estimated losses -
Settled amounts 328,056,241.67
Completed but unsettled assets formed by construction contracts 234,370,008.65
8. Other current assets
Unit: RMB
Item Closing balance Opening balance
Principal-garanteed bank finance products (Note) 100,000,000.00 3,820,000,000.00
Deductible VAT input 285,333,990.28 293,158,008.82
Prepaid income tax 42,769,181.89 40,834,267.96
Total 428,103,172.17 4,153,992,276.78
Note：The management team agreed that there won’t be significant differences between the estimated interests and risks of those bank entrusted financial products and the book value of
those products, because those financial products are all principal-garanteed, with a termination period less than one year.
9. Available-for-sale financial assets
(1) Available-for-sale financial assets
Unit: RMB
Closing Balance Opening Balance
Item
Carrying amount Provision for decline in value Carrying Value Carrying amount Provision for decline in value Carrying Value
Available-for-sale equity instruments 283,836,013.00 - 283,836,013.00 283,836,013.00 - 283,836,013.00
Cost method 283,836,013.00 - 283,836,013.00 283,836,013.00 - 283,836,013.00
Total 283,836,013.00 - 283,836,013.00 283,836,013.00 - 283,836,013.00
(2) Closing balance of available-for-sale financial assets using cost method
109
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Unit: RMB
Carrying Balance Provision for decline in value Proportion of Cash Dividend in the
The invested entity (Note 1) Opening shareholding in the current reporting
Opening balance Increase Decrease Closing balance Increase Decrease Closing balance invested entity (%) period
balance
Zhejiang Tuxun Technology Co., Ltd. (浙江图
28,800,000.00 - - 28,800,000.00 - - - - 9.5238 -
讯科技股份有限公司)
Confirmware Technology (Hangzhou) Co.,
26,629,200.00 - - 26,629,200.00 - - - - 10.0000 -
Ltd.（康奋威科技(杭州)有限公司）
Nanwang Group Co., Ltd （南望信息产业集
604,313.00 - - 604,313.00 - - - - 0.2518 -
团有限公司）
Hangzhou Hikvision Equity Investment
Partnership (Limited Partnership) （杭州海康 10,000.00 - - 10,000.00 - - - - 0.0017 -
威视股权投资合伙企业(有限合伙)）
CETC Finance Co., Ltd (Note2) （中国电子科
227,792,500.00 - - 227,792,500.00 - - - - 3.8300 8,505,842.42
技财务有限公司）
Total 283,836,013.00 - - 283,836,013.00 - - - - - 8,505,842.42
Note1： The Group’s equity investments listed are all non-listed companities; therefore, the Group has no control, joint control or significant influence on the invested entities.
Note2： CETC Finance Co., Ltd is one of the companies held under CETC, which is the Company’s ultimate controlling shareholder.
10. Long-term receivables
(1) Details of long-term receivables
Unit: RMB
Closing balance Opening balance
Item Provision for Provision for Range of discount rate
Carrying amount Carrying value Carrying amount Carrying value
decline in value decline in value
Financial leases receivables 61,887,821.73 - 61,887,821.73 74,504,325.33 - 74,504,325.33 2.08% - 2.52%
including:Unrealized income from
1,029,448.82 - 1,029,448.82 1,513,690.63 - 1,513,690.63
financing
Borrowings for project 18,000,000.00 - 18,000,000.00 18,000,000.00 - 18,000,000.00
Installment payment for selling products 91,254,524.26 - 91,254,524.26 159,084,593.82 - 159,084,593.82
Total 171,142,345.99 - 171,142,345.99 251,588,919.15 - 251,588,919.15
As of June 30th, 2017,there is no termination of long-term receivables booking due to transfer of a financial asset.
As of June 30th, 2017, the Group has no assets/liabilities booked due to any transferred long-term receivable that the Group still keep recourse or retain part of the corresponding rights
or interests.
110
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
11. Long-term equity investment
Unit: RMB
Decrease/Increase in the current period
Closing
Blance
Opening Adjustment: Closing For
The invested entity Investment Profit/Loss Declaration of Provision
Balance Other Other Balance Provision
Additional Investment confirmed under the cash dividends for
comprehensive Changes others for decline
Investments reduction Equity Method or profit decline in
income in equity in value
distribution value
Associated Companies
Wuhu Sensor
35,000,000.00 - - (1,409,148.78) - - - - - 33,590,851.22 -
Technology Co, Ltd.
Maxio Technology
- 98,000,000.00 - (2,468,553.27) - - - - - 95,531,446.73 -
(Hangzhou) Ltd.
Subtotal 35,000,000.00 98,000,000.00 - (3,877,702.05) - - - - - 129,122,297.95 -
Total 35,000,000.00 98,000,000.00 - (3,877,702.05) - - - - - 129,122,297.95 -
111
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Note: According to the equity transfer agreement signed between the Company and Hangzhou Lingqi Technology Co.,
Ltd, the Company’s subsidiary, Hangzhou Hikvision Science and Technology Co., Ltd acquired 26.68% equity of Maxio
Technology (Hangzhou) Co., Ltd. (hereinafter refers to as “Maxio Technology”) with RMB 50 million. Payment for
equity transfer was paid in January 2017, and relevant property rights transfer was processed. According to the Equity
Capital Increase Agreements signed between the Company and MaxioTechnology and its shareholders, the Company
increase capital investment of RMB 48 million on Maxio Techonology, and increased capital has been paid in May 2017.
After this capital increment, the Company and its subsidiary together are holding 41.63% equity of Maxio Techonology.
12. Fixed Aseets
(1) Details
Unit: RMB
Office and other Machinery and Transportation
Items Building Total
equipment Equipment vehicles
Total original carrying amount
1. Opening balance 2,557,263,629.24 153,875,892.42 634,591,114.67 61,860,747.84 3,407,591,384.17
2. Increased 17,641,729.41 34,484,534.90 207,573,141.96 3,212,496.64 262,911,902.91
1) purchase 17,641,729.41 34,484,534.90 185,821,460.76 3,212,496.64 241,160,221.71
2) transferred from
- - 21,751,681.20 - 21,751,681.20
construction in progress
3.Decrease 5,328,312.71 3,730,649.72 4,325,102.02 2,268,366.81 15,652,431.26
1) disposal or write-off 5,328,312.71 3,730,649.72 4,325,102.02 2,268,366.81 15,652,431.26
4. Effect of foreign currency
(1,656,941.04) 589,585.35 200,980.64 610,329.50 (256,045.55)
exchange difference
5.Closing Balance 2,567,920,104.90 185,219,362.95 838,040,135.25 63,415,207.17 3,654,594,810.27
Accumulated depreciation
1. Opening blance 275,060,799.95 59,217,137.26 173,740,268.29 45,664,703.18 553,682,908.68
2. Increased 58,077,078.09 18,258,632.77 82,770,437.77 3,201,860.53 162,308,009.16
(1) provided 58,077,078.09 18,258,632.77 82,770,437.77 3,201,860.53 162,308,009.16
3. Decreased 1,518,569.11 2,544,510.56 700,280.68 2,041,775.20 6,805,135.55
(1) disposal or
1,518,569.11 2,544,510.56 700,280.68 2,041,775.20 6,805,135.55
write-off
4. Effect of foreign currency
(62,719.76) (161,726.46) 287,001.59 201,988.10 264,543.47
exchange difference
5.Closing balance 331,556,589.17 74,769,533.01 256,097,426.97 47,026,776.61 709,450,325.76
Provision for decline in value
1.Opening balance - - - - -
2.Increased - - - - -
3. Decreased - - - - -
4.Closing balance - - - - -
Total carrying amount
1. Closing balance 2,236,363,515.73 110,449,829.94 581,942,708.28 16,388,430.56 2,945,144,484.51
2. Opening balance 2,282,202,829.29 94,658,755.16 460,850,846.38 16,196,044.66 2,853,908,475.49
(2) As of June 30th 2017, the Group does not have any idle fixed assets.
(3) As of June 30th 2017, the Group has not leased any fixed asset through financial leasing.
(4) As of June 30th 2017, the Group has not rent out any fixed asset through operating leasing
(5) Fixed assets of which certificates of title have not been granted as of June 30th 2017
Unit: RMB
Carrying
Item Reason for certificates of title not granted
amount
Office building for branches In the process of obtaining the real estate certificates
149,433,978.73
Tonglu Security Industrial Base (Phase 1) -the factory In the process of obtaining the real estate certificates after
617,155,169.94
and dormitory transferred from construction in process
Total 766,589,148.67
112
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
13. Construction in progress
(1） Details of construction in progress
Unit: RMB
Closing balance Opening balance
Item
Carrying amount Provision Carrying value Carrying amount Provision Carrying value
Security industrial (Tonglu) base (Phase 1) 34,328,031.91 - 34,328,031.91 18,104,535.49 - 18,104,535.49
Security industrial (Tonglu) base (Phase 2) 19,168,601.89 - 19,168,601.89 2,713,228.89 - 2,713,228.89
Internet Security Industry Base 584,252,250.38 - 584,252,250.38 238,269,427.37 - 238,269,427.37
Public Security Monitoring Site Project 81,785,245.91 - 81,785,245.91 42,542,379.61 - 42,542,379.61
Others 45,316,684.49 - 45,316,684.49 14,852,951.00 - 14,852,951.00
Total 764,850,814.58 - 764,850,814.58 316,482,522.36 - 316,482,522.36
(2) Changes in significant construction in progress
Unit: RMB
Transferred to Amount Including:
Transferred to Accumulated Capitalizati
long-term invested as a Constructio capitalized interest
Budget fixed assets capitalized interest on rate for Source of
Item Opening balance Increased receivables Closing balance proportion of n Progress and profit/loss on
(RMB 0,000) during the and profit/loss on the current funds
during the current budget (%) exchange for the
current period exchange (Note) period (%)
period amount (%) current period
Security industrial
Self-
(Tonglu) base 72,000.00 18,104,535.49 16,223,496.42 - - 34,328,031.91 90.48 90.48 - -
financing
(Phase 1)
Security industrial
(Tonglu) base 74,100.00 2,713,228.89 16,455,373.00 - - 19,168,601.89 2.59 2.59 - - Bond
(Phase 2)
Internet Security
100,000.00 238,269,427.37 345,982,823.01 - - 584,252,250.38 58.43 58.43 107,883,858.92 212,883,858.92 1.25% Bond
Industry Base
Self-
Others - 57,395,330.61 91,822,469.04 21,751,681.20 364,188.05 127,101,930.40 - - - -
financing
Total - 316,482,522.36 470,484,161.47 21,751,681.20 364,188.05 764,850,814.58 - - - -
Note：This amount is calculated by interest expense for specific foreign currency borrowings, less interest income for ununsed borrowing fund and profit/loss on exchange rate
difference.
As of June 30th 2017, the Group dose not have any sign of impairment of projects under construction, therefore, no provision for impairment loss was booked.
113
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
14. Intangible assets
(1) Details of Intangible assets
Unit: RMB
Intellectual property
Item Land use right right Software Total
Total original carrying amount
1.Opening balance 323,531,470.36 27,923,432.16 143,092,986.87 494,547,889.39
2. Increased 2,611,200.00 889,118.71 18,896,994.95 22,397,313.66
(1) Purchase 2,611,200.00 889,118.71 18,896,994.95 22,397,313.66
3.Decreased - - - -
(1)Disposal or write-off - - - -
4.Effect of foreign currency
- 1,196,147.85 - 1,196,147.85
exchange
5.Closing balance 326,142,670.36 30,008,698.72 161,989,981.82 518,141,350.90
Total accumulated amortization
1.Opening balance 12,088,524.92 9,121,583.99 62,880,990.85 84,091,099.76
2.Increased 3,236,766.72 1,810,515.68 16,068,501.11 21,115,783.51
(1)Provided 3,236,766.72 1,810,515.68 16,068,501.11 21,115,783.51
3.Decreased - - - -
(2)Disposal or write-off - - - -
4.Effect of foreign currency
- 381,996.34 - 381,996.34
exchange
5. Closing balance 15,325,291.64 11,314,096.01 78,949,491.96 105,588,879.61
Provision for decline in value
1.Opening balance - - - -
2.Increased - - - -
3. Decreased - - - -
4.Closing balance - - - -
Total carrying amount
Closing balance 310,817,378.72 18,694,602.71 83,040,489.86 412,552,471.29
Opening balance 311,442,945.44 18,801,848.17 80,211,996.02 410,456,789.63
15. Goodwill
(1) Goodwill book value
Unit: RMB
Increased Decreased
The invested entity Opening balance Business combination not Closing balance
Disposal
under common control
ZAO Hikvision 67,349.64 - - 67,349.64
Beijing Brainaire Storage Technology Co.,
42,695,573.44 - - 42,695,573.44
Ltd. (北京邦诺存储科技有限公司)
Henan HuaAn Intelligence Development Co.,
Ltd. (河南华安保全智能发展有限公司) and 61,322,871.63 - - 61,322,871.63
its subsidiaries
Hundure Technology (Shanghai) Co.,
13,774,405.88 - - 13,774,405.88
Ltd.( 汉军智能系统(上海)有限公司)
Hangzhou Hikvision Zhicheng Investment
and Development Co. Ltd. (杭州海康智城投 12,573.42 - - 12,573.42
资发展有限公司)
Secure Holdings Limited 130,491,627.46 - - 130,491,627.46
Total 248,364,401.47 - - 248,364,401.47
(2) Provision of decline in value for goodwill
114
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
The Group performed impairment test at the end of the reporting period.The key assumptions used in the
Group’s annual impairment test performed for goodwill at the end of the reporting period:
The recoverable amounts of the the relevant assets have been determined on the discounted present value of the
future cash flow projections. The cash flow projections are based on 2017-2021 Financial Budgets approved by
management covering a 5-year period, with discount rates of 18% to 20%. The sets of cash flows beyond the
5-year period are projected without growth. This growth rates are based on the relevant industry growth
forecasts and do not exceed the average long-term growth rate for the relevant industry. Expected cash
inflows/outflows, which include budgeted net sales, cost of revenue and operating expenses, have been
determined by management based on past performance and expectations for the future market development.
There was no case recognized that the recoverable amount of the goodwill is less than the carrying value of the
goodwill, therefore, no provision for impairment loss was booked during the period.
16. Deferred tax assets/deferred tax liabilities
(1) Deferred tax assets that are not presented at 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
1,065,338,332.12 214,297,107.80 857,050,100.60 183,020,355.82
losses of assets
Payroll payables 174,795,783.91 26,219,367.59 174,795,783.91 26,219,367.59
Share-based compensation 234,532,772.22 32,796,191.15 136,678,690.94 18,118,078.96
Provisions 46,550,937.15 6,982,640.58 28,799,848.84 4,319,977.33
Unrealized profit from
1,017,081,996.99 151,536,034.90 918,416,162.13 137,762,424.32
inter-group transactions
Changes in the fair value of
derivative financial 18,562,128.16 2,944,449.35 60,459,998.68 9,229,129.93
instruments
Total 2,556,861,950.55 434,775,791.37 2,176,200,585.10 378,669,333.95
(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
Changes in the fair value
of derivative financial 3,004,171.92 450,625.79 15,547,537.34 3,358,395.25
instruments
Total 3,004,171.92 450,625.79 15,547,537.34 3,358,395.25
(3) Deferred tax assets and deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
Closing balance Opening balance
Item Deferred tax assets or Deferred tax assets or
Offset amount Offset amount
liabilities liabilities
Deferred tax assets 450,625.79 434,325,165.58 3,358,395.25 375,310,938.70
Deferred tax liabilities 450,625.79 - 3,358,395.25 -
17. Other non-current assets
Unit: RMB
115
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Item Closing balance Opening balance
Prepayments for acquisition of real estate 10,932,858.00 10,782,858.00
Prepayments for purchase of equipments 18,986,564.70 30,216,826.42
Total 29,919,422.70 40,999,684.42
18. Short-term borrowings
(1) Categories of short-term loans
Unit: RMB
Item Closing balance Opening balance
Fiduciary loan 10,044,523.17 1,448,732.40
Guaranteed loans 1,593,386,873.62 21,842,592.45
Secured loans (pledged) 361,701,055.97 9,000,000.00
Total 1,965,132,452.76 32,291,324.85
(2) As of June 30th 2017, the Group did not have any overdue short-term loans that were failed to repay.
19. Financial liabilities booked at fair value, and differences in fair value booked through profit or loss in the
current period
Unit: RMB
Item Closing balance Opening balance
Held-for-trading financial liabilities 18,562,128.16 69,789,502.97
Including: derivative financial liabilities 18,562,128.16 69,789,502.97
total 18,562,128.16 69,789,502.97
Derivative financial assets includes forwards and foreign currency structured contracts.
20. Notes payable
Unit: RMB
Item Closing balance Opening balance
Bank acceptance Bill 536,694,693.25 876,804,536.72
Total 536,694,693.25 876,804,536.72
As of June 30th 2017, the Group did not have any unpaid matured notes payables.
21. Accounts payable
(1) List of accounts payable
Unit: RMB
Item Closing balance Opening balance
Loans 6,150,299,056.87 6,944,209,175.02
Payment for construction 5,594,726.08 65,112,853.11
Total 6,155,893,782.95 7,009,322,028.13
As of June 30th, 2017, the Group did not have any significant account payable with aging above one year.
22. Receipts in advance
1. List of receipts in advance
Unit: RMB
116
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Item Closing balance Opening balance
Advanced payments from sales of goods 366,062,570.34 357,102,290.89
Advanced payments from construction
78,312,638.80 112,702,546.56
contracts
Total 444,375,209.14 469,804,837.45
As of June 30th 2017, the Group did not have any significant receipts in advance with aging above one year
23. Payroll payable
(1) Details of payroll payables
Unit: RMB
Increase in the Decrease in the current
Item Opening balance Closing balance
current period period
Short-term remuneration 1,084,423,286.90 1,953,579,173.11 2,445,180,248.45 592,822,211.56
Dimission benefits – defined contribution
527,852.20 119,335,791.47 117,614,285.36 2,249,358.31
scheme
Total 1,084,951,139.10 2,072,914,964.58 2,562,794,533.81 595,071,569.87
(2) List of Short-term remuneration
Unit: RMB
Increase in the Decrease in the current
Item Opening balance Closing balance
current period period
1.Wages or salaries, bonuses, allowances
1,049,466,834.71 1,687,793,714.26 2,192,427,673.07 544,832,875.90
and subsidies
2.Staff welfare 2,967,561.72 77,250,760.29 73,213,181.75 7,005,140.26
3.Social insurance contributions 225,829.18 89,958,289.94 89,705,859.74 478,259.38
Including: medical insurance 208,370.79 79,249,412.46 78,994,755.04 463,028.21
injury insurance 2,635.97 4,097,137.71 4,097,106.22 2,667.46
maternity insurance 14,822.42 6,611,739.77 6,613,998.48 12,563.71
4.Housing funds 812,400.00 78,578,246.76 78,035,109.76 1,355,537.00
5.Labor union and education fund 30,950,661.29 19,998,161.86 11,798,424.13 39,150,399.02
subtotal 1,084,423,286.90 1,953,579,173.11 2,445,180,248.45 592,822,211.56
(3) Defined contribution scheme (Note)
Unit: RMB
Increase in the Decrease in the current
Item Opening balance Closing balance
current period period
Basic pension insurance 472,261.07 111,959,526.54 110,393,061.60 2,038,726.01
Unemployment insurance 55,591.13 7,376,264.93 7,221,223.76 210,632.30
Subtotal 527,852.20 119,335,791.47 117,614,285.36 2,249,358.31
Note：
During the reporting periods, the employees of the Company are the members of state-managed retirement
benefit plan, and unemployment insurance plan, operated by the respective governments of these jurisdictions.
The Group is required to contribute specified percentage out of payroll costs to the retirement benefit schemes
and unemployment insurance schemes to fund the benefits. The Group has no other material obligation for the
payment of pension benefits beyond the contributions described above, and corresponding expenses are booked
into profits and losses of related assets during the current period.
117
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
24. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 788,850,622.73 898,545,866.96
Value-added tax 104,391,785.87 229,179,164.71
City construction and maintenance tax 19,224,829.95 28,164,970.24
Local education surcharges 11,072,061.70 8,216,807.76
Education surcharges 9,978,050.97 15,154,496.86
Others 7,578,028.38 26,449,415.69
Total 941,095,379.60 1,205,710,722.22
25. Dividends payable
Unit: RMB
Item Closing balance Opening balance
Dividends of restricted shares (Share Incentive Scheme) 92,407,139.16 20,105,831.16
Total 92,407,139.16 20,105,831.16
26. Other payables
(1) List of other payables according to the nature of the payment
Unit: RMB
Item Closing balance Opening balance
Collection and payment on behalf 232,204,209.43 101,627,498.81
Accrued expenses 101,590,445.51 127,849,041.50
Guarantee and deposit fees 88,799,182.25 110,171,087.75
Others 59,135,379.05 48,628,862.84
Subscription proceeds for restricted shares 660,888,216.54
Total 481,729,216.24 1,049,164,707.44
(2) As of June 30th 2017, the Group does not have any significant other payables aging over one year.
27. Non-current liabilities due within one year
Unit：RMB
Item Closing balance Opening balance
Long-term borrowings due within one year (Note (V)29) 700,000,000.00 15,340,813.03
Bond Interest Payable due within one year 14,012,975.36 -
Total 714,012,975.36 15,340,813.03
28. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Payment for subscription of restricted shares 853,507,327.55 300,177,750.17
Total 853,507,327.55 300,177,750.17
118
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
29. Long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged loan (Note 1) 20,947,334.00 31,421,001.00
Guaranteed loans 1,800,000,000.00 1,500,000,000.00
Fiduciary loan 8,460,841.80 16,127,396.36
Other borrowing (Note 2) 190,000,000.00 190,000,000.00
Less：Long-term loans due within one year (Note (V) 27) 700,000,000.00 15,340,813.03
Total 1,319,408,175.80 1,722,207,584.33
As of June 30th 2017, the GBP loans, with book value RMB 8,300,291.68, carry annual interest rate ranging
from 2.1% to 3.45% (as of December 31st 2016: 1.20% to 3.50%)；the RMB loans, with book value RMB
1,310,947,334.00, carry annual interest rate ranging from 2.65% to 5.00% (as of December 31st 2016: range
from 2.65% to 5.00%).
Note 1：The Group pledged RMB 70,036,733.76 account receivables for this pledged loan, maturity date
September 21st 2018, annual rate 5%.
Note 2: During the reporting period, the Group entered into an agreement with CDB Development Fund(国开发
展基金, as "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 or take part in decision-making. The Group shall pay a 1.2%
annualized return to CDBDF by way of dividends or interest payments, and the Group is required to redeem the
CDBDF's equity investment by instalment each year from 2021 to 2024. Therefore, the capital injection by
CDBDF is treated as a long-term loan. As of June 30th 2017, CDBDF has aggregately invested RMB 190
million (December 31st 2016: RMB 190 million).
119
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
30. Bonds payable
(1) Bonds payable
Unit: RMB
Item Closing balance Beginning balance
Euro Bond (Note) 3,099,840,000.00 2,954,449,528.77
Total 3,099,840,000.00 2,954,449,528.77
(2) Change in bond payable balance
Note: On February 3rd, 2016, the Company publicaly issued the bond with nominal value amounting to Euro 400 million ("Euro Bond"); and the bond was settled, listed and traded
on the Irish Stock Exchange on February 18th, 2016. The Euro bond has a maturity term for 3 years, maturity date is Feburary 18th, 2019, the issuance price of the bond is 99.959%
of the nominal value, and interest rate is 1.25% per annum, with interest payment date of Feburary 18th per annum, and one-time principal repayment on maturity date. The Euro
Bonds are mainly used for the company's security industry base construction and the Internet security industry base construction。
Unit: RMB
Amortization Payments
Issuance Interests expenses
in the
Issue in Foreign accrued based on Less: interest paid Interests due of premiums
Item Face value Maturity Issuance Opening blance current Closing balance
Date current exchange effects the principal in the current year within one year or discounts
reporting
period amount
period
Irish
Euro Euro 400,000, Feburary
3 years 2,903,120,000.00 2,954,449,528.77 - 177,120,000.00 25,519,995.30 43,236,548.71 14,012,975.36 - - 3,099,840,000.00
Bond 000.00 18th 2016
(Note)
Euro 400,000, -
Total 2,903,120,000.00 2,954,449,528.77 - 177,120,000.00 25,519,995.30 43,236,548.71 14,012,975.36 - 3,099,840,000.00
000.00
120
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
31. Provisions
Unit: RMB
Item Closing balance Beginning balance
Sales warranty 46,550,937.15 41,933,212.54
Total 46,550,937.15 41,933,212.54
32. Deferred income
Unit: RMB
Item Beginning balance Increase in current Decrease in current Closing balance Details
Period period
Cloud storage service income 10,833,745.99 20,609,104.65 14,624,948.58 16,817,902.06 Note
Total 10,833,745.99 20,609,104.65 14,624,948.58 16,817,902.06
As of June 30th 2017, the Company has no deferred income related to government subsidies.
Note: This is revenue related to the cloud storage service the Company provides to its customers; and the Company will
recognize the revenue accordingly during the period the service is actually provided.
33. Share capital
Unit: RMB
Changes for the period（”-” represents decrease）
Opening balance Closing balance
New issue of shares (Note
Bonus issue (Note 2) Others (Note 3) Subtotal
1)
2017.6.30：
Total
6,102,706,885.00 52,326,858.00 3,076,288,371.00 (2,457,000.00) 3,126,158,229.00 9,228,865,114.00
shares
Note 1: Pursuant to the Articles of Association of the Company revised by the resolution of 20th Meeting of the 3rd
session Board of Directors authorized by the 2nd extraordinary general meeting in 2016, the company was approved
to grant 53,557,028 shares RMB common shares (A-share) to Hu Yangzhong and other grantees totaled in 2989,
with face value RMB 1 and issuing price of RMB 12.63 per share. In the payment process of capital, 1 grantee left
the company and became unqualified, part of the grantees partially or completely renounce the subscription of the
incentive shares because of personal resons, 3 grantees were postponed, resulted in an actual granted 2936
personnels, with 52,326,858 actual granted shares.，increased paid-in capital of RMB 52,326,858.00, resulted in
capital reserve of RMB 608,561,358.54. The above Change in Equity has been inspected by Tianjian Accounting
Firm (special general partnership), and the capital verification report was issued on December 31st 2016 (TianJian
Verification (2016) No.556). The registration procedures were completed on Feburary 9th 2017.
Note 2：Pursuant to shareholder's resolution of 2016 annual General Meeting dated on May 4th 2017, based upon
the total capital share of 6,152,576,743 shares, the company proposed to distribute bonus 5 shares for each 10
ordinary shares (tax inclusive), As a result, 3,076,288,371 shares were distributed, with face value RMB 1, and a
total increase in capital share of RMB 3,076,288,371.00.
Note 3：Pursuant to the Articles of Association of the Company revised by the resolution of 19th General Meeting
of 3rd session Board of Directors authorized by the first Extraordinary General Meeting in 2014, the Company
repurchased and cancelled 2,457,000.00 granted but restricted treasury shares by cash, and the total share capital of
the Company decreased by RMB 2,457,000.00, capital reserve decreased by RMB 12,694,500. The registration
procedures were completed on April 20th 2017.
121
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
34. Capital reserves
Unit: RMB
Increased in the Decreased in the
Item Opening balance current period current period Closing balance
(Note 1) (note 2)
2017.06.30
Share premium 907,959,832.49 608,561,358.54 34,378,809.19 1,482,142,381.84
Other capital reserves 142,281,021.17 97,854,081.28 - 240,135,102.45
Total 1,050,240,853.66 706,415,439.82 34,378,809.19 1,722,277,484.29
Note 1：The increase of RMB 608,561,358.54 in share premium is due to the Company’s new issued restricted
shares, please refer to Note (V) 33; The increase of RMB 97,854,081.28 in other capital reserves is due
to recognition of equity investment payments into capital reserve, please refer to Note (XI).
Note 2： The decrease of RMB 12,694,500.00 in share premium was due to the Company’s repurchase and
cancel of 2,457,000.00 granted but restricted treasury shares by cash, please refer to Note (V) 33-Note
3. The decrease of RMB 19,559,953.47 in share premium was due to business merger under common
control for Hangzhou Hikvision Ximu Intelligent Technology Co., Ltd. (of which RMB 16,300,000
was acquisition payment, RMB 3,259,953.47 was payments for acquiring minority’s equity and
increase capital reserves). The decrease of RMB 2,124,355.72 in share premium was due to restriced
shares distributed to subsidiaries.
35. Treasury shares
Unit: RMB
Increased in the Decreased in the
Item Opening Balance Closing balance
current year (Note 1) current year (Note 2)
2017.06.30
Restricted shares incentive scheme 300,177,750.17 660,888,216.54 107,558,639.16 853,507,327.55
Total 300,177,750.17 660,888,216.54 107,558,639.16 853,507,327.55
Note 1：Treasury shares increased of RMB 660,888,216.54 due to granted 52,326,858 shares RMB common
shares (A-share) to Hu Yangzhong and other grantees totaled in 2936, with issuing price of RMB 12.63
per share.
Note 2： Treasury shares decreased of RMB 107,558,639.16，including a decrease of RMB 15,151,500 due to
the repurchase and cancellation of 2,457,000.00 restricted ordinary shares of 2014 Restricted Share
Incentive Scheme；And a decrease of RMB 92,407,139.16 due to provision of cash dividend allocated to
restricted shareholders.
36. Other comprehensive income
Unit: RMB
Change for the period
Less: transfer to
current period Attributable to
Less: Attributable
Item Opening balance Before tax P/L from income the owner of the to minority Closing balance
balance previous other tax Company (after interest
expense (after tax)
comprehensive tax)
income
2017.06.30
Items that may be reclassified
(41,230,777.21) 29,434,317.10 - - 28,590,931.77 843,385.33 (12,639,845.44)
subsequently to profit or loss
Included: Effect on conversion of
financial statements denominated in (41,230,777.21) 29,434,317.10 - - 28,590,931.77 843,385.33 (12,639,845.44)
foreign currencies
Other comprehensive income (41,230,777.21) 29,434,317.10 - - 28,590,931.77 843,385.33 (12,639,845.44)
122
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
37. Surplus reserve
Unit: RMB
Increased in the current Decreased in the current
Item Surplus reserve Closing balance
period period
2017.06.30
Statutory surplus reserve (Note) 2,615,437,822.15 - - 2,615,437,822.15
Total 2,615,437,822.15 - - 2,615,437,822.15
38. Retained earnings
Unit: RMB
Item First half-year of 2017 First half-year of 2016
Retained Earnings at the close of previous reporting period before
14,866,457,856.65 12,196,097,444.07
adjustment
Adjustment of initial retained earnings under the common control (9,679,463.77) (12,049,426.69)
Retained earnings at the beginning of the year 14,856,778,392.88 12,184,048,017.38
Add: Net profit attributable to owners of the Company for the current
3,291,546,056.70 2,607,821,529.43
period
Less: Appropriation to statutory surplus reserve
Dividends on ordinary shares (Note) 3,728,583,103.20 2,807,336,489.30
Share bonus (Note) 3,076,288,371.00 1,220,631,676.00
Retained earnings at the end of the period 11,343,452,975.38 10,763,901,381.51
Note：Pursuant to the 2016 shareholder's equity distribution scheme approved by 2016 annual General Meeting
dated on May 4th 2017, based upon the total capital share of 6,152,576,743 shares, for each 10 ordinary
shares, the company proposed distributing cash dividends of RMB 6 (tax inclusive), and distributing 5
bonus shares for each 10 ordinary shares to all shareholders, the rest of retained earnings were all
carried forward for future distributions.
39. Operating income/operating cost
Unit: RMB
2017 first half year 2016 first half year
Item
Revenue Cost Revenue Cost
Operating income 16,190,840,525.65 9,290,852,501.98 12,346,411,908.82 7,355,238,670.80
Other operating income 256,699,210.87 129,842,522.86 207,064,839.76 162,977,593.50
Total 16,447,539,736.52 9,420,695,024.84 12,553,476,748.58 7,518,216,264.30
40. Business Taxes and Surcharges
Unit: RMB
Amount recognized in 2017 first Amount recognized in 2016 first
Items (Note)
half-year half-year
Business tax 1,889,150.09 6,584,762.49
City construction and maintenance tax 81,381,228.77 52,958,623.11
Education surcharges 36,835,581.00 22,705,021.67
Local education surcharges 28,681,113.91 15,173,252.71
Real estate tax 15,144,057.60 -
Stamp duty 8,924,393.79 -
Tax on use of land 1,104,700.47 -
Vehicle and vessel tax 272,370.07 -
Total 174,232,595.70 97,421,659.98
Note: According to the Value-added Tax Accounting Regulations (《增值税会计处理规定》) issued by
Ministry of Finance (Finance and Accounting [2016] no. 22), the company accounted real eastate tax, tax on
use of land, and stamp duty under “Business taxes and Surcharges” starting from May 1st, 2016
123
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
41. Financial Expenses
Unit: RMB
Amount recognized in 2017 first Amount recognized in 2016 first
Items
half-year half-year
Interest expenses 81,683,226.19 61,229,707.83
Less：Interest income 159,445,016.70 117,541,491.86
Effect on foreign exchange 346,869,555.21 (48,838,147.23)
Less﹕Foreign exchange effect on specific loan and the
212,883,858.92 -
capitalization of specific loan interests
Others 9,276,721.87 7,966,982.90
Total 65,500,627.65 (97,182,948.36)
42. Impairment losses of assets
Unit: RMB
Amount recognized in 2017 first Amount recognized in 2016 first
Items
half-year half-year
Bad debt provision 212,178,792.88 140,744,360.17
Inventory provision 39,559,582.08 18,241,600.53
Total 251,738,374.96 158,985,960.70
43. Gains from changes in fair values (losses)
Unit: RMB
Amount recognized in 2017 first Amount recognized in 2016 first
Sources of gains/losses from changes in fair values
half-year half-year
Financial assets measured by fair value and their changes
(12,543,365.42) (8,281,896.32)
recognized in the gains and losses during the current period
Including: Profits or losses on the changes in fair value of
(12,543,365.42) (8,281,896.32)
derivative financial asset
Financial liabilities measured by fair value and their changes
51,095,855.83 -
recognized in the gains and losses during the current period
Including: Profits or losses on the changes in fair value of
51,095,855.83 -
derivative financial asset
Total 38,552,490.41 (8,281,896.32)
44. Investment income
Unit: RMB
Amount recognized in 2017 first Amount recognized in 2016 first
Item
half-year half-year
Disposal G/L of financial assets measured by fair value and their
changes recognized in the gains and losses during the current 22,296,650.52 (4,317,198.97)
period
Investment income on matured financial product redemption 22,727,398.21 30,768,699.87
Long-term equity investment gains (losses) based on equity
(3,877,702.05) -
method
Investment gains (losses) for available-for-sale financial assets
8,505,842.42 -
during the holding period
Total 49,652,189.10 26,451,500.90
45. Other income
Unit: RMB
Amount recognized in 2017 first Amount recognized in 2016 Pertinent to assets /
Government Subsidy Item Pertinent to incomes
half-year first half-year
VAT Refund 677,411,292.41 - Pertinent to incomes
124
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
46. Non-operating income
Unit: RMB
Item Amount recognized in Amount recognized in Amount incurred in nonrecurring gains and
2017 first half-year 2016 first half-year loss in the current period
Profits from disposal of non-current
2,798,685.80 1,320,478.05 2,798,685.80
assets
Government subsidies 14,130,234.67 641,245,222.90 14,130,234.67
Fines and confiscations 10,498,710.41 5,794,336.34 10,498,710.41
Others 7,088,648.70 3,625,484.35 7,088,648.70
Total 34,516,279.58 651,985,521.64 34,516,279.58
Government subsidies recognized in current period P/L:
Unit: RMB
Amount recognized in Amount recognized in Pertinent to assets or
Item
2017 first half-year 2016 first half-year Pertinent to incomes
2
VAT Refund - 629,279,468.11 Pertinent to incomes
Grants and subsidies3 12,859,922.90 11,943,630.07 Pertinent to incomes
Refund of tax and levies4 1,270,311.77 22,124.72 Pertinent to incomes
Total 14,130,234.67 641,245,222.90 /
47. Non-operating expenses
(4) Unit: RMB
Amount recognized in Amount recognized in Amount recorded into the current period
Item
2017 first half-year 2016 first half-year non-recurring profits (losses)t
Total losses from disposal of
571,711.25 1,619,629.70 571,711.25
non-current assets
Local water conservancy construction
544,266.79 15,952,521.87 -
fund
Others 1,164,510.38 476,219.24 1,164,510.38
Total 2,280,488.42 18,048,370.81 1,736,221.63
48. Income tax expenses
Unit: RMB
Item Amount for 2017 first half-year Amount for 2016 first half-year
Current income tax 627,672,617.73 497,553,186.34
Deferred income tax (59,014,226.88) (65,021,210.23)
Total 568,658,390.85 432,531,976.11
49. Notes to consolidated cash flow statement
(1) Other cash receipts relating to operating activities
Unit: RMB
Item Amount for 2017 first half-year Amount for 2016 first half-year
Interest income 159,445,016.70 117,541,491.86
5
Government subsidies 14,130,234.67 11,965,754.79
Others 17,587,359.11 9,419,820.69
Total 191,162,610.48 138,927,067.34
2
VAT Refund: Standard VAT tax rebate regulated by Ministry of Finance and State Administration of Taxation. (Finance and Tax
No.[2011]100)
3
Grants and subsidies: local government incentives provided to businesses (including foreign-owned businesses) that promote employment
and economic development.
4
Refund of tax and levies: Standard tax rebate, such as tax rebate for local water conservancy constructions.
5
Please refer to Note (V) 46 for details about government subsidy closely related to regular course of business of the Company and
government subsidy based on standard quota or quantitative continuous application according to the state industrial policy.
125
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
(2) Other cash payments relating to operating activities
Unit: RMB
Item Amount for 2017 first half-year Amount for 2016 first half-year
Office expenses and business expenses 201,114,049.99 209,942,116.75
Advertising and Selling services 350,742,415.17 296,680,515.19
R&D expense 232,735,332.67 242,322,051.41
Shipping and transportation expense 220,925,130.08 153,119,230.11
Travelling expense 110,284,099.64 67,269,016.25
Rental expense 57,015,437.63 36,637,946.55
Others 58,150,376.77 135,751,003.50
Total 1,230,966,841.95 1,141,721,879.76
(3) Other cash receipts relating to investing activities
Unit: RMB
Item Amount for 2017 first half-year Amount for 2016 first half-year
Receipts of financing leases 13,100,745.41 1,595,000.00
Total 13,100,745.41 1,595,000.00
(4) Other cash receipts relating to financing activities
Unit: RMB
Item Amount for 2017 first half-year Amount for 2016 first half-year
Bank acceptance deposit 1,037,596,477.69 933,662,704.53
Letter of Credit Deposit 20,817,664.54 -
Guarantee deposit 3,101,789.16 2,754,149.98
Guarantee deposit for Forwards settlement and sale - 321,959,457.63
Total 1,061,515,931.39 1,258,376,312.14
(5) Other cash payments relating to financing activities
Unit: RMB
Item Amount for 2017 first half-year Amount for 2016 first half-year
Repurchase of shares 15,151,500.00 -
Payments for merger under the common control 16,300,000.00 -
Short-term borrowing deposit 362,430,400.00 -
Long-term borrowing deposit 5,000,000.00 -
Letter of Credit deposit 1,244,100.00 -
Bank acceptance deposit 1,224,149,215.14 1,512,537,047.82
Gurantee Deposit 6,243,523.15 12,083,933.16
Guarantee deposit for Forwards settlement and sale - 166,064.33
Total 1,630,518,738.29 1,524,787,045.31
126
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
50. Supplementary information about cash flow statement
(1) Supplementary information about cash flow statement
Unit: RMB
Amount for 2017 first Amount for 2016 first
Supplementary information
half-year half-year
1. Reconciliation of net profit to cash flows from operating activities:
Net profit 3,275,931,652.25 2,611,827,056.67
Add: Impairment of assets 251,738,374.96 158,985,960.70
Fixed assets depreciation 162,308,009.16 90,401,370.71
Amortization of intangible assets 21,115,783.51 16,502,102.99
Losses on disposal of fixed assets, intangible assets and other
(2,226,974.55) 299,151.65
long-term assets (gains expressed with “-”)
Losses on discarding of fixed assets (gains expressed with “-”) - -
Losses from changes in fair value (gains expressed with “-”) (38,552,490.41) 8,281,896.32
Financial expenses (incomes expressed with “-”) 215,668,922.48 12,391,560.60
Investment losses (gains expressed with “-”) (49,652,189.10) (26,451,500.90)
Share-based payment based on equity 97,854,081.28 -
Decrease in deferred income tax assets (increase expressed with “-”) (59,014,226.88) (65,021,210.23)
Decrease in inventories (increase expressed with “-”) (1,145,432,144.84) (773,634,492.70)
Decrease in operating receivables (increase expressed with “-”) (2,803,131,577.53) (1,541,366,267.97)
Increase in operating payables (decrease expressed with “-”) (1,875,392,178.82) (94,441,399.56)
Decrease in deferred income (increase expressed with “-”) 5,984,156.07 -
Net cash flow from operating activities (1,942,800,802.42) 397,774,228.28
2. Significant investing and financing activities not involving cash
receipts and payments:
3. Net changes in cash and cash equivalents:
Ending balance of cash 12,526,354,618.56 9,878,347,644.10
Less: Beginning balance of cash 13,522,337,697.28 10,033,468,750.19
Add: Ending balance of cash equivalents - -
Less: Beginning balance of cash equivalents - -
Net increase (decrease) in cash and cash equivalents (995,983,078.72) (155,121,106.09)
(2) Constituents of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
Cash 12,526,354,618.56 13,522,337,697.28
Including: Cash on hand 2,619,654.74 748,616.60
Bank deposit for payment at any time 12,507,714,893.76 13,513,777,442.33
Other monetary capital for payment at any time 16,020,070.06 7,811,638.35
Cash equivalents - -
Ending balance of cash and cash equivalents 12,526,354,618.56 13,522,337,697.28
Among the total balance of RMB 669,311,819.24 of the other monetary fund(s) at the end of the period, RMB
653,291,749.18 are various guarantee deposits, not cash and cash equivalents.
51. Assets with restriction in ownership or use rights
Unit: RMB
Item Amount Cause of restriction
Cash and bank balances Various guarantee deposits, pleged for obtaining long-term
653,291,749.18
borrowing
Notes receivable 584,027,766.90 Pledged for bank acceptance bill
Accounts receivable 70,036,733.76 Pledged for obtaining long-term borrowing
Total 1,307,356,249.84
127
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
52. Monetary items of foreign currencies
(1) foreign currencies
Unit: RMB
Balance in foreign currency at Exchange rate for Balance of RMB converted at
Item
the end of period conversion the end of period
Monetary funds
Including: USD 758,578,206.92 6.7744 5,138,912,204.98
EUR 7,592,210.06 7.7496 58,836,565.39
GBP 49,984.27 8.8144 440,581.33
CHF 4,350.90 7.0888 30,842.66
JPY 408.00 0.0605 24.68
Accounts receivable
Including: USD 220,083,935.04 6.7744 1,490,936,609.54
EUR 4,147,353.93 7.7496 32,140,334.02
Short-term borrowing
Including: GBP 2,500,000.00 8.8144 22,036,000.00
Accounts Payable
Including: USD 122,316,676.82 6.7744 828,622,095.45
Bond Payable
Including: EUR 400,000,000.00 7.7496 3,099,840,000.00
(2) Details of Overseas Operational Entities
Main Recordin
overseas g
Name of overseas subsidiaries Basis of selection
operational Currenc
office y
Selection based on local economic
Hikvision USA,Inc. USA USD
environment
Selection based on local economic
HDT International Ltd. Hongkong HKD
environment
Selection based on local economic
Prama Hikvision Indian Private Limited India INR
environment
Netherland Selection based on local economic
Hikvision Europe BV EUR
s environment
Selection based on local economic
Hikvision FZE Dubai USD
environment
Selection based on local economic
Hikvision Singapore Pte. Ltd Singapore SGD
environment
South Selection based on local economic
Hikvision South Africa (Pty) Ltd. ZAR
Africa environment
Selection based on local economic
Hikvision Italy (S.R.L.) Italy EUR
environment
Selection based on local economic
Hikivision do Brasil Comercio de Equipamentos de Segurana Ltd. Brazil BRL
environment
Selection based on local economic
Hikvision Australia PTY Ltd. Australia AUD
environment
Selection based on local economic
Hikvision International Co., Limited Hongkong HKD
environment
Selection based on local economic
Hikvision France SAS France EUR
environment
Selection based on local economic
Hikvision Spain,S.L. Spain EUR
environment
Selection based on local economic
ZAO Hikvision Russia RUB
environment
Selection based on local economic
Hikvision Uk Limited UK GBP
environment
128
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Main Recordin
overseas g
Name of overseas subsidiaries Basis of selection
operational Currenc
office y
Selection based on local economic
Hikvision Poland Spolka Z ograniczona Odpowiedzialnoscia. Poland PLN
environment
Netherland Selection based on local economic
Cooperative Hikvision Europe U.A. USD
s environment
Selection based on local economic
Hikvision Canada INC. Canada CAD
environment
Selection based on local economic
Hikvision LLC Russia RUB
environment
Selection based on local economic
Hikvision Korea Limited Korea KRW
environment
Selection based on local economic
Ezviz Inc. USA USD
environment
Selection based on local economic
Hikvision Kazakhstan limited liability partnership Kazakhstan KZT
environment
Selection based on local economic
Secure Holdings limited UK GBP
environment
Selection based on local economic
Pyronix Ltd UK GBP
environment
Selection based on local economic
Microwave Solutions.Limited UK GBP
environment
Hikvision Turkey Technology And Security Systems Commerce Selection based on local economic
Turkey TRL
Corporation environment
Selection based on local economic
Hikvision Colombia SAS Columbia COP
environment
Selection based on local economic
Hikvision Hungary Kft Hungary HUF
environment
New Selection based on local economic
Hikvision New Zealand Limited NZD
Zealand environment
Selection based on local economic
Hikvision Tashkent LLC. Uzbekistan UZS
environment
Selection based on local economic
Hikvision Kenya (Pty) Ltd Kenya KES
environment
129
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
VI. Changes in consolidation scope
1. Business merger involving enterprises under common control
(1) Business merger involving enterprises under common control during the reporting period
Hangzhou Hik Ximu Intelligent Technology Co., Ltd. (杭州海康希牧智能科技有限公司)
Pursuant to the resolution approved by the 21st meeting of the 3rd session of the Board of Directors held on January 18th 2017, the Company’s subsidiary Hangzhou Hikvision
Automotive Technology Co., Ltd. , CETHIK and 7 individual shareholders including Yang Feng signed the agreement to 100% acquire CETHIK’s subsidiary Hangzhou Hik Ximu
Intelligent Technology Co., Ltd. (hereinafter refer to as “HIK Ximu”) with RMB 16.3 million, of which RMB 9.78 million was for acquiring 60% shares of HIK Ximu held by
CETHIK, and RMB 6.52 million was for acquiring 40% shares of HIK Ximu held by 7 individual shareholders including Yang Feng. The acquicision was completed on May 24th
2017.
Unit：RMB
Equity Net profit of acquiree Income of acquiree from Net profit of acquiree
Basis for Business Income of acquiree from
Name of the acquisition Date of acquisition Basis for determining from beginning of the beginning of the prior from beginning of the
merger under common beginning of the year to
acquiree ratio date of acquisition year to the date of year to the date of prior year to the date of
control the date of acquisition
(%) acquisition acquisition in prior year acquisition in prior year
Both parties are under the
common control of
Equity transfer date of
CETHIK before and after
HIK Ximu 100 April 12th 2017 acquiring the control of 6,146.76 (209,736.97) 5,278,022.46 1,625,123.41
the business
acquiree
combination, which is
not temporary
(2) Cost of business merger
Unit：RMB
Cost of business merger HIK Ximu
- Cash 16,300,000.00
130
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
(3) Acquiree’s book value of assets and liabilities at the date of acquisition
Unit: RMB
HIK Ximu
On date of acquisition Ending balance at the end of prior year
Assets：
Cash and bank balances 2,462,383.90 382,694.41
Accounts receivable 919,422.04 3,191,155.73
Inventories 4,788,664.47 4,755,416.17
Prepayments 16,557.43 15,103.89
Fixed assets 123,067.64 237,137.87
Intangible assets 197,649.60 216,346.18
Deferred income tax asset 55,862.09 39,137.72
Liabilities：
Accounts payable 867,089.36 3,105,113.00
Other payables 15,927,658.68 15,693,470.53
Net assets (8,174,510.52 ) (18,457,254.41)
less：minority interests
Net assets acquired (8,174,510.52) (18,457,254.41)
2. Changes of consolidation scope due to other causes
(1) The subsidiaries newly established and incorporated in the consolidation scope during the current period as
follows:
Amount of
Time of Ratio of
Company Name Registered capital contribution of the
establishment contribution (%)
Company
Hikvision New Zealand Limited (New Zealand
March 2017 NZD 300,000 NZD 300,000 100
Subsidiary)
Wuhan HIK Storage Technology Co., Ltd. (“Wuhan
April 2017 RMB 100 million RMB 60 million 60
Storage”) Note 1
Urumchi Hai Shi Xin An Electronics Technology Co., April 2017
Ltd. (乌鲁木齐海视新安电子技术有限公司) RMB 120 million RMB 108 million 90
(“Hai Shi Xin An”)
Chengdu Hikvision Digital Technology Co., Ltd. April 2017 RMB 80 million RMB 80 million 100
(“Chengdu Hikvision”) Note 2
Hikvision Kenya (Pty) Ltd April 2017 KES 26 million KES 26 million 100
(“Kenya Subsidiary’) Note 3
Hikvision Tashkent LLC. April 2017 USD 130,000 USD 130,000 100
(“Uzbekistan Subsidiary”) Note 4
Hikvision Hungary Kft
May 2017 HUF 58 million HUF 58 million 100
(“Hungary Subsidiary”)
Note 1: At the end of the reporting period, the actual paid-up capital of Wuhan Storage was RMB 25,000,000.00, of
which, RMB 15,000,000.00 that resulted in 60% equity holding percentage was contributed by the Company,
Note 2: At the end of the reporting period, Chengdu Hikvision has not completed capital contribution yet; therefore, its
actual paid-up capital was nil.
131
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Note 3: At the end of the reporting period, Kenya Subsidiary has not completed capital contribution yet; therefore, its
actual paid-up capital was nil.
Note 4：At the end of the reporting period, Uzbekistan Subsidiary has not completed capital contribution yet; therefore,
its actual paid-up capital was nil.
(2) Cancellation of the Company’s Subsidiary during the current reporting period：
Net profit from
Method of equity Data of equity Net asset on the date
Company Name beginning of 2017 to the
Disposition disposition of equity disposition
date of equity disposition
Wuhan Hikvision System
Liquidation March 2017 9,929,719.62 16,361.84
Technology Co., Ltd.
VII. Interest in other entities
1. Equity in subsidiaries
(1) Composition of corporate group
Shareholding ratio
Location of Place of Acquisition
Name Nature of business (%)
operation registration Method
Direct Indirect
Hangzhou, System integration, 100.00
Hangzhou Hikvision System Technology Co., Ltd. Hangzhou Establishment
Zhejiang Technology development
Hangzhou Hikvision Science and Technology Co., Hangzhou, 100.00
Hangzhou manufacture Establishment
Ltd. Zhejiang
Hangzhou Hikvision Security Equipment Leasing Hangzhou, 100.00
Hangzhou Finance lease Establishment
Services Ltd. Zhejiang
Chongqing Hikvision System Technology 100.00
Chongqing Chongqing System integration Establishment
Co., Ltd.
Hikvision USA, Inc. USA Los Angeles Sales 100.00 Establishment
HDT International Ltd. Hong Kong Hong Kong Sales 95.00 5.00 Establishment
Business combination
Prama Hikvision Indian Private Limited India Mumbai Sales 58.00 not under common
control
Hikvision Europe BV Europe Amsterdam Sales 100.00 Establishment
Hikvision FZE Dubai Dubai Sales 100.00 Establishment
Hikvision Singapore Pte. Ltd Singapore Singapore Sales 100.00 Establishment
Chongqing Hikvision Science and Technology Co., 100.00
Chongqing Chongqing Manufacture Establishment
Ltd.
Beijing Hikvision Security Technology Services Co., 100.00
Beijing Beijing Services Establishment
Ltd.
Hangzhou Fuyang Hikvision Baotai Security Hangzhou, 51.00
Hangzhou Construction Establishment
Technology Services Co., Ltd. (Note 1) Zhejiang
Hikvision South Africa (Pty) 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
Brazil Brazil Sales 95.00 5.00 Establishment
Seguran Ltda.
Hikvision Australia PTY Ltd. Australia Australia Sales 100.00 Establishment
Hikvision International Co., Limited Hong Kong Hong Kong Sales 100.00 Establishment
Hikvision France SAS France France Sales 100.00 Establishment
Hikvision Spain,S.L. Spain Spain Sales 100.00 Establishment
Business combination
Shanghai Goldway Intelligent Traffic System Co., 100.00
Shanghai Shanghai Manufacture not under common
Ltd.
control
Business combination
ZAO Hikvision Russia St. Peterburg Sales 100.00 not under common
control
Business combination
Beijing Brainaire Storage Technology Co., Ltd. Beijing Beijing Manufacture 100.00
not under common
132
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Shareholding ratio
Location of Place of Acquisition
Name Nature of business (%)
operation registration Method
Direct Indirect
control
Business combination
Henan Hua’an Intelligence 51.00
Zhengzhou Zhengzhou Construction not under common
Development Co., Ltd.
control
Business combination
Henan Hua’an Security Services Co., Ltd. (Note 2) Zhengzhou Zhengzhou Services 90.00 not under common
control
Business combination
Hundure Technology (Shanghai) Co., Ltd. Shanghai Shanghai Manufacture 100.00 not under common
control
Hikvision Uk Limited UK UK Sales 100.00 Establishment
Hikvision Poland Spolka Z ograniczona Establishment
Poland Poland Sales 100.00
Odpowiedzialnoscia
Hangzhou Hikvision Electronics Co., Ltd.（Note 3） Hangzhou Hangzhou Manufacture 71.30 Establishment
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
Technology 60.00 Establishment
Hangzhou EZVIZ Network Co., Ltd. Hangzhou Hangzhou
development
Ezviz Inc. USA Los Angeles Sales 100.00 Establishment
Business combination
Hangzhou Hikvision Zhicheng Investment
Hangzhou Hangzhou System integration 80.00 not under common
Development Co., Ltd
control
Hangzhou Hikvision Robtics Technology Co. Ltd. Technology 60.00 Establishment
Hangzhou Hangzhou
development
Hangzhou Hikvision Investment Management Co., Investment 100.00 Establishment
Hangzhou Hangzhou
Ltd. Management
Technology 60.00 Establishment
Hangzhou Hik Automotive Technology Co., Ltd. Hangzhou Hangzhou
development
Hangzhou Hikvision Communication Technology Technology 70.00 Establishment
Hangzhou Hangzhou
Co., Ltd. development
Hangzhou Hikvision Weiying Sensory Technology Technology 60.00 Establishment
Hangzhou Hangzhou
Co., Ltd. development
Hikvision Turkey Technology And Security Systems Establishment
Turkey Istanbul Sales 100.00
Commerce Corporation
Hikvision Colombia SAS Columbia Santa Fe Bogota Sales 100.00 Establishment
Hikvision Kazakhstan limited liability partnership Kazakhstan Astana Sales 100.00 Establishment
Manufacture Business combination
Secure Holding Limited British Sheffield 100.00 not under common
control
Manufacture Business combination
Pyronix Limited British Sheffield 100.00 not under common
control
Manufacture Business combination
Microwave Solutions Limited British Sheffield 100.00 not under common
control
Tianjin Hikvision System Technology Co., Ltd. Tianjin Tianjin System integration 100.00 Establishment
Hikvision Hungary Kft Hungary Hungary Sales 100.00 Establishment
Hikvision New Zealand Limited New Zealand Auckland Sales 100.00 Establishment
Technology
Wuhan HIK Storage Technology Co., Ltd. Wuhan Wuhan 60.00 Establishment
development
Urumchi Hai Shi Xin An Electronics Technology Urumchi,
Urumchi Construction 90.00 Establishment
Co., Ltd. Xinjiang
Business combination
Hangzhou,
Hangzhou Hik Ximu Intelligent Technology Co., Ltd Hangzhou Manufacture 60.00 under common
Zhejiang
control
Hikvision Tashkent LLC. Uzbekistan Tashkent Sales 100.00 Establishment
Hikvision Kenya (Pty) Ltd Kenya Kenya Sales 100.00 Establishment
Note 1: Hangzhou Fuyang Hikvision Baotai Security Technology Services Co., Ltd. is a subsidiary controlled by
Hangzhou Hikvision System Co., Ltd who holds 51% equity interests. According to the Articles of Association of the
133
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Company, the dividend payout ratio of Hangzhou Hikvision Systems Co., Ltd. was 50% in the said company (Fuyang
Baotai).
Note 2: Henan Hua’an Security Services Co., Ltd. is a subsidiary controlled by Henan Hua’an Intelligence Development
Co., Ltd.
Note 3: The remaining 29.70% equity interests of Hangzhou Hikvision Electronics Co., Ltd.is held by China
Development Bank Fund. Please refer to Note (V) 29 for details.
2. Equity in joint ventures or associates
(1) Aggregated financial information of insignificant joint ventures or associates
Unit：RMB
Closing balance / amount for Opening balance / amount for
2017 first half-year 2016 first half year
Associates：
The aggregate carrying amount of investments in associates 133,000,000.00 35,000,000.00-
The aggregate amount of its share percentage of the associates - -
--Total net profit and comprehensive income (3,877,702.05) -
VIII. Risks associated with financial instrument
The Group's principal financial instruments include cash and bank balances, equity investments, notes receivable,
accounts receivable, other receivables, long-term receivables, borrowings, accounts payable, interest payable, other
payables, other current assets, note payables, dividends payable, bonds payable, 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.
The Company adopts sensitivity analysis techniques to analyse 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.
1. 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.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
1.1 Market risks
1.1.1. Foreign exchange risks
Foreign exchange risks refer to the risk that losses will occur because of changes in foreign exchange rates. The
Company is primarily exposed to risks relating to the currencies such as USD and EUR. The Group’s subsidiaries in the
mainland of China whose procurement, sales and financing are denominated in RMB, USD and EUR, other principal
activities are settled in RMB. The Group’s subsidiaries in Hong Kong and outside China are principally engaged in
procurement, sales, financing and other major business activities in local currencies such as USD, EUR, GBP and RUB.
As of June 30th 2017, except for monetary items of foreign currencies set out in Note (V), 53, the Group mainly
adopted the functional currency of each of its subsidiary to present the balance of its assets and liabilities. The foreign
exchange risks arising from assets and liabilities denominated in USD and EUR (which has been translated into RMB)
as follows may affect the operating results of the Group.
Unit: RMB
Assets Liabilities
Currencies
Closing balance Opening balance Closing balance Opening balance
USD 6,629,848,814.52 5,368,890,321.65 828,622,095.45 858,395,317.22
EUR 90,976,899.41 459,593,188.17 3,099,840,000.00 2,954,449,528.77
The Company has been paying close attention to the effect of fluctuation in exchange rate on the foreign exchange
risks of the Group and has purchased forward foreign exchange contracts 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
2017 first HY 2016 first HY
Change in interest rates Effect on shareholders’ Effect on shareholders’
Effect on profit Effect on profit
equity equity
5% appreciation of USD against functional currency 290,061,335.95 290,061,335.95 128,413,114.07 128,413,114.07
5% depreciation of USD against functional currency (290,061,335.95) (290,061,335.95) (128,413,114.07) (128,413,114.07)
5% appreciation of EUR against functional currency (150,443,155.03) (150,443,155.03) (136,377,609.77) (136,377,609.77)
5% depreciation of EUR against functional currency 150,443,155.03 150,443,155.03 136,377,609.77 136,377,609.77
1.1.2. Interest rate risk－risk related to changes in cash flow
.
The Group's risk related to changes in the cash flow of financial instruments due to changes in interest rates is mainly
related to floating interest rate bank borrowings. The Group's policy is to maintain the floating rate of these borrowings
to eliminate the risk of changes in the fair value of interest rates.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Sensitivity analysis on interest rate risk
The sensitivity analysis on interest rate risk is carried out based on following assumptions:
Changes in market interest rate have influence on the interest revenue or cost of financial instruments with
variable rate;
For the financial instruments with fixed rate and measured with fair value, changes in market interest rate only
have influence on their interest revenue or cost;
Based on the above assumptions, with other variables unchanged, the interest 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
2017 first HY 2016 first HY
Change in interest rates
Effect on profit Effect on shareholders’ Effect on profit Effect on profit
equity
Increase by 50 basis points of the
199,227,031.43 199,227,031.43 46,421,647.15 46,421,647.15
borrowing rates
Decrease by 50 basis points of the
(199,227,031.43) (199,227,031.43) (46,421,647.15) (46,421,647.15)
borrowing rates
1.2 Credit risk
As at June 30th 2017, the biggest credit risk exposure that may cause financial loss suffered by the Group was
mainly due to the other party’s inability to fulfill obligations that caused the loss on the Group’s financial assets,
which include:
The book value of a confirmed financial asset in the consolidated balance sheet : for those financial instruments that
are measured by fair value, the book value reflects its risk exposure rather than its biggest risk exposure, the biggest
risk exposure will change as the future fair value changes.
In order to minimize credit risk, the Group has established a team responsible for formulating credit limit, credit
approval and implementing other monitoring procedures to ensure necessary follow-up measures are carried out to
recover the overdue debts. In addition, the Group reviews the recovery of each individual receivable at each balance
sheet date to ensure that sufficient provision for bad debts is made for uncollectible funds. As such, the
management of the Group believes that the Group’s exposure to credit risk has been significantly lowered.
The Group only deposits cash and cash equivalents into banks with relatively high level of credit rating; as such the
risk of cash and cash equivalents is low.
The Group has adopted necessary policies to ensure that all the sales customers have good credit records. Since the
Group’s risk exposure exists in several parties to the contract and certain customers, the Group has no other
significant concentration of credit risk.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
1.3. 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 Company 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 2017
Total
Within one year 1-5 years More than five years
Non-derivative financial
liabilities
Short-term borrowings 1,994,061,514.71 - - 1,994,061,514.71
Notes payables 536,694,693.25 - - 536,694,693.25
Accounts payables 6,155,893,782.95 - - 6,155,893,782.95
Other payables 481,729,216.24 - - 481,729,216.24
Other current liabilities 853,507,327.55 - - 853,507,327.55
Bonds payable 24,735,024.64 3,138,588,000.00 - 3,163,323,024.64
Dividends payable 92,407,139.16 - - 92,407,139.16
Long-term borrowings 30,829,735.04 1,152,834,814.08 194,165,808.22 1,377,830,357.34
Long-term payables - 7,466,200.00 - 7,466,200.00
Non-current liabilities due within
730,275,989.06 - - 730,275,989.06
one year
Derivative financial liabilities
Forward foreign exchange
contracts- settled in the gross
amount
- Cash inflow 707,652,770.72 - 707,652,770.72
- Cash outflow 727,049,704.21 - 727,049,704.21
- Net cash outflow 19,396,933.49 - 19,396,933.49
IX. Fair value disclosure
1. The financial assets and financial liabilities measured at fair value at the balance sheet date:
Unit：RMB
Closing fair value
Items
Level 1 Level 2 Level 3 Total
I. Continuous fair value measurement (15,557,956.24) (15,557,956.24)
(I) Financial assets designated as fair value through profit and loss -
1. Tradable Financial Assets 3,004,171.92 3,004,171.92
-- Derivative financial assets 3,004,171.92 3,004,171.92
Total assets measured continuously at fair value 3,004,171.92 3,004,171.92
(II) Tradable Financial Liabilities 18,562,128.16 18,562,128.16
- Derivative financial liabilities 18,562,128.16 18,562,128.16
Total liabilities measured continuously at fair value 18,562,128.16 18,562,128.16
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
2. Information on the estimation technique and important parameters adopted as for continuous Level 2 fair
value measurement items
Fair value at June 30th
Estimation technique Inputs
2017
Discounted cash flow Forward exchange rate
Forward Foreign Exchange
2,297,956.17 approach discounted rate that reflects the credit risk of
Contracts (Assets)
counterparties
Discounted cash flow Forward exchange rate
Interest rate swap contracts
706,215.75 approach discounted rate that reflects the credit risk of
(Assets)
counterparties
Discounted cash flow Forward exchange rate
Forward Foreign Exchange
(18,562,128.16) approach discounted rate that reflects the credit risk of
Contracts (Liabilities)
counterparties
3. 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
4. Fair values of financial assets and financial liabilities that not measured at fair value
The Company’s management believes that the carrying amounts of financial assets and financial liabilities stated in
current assets and current liabilities in financial statements approximate to their respective fair values.
The financial liabilities which are not subsequently measured at fair values by the Group include long-term
borrowings, bonds payable and long-term payables, and the differences between their carrying amounts and their
respective fair values are small.
X. Related parties and related 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 Investment
Hangzhou,
HIK Group Co., Ltd. and asset RMB 660 million 39.59 39.59
Zhejiang
(CETHIK) management
The ultimate controlling party of the Company is China Electronics Technology Group Corporation ("CETE").
2. Information on the subsidiaries of the Company
For details of the subsidiaries of the Company, see Note (VII).
3. Information on the joint ventures and associated companies of the Company
For details of the associated companies of the Company, see Note (V) 11.
4. Information on other related parties
Name Relationship
Gong Hongjia Director of the company, holds 16.16% of the share of the Company
Shanghai Fullhan Microelectronics Co., Ltd. (“Shanghai Fullhan”) Gong Hongjia or his relative(s) serve(s) as the director(s)
Beijing Woqi Co., Ltd.(“Beijing Woqi”) Gong Hongjia or his relative(s) serve(s) as the director(s) (Note)
Subsidiaries of CETE Under common control of the ultimate controlling party of the Company
Zhejiang Tuxun Technology Co.,Ltd. (“Tuxun Technology”) Joint-stock corporation, the Company’s senior management serve(s) as director(s)
Wuhu Sensor Technology Co, Ltd. (“SensorTech”) Associated company，the Company’s senior management serve(s) as director(s)
Maxio Technology (Hangzhou) Ltd. (“Maxio Technology”) Associated company，the Company’s senior management serve(s) as director(s)
Note: Mr Gong Hongjia left Beijing Woqi as a director on November, 2016.
138
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
5. Related party transactions
(1) Sales and purchases of goods, provision of services and receiving services
Purchase of commodities/receiving of services:
Unit: RMB
Amount for 2017 first half AAmount for 2016 first half
Related party Transaction type
year year
Purchase of materials and
Subsidiaries of CETE 94,447,392.66 56,328,655.64
receiving of services
Purchase of materials and
Shanghai Fullhan 72,069,293.64 55,709,889.89
receiving of services
Beijing Woqi Purchase of materials 2,058,082.38 1,471,794.90
SensorTech Purchase of materials 4,489,736.27 -
Maxio Technology receiving of services 23,584,904.76 -
Total 196,649,409.71 113,510,340.43
Sales of commodities/rendering of services:
Unit: RMB
Amount for the current
Related party Transaction content Amount for the prior year
year
Subsidiaries of CETE Sales of products 190,588,282.71 28,171,629.23
Tuxun Technology Sales of products 419,664.11 -
Total 191,007,946.82 28,171,629.23
The above transactions are executed at market prices.
(2) Guaranteed by the related party
As required by the project owner, China Electronics Technology Group Corporation has provided a joint
guarantee to responsibility and duties of 41 construction projects of “Safe Chongqing, Emergency Control
System Digital Construction Project,” signed by Chongqing Hikvision System Technology Co., Ltd.
Meanwhile, the Company provides a counter guarantee to China Electronics Technology Group Corporation.
(3) Other related party transactions
During the current reporting period, the Company’s subsidiary Hangzhou Hikvision Automotive Technology
Co., Ltd. acquired the asset group of CETHIK’s Intelligent Automotive Department with acquisition target
price of RMB 68.02 million. During the transitional period, the acquisition price was auditied and adjusted up
with RMB 11.39 million, and the final settlement price was RMB 79.41 million; Hangzhou Hik Ximu
Intelligent Technology Co., Ltd., CETHIK’s holding subsidiary, was acquired by the Company with RMB
16.30 million, holding 100% equity, please refer to Note (VI) 1 for details.
As of June 6th 2017, the Company made a one-year saving of RMB 200.00 million into CETC Finance Co.,
Ltd. As of June 30th 2017, the balance of the saving account is 200.00 million.
139
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
6. Receivables from related parties and Payable to related parties
(1) Receivables from related parties
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Bad debt provision Carrying balance Bad debt provision
Accounts
Subsidiaries of CETE 440,236,780.92 22,599,774.54 417,423,058.74 21,711,986.75
receivable
Tuxun Technology 905,290.01 45,264.50
Total 441,142,070.93 22,645,039.04 417,423,058.74 21,711,986.75
Prepayments SensorTech 445,487.19 - - -
Maxio Techonology 5,419,526.77 - - -
Total 5,865,013.96 - - -
Other
Subsidiaries of CETE 23,553,271.93 1,177,663.60 - -
Receivables
Total 23,553,271.93 1,177,663.60 - -
(2) Payables to related parties
Unit: RMB
Item Related Party Closing balance Opening balance
Accounts payable Subsidiaries of CETE 134,900,796.42 144,521,684.68
Accounts payable Shanghai Fullhan 64,682,871.01 40,115,748.45
Accounts payable Beijing Woqi 1,272,000.00 888,807.70
Total 200,855,667.43 185,526,240.83
Receipts in advance Subsidiaries of CETE - 22,293,294.23
Total - 22,293,294.23
Other payables Subsidiaries of CETE 32,343,298.26 29,057,883.21
Total 32,343,298.26 29,057,883.21
XI. Share-based payments
1. Overview of share-based payments
According to the “Approval of the Implementation of the Restrictive Share Incentive Scheme of Hangzhou
Hikvision Digital Technology Co., Ltd. (关于杭州海康威视数字技术股份有限公司实施限制性股票激励计
划的批复)” (Guo Zi Fen Pei [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 Participants 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 Participants under the Scheme. However, all the provisions of the Scheme remain valid to
the restricted shares granted under the Scheme.
The total number of subject Shares related to the Restricted Shares granted under the Scheme (excluding lapsed
restricted shares) and the total number of subject Shares related to other effective share incentive schemes of the
140
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Company (if any) in aggregate shall not exceed 10% of the total issued share capital of the Company. Unless
approval is obtained at the general meeting by way of special resolution, the total number of Restricted Shares
granted or to be granted to any Participant under this Scheme or other effective share incentive schemes of the
Company (if any) in aggregate shall not exceed 1% of the total issued share capital of the Company.
The grant price for restricted shares, being the purchase price by staff, shall be determined by the Board of
Directors. The grant price shall not be lower than 50% of the following price, whichever is the highest:
(I) The closing price of the subject shares of the Company for one trading day prior to publication of the
summary Share Incentive Scheme draft;
(II) The average closing price of the subject shares of the Company for 30 trading days prior to publication of
the summary Share Incentive Scheme draft;
(III) The average price of the subject shares of the Company for 20 trading days prior to publication of the
summary Share Incentive Scheme draft; or
(IV) The unit nominal value of the subject shares of the Company.
Each batch of restricted shares shall not be unlocked unless fulfilling, each time, by the Company its unlock
performance criteria, including net asset yield and operating income growth rate, and by Participants their
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 Participants 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 24 October 2014, after consideration and approval by the general meeting, the Company granted 52,910,082
restricted shares to Participants at a grant price of RMB 9.25 per share (“2014 Share Incentive Scheme”). The
Lock-up Period of the Subject Shares shall last for a period of 24 months commencing on the grant date, during
which the Subject Shares granted to Participants 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 Participants may, subject to unlocking conditions stipulated by the
scheme being satisfied, apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months
following the grant date and the number of shares to be unlocked shall be 40% of the aggregate number of the
Subject Shares granted; the second unlocking period shall be the 36 to 48 months following the grant date and
the number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted; the
third unlocking period shall be the 48 to 60 months following the grant date and the number of shares to be
unlocked shall be 30% of the aggregate number of the Subject Shares granted.
On 23 December 2016, after consideration and approval by the general meeting, the Company granted
52,326,858 restricted shares to Participants 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 Participants 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 Participants 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
registration of restricted shares under 2016 Share Incentive Scheme was completed on 20 January 2017.
141
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Unit: share
2014 Share Incentive Scheme Current reporting period
Total of equity instruments outstanding at the beginning of the year 46,220,473
Total of equity instruments granted (share dividend) during the current reporting period 23,110,236
Total of equity instruments vested during the current reporting period -
Total of equity instruments forfeited during the current reporting period -
Total of equity instruments outstanding at the end of the reporting period 69,330,709
The exercise price and the remaining period of the contract of the outstanding
Share-based payments of the Company (ex-rights) issued at the end of the year RMB 4.11 per share and 28 months.
Unit: share
2016 Share Incentive Scheme Current reporting period
Total of equity instruments outstanding at the beginning of the year 52,326,858
Total of equity instruments granted (share dividend) during the current reporting period 26,163,429
Total of equity instruments vested during the current reporting period -
Total of equity instruments forfeited during the current reporting period -
Total of equity instruments outstanding at the end of the reporting period 78,490,287
The exercise price and the remaining period of the contract of the outstanding
Share-based payments of the Company (ex-rights) issued at the end of the year RMB 8.42 per share an 54 months
2. Information of the equity settled share-based payment
Unit: RMB
2014 Share Incentive Scheme 2016 Share Incentive Scheme
Determined based on stock price at the grant Determined based on stock price at the grant
Method of determing the fair value of
date and the costs of restricted shares during date and the costs of restricted shares during
equity instruments at the grant date Lock-up Period Lock-up Period
Recognition basis of the number of the Determined based on the results estimation of Determined based on the results estimation of
vested equity instruments each release period each release period
Reasons of the significant difference
between the estimates of the current year None None
with that of the prior year
Accumulative amount of the equity settled
with share-based payment and included in 318,752,215.19 69,423,390.50
the capital reserve
Total amount of the expenses recognized
according to the equity settled with
28,430,690.78 69,423,390.50
share-based payment in the current
reporting period
3. There is no share-based payment through cash settlements
142
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
XII. Commitments and contingencies
1. Significant commitments
(1) Capital commitments
Unit: RMB’000
Closing balance Opening balance
Contracted but not yet recognised in financial statements
- Commitment on construction of long-term assets 908,924 490,098
Total 908,924 490,098
(2) Operating lease commitments
At the balance sheet date, the Group had the following external commitments in respect of non-cancellable
operating leases:
Unit: RMB’000
Closing balance Opening balance
Minimum lease payments under non-cancellable operating leases:
First year from the balance sheet date 67,003 61,829
Second year from the balance sheet date 72,087 40,469
Third year from the balance sheet date 33,183 23,452
Subsequent years 34,544 42,010
Total 206,817 167,760
(3) As of June 30th 2017, the Group has no other commitments to be disclosed.
2. Contingencies
The Group has no important contingencies to be disclosed.
XIII.Events after the balance sheet date
1. Significant unadjusted events
The Group did not have any significant unadjusted events after the balance sheet date.
XIV.Other significant events
1. Management Measures for Core Staff’s Co-Investment in Innovative Business
According to Management Measures for Core Staff’s Investment in Innovative Business (Draft) approved by
The fifth meeting of the third board and the second provisional shareholders' meeting in 2015, core employees
can invest at the innovation business of Company via Hangzhou Hikvision Equity Investment Partnership
(Limited Partnership). The Group will assess the fair values of the investee companies before employees make
investments at the fair values. Hangzhou Hikvision Equity Investment Partnership (Limited Partnership) was
established in the year, 99.9983% of which is hold by core employees. Hangzhou Hikvision Equity Investment
Partnership (Limited Partnership) holds 40% of its subsidiaries Hangzhou EZVIZ, Hangzhou Robotic
Technology Co., Ltd., Hangzhou Hikvision Automotive Technology Co., Ltd., Hangzhou Hikvision Weiying
Sensory Technology Co., Ltd., and Wuhan HIK Storage Technology Co., Ltd. respectively.
2. Segment information
2.1 Report segment determining and accounting policy
143
Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
According to the Group's internal organization structure, management requirements and internal report
principles, the Group has only one operating segment i.e. the research and development, production and sales of
security products.
2.2 Segment financial reporting
External revenue by product or business segments
Unit: RMB
Amount for 2017 first half-year
Item Operating income Operating cost
Front-end equipment 8,471,727,239.99 4,330,837,875.51
Back-end equipment 2,581,996,973.35 1,318,164,201.90
Central control equipment 1,893,438,540.55 1,035,848,060.56
Construction project(s) 428,858,036.85 387,677,860.96
Innovative business 613,825,422.23 412,952,376.29
Others 2,200,994,312.68 1,805,372,126.76
Total 16,190,840,525.65 9,290,852,501.98
Unit: RMB
Amount for 2016 first half-year
Item Operating income Operating cost
Front-end equipment 6,601,052,833.16 3,462,274,282.21
Back-end equipment 2,182,475,391.78 1,212,978,813.40
Central control equipment 1,182,860,160.42 657,013,996.25
Construction project(s) 408,576,652.08 400,274,058.19
Innovative business 234,586,712.01 156,985,171.41
Others 1,736,860,159.37 1,465,712,349.34
Total 12,346,411,908.82 7,355,238,670.80
External revenue by geographical area and non-current assets by geographical location
Unit: RMB
Item Amount for 2017 first half year Amount for 2016 first half year
External revenue generated in domestic 11,478,885,424.15 8,959,841,363.15
area
External revenue generated in overseas 4,968,654,312.37 3,593,635,385.43
area
Total 16,447,539,736.52 12,553,476,748.58
Unit: RMB
Item (Note) Closing balance Opening balance
Non-current assets in domestic area 4,233,625,800.15 3,524,816,425.20
Non-current assets in overseas area 167,205,794.40 345,030,264.81
Total 4,400,831,594.55 3,869,846,690.01
Note: the non-current assets above did not include available-for-sale financial assets, long-term receivables, long-term
equity investment and deferred tax assets.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
XV. Notes to major items of financial statements of the parent company
1. Accounts receivable
(1) Accounts receivable disclosed by categories:
Unit: RMB
Closing balance Opening balance
Carrying balance Bad debt provision Carrying balance Bad debt provision
Category
Percentage Percentage Carrying value Percentage Percentage Carrying value
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts receivable that are
individually significant and for
- - - - - - - - - -
which bad debt provision has
been assessed individually
Accounts receivable with
provision accrued collectively on 13,220,744,215.33 100 847,153,879.17 6.41 12,373,590,336.16 10,908,625,274.90 100 779,871,754.48 7.15 10,128,753,520.42
a portfolio basis for credit risk.
Accounts receivable that are not
individually significant but for
- - - - - - - - - -
which bad debt provision has
been assessed individually
Total 13,220,744,215.33 100 847,153,879.17 6.41 12,373,590,336.16 10,908,625,274.90 100 779,871,754.48 7.15 10,128,753,520.42
The Group recognizes accounts receivable of over RMB 4 million (representing over 10% of balance in total) as accounts receivables that are individually significant.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Accounts receivable with bad debt provision provided by aging analysis on portfolio basis:
Unit: RMB
Closing balance
Aging
Amount Bad debt provision Percentage (%)
Within 1 year 12,490,500,098.43 624,525,004.92 5.00
1–2 years 346,250,470.11 34,625,047.01 10.00
2–3 years 190,112,808.12 57,033,842.44 30.00
3–4 years 88,853,019.38 44,426,509.69 50.00
4–5 years 92,421,720.90 73,937,376.72 80.00
Over 5 years 12,606,098.39 12,606,098.39 100.00
Total 13,220,744,215.33 847,153,879.17 6.41
(2) Bad debt provision provided, recovered or reversed during the reporting period
The amount of bad debt provision in the current reporting period was RMB 67,090,124.69, and the recovered
bad debt provision was RMB 192,000.00.
(3) Accounts receivable actually written off in the current reporting period.
The accounts receivable actually written off in the current reporting period was nil.
(4) The five largest accounts receivable assembled by debtors
Unit: RMB
Proportion of ending balance
Relationship with Ending balance of bad debt
Company name Carrying balance of accounts receivables in
the Company provision
total (%)
Subsidiary A Subsidiary 10,979,742,688.75 548,987,134.44 83.05
Company B Third party 73,311,121.80 50,431,328.89 0.55
Company H Third party 67,606,358.90 3,380,317.95 0.51
Subsidiary B Subsidiary 56,318,865.55 11,569,524.33 0.43
Company I Third party 48,285,230.00 7,167,535.70 0.37
Total 11,225,264,265.00 621,535,841.31 84.91
(5) At the end of the reporting period, there are no accounts receivable derecognised due to the transfer of
financial assets.
(6) At the end of the reporting period, there are no assets or liabilities formed by continuing involvement in
derecognised accounts receivables.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
2. Other receivables
(1) Other receivables disclosed by category
Unit：RMB
Closing balance Opening balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category
Percentage Percentage Carrying value Percentage Percentage Carrying value
Amount Amount Amount Amount
(%) (%) (%) (%)
Other receivables that are
individually significant and for
- - - - - - - - -
which bad debt provision has been
assessed individually
Other receivables with provision
accrued collectively on a portfolio 1,356,649,784.14 100.00 82,925,385.81 6.11 1,273,724,398.33 449,863,926.01 100.00 31,900,680.55 7.09 417,963,245.46
basis for credit risk
Other receivables that are not
individually significant but for
- - - - - - - - - -
which bad debt provision has been
assessed individually
Total 1,356,649,784.14 100.00 82,925,385.81 6.11 1,273,724,398.33 449,863,926.01 100.00 31,900,680.55 7.09 417,963,245.46
The Group determined that a single other receivable in an amount of RMB 4 million or more and representing more than 10% of the total amount was considered individually
significant.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Other receivables with bad debt provision provided by aging analysis on portfolio basis:
Unit：RMB
Closing balance
Aging Percentage of appropriation
Carrying amount Bad debt provision
(%)
Within 1 year 1,262,042,816.79 63,102,140.84 5.00
1–2 years 55,517,977.00 5,551,797.70 10.00
2–3 years 28,122,124.50 8,436,637.35 30.00
3–4 years 9,795,609.20 4,897,804.60 50.00
4–5 years 1,171,256.65 937,005.32 80.00
Total 1,356,649,784.14 82,925,385.81 6.11
(2) The provision, recovery and reversal of bad debt allowance for the current reporting period
The amount of bad debt provision in the current reporting period was RMB 51,024,705.26.
(3) The write-off of other receivables for the year
No write-off of other receivables was recorded for the current reporting period.
(4) Other receivables by nature
Unit：RMB
Nature Closing balance Opening balance
Guarantee deposit 44,511,291.46 31,242,843.36
Other lending 1,029,782,567.45 149,296,781.06
Temporary receivables 276,484,294.96 232,789,859.54
Investment deposit - 35,000,000.00
Others 5,871,630.27 1,534,442.05
Total 1,356,649,784.14 449,863,926.01
(5) Top 5 debtors of other receivables in terms of closing balance
Unit：RMB
Percentage to
The name of entity Nature Closing balance Aging total other Bad debt provision
receivables (%)
Subsidiary B Other lending 485,209,165.76 Within 1 year 35.77 24,260,458.29
Subsidiary C Other lending 451,047,563.85 Within 1 year 33.25 22,552,378.19
Subsidiary A Other lending 45,752,855.06 Within 1 year 3.37 2,287,642.75
Company J Temporary
20,699,153.07 Within 1 year 1.53 1,034,957.65
receivables
Company K Temporary
7,017,000.00 Within 1 year 0.52 350,850.00
receivables
Total 1,009,725,737.74 74.43 50,486,286.88
(6) At the end of the reporting period, there were no other receivables derecognized due to the transfer of
financial assets.
(7) At the end of the reporting period, there were no assets or liabilities formed by continuing involvement in
derecognised other receivables.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
3. Long-term equity investment
Details of long-term equity investment:
Unit：RMB
Decrease during the current reporting period
Increase during the current reporting period Provision for
Accounting Provision for
Name of investee Opening balance Closing balance impairment losses for
method Additional Increase due to the grant Investment Income recognized Cancellation of impairment losses
the year
investment of share options based on equity method subsidiary
Hikvision System Technology Co. Ltd. Cost method 233,378,669.31 - 17,942,647.96 - - 251,321,317.27 - -
Hangzhou Hikvision Science and
Technologies Cost method 108,430,558.84 900,000,000.00 3,387,738.78 - - 1,011,818,297.62 - -
Co. Ltd.
Hangzhou Hikvision Security Equipment
Cost method 200,000,000.00 - - - - 200,000,000.00 - -
Leasing Services Ltd.
Chongqing Hikvision
Cost method 200,000,000.00 - - - - 200,000,000.00 - -
System Technology Co., Ltd.
Hikvision USA,Inc. Cost method 1,546,160.00 - - - - 1,546,160.00 - -
HDT International Ltd. Cost method 87,786.14 - - - - 87,786.14 - -
Prama Hikvision Indian Private Limited Cost method 1,585,696.80 - - - - 1,585,696.80 - -
Hikvision Dubai FZE Cost method 1,870,351.40 - - - - 1,870,351.40 - -
Hikvision Singapore Pte. Ltd Cost method 1,900,590.00 - - - - 1,900,590.00 - -
Chongqing Hikvision Science and
Cost method 100,000,000.00 - - - - 100,000,000.00 - -
Technologies Co., Ltd.
Beijing Hikvision Security Technology
Cost method 10,000,000.00 - - - - 10,000,000.00 - -
Services Co., Ltd.
Shanghai Goldway Intelligent Traffic
Cost method 23,000,000.00 - - - - 23,000,000.00 - -
System Co., Ltd.
Beijing Brainaire Storage Technology
Cost method 96,482,439.85 - - - - 96,482,439.85 - -
Co., Ltd.
Hikvision South Africa (Pty) Ltd. Cost method 1,578,650.00 - - - - 1,578,650.00 - -
Wuhan Hikvision System Technologies
Cost method 10,000,000.00 - - - 10,000,000.00 - - -
Co., Ltd.
Henan Hua’an
Cost method 67,475,000.00 - - - - 67,475,000.00 - -
Intelligence Development Co., Ltd.
Hikvision do Brasil Comercio de
Cost method 4,579,750.50 - - - - 4,579,750.50 - -
Equipamentos de Segurana Ltda.
Hikvision Australia PTY Ltd. Cost method 2,866,850.00 - - - - 2,866,850.00 - -
Hikvision International Co., Limited Cost method 79,423.52 - - - - 79,423.52 - -
Hundure Technology
Cost method 37,247,790.28 - - - - 37,247,790.28 - -
(Shanghai) Co., Ltd.
Hangzhou Hikvision Electronics Co.
Cost method 397,745,645.00 - - - - 397,745,645.00 - -
Ltd.
Cooperative Hikvision Europe U.A. Cost method 65,485.53 - - - - 65,485.53 - -
Hikvision Canada inc. Cost method 994,442.54 - - - - 994,442.54 - -
Hikvision LLC Cost method 647,249.19 - - - - 647,249.19 - -
HIKVISION Korea Limited Cost method 1,535,850.00 - - - - 1,535,850.00 - -
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
Decrease during the current reporting period
Increase during the current reporting period Provision for
Accounting Provision for
Name of investee Opening balance Closing balance impairment losses for
method Additional Increase due to the grant Investment Income recognized Cancellation of impairment losses
the year
investment of share options based on equity method subsidiary
Hangzhou EZVIZ Network Co., Ltd. Cost method 1,000,000.00 - 2,520,069.08 - - 3,520,069.08 - -
Hangzhou Hikvision Zhicheng
Cost method 24,000,000.00 - - - 24,000,000.00 - -
Investment and Development Co., Ltd.
Hangzhou Hikvision robotic Technology
Cost method 10,000,000.00 - 1,617,565.00 - - 11,617,565.00 - -
Co., Ltd.
Hangzhou Hikvision Investment
Cost method 100,000.00 - - - 100,000.00 - -
Management Co., Ltd.
Hangzhou Hik Automotive Technology
Cost method 72,000,000.00 - 1,173,255.30 - - 73,173,255.30 - -
Co., Ltd.
Hangzhou Hikvision Communication
Cost method 7,000,000.00 - - - - 7,000,000.00 - -
Technology Co. Ltd.
Hangzhou Hikvision Weiying Sensory
Cost method 60,000,000.00 - - - - 60,000,000.00 - -
Technology Co., Ltd.
Hikvision Turkey Technology And
Security Systems Commerce Cost method 1,148,115.83 - - - - 1,148,115.83 - -
Corporation
Hikvision Colombia SAS Cost method 1,337,440.00 - - - - 1,337,440.00 - -
Hikvision Kazakhstan limited liability
Cost method 4,758.69 - - - - 4,758.69 - -
partnership
Wuhu Sensor Technology Co. Ltd. Equity method 35,000,000.00 - - (1,409,148.78) - 33,590,851.22 - -
Tianjin Hikvision System Technology
Cost method - 10,000,000.00 - - - 10,000,000.00 - -
Co., Ltd.
Wuhan HIK Storage Technology Co.,
Cost method - 15,000,000.00 - - - 15,000,000.00 - -
Ltd.
Maxio Technology (Hangzhou) Ltd. Equity method - 48,000,000.00 - - - 48,000,000.00 - -
Total 1,714,688,703.42 973,000,000.00 26,641,276.12 (1,409,148.78) 10,000,000.00 2,702,920,830.76 - -
As of June 30th 2017, there were no restrictions on the capability of transferring fund to the Company from investees in which the Company held long-term equity
investment.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
4. Operating income and operating cost
Unit：RMB
2017 first half year 2016 first half year
Item
Income Cost Income Cost
Operating income 6,798,573,690.37 2,251,271,391.25 6,340,292,309.26 1,861,474,489.65
Other operating
710,968,437.01 99,917,571.80 639,101,207.28 568,164,565.21
income
Total 7,509,542,127.38 2,351,188,963.05 6,979,393,516.54 2,429,639,054.86
5. Investment income
(1) Details of investment income
Unit：RMB
Item Amount for 2017 first half year Amount for 2016 first half year
Long-term equity investment income measured by equity
(1,409,148.78) -
method
Long-term equity investment income measured by cost
(7,379,719.62) -
method
Disposal G/L of financial assets measured by fair value and
their changes recognized in the gains and losses during the 4,064,470.64 30,136,515.97
current period
Investment gains (losses) for available-for-sale financial
8,505,842.42 -
assets during the holding period
Investment income from redemption of finance products of
29,315,524.76 -
banks upon expiry
Total 33,096,969.42 30,136,515.97
XVI. Supplementary information
1. Details of current non-recurring gains and losses
Unit：RMB
Item Amount Description
Profit or loss from disposal of non-current assets 2,226,974.55
The government subsidies included in the current profits and
losses (excluding the government subsidy6 closely related to
regular course of business of the Company and government 14,130,234.67
subsidy based on standard quota or quantitative continuous
enjoyment according to the state industrial policy)
Held- for-trading financial assets, profits and losses from change
in fair value of held-for-trading financial liabilities, and
investment income from disposal of held-for-trading financial
88,204,679.51
assets and liabilities and available-for-sale financial assets
excluding the effective hedging business related to the regular
business operation of the Company
Other non-operating income and expense except the items
16,422,848.73
mentioned above
Impact of income tax (18,147,710.62)
The impact of minority interests (1,157,189.00)
Total 101,679,837.84
6
Please refer to Note (V) 46 for details about government subsidy closely related to regular course of business of the Company and
government subsidy based on standard quota or quantitative continuous application according to the state industrial policy.
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Hikvision 2017 HY Report
Notes on Financial Statements
For fiscal year period from January 1st 2017 to June 30th 2017
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 average Earnings per share
Profit for the reporting period return on net assets Basic earnings per Diluted earnings per
(%) share share
Net profit attributable to ordinary shareholders of the
12.98% 0.357 0.357
Company
Net profit excluding non-recurring items of profit or loss
12.55% 0.346 0.346
attributable to ordinary shareholders of the Company
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Hikvision 2017 HY Report
Section XI Documents Available for Reference
1. The financial report was signed a by the Company's legal representative.
2. The financial report was signed and sealed by the person in charge of the Company, responsible
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.
Hangzhou Hikvision Digital Technology Co., Ltd.
Chairman: Chen Zongnian
July 22nd 2017
153
